San Francisco also applies rent control only to older buildings. The effect is that developers only build top-of-market “luxury” housing (often cheaply constructed it rented at luxury rates). This helps them recover their development costs, which they couldn’t recoup on affordable housing.
SF also has some of the most ridiculously onerous zoning laws in the country.
A HUGE portion of the city is just giant single family homes or 2-3 story buildings and you are absolutely forbidden from redeveloping them into dense, affordable housing.
Change the zoning laws and developers will gladly build affordable market-rate housing.
Yes, the zoning laws in SF are a disaster. This map[1] shows the extent of the problem.
And it's not like people can easily find housing outside of SF and commute in, about 80% of the Bay Area is zoned for single-family housing as well. There was a damning report[2] from UC Berkeley on this just a few months ago.
I don’t understand how those things impacts each other. Are you saying that if old buildings didn’t have rent control then developers would build less profit maximising buildings?
What do you mean by that? Rent control in SF only applies to buildings built before mid-1979. New buildings built today, whether low-end or high-end, will not be subject to rent control now, or in 15 years.
There was a 2020 ballot initiative to change that so buildings older than 15 years old could be subject to rent control on a rolling basis, but IIRC that failed. (And even if it had passed, that wouldn't explain the last 10+ years of predominately "luxury" building.)
Not quite true. California passed statewide rent control at inflation + 5% in 2019. Now some have moved the goalposts and called that rent stabilization instead of control because it allow rents to increase.
I doubt this calculation changes whether a developer chooses $500 or $1000 countertops. New units in San Francisco are not luxury units. Few have luxury amenities like doormen.
"luxury" is one of the most meaningless and oft misused terms in housing/real estate.
It's not legally defined as anything so any developer can build a shoebox with a bathroom and a murphy bed throw in a nice countertop and call it "luxury".
It's also become a pejorative for ANY market-rate housing in cities by NIMBY anti-development types.
Few San Francisco new constructions have pools, and I don’t see how putting some exercise equipment in what would otherwise be a storage closet makes a building luxury. That can’t be more than a few basis points of total project cost.
I'm not sure those are the amenities that would signify a high end apartment; which probably tracks with the dilution of the brand. Those amenities are pretty standard for most corporate housing, (ex. Avalon's 55 9th[1] has those amenities, but doesn't market itself has luxury).
Compare that building with the 181 Fremont[2] in SOMA which has a several private lounges, a doorman, a building concierge, and valet parking. Several other building in that area, such as the Avery[3] do have pools. I'd consider that 181 Fremont would still be a luxury offering in a city like Chicago where the housing market isn't insane.
However, despite the range the building offerings, most units still rent out for $55-75/sqft.
Maybe we have different opinions of what qualifies as luxury. My example is in a trendy location and above a whole foods. Based on the price (and the units sold quickly) there are no middle or lower class folks living in those apartments/condos. Like zero.
Contrast that with the more spartan apartment buildings building 30-40 years ago. Basic construction, laundry in the basement was the main amenity. These were clearly built for middle or lower class folks to live in.
My point is the building isn't really competitive with other high end residences - it just gets away with charging high pricing because everything in SF high priced. Just because a bunch of high income earners live there doesn't mean it's competitive with other offerings, just like I wouldn't consider a Ford Fusion a luxury car just because Steve Ballmer drives one.
Rather than contrasting it to living standards 30 years ago, it makes more sense to contrast it with living standards today in real estate markets that aren't insane. A comparable apartment to 38 Dolores, with similar amenities is Chicago's Jeff Jack apartments[1] which has much of the similar amenities at a fraction of the price (~$1,000/mo for 1bd) - still likely targeting yuppies but in a different tier than Chicago's high end offerings. However something like a building in Chicago's Gold Coast (which has pricing of around ~3,500/mo for bd) includes features that are in 181 Fremont - pool, lounges, concierge, dry cleaning and even larger floor plans than you would typically find [2].
Alternatively you could say that a lot of apartments in SF get away with charging luxury prices for what really should be standard fan-fare apartment because demand is so high. The GP mentioned more succinctly, a lot of units in SF are cheaply constructed building that are actually rented at luxury rates.
Are you aware that the space for the outdoor living room and butterfly garden are almost certainly mandated by the planning code’s open space requirements? I suppose the builder could have left them as an unlandscaped pile of dirt, but most of the cost is a statutory requirement.
That's more like middle-class apartments than actual luxury. The amenities of Luxury apartments include things like exclusive Michelin star restaurants and grand ballrooms for rent.
Is there a functional difference between places that have a front-desk person and actual doormen, besides opening doors? Not that the former is super-common in San Francisco either, but it's at least existent.
My main dealings with them were, in my most-cash strapped days, delivering Postmates orders to their buildings. They also serve the valuable service of not having to explain to the delivery guy how to get into the building. Much longer notes from the people whose buildings were not manned.
NYC is one of the few places in the United States building truly luxurious condos. The per unit construction cost of new construction in San Francisco is probably within 20% of 100% affordable non-profit developer built subsidized housing (which runs at around $850k/unit).
How are you defining "luxury" here? The land in SF is inherently expensive; any newly constructed apartment building is likely to have rents meeting your definition of "luxury". The land is expensive and so too is building buildings on top of it! The granite countertops and stainless steel appliances are a tiny fraction of the overall cost.
I thought luxury was being used by marketers as their favorite new mouth-noise that sounds good but doesn't mean anythingm Like "premium". If you pay $150 for a $1.5 bottle of wine it actually means overpriced but it is used to make it sound posh. Snark aside it could be "quality enough that it sells above commodity prices" but it is still about what others are willing to pay.
Luxury has many uses as a euphemism "No Karen, just because it is an apartment doesn't mean it will cause a flood of criminals!" NIMBY defense, "Sounds good so you will pay more." and the hillariously low bar to pass "Literally anything above neccessities to sell the place."
NIMBYs define "luxury" very broadly as a semantic tool in their warchest. There isn't a good definition of it at all, but it's commonly used to mean "high rents", or simply, market rate rents.
