The median rent for a one-bedroom apartment in San Francisco is nearly $3,500 a month. That's the most expensive rent in the country, according to the apartment listing website Zumper. Take a walk around San Francisco's financial district and you’ll see cranes and construction crews working on towering high-rise condo projects. But as Here & Now’s Peter O’Dowd reports, all this development comes with a price.
The elevator at One Rincon Hill goes up and up and up until it reaches an ear-popping 52nd floor. Matt Finley, with Climb Real Estate, has a key to an empty unit that’s between renters.
"It’s a three-bedroom, it’s about 2,000 square feet, so pretty spacious," Finley says. "Upgraded finishes. Very upscale granite. Marble. Open floorplans. And views. Views really to die for. Just really exceptional."
That is an understatement. The Bay Bridge stretching toward Oakland is about 500 feet below us. Sailboats look like toy boats from up here.
"This building is really one of the more identifiable high-rise luxury buildings in the city, just because of its location. We’re starting on a hill, and it is really the icon of San Francisco," he says.
Who could afford to live on this hill? Finley says the owner is a pharmaceutical executive from China. The last tenant paid $12,000 a month in rent. But the price is going up.
"You could get three techies living here, paying maybe 7 grand apiece to rent a place like this - just grinding it out on computers, programming - that’s common," says Finley.
San Francisco's High-Rollers
Finley introduced me to a few people who live in this building. One owner getting ready to sell his unit tells me he’ll ask for about a million dollars more than what he bought it for just six years ago. I also met Rahul Vohra, founder and CEO of a company called Superhuman, an email system for professionals. Vohra says it’s not the first company he started in San Francisco. He sold that one to LinkedIn.
"There was a little bit of an exit event," Vohra explains. "I guess that’s technical jargon. We exited the company. Investors got their money back and then some, and everyone did well."
Well enough to move out of his luxury rental at One Rincon Hill, and into a place of his own around the corner.
"It’s going to be the shortest move of all time - 20 meters away," he says. "I fell in love with this place as soon as I walked in. I think one of the best one-bedrooms on the market in this area right now."
Vohra wouldn’t tell me how much he paid, but his offer was 40 percent above asking price. Vohra says he knew from previous failed bids that if he wasn’t aggressive, he’d lose his chance.
"I lost out on one place due to being too slow. I lost out on another place due to coming in too low. You learn each of those lessons once, I think. And then the third time, I was like OK, I’m going to be really fast and very aggressive."
The offer was all cash.
San Francisco's Middle Earners
It’s offers like Vohra's that are driving growth in a city where the sound of new construction is everywhere. In fact, the construction noise is downright overwhelming outside the office of Peter Cohen, an affordable housing advocate who sees a darker side to the luxury towers going up across the city.
"The sound of progress," Cohen says with a wry grin. "It’s kind of shocking, actually. It raises the question of who is actually buying or absorbing all this housing."
City planners are trying to keep track of affordability with something called a Housing Balance Report. And the last one in September showed something interesting. When you count up the apartments that lost their rent-controlled status in the past decade, just 15 percent of the city's new development was affordable to people with low or moderate incomes. But the question is – what does affordable even mean anymore?
"This has become one of the latest big debates – it’s become extremely politicized," Cohen explains. "For the course of time, over the past 30 to 40 years, affordable housing has been for very low-income folks because they are the ones locked out of the market."
But Cohen says housing prices have gotten so high that even families making 140 percent of San Francisco’s median income have trouble getting by. That’s a family of four taking home $143,000 a year.
"Now there’s an argument that those folks are just as much in need as the folks who are down around 50 percent of the median income, scraping to get by in the local restaurant industry," says Cohen. "The fact is we have a market that has left so many people behind that we’ve had to embrace this broad spectrum of folks."
San Francisco's Low-Income Residents
Among those feeling left behind is 84-year-old Marilyn Fowler, who is being evicted from her apartment.
"We do not want to see this neighborhood taken over by greed, and that’s what this is all about," says Fowler.
She has called a group of friends and neighbors together at a coffee shop in the Haight – a neighborhood known around the world as the quirky epicenter of pot smoke and free love.
You could call this meeting a mini protest. Fowler says on November 1, her rent is going from $1,200 a month to $3,500. She lives on Social Security and can't pay rent that high. She's found a lawyer to plead her case.
"To begin with, I was kind of personally crushed. I was like, 'Why is he doing this to me?' He’s literally throwing me on the street."
As Fowler and her friends leave the coffee shop, we take a short walk to the apartment where she's been living for two decades. I ask her what she'll do if she loses this battle.
"I don’t know that’s why I’m traumatized," she responds. "I have physical issues. I can’t pick up and move 23 years of stuff. And where would I put them? In storage? And then live in a little dark hole someplace?"
In a way, Fowler is a symbol of the crisis. Advocates say eviction notices are up 55 percent over the past five years as landlords try to cash in on skyrocketing property values. If Fowler can't come up with the money, she may be the next. And she's clear about who's to blame.
"I don’t want to point the finger at the techies – the young people," she says. "They don’t know. Of course they want to live in the Haight. And they have the money to pay for it. My son’s a tech. I’m pointing the finger at our city government. They didn’t have a plan."
More Development Ahead
But really, there are plenty of plans. Next week’s election is chock-full of housing measures. One would authorize a $310 million bond to build more affordable housing. And most developers must already pay an affordable housing fee, or build affordable units in their new projects.
I asked Lynn Bell from Climb Real Estate to drive me to the Shipyard. It's a massive new development in a quiet industrial neighborhood that feels a million miles from downtown. Bell says 30 percent of the new homes are set aside for people who earn less than the median income.
"It was extremely important for this community to have affordable housing. It was extremely important for the community to create opportunities for residents of the community to be able to buy," Bell says.
Especially important in a community that's been historically poor, environmentally toxic and black.
"It’s an issue here in San Francisco, and there are extremes of people who are mandating they don’t want any more development – that it’s changing areas," she says. "But you have to have it, because if you don’t have sufficient housing, you’re going to have an issue of affordability. It’s a supply and demand question. The big thing is, how do you do it?"
And there will be more supply. Someday this area with sweeping views of the bay will be home to more than $10,000 new condos and townhouses in a city that seems to be endlessly for hungry it.
This segment aired on October 28, 2015.