A Second Perspective on the Future San Francisco (Weekly Photo Challenge: Foreshadow)

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Good Evening:

I have the good fortune to have made the good acquaintance of a New Zealand woman who long ago fell in love with San Francisco and a San Francisco gentleman (not necessarily in that order) and has lived in the city much longer than I have. Now retired, she performs accounting duties for one property management firm, manages her own rental properties, and prepares income tax returns on the side. Did I mention that she’s retired? Anyway, I’ve given you my perspective on the massive changes coming to/overwhelming San Francisco, and it seems fair that this renter give my readers a landlord’s perspective in return.

All of these photos come from only two of the probably hundreds of construction projects in San Francisco right now. My blogging colleague Franco over at Peach, Plum, Orange claims that Toronto has as many construction cranes in action in his home town as does San Francisco, a statement which if true is mind-boggling.

Old Advertising Exposed for the First Time in Decades on Market Street

Old Advertising Exposed for the First Time in Decades on Market Street

Old Advertising Overlooking Parking Lot

Old Advertising Overlooking Parking Lot

She feels a bit concerned about the stunning numbers of new rental units under construction right now in the city. Make no mistake, life does offer its bright spots for property managers and landlords in this town; after all, they can pretty much charge whatever they desire in the way of rents and still fill 100% of their apartments 200% of the time. But she wants to anticipate trends and changes before they happen, and from her perspective, she sees rents going down in a few years as the supply equals or even exceeds demand. Today the demand overwhelms the supply; indeed, opponents of government regulation and rent control should note that San Francisco has more than plenty of both and yet the rents are more than high enough to reward developers. Supply and demand rule the San Francisco markets, and today demand rules the supply as a South of Market dominant rules a submissive.

Mission Street between 5th and 6th Streets, 4 August 2013

Mission Street between 5th and 6th Streets, 4 August 2013

And yet my landlord friend has her concerns. She has the conviction that the supply of new housing will eventually surpass the demand and ultimately force rents downward. It happened a decade ago as people left their apartments by the hundreds to move into their first homes with the aid of Adjustable Rate Mortgages. I might have been the only person to check out the artist’s garret that I proudly call my home. She and I have agreed to disagree on her foreshadowing of the future. Personally, I feel that that at best rents will only stabilize at their current stunning heights.

There does exist one point upon which we do agree. Wholeheartedly.

(these two): Construction Equipment, Market Street Between 5th & 6th Streets

(these two): Construction Equipment, Market Street Between 5th & 6th Streets

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San Francisco has always been not a boom-and-bust town, but a HUGE-boom-and-HUGE-bust town. San Francisco will have a huge bust commensurate with the current huge boom. There exist riskier predictions than this one–for example, the sun will rise tomorrow.

San Francisco will bust again. If you could extract DNA from a city, you would find bust DNA in this town. William Richardson, the British sailor who fell in love with a Spanish officer’s mixed-race daughter, jumped ship, and eventually founded Yerba Buena, the future San Francisco, once owned most of the land in what is now the City’s Financial District, plus vast tracts in the North Bay. Land worth a billion or two or three today, but who’s counting? He died broke, and no one knows where his grave lies in San Rafael–if indeed it lies there.

So when will the next bust come? No one can say.

Backhoes, Market Street Development, 4 August 2013

Backhoes, Market Street Development, 4 August 2013

Backhoe, Construction Site, Market Street Between 5th & 6th Streets, San Francisco, California, 4 August 2013

Backhoe, Construction Site, Market Street Between 5th & 6th Streets, San Francisco, 4 August 2013

People have their favorite guesses. My New Zealand friend fears the real estate boom might cause the bust, forcing rents downward before the construction projects have all been completed, perhaps leaving the city scarred with abandoned sites taken over by homeless squatters. I think our latest tech boom will go bust just as the last set of new apartments buildings open for business, right as the next great exodus from the city begins. She and I have each lived here long enough that we have seen busts happen before. And the booms, too; I moved here just as the city began to recover from the Seventies, its disastrous decade of murders, terrorism and assassinations.

But we don’t know when the next bust comes. No one does.

I suppose that might partially account for the intense international interest in the affairs of my “cool grey city of love.” Everyone can see the excitement of the new tech boom, the excitement of the new real estate boom, and the excitement of the 21st Century equivalent of the gold miners of 1849. The facts that the restaurants, the Giants, and the 49ers are all great at the same time is another bonus.

And everyone knows this will all go bust. Again.

Vonn Scott Bair

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2 responses »

  1. Friends who have relocated to Tokyo from The City tell me that rents are cheaper there for comparable units in reasonable commuting distance from work. One friends who is finishing graduate school and has been tracking housing costs in Tokyo says that is very much the case. When San Francisco has higher rents than a still growing city like Tokyo, which has a higher median income, something is too high.

    • Gilles: Wow. More expensive than Tokyo. I have had the impression, correct or not, that the rents in cities like London, Paris and Tokyo–cities critically important to their countries in terms of politics, economics, culture and national pride–had the highest rents in the world. Even New York City used to have lower rents than these cities. If San Francisco–somewhat important to America in culture and economics, not so much in politics and national pride–has reached these levels, then uh, um, well, um, uh–wow. That’s all I can say. Wow. Vonn Scott Bair

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