Sky-high real estate out of reach for many

Rosario Ramirez said she feels lucky to live in a studio apartment near San Francisco’s popular South Park neighborhood, but her daughter doesn’t.

“She’s embarrassed by the place she lives,” Ramirez said. “She doesn’t want to have her friends come over.”

Her daughter sleeps on a sofa bed that’s squeezed in next to the bed that Ramirez and her husband share. It’s tight, but the price — $460 a month — is right, she said.

The family stays in the cramped quarters to save money in hopes that someday they could own a home in San Francisco, said Ramirez, who works full time for a San Francisco nonprofit and takes home about $2,000 a month. Her husband, a cook, adds another $1,600 to the family budget.

Their combined salary is less than The City’s median annual household income of $65,497, but more than the threshold to qualify for a city-subsidized rental unit. Those are set aside for families making 50 percent or less of the median income.

The family does qualify to apply for one of San Francisco’s below-market-rate homeownership opportunities, which come up infrequently and usually draw hundreds of eligible applicants. One of the three available units listed on The City’s Web site is for a two-bedroom condominium priced at $599,000, with monthly homeowner dues of $265 per month.

“It seems so unreachable,” Ramirez said. “To buy even a one-bedroom condominium, all of my salary would go into the monthly payment.”

Homeownership for most San Franciscans is unreachable, according to a recent report by the National Association of Homebuilders, which said less than 6 percent of Bay Area homes on the market are affordable to households with an income of $86,500. Not surprisingly, 61 percent of San Francisco households are renting, compared with 33 percent nationwide.

Recognizing the high cost of housing, city leaders have tried to maintain economic diversity. In addition to federally subsidized public housing and housing vouchers for the lowest-income households, San Francisco has laws that mandate rent control, provide taxpayer-supported subsidies used to create housing units, and require private developers to fund affordable units when they want to create market-rate projects.

Rent control applies to apartments built before 1981, around the time the legislation was passed. If a tenant remains in a rent-controlled unit, annual rent increases are calculated by the Consumer Price Index, not the market rate. When a tenant leaves, the landlord is allowed to bring the rate up to market level, but then the increase controls begin again with the new tenant.

Gabriella Ayala and her husband are another example of a couple who decided to start a family but couldn’t afford to give up their rent-controlled, one-bedroom apartment in the Tenderloin to make space for a child.

“We pay just $800 because my husband has been there for 12 years,” Ayala said. She said others in her building pay $1,500 for units of the same size.

Ayala and her husband, who both work for restaurants in The City, have a combined income of $2,400 a month. She said she feels lucky, even though her neighborhood isn’t safe.

“I know families who are in a studio with four kids,” she said.

In an effort to hold down market price by putting more units on the market, Mayor Gavin Newsom vowed to facilitate the development of 15,000 new housing units in five years, one-third of which would be made affordable to low- and moderate-income residents.

Since 2004, when Newsom came into office, 12,064 housing units have been issued building permits.

Is economic diversity worthwhile, or should market forces rule?

San Francisco has one of the highest median household incomes in the United States — the third-highest of cities with more than 250,000 people, according to 2006 Census data. The City is also tied for third, however, for the highest income inequality between the haves and the have-nots, according to a study released last year by the Mayor’s Office of Economic and Workforce Development.

The question has been raised by officials and residents about the future of San Francisco’s diversity and whether it should be a goal to remain a city of diverse cultures and income levels.

Lawrence McQuillan, director of business and economic studies for the Pacific Research Institute, a libertarian think tank, said San Francisco’s high prices are a result of its desirability as a place to live.

San Francisco’s “public entitlement programs,” he said, discourage market competition that would boost wages, as well as encourage the lowest-income people to remain in a city where the cost of living will be a hardship.

“Not everybody can live there,” McQuillan said. “Why should people have their taxes used to subsidize working poor people who decide to have children and live in San Francisco?”

A city benefits from economic diversity, said Carole Watson, the chief community investment officer for the United Way of the Bay Area.

“If you only strive to have a certain income homogeneity, you end up shortchanging even those who are born into that community,” she said.

Programs such as rent control are essential, said Delene Wolf, executive director of the Rent Stabilization and Arbitration Board.

“I have no doubt in my mind that working families could not afford to stay here if it weren’t for rent control,” Wolf said. “Chinatown would not be Chinatown, the Mission would not be the Mission. The market would have priced those people out years ago.”

Rosario Ramirez said she and her husband work hard at their jobs and shouldn’t have to consider leaving San Francisco, their home for more than a decade, just because they’re low-income.

“I believe we have a right to stay here,” she said. “We have friends here. Our family is here.”

High wages needed even for renters in city

Nearly two-thirds are renters

39% Homeowner

61% Renters

22% Families with children that have annual incomes of less than $35,000

$38,022 Average annual income for two parents working full time at minimum wage

$25,500 Average annual rent for a market-rate, two-bedroom, one bath apartment in S.F.

– Source: U.S. Census, 2006 American Community Survey; California Division of Labor Standards Enforcement; RealFacts

S.F. housing, by the numbers*

115,000 Nonrental housing units

215,000 Nonrental housing units

179,000 Privately owned rental units that are rent controlled

24,000 Privately owned rental units that are rent controlled

6,400 Privately owned rental units that are rent controlled

6,415 Units completed since 2004

21,087 Units entitled since 2004

* All numbers are estimated

– Source: Mayor’s Office of Housing; San Francisco Rent Stabilization and ArbitrationBoard

Working to survive

Thousands of Bay Area residents live in poverty despite working full time. The Examiner looks at the choices they make to pay for necessities.

Monday: Introduction

Tuesday: Health care

Today: Housing

Thursday: Transportation

Friday: Child care

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