San Francisco could soon impose a new tax for property owners whose flat or condo stayed vacant for a longer period. This measure has been put forward by District 5 supervisor Dean Preston as a way to fight the existing housing crisis and inequality gap that rises in this city.
This ballot is inspired by the ones already implemented in Oakland and in Vancouver, where the number of empty homes decreased by around 10% since 2016. San Francisco lacks more than 80,000 homes according to the allocation report done by the Association of Bay Area Governments. This number is even more remarkable when taking into account around 40,000 vacant housing units from a 2019 report.
The goal with the new vacancy tax in San Francisco is double-natured but ultimately should help the housing market crisis in the Bay Area. First, it would be possible to collect more than $35 million annually, which would then be allocated to creating affordable housing. Second, it is expected that many property owners would put their vacant homes on the market, thus injecting the supply in the dry market.
If the measure gets at least 9,000 signatures by July 11, voters could cast their vote on the November ballot. There are many in favor of the tax, but there are also people who have inquiries about the implementation.
According to the text of the measure, the properties that are principal residences would be excluded, the tax would be based on the square footage and the length of vacancy, and it does not apply for duplexes and single-family units. The last item has gotten many people wondering why.
Dean Preston has explained that the tax targets housing types that are most likely to be vacant for a longer period. That problem is mostly situated in condos and smaller apartment buildings, where private equity investors bought properties the most.
Many do not agree and think that the exclusion is a political gesture, and the fact is that 24% of vacant housing units are single-family houses. However, a significant portion of that number represents houses that are sold, but not yet occupied, because many await renovation. Another problem of the housing crisis is that there is a shortage of construction workers in the States.
Affordable housing activists are in support of this tax, although they state that the tax itself will not resolve this crisis and lack of access to housing. A short-term vacancy is good because it means that a house is on the market or it is under construction, and that means that soon enough there will be a household.
However, San Francisco has a big problem because the vacant homes are usually seasonal, secondary, or derelict property - and those need to be properly taxed, according to Dean Preston and his supporters.
San Francisco has the second-highest one-bedroom apartment median rents, after New York, with almost $2,900 monthly. San Francisco’s median home price has been above one million dollars for more than ten months. These figures tell a story of a hot housing market that does not cool off, although the national numbers tell a different story.
San Francisco has one of the highest numbers of bidding wars and houses are sold for hundreds of thousands of dollars above the asking price. It is impossible for a median-earning first-time homebuyer to find appropriate housing in the Bay Area. Investors come with cash offers and rent out properties or keep them vacant.
The new tax on vacant homes could try and discourage this kind of pricing out in the market, plus the collected tax money could finance more affordable housing. There will be more debate on this measure until July, and subsequently on the November ballot.
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