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by Barry Hermanson
We have a long history in this country of promoting private ownership of land. It is part of the American dream to own a home.
According to the Smithsonian National Museum of the American Indian, “To Europeans, land was a commodity, an item which could be bought and sold and assigned to an individual owner. Native Americans did not appreciate the notion of land as a commodity, especially not in terms of individual ownership. As a result, Indian groups would sell land, but in their minds had only sold the rights to use the lands. It seems, in fact, that when they sold land to the Dutch, they did not give up their right to occupy it either. The famous purchase of Manhattan Island for 60 guilders loses some of its impact as a great real estate deal when one considers that the Indians probably never intended to give it up, but rather to “lease” it for Dutch use while they continued to occupy it.
“In 1626 Indians did everything by trade, and they did not believe that land could be privately owned, any more than could water, air or sunlight. But they did believe in giving gifts for favors done. The Lenape – one of the tribes that lived on the island now known as Manhattan – interpreted the trade of goods as gifts given in appreciation for the right to share the land.”
Today, many meetings and gatherings begin with a land acknowledgment. “A Land Acknowledgment is a formal statement that recognizes and respects Indigenous Peoples as traditional stewards of this land and the enduring relationship that exists between Indigenous Peoples and their traditional territories.” (Northwestern University)
If you are participating in a meeting or gathering where there is a land acknowledgment, I encourage you to reflect on the following: “Native people were never homeless before 1492.” (National League of Cities)
In the San Francisco Bay Area and many other places around the world, buying and selling property increases housing costs for future homeowners and renters. In San Francisco particularly, home property values have risen dramatically over the years. Almost every time a home is sold, the new owner pays more to buy than the previous owner.
What are some of the additional costs every time property is sold? Realtors generally charge 6% of the sale price. On a $1,000,000 home, that is equal to $60,000. The property seller and buyer normally share this cost. The next major cost is bank financing. Today, with interest rates at 7%, if you put 20% down on that million dollar home, monthly payments on an $800,000 30 year loan would be $5,322. Your property taxes and maintenance costs would be on top of that. Your total loan payments, interest and principal, over 30 years would be nearly $2 million. Real estate professionals and bankers like it when property is bought and sold. That is when they make money.
I was very fortunate to be able to buy a home in 1990. My mortgage was paid off a long time ago. Today, the market value of my home is four to five times what I paid for it. Because of Prop 13 back in 1978, the annual property tax rate I pay is far below the rate someone else would pay if I sold my home today. My annual property tax bill this year, even with all of the extra charges and assessments, is only $6,970, or $580 per month for a two bedroom home.
It is less than it would cost to rent a publicly subsidized single room in the Tenderloin. Yes, I have annual maintenance costs, but even averaged on a monthly basis, I’m still paying less than I would for an SRO room.
I don’t provide this information to advocate for a repeal of Prop 13. If it was repealed and I had to pay market rate real estate taxes on my home, my modest Social Security income would not be enough. I would be forced to sell it. I would make a lot of money by selling my home. But, the sale would not create an affordable place for anyone else to live. And, my costs for housing would dramatically increase. Selling a home in San Francisco can be a lot like winning the lottery. My winnings, however, will mean increased housing costs for someone else. Every time a house in my neighborhood is sold, a working class family is replaced by one that is wealthy.
The American dream of owning a home doesn’t work for many people. “The U.S. Department of Housing and Urban Development estimates that in 2022, about 582,000 people experienced homelessness across the country.” (USAFacts)
If you are fortunate to be housed, is your housing affordable? “Households paying more than 30 percent of income toward housing are considered housing ‘cost-burdened,’ and those with housing costs that exceed half of income are considered ‘severely’ cost-burdened. Across California, more than 4 in 10 households had unaffordable housing costs, exceeding 30 percent of household income, in 2015. More than one in five households statewide faced severe housing cost burdens, spending more than half of their income toward housing expenses.” (California Budget & Policy Center)
If housing costs are equal to 30% of your income, your income should be 3.33 times your rent.
- $1,000 per month rent: income of $3,330 per month or $39,960 per year
- $2,000 per month rent: income of $6,660 per month or $79,920 per year
- $3,000 per month rent: income of $9,990 per month or $119,880 per year
Market rate rent for a one bedroom apartment in San Francisco is $3,000 per month.
Zibrecruiter states that, “as of Nov. 22, the average annual salary in San Francisco is $93,842.”
I wrote earlier this year about a proposed major housing development and shopping center expansion at the Stonestown Galleria in San Francisco. More than 80 percent of the housing that will be built will be market rate. Instead, what is needed is 80 percent to be affordable.
“$18.50 per hour, part-time” was recently advertised on-line for a sales associate job at a Stonestown store. “Trader Joe’s Company pays its employees an average of $18.51 an hour,” says Payscale.com. Working full-time at $18.51 per hour equals $38,500 per year.
On Indeed: “The average Whole Foods Market salary ranges from approximately $22,000 per year for Customer Service Associate/Cashier to $73,231 per year for Store Manager.” In the new expanded Stonestown, many more low and middle income wage earners will be employed there. Few, if any, will be able to afford to live there.
At the state and local level, there is a lot of legislation that has been passed recently to make it easier and less costly for developers to build housing. California Gov. Gavin Newsom, Mayor London Breed and state Sen. Scott Wiener, among many others, apparently believe that making it easier to build market rate housing will somehow provide the affordable housing that is our primary need. The fact that working people cannot afford market-rate housing seems to escape them. It is like a revival of the discredited Reagan era trickle-down economic theories by leading Democratic politicians. At a community housing meeting in 2019, someone told me, “I’m tired of getting pissed on.”
Despite the state mandate that 58% of the 82,000 housing units San Francisco must build in the next few years be affordable, public funding to help meet that goal is a small fraction of what it needs to be. Tens of billions of dollars are needed every year in public subsidies. It isn’t profitable for developers to build affordable housing without public subsidy. If we don’t build, San Francisco will lose more control over what gets built. There will be fewer constraints on developers. Community concerns and even many environmental questions will be dismissed. Still, few affordable housing units will be built. It is as if Democratic politicians are setting up communities to fail. The beneficiaries will be the housing developer donors to their political campaigns.
What if the American dream was not to individually own a home, but instead, be part of a community where everyone is housed? Community Land Trusts, limited equity coops and non-profit housing developers help to remove property from the speculative market, providing increasing affordability with each year properties remain off the market.
In Vienna, more than 50% of housing is affordable. “Rents are regulated by the city government so that none of the residents pay any more than 20 to 25 percent of their household income for housing, compared to the corresponding 30 percent benchmark in the U.S.” (HUDUSER.gov)
“The median burden of rent payments for tenant households is highest in Finland (31%), the Netherlands (30%), Norway (29%), Sweden (29%), Denmark (28%) and Iceland (28%). It is lowest in Central and Eastern European countries, as well as in Japan (20%), Mexico (17%), Ireland (16%) and Malta (below 3%).” (OECD.org)
Amanda Huron, in her 2018 book, “Carving Out the Commons,” discusses the Bin-Zib housing of Seoul, Korea. “Residents of Bin-Zib are not only required to maintain and reproduce the resources for the group, but are also compelled to expand the common resources for potential, future guests. What this has meant in practice is that … Bin-Zib dwellers opened a new house every time existing houses became too full of guests.” Every community member pays a little extra every month in order to expand the community. “Opposed to the ideology of private property ownership associated with housing, residents of Bin-Zib have tried to turn urban housing into a common system.” (ResearchGate)
We have depended on the private for-profit real estate market to provide almost all of our housing for far too long. When I finally decide to move out of my home, I plan on donating it to a community land trust or non-profit housing community. I have no need to sell it and “win” the lottery at the expense of those who come after me. If you are so fortunate to be in a similar position, I encourage you to consider helping to increase the resources available for affordable housing.
If you live in San Francisco, save the date. Thursday, Dec. 14, at 5 p.m. at Civic Center Plaza will be the Annual Vigil – A Memorial for Homeless and Unstably Housed San Franciscans. Remember our neighbors who have died this year while living on the streets and on the margins of San Francisco. The event will also be live online at 5:30, at www.facebook.com/sanfrancisconightministryj/live. If we treated housing as a right instead of as a commodity, many of these people would be alive today.
Barry Hermanson is a member of the San Francisco Green Party and a former small business owner. Contact him at Barry@Hermansons.com or 415-255-9494.
