We are living in a period of unmatched wealth inequality in the U.S. The 400 richest Americans now have more wealth than the bottom 150 million of us. And the vast majority of all the economic gains in the last 20 years have gone to the richest one percent of society. Banks, corporations, and wealthy individuals have so much money they don’t know what to do with it. So, one market many of them are flocking to is real estate. In big cities across the country, the rich are swooping in, buying up properties, and making a killing. The Bay Area is no exception to this housing robbery.
One area of the economy that is growing is the tech sector – though based in silicon valley, many workers in the sector are moving to San Francisco and Oakland. This creates a market for high-priced condos and apartments for the employees of the tech companies. As a result, home prices and rents have become increasingly more expensive. Large-scale investors buy up entire neighborhoods at a time, and sell them back at prices that most locals can’t afford. Investors outbid local buyers and can often pay all cash while a working family often needs a 30-year mortgage. All-cash sales have increased and now make up about half of all purchases. Many of these homes that are bought are called “fix and flips” – the buyer slaps on some new door-knobs, new paint, and a higher price tag. In Oakland, home purchase prices went up 64 percent between 2012 and 2013. In San Francisco the average price for a home is $841,800, among the highest in the country.
The Bay Area is the toughest area in the country to be a renter, but one of the best places to be a landlord and apartment investor. San Francisco and Oakland hold the top two slots for fastest rising rents in the country, followed by San Jose holding fifth. Rent in the Bay Area has increased more than twice as much as the rest of the nation. The average price for a one-bedroom apartment in San Francisco is $2,800, the highest in the country. For Oakland, the average rent for a one-bedroom in 2012 was $1,925, a 20 percent rise from 2011.
These skyrocketing rents are happening in a backdrop of record levels of evictions. An act called the Ellis Act, allows landlords to evict all tenants if the landlord is converting the type of property. This creates an opportunity for landlords to turn apartment rentals into condos or single-family million-dollar homes – all of which cater to the rich, kicking out poorer families in the process. Ellis Act evictions jumped by 170 percent from February 2010 to February 2013. During the same period, there was a 38 percent increase in total evictions, and home prices in San Francisco rose by 22 percent. And this past year, from March 2012 to February 2013, there were 1,716 total evictions.
The Bay Area is already one of the most expensive areas to live. With investors coming in and using our neighborhoods and communities as playgrounds for their money, living here is only becoming more expensive. For workers, this means working in Oakland and San Francisco while we have to move to Tracy, Antioch, Stockton, and even farther. With shrinking wages and skyrocketing rents and housing prices, we are being priced out of our own neighborhoods.
