Who Really Are Beneficiaries of Rent Control in San Francisco?

48 Hills Online covered a map produced by the Anti-Eviction Mapping Project about how renters have dramatically lower incomes in San Francisco than home owners.  The results are pretty stunning: watch the changes of the census tracts in the Mission when you swipe from home owner to renter.

While useful in illustrating where and how the non-rich manage to afford to live in the City, the jump made by 48 Hills Online and AEMP that this suggests rent control isn’t being taken advantage of by high income earners it is a bit simplistic.

This post is devoted to more deeply understanding who is really benefiting from rent control in San Francisco.  To do this, I pull data from the 2000 Long form Census and 2007-2011 American Community Survey microdata (PUMS).  It’s the actual survey responses used to make all kinds of Census economic and demographic estimates, but detached from small geographic tags (like tracts, blocks, block groups) to preserve anonymity.  The richness of the dataset and ability to isolate responses just living in San Francisco proper makes it the ideal dataset for this task.

A.  Income Differences

Figure One below charts density plots of the income distributions of households in rent controlled units, non-rent controlled rental units, homes completely owned/paid off by their owners, and homes owned by residents with mortgages using the 2000 Census data:

Income Distributions
Click on image to see full size

In this dataset, there’s no systematic difference in incomes between those in rent controlled and non-rent controlled units according to both a KS Test (p value: .11) and T-Test (p value: .66).  Given what the AEMP has shown, the enormous income differential between those still paying off mortgages (in blue) and those renting shouldn’t be much of a surprise.  The last group, those who paid off their homes, have lower incomes–similar to renters (we’re talking about a lot of retired families who may have bought before the market got real hot).

So you’re wondering what the big deal is.  I have re-run these distributions for 2000 and 2007-2011 ACS wave (results are dotted lines).  Note whose incomes move up and whose do not:

Pic2
Click on image to see full size

Those in non-rent controlled units saw their incomes rise faster (or wealthier people started moving in) compared to those in rent controlled units.  At this point in time, a statistically significant gap in incomes emerges between households with rent control and those without–according to both the KS (Kolmogorov-Smirnov) Test (p-score .053) and T-Test (p-score .06).  I re-ran this comparison using the 2009-2013 wave of the ACS, the latest version, and found the difference vanishes.

What explains the swing?  When cohorts of renters started renting:

Pic4
Click on image to see full size

It’s among long-time residents of San Francisco where the difference in income between rent-control and non-rent control households is most apparent.  Rent control is extremely beneficial to older residents who started renting before San Francisco became way to expensive for the middle class. There are a lot of elderly and retired people in this category, an issue that AEMP has brought up repeatedly in protests against speculative land lords.

B. Searching For Other Differences–Focusing on Race

I spent a solid couple of hour looking for other differences between residents of rent control and non-rent control units, looking for anything significant along lines of poverty status, Household Structure, Location of Employment, Sector of Employment, etc.  The only significant story is along lines of race.  The racial breakdown within each category of tenure is presented below:

7
Click on image to see full size

My apologies for granularity. To see a better version click this to see in pdf form: RaceAndTenure.

People of Color disproportionately benefit from rent control, particularly the African American and Latino communities.  This is why future Ellis Act evictions could be so devastating if investors continue eye Bayview-Hunters Point as the next site for property flipping.  This is on top of the pressures these communities face from how gentrification influences policing behavior ( learn about Alex Nieto’s case to learn more in the SF context).

Conclusion

In some respects, the households in rent controlled units represent an older San Francisco: more diverse, not as wealthy, a little older.  Otherwise, they are relatively indistinguishable to renters on the open market.  What does this mean for the debate on rent control?  It means that the abolition of rent control would be disproportionately destructive to communities of color and to older residents who are not making as much money in this new economy as their younger counterparts.

Published by mattdpalm

Doctoral Student UC Davis USDOT Graduate Eisenhower Fellow 2014-2015

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