Lost amidst daily media stories of plunging house sales, rising foreclosures and decreasing home prices is a critical fact: rents are on the upswing. Rents are not only rising in the traditional high-cost areas of San Francisco and New York City, but rental markets are even tightening in weak economic cities like Detroit and Cleveland. Vacancy rates are falling virtually everywhere, as those who would have bought homes during the good times are now staying in the rental market. But while politicians and editorial boards call for action to limit foreclosures, no attention is paid toward addressing the nation’s lack of affordable rental housing. And with rising interest rates and huge construction costs, do not expect the rental housing market to improve anytime soon.

It is a sign of tenants’ invisibility in the national arena that an avalanche of stories about the nation’s housing crisis---due to the subprime lending scandal---has focused on declining home prices while ignoring rising rents. The message is clear: rising foreclosures due to unaffordable mortgage payments is news, rising evictions due to unaffordable rents is not.

In San Francisco, there is almost a direct connection between the cost of a two-bedroom apartment in the Marina District and the availability of condos affordable to first-time buyers.

When the condo market is hot, people who can afford to rent a two-bedroom Marina pad become owners, reducing rental demand. When interest rate rises slow the condo market, these people continue to rent, increasing demand and driving up rents.

The impact of economic decisions in the Marina does in fact “trickle-down” to less costly neighborhoods. That’s why San Francisco rents have been rising for a couple years, as uncertainty about the housing market kept potential buyers in the rental market.

In San Francisco from 1989-1995, and again during the dot-com boom, rents and home prices moved in the same direction. This is logical, since surrounding economic conditions would seem to drive both markets.

But with nearly all private development across America creating ownership not rental housing, and with the Bush Administration starving federally-funded rental housing construction, the imbalance between supply and demand for rental housing has steadily grown. As a result, even cities like Cleveland and Detroit with declining populations and steady job losses are seeing lower vacancy rates and higher rents.

This is great news for landlords, but not good news for the millions of working renters already suffering from stagnant paychecks, no health insurance, and now rising rents.

But I am unaware of any media outlet covering this angle, preferring instead to focus exclusively on families who are losing their homes through foreclosure, not eviction.

Forbes magazine, not usually identified with exposing the underside of United States social policies, published an article this month titled “Best Market For Landlords.” Matt Woolsey’s piece argues that “rental fundamentals have remained strong” despite---and even because---of the surrounding foreclosure and subprime crisis.

Woolsey describes West Coast landlords as feeling “giddiness” over the hot rental market. Skyline Realty is certainly giddy---it recently purchased a nondescript Tenderloin building for $110,000 a unit, more than double what the apartments sold for just five years ago.

While nobody cheers foreclosures or rising rents, the sub prime lending crisis has been good for San Francisco. The overheated real estate market from 2003-05 paved the way for speculator eviction of longterm tenants, and was a nightmare for those forced out of their longtime homes.

Of course, these victims of real estate market trends received nowhere near the media attention of those facing foreclosure. This was true despite many of these new owners having lived in their homes for only a few years, while the tenants often lived in their abodes for decades.

That’s just another example of the class biases of the traditional media. And even though most national media is based in heavily tenant New York City, national news outlets still act as if everyone in the United States owned their home and that tenant problems do not exist.

With a potential condo glut coming to San Francisco, expect the rental market to stay hot.
But this heat will not provoke speculator evictions, so for most tenants living in small buildings, this is a time to enjoy the lull and get prepared for the next storm.

Send comments to rshaw@beyondchron.org