As rents rise, tenants confront Oakland’s perfect housing storm

This map uses rental postings from Craigslist in December 2015 to show a sampling of rent prices for apartments with two bedrooms and one bathroom across Oakland. The individual houses do not reflect a calculated median rent for that neighborhood.

­­Elizabeth Dougherty doesn’t want to raise Megan Young’s rent. Both women are living paycheck-to-paycheck, and Dougherty would much prefer to have Young as a housemate than rent her place out to a stranger. Young works in artist relations at local music festivals and pays $850 each month to a rent a room in Dougherty’s home in North Oakland. Dougherty runs a nonprofit organization focused on water reuse, but relies on rent from the two tenants in her spare bedrooms to pay her mortgage.

“I’m really struggling to figure out how to make ends meet,” said Dougherty, who purchased her house in 2003 and pays more than $2,000 each month for her mortgage. “I wanted to raise [Young’s] rent by $25, but she said she couldn’t do it.”

Like many landlords in Oakland, Dougherty knows she could charge higher rents if her current tenants move out. But unlike most other landlords, Dougherty desperately wants to keep her tenants’ rent below market rate. She likes Young and she feels a moral obligation to not inflate the price of her rooms just because there is a housing crisis in Oakland.

For Young, a rent increase could push her to look for housing in a different city. “If I needed to move suddenly, I would seriously consider leaving the area,” said Young, who is originally from Sonoma County. Before securing her room in Dougherty’s house, she spent two months looking for housing on Craigslist and Facebook groups, but competition was steep. “I’m concerned I won’t ever be able to rent my own house in Oakland,” Young continued. “At 35 years old and with a decent salary, it makes me very sad that I can’t afford to live in my own apartment.”

If Young leaves Oakland, she will join the growing crowd of renters combating displacement in the East Bay’s largest city. Median rents across Oakland are at an all-time high, pushing low-income families into motels or family members’ homes, pricing working-class households out of their neighborhoods and creating fierce competition for available housing at all income levels. Last month, Oakland became the fourth most expensive rental market in the nation, according to Zumper, a technology company that tracks rental data in major US cities. The median monthly rent for a one-bedroom unit in Oakland in November reached $2,190, an increase of 19 percent over the same month last year. For two-bedroom units, median rent soared 13.3 percent to $2,550 a month. Oakland now trails only San Francisco, New York City, and Boston among major US cities in terms of rent prices.

In addition, since 2011, Oakland’s affordability crisis has deepened more rapidly than in any other major US city, according to a recent report by the tech analysis firm SmartAsset. As the Express reported online last week, fair market rents in Oakland have nearly doubled since 2011, while the median income earned by city residents increased by only 11.3 percent during that time. That means the average Oakland renter now must pay an astounding 70 percent of his or her income to rent a market-rate apartment in the city.

Fundamentally, Oakland’s housing crisis is a problem of supply and demand — more people at all income levels need more housing than what is available. High-income households compete with middle-income households in Oakland’s more affluent neighborhoods. And then as middle-income households are priced out of those areas, they seek housing in traditionally lower-income areas, pushing those households out of their own neighborhoods.

The Association of Bay Area Governments (ABAG) reported that more than 286,000 people moved to the Bay Area between 2011 and 2013. With Silicon Valley and San Francisco at the center of the economic boom, housing costs started increasing in both regions more rapidly than in Oakland. From 2010 to 2014, the average monthly rent in San Francisco shot up by 38 percent, and median rent for a one-bedroom in San Francisco skyrocketed to $3,105 (it’s now $3,500, according to Zumper). Evictions in San Francisco increased by 59.9 percent from 2010 to 2015, based on annual reports filed by the San Francisco Rent Board. As rents soared in San Francisco, more renters began looking in the East Bay for housing.

The crisis “is primarily caused by the San Francisco and Silicon Valley housing problem,” said Oakland Vice Mayor Rebecca Kaplan, noting that neither region has produced the housing required to keep up with its job growth. “Now, Oakland has an affordable housing crisis that we have to solve, even though we didn’t create it,” Kaplan said.

But Kalima Rose, senior director of the PolicyLink Center for Infrastructure Equity, a research institute, argues that the crisis in Oakland is not simply a result of San Francisco and Silicon Valley’s problems. “Oakland itself could do a lot more with local policies than it has,” she said, adding that city officials have not done enough to find funding sources for affordable housing development.

In May, Oakland’s Department of Housing and Community Development partnered with PolicyLink and published a comprehensive report on the city’s housing crisis, officially called “A Roadmap Toward Equity: Housing Solutions for Oakland, California.” The report described Oakland’s housing problem as “a perfect storm,” noting that while the city’s median rent has skyrocketed, city government has failed to meet any of its goals for building new affordable housing.

A report by ABAG presented to the Oakland Planning Commission in 2014 stated that 14,629 new housing units—for all income levels—needed to be built between 2007 and 2014 to keep up with the city’s demand for housing. According to the roadmap report from PolicyLink, only 25 percent of that housing was built.

“The mismatch between job growth and housing production across the Bay Area is extreme,” said Rose, who emphasized the need for Oakland city officials to prioritize finding funding for housing near major transit centers, like BART stations.

And while the city has been slow to respond to the affordability crisis, Oakland’s perfect housing storm is continuing to displace more and more people, especially African Americans.

Paula Beal has lived in Oakland for 40 years and watched her seven children and 27 grandchildren all leave Oakland over the last several decades, many because of affordability concerns.

Beal rented a two-bedroom house on Linden Street in West Oakland for four years until her landlord died in 2011, and the house went into foreclosure. After the lender, Fannie Mae, repossessed the house, Beal moved out. She said she knew the lender would want to sell the house, which would mean an uphill legal battle for current tenants. According to property records, the property sold in January 2015 for $260,000. The property was then sold again in April for $490,000—an 88-percent markup.

After leaving West Oakland in 2011, Beal moved into a one-bedroom apartment in Eastlake. In November, she received a 60-day notice from her landlord that her rent would be raised by $230 a month—from $995 to $1,225. The notice cited the increase in cost of utilities, maintenance, taxes, and insurance as the causes of the 23 percent increase.

In an interview, Jane To, the building’s landlord, confirmed that she sent the 60-day notices to her tenants, but asserted that the increase is within the limits of the current laws.

Beal said she is seeking legal help from Causa Justa Just Cause (CJJC), a tenants’ rights organization that has helped Beal in the past, for legal advice to determine if the increase is actually lawful.

Though Beal is informed about renters’ resources, she said she’s very concerned about the thousands of Oaklanders who don’t know about the city’s Rent Adjustment Program, which limits many landlords from increasing rents beyond the annual change in the Consumer Price Index (which is 1.7 percent in 2015)—the cap established by Oakland’s Just Cause for Evictions Ordinance, which voters passed in 2002.

In Oakland, the responsibility to enforce tenant protections falls entirely on the tenant. In the case of an illegal rent increase, tenants have sixty days to file a petition challenging the rent hike. If they do not file in that time period, they lose their legal rights to challenge the increase.

Beal said her son, his wife and their four children moved to Hercules earlier this year after being evicted from a three-bedroom apartment in East Oakland. Beal’s son, who supports his family through working as a security guard, looked for eight months for housing he could afford in Oakland. His family stayed in a shelter for four days and then moved between motel rooms before deciding to move away.

“He was paying his whole paycheck and half of my paycheck” on hotel rooms, Paula Beal recalled. “Even his brother in Florida was sending him money.” Willie Beal applied for housing subsidies through the Oakland Housing Authority, but his mother said the line for subsidies is so long that she does not expect him to hear back anytime soon.

Though her son’s family has found housing, Paula Beal said she’s worried about other low-income families experiencing homelessness. “It’s getting worse and worse everyday,” she said.

Though displacement affects tenants of all races, the African-American community in Oakland has been disproportionately affected by rising housing costs. According to the equity report, Oakland’s African-American population decreased 24 percent from 2000 to 2010. In the same time frame, median income for African-American households decreased from $42,975 to $35,050—less than half of the income needed to make Oakland’s median rent affordable, based on 2014 data. Affordability, as defined in the equity report, requires a household to spend no more than 30 percent of its income on housing costs.

At an October city council meeting, Oakland native John Jones III, outreach coordinator for the Ella Baker Center, a nonprofit organization that advocates for racial and economic justice through lobbying lawmakers and organizing community programs, implored councilmembers to act to protect low-income communities and make sure African Americans are not pushed out of their own neighborhoods. Jones said he is currently searching for housing and staying on a friend’s couch.

“If I’ve got to live on the streets to stay here, I will, because this is my home,” said Jessica Hollie, a 32-year-old Oakland native, during a public comment period at the same council meeting. “I refused to be pushed out. I refused to keep feeling like I’m not worth it.”

Hollie, who identified herself as activist with Black Lives Matter, choked back tears as she explained to the council members that she is a single mother from West Oakland working full-time and facing homelessness as council President Lynette Gibson McElhaney, who represents West Oakland, looked on, her brow furrowed and tears welling in her eyes.

“As a college-educated citizen of Oakland, I’m angry as hell because I can’t afford affordable housing,” Hollie continued, telling the council that although 2015 has seen the growth of Black Lives Matter, she doesn’t feel like black lives actually matter in Oakland.

Kat Otto moved to West Oakland in June, in part because of its proximity to her work in San Francisco—just an eight-minute BART ride away. For two years, Otto lived in San Francisco’s Tenderloin district in a two-bedroom apartment with a small kitchen and no communal living space. She worked as a waitress and paid $550 monthly to share one of the bedrooms with a friend. “There’s no way in hell I could have paid more than $550,” Otto said of her financial situation at the time.

In 2014, one of her roommates moved out of state and her rent spiked 68 percent to $925 a month. She had secured a job as an operations manager at a technology education center in downtown San Francisco, but her salary couldn’t cover the rent.

Otto moved to West Oakland because it was more affordable. She has her own room in a four-bedroom apartment for $550, and her household, made up of four twentysomething white women, collectively pays $2,300 in rent—several hundred dollars less than what her old apartment in the Tenderloin is now renting for.

Otto knows she’s associated with gentrification in West Oakland. “Oaklanders see what’s happening in San Francisco, and they are not going to take that shit lying down,” she said of the West Oakland community’s efforts to stop displacement. “Is there a possibility for me to be part of the solution?” she asked. Like many renters, she doesn’t know what the solution is, but she wants to see both newcomers and City Hall take action to prevent more displacement.

In October, Kaplan and City Councilmember Desley Brooks introduced a measure to the council to immediately increase funding to “vital community needs.” Citing the housing affordability and displacement crisis across the city, the measure allocated $200,000 to “rapid rehousing funds,” which are used to pay first and last months’ rent and deposit fees for homeless people trying to return to permanent housing.

The measure also allocated $100,000 to education about and enforcement of tenants’ rights laws, namely Oakland’s Just Cause ordinance. The ordinance explicitly bans landlords from evicting tenants in order to raise the rent or to carry out renovations on the property. Landlords are permitted to evict tenants if the landlord is moving into the unit, housing a family member there or otherwise taking the unit off the market—known as an Ellis Act eviction—but the measure bars the landlord from renting out the unit again for at least 36 months.

The funding measure introduced by Kaplan and Brooks passed on October 20, and council staffers are due to report back on the implementation of the funding in January.

Over the years, the city has tried to aid Oakland’s poorest households by building more government-subsidized affordable housing, but funding for affordable housing has dried up. After Governor Jerry Brown dissolved redevelopment financing for cities in 2011, Oakland’s annual budget for affordable housing production plummeted from $20–$25 million annually to $5–$7 million, according to the equity report.

The Oakland House Authority (OHA) manages citywide affordable housing initiatives as well as federally funded Section 8 vouchers, which are part of a program that subsidizes housing costs for renters in market-rate units. In March 2015, OHA distributed Section 8 vouchers of up to $1,585 per month to 609 Oakland families. According to Michelle Hasan, OHA’s director of leased housing, only 19 percent of the 609 vouchers were used, indicating that even with the subsidy, low-income families can’t afford housing or compete for market-rate units.

In addition to funding shortages, the equity report highlights some of the legislative problems plaguing Oakland’s housing market, and offers suggestions for creating better policies. Though the city has individually negotiated with market-rate developers to include funding for or construction of affordable housing in past projects, the city does not require market-rate developers to build affordable housing units or contribute to an affordable housing fund. In San Francisco, market-rate developers are required to pay an affordable housing fee or make 12 percent of their units affordable to low-to-moderate income households. Without such a policy, the equity report notes that Oakland is missing out on considerable funding.

“I really want to make sure we streamline our development process,” said City Councilmember Annie Campbell-Washington (District 4), who supports establishing a housing “impact fee” for all market-rate developments in the city. The fee would be paid by the developers to the city as a prerequisite for approval of projects. “Oakland is a very attractive city to invest in right now and I want to make sure we get that impact fee in place,” Campbell-Washington said.

Like San Francisco, both Berkeley and Emeryville already have impact fees. Both cities charge market-rate developers $28,000 per unit in order to help fund affordable housing. They also have so-called “inclusionary zoning” policies that require market-rate condominium developers to include affordable units in their projects or pay in-lieu fees. The Oakland City Council is expected to take up housing impact fees in early 2016, but it’s not clear whether it will adopt inclusionary zoning as well.

The equity report also proposes creating a uniform policy for relocation assistance for displaced renters. Currently, the city has multiple policies governing when and how much assistance must be distributed to households displaced by eviction, but does not provide any funding for enforcing payment. The equity report recommends that city officials “explore new strategies to fund and recover relocation costs” to help tenants undergoing evictions that are not caused by the tenant breaking the lease or failing to pay rent.

Additionally, the report recommends the city council propose a measure for proactive rental inspections by city agencies to enforce tenant protections and for city agencies to aggressively pursue a $254 million affordable housing bond administered by ABAG and apply for additional state and federal housing funds.

But the money lost when redevelopment ended is still haunting City Hall. In 2014, the city council approved plans to develop vacant and underutilized areas of West Oakland—called the “West Oakland Specific Plan” (WOSP)—through extensive infrastructure projects, business development, and construction of both market-rate and affordable housing near the West Oakland BART Station and other major transit lines. The development projects, as described in the plan’s “Vision and Goals” section, would coincide with projected “economic and demographic changes over the next 20 to 25 years.”

The project was kickstarted with a $2 million federal grant, but other sources of funding for the project have not been identified. In a report released by the Planning and Zoning Department in 2014, officials loosely outlined a plan to identify funding from within the city, from state, and federal programs, and from private developers. The plan’s feasibility will depend on the resources city officials can cobble together from grant applications, regional bonds, and other fundraising initiatives in the short-term. “West Oakland is at risk unless real money is put on the policy table in the next two years,” Rose said.

Phase II of the Fruitvale Transit Village, a development project similar to WOSP but smaller in scale, may have a better shot at success, according to Rose. This project centers on the Fruitvale BART station, one of the busiest stations in the multi-city system, according to The Unity Council, the project’s primary developer. Phase I of the transit village was completed in 2003 with the development of 37 market-rate housing units, 10 affordable units, 40,000 square feet of ground floor retail stores, and more than 114,000 square feet of office space, largely leased by social services and nonprofit organizations. The total cost of Phase I was $69 million, according to a study of the project released in 2005 by the Urban Land Institute.

In November of this year, the Oakland’s Community and Economic Development Committee approved a measure to allow the city administrator to delegate $7.5 million in funding to Phase IIA of the project. It will include the construction of 94 new housing units, 80 of which will be reserved for households earning 60 percent or less than the Area Median Income, according to the committee’s report.

Chris Iglesias, CEO of The Unity Council, said construction of the 94 new units would cost about $44 million. He hopes to secure part of the funding through federal tax credits and said if the fundraising goes well, construction could start in the first quarter of 2017.

But for middle-income residents like Tracy Inouye, projects like the Fruitvale Transit Village may be too little too late. Inouye, his wife, and 9-year-old daughter moved to small two-bedroom house in the Laurel district in June after being evicted from their two-bedroom basement apartment in the Glenview neighborhood. For six years, he and his wife raised their daughter in the apartment and paid $1,400 per month.

Last year, the property owners gave the family an Ellis Act eviction notice (which is not illegal) and told Inouye they intended to sell the house. Inouye said he was shocked. Rents in his neighborhood were listed at upwards of $2,500 per month, and, he said, most open houses had lines of interested parties out the door. He remembered that in the Rockridge district, a prospective tenant offered the landlord $2,800 for an apartment listed at $2,500.

Oakland law only requires landlords to provide a relocation allowance to tenants they evict using the Ellis Act if the tenant is a “lower-income household,” defined as making 50 percent or less of the Area Median Income. Inouye made too much to qualify, but too little to out-bid the long lines of anxious renters.

Inouye said he feels lucky that he managed to find the two-bedroom house he lives in now for $2,000 per month. He doesn’t direct his anger at the wealthy people moving into the Bay Area, either. Primarily, he wants to see legislation passed to protect tenants and ban bidding wars between prospective renters. “I just want it to be fair,” he said, acknowledging that people at all income levels—tech workers and high-income households included—need places to live.

But Inouye said his current landlord warned him when he moved in that she intends to sell the property or move into the unit in the next few years. If his family is evicted again, Inouye said he will likely leave Oakland and look for cheaper rents in San Leandro or Hayward.

“I work all over the Bay Area and I see what’s going on,” Inouye said. “The bottom line is, if you’re middle class, or poor, it’s really hard for you.”

This report was co-published by the East Bay Express.

5 Comments

  1. Melissa

    This is one of the better articles I have seen on the housing crisis in the Bay Area, especially Oakland. Those of us who are renters are at the mercy of our landlords to keep our rents affordable while others struggle to even find housing. This is not sustainable and I think we will start to see a mass exodus of people who just can no longer afford to live here. I feel for the natives especially.

    • Joshua Rodman

      The underlying pressures here are very strong. The US has a dearth of quality urban living. The bay area has traditionally been very anti-development, leading to something of a housing shortage. Development patterns that have occurred are relatively low-density (suburbs). Development inside established cities has many red-tape costs. Development that has occurred in Oakland and SF has been almost entirely luxury housing, because developers believe that is profitable and other housing development is not.

      All these factors raise the cost of housing for everyone, and do not create a healthy city or healthy growth.

      The most practical thing that can be done at an Oakland scale (some problems are more regional or national) would be to actively shepherd in developers and cut red tape on high-density mixed-income housing. That basically means buildings which have a variety of unit sizes mixed per floor or area.

      Among the housing that has gone up in Jack London, Uptown, and Old Oakland, if a healthy portion simply had some smaller units that would satisfy a lot of the housing demands at the midpoint of the market, and relieve the pressure on existing rentals around the city. It would *also* help revitalize our city center as something more than a rich-playground.

      • Keith

        It seems that is a clear cut case of supply and demand!

        Folks, if you don’t own, MOVE! You’ll be glad you did!

  2. Ben

    I just want to point out one note about why the average income in Oakland has gone down while rents and home prices have gone up.

    The middle income people are leaving Oakland for the San Joaquin Valley, Antioch, etc. The richer people that have moved in don’t work in Oakland, they work in SF. Thus, we get a hollowing out of the middle, where the poorer residents who have nowhere else to go are stuck and the richer ones are commuting.

    The one ray of hope is that all booms end. I’ve seen it happen several times in my 20 years here and it was going on long before that. This too will pass. The only question is if we can take advantage of this upswing in growth to build a sustainable base of jobs and housing to last through the next bust.

    • Keith

      Ben, you are correct.

      Booms do end, however, the type of things Oakland is doing will likely make the situation worse when the boom does end.

      You may hear the sucking sound of investors leaving the area for greener pastures when the boom finally does end. The city should let the city grow the way it should grow and not try to control it so much.

Comments are closed.