An estimated 40,458 homes and condos are sitting vacant in San Francisco, and that number could potentially go down if the city were to introduce a vacancy tax that would fine homeowners who leave their properties empty, a new report released Monday by the city’s budget and legislative analyst said.
The report was commissioned by Supervisor Dean Preston, who wanted to take a deep look at the scope of residential vacancies in San Francisco and explore whether vacancy tax policies adopted in other cities could help ease SF’s housing shortage.
Vancouver, British Columbia, is among the cities that have imposed an empty home tax. The Canadian city adopted the tax in 2016, and its overall vacancy rate decreased from 4.3% to 3.1% as a result, with 1,676 units returning to occupancy in 2018, followed by an additional 220 in 2019, the report said. Vancouver’s tax generated the equivalent of about $21.3 million in 2019; the city used the net proceeds for affordable housing initiatives, the report said.
Preston said that if San Francisco were to introduce a tax similar to the one in Vancouver, “just under 5,000 homes in two years would go from being vacant to occupied — that’s 90% of our annual new housing production.”
“The main idea was to look at the issue, to quantify it and get some data on the issue of residential vacancy,” added Preston, who represents District 5, which includes areas such as Haight Ashbury, Hayes Valley, Japantown and Western Addition. “There has been a lot of anecdotal talk, but there hasn’t been a systematic look at it.”
Washington, D.C., also has a vacancy tax, fining owners $5 for every $100 of assessed value for vacant properties, and $10 for every $100 of assessed value for blighted properties. The tax generated $9.4 million in gross revenue in 2016, the report said.
San Francisco saw the number of vacant units go from about 33,300 in 2015 to 40,458 in 2019, rising roughly 20%. (Note: 2019 is the most recent year vacancies were reported.)
“This increase has outpaced the number of new residential units as the vacancy rate has increased from 8.5% in 2015 to 10% in 2019 whereas housing units grew by 4.2% during that period,” the report said.
The fastest growing segment of vacant housing in the city over five years through 2019 were homes that were sold and not occupied.
“This type of vacancy may be due to owners buying new units while they are still under construction but it may also be due to owners purchasing them as investments or cash havens with no intention of moving in or renting them out,” the report said.
The highest number of vacant homes are in SoMa, Downtown and the Mission District, the neighborhoods that have seen the highest concentration of new housing in recent years, the report said.
It’s also interesting to note that the city’s rental vacancies (housing available for rent) makes up only 3% of vacant units, which reflects the tight rental market. San Francisco’s rental vacancy rate is lower than the rate in other major metro areas including New York City (2.6%), Chicago (4.6%) and Houston (8.7%).
Editor’s note: This story was updated at 8:45 a.m. on Feb. 2 to include information on San Francisco’s rental vacancy rate.