Bay Area rent-control fight heats up

Activists and tenants of 1049 Market Street hold signs as they stage a protest against the landlord's attempts to evict them from the building on March 8, 2016 in San Francisco, California.
Justin Sullivan | Getty Images

The battle cry for rent control in the Bay Area is getting louder.

Tenant activists are now working to place rent control on ballots in multiple cities including Mountain View, California — headquarters of Google parent Alphabet — as well as cities around the region from Alameda to Richmond.

It's a response to the surging cost of rent. In San Francisco, the median rental price in February was $4,547, a jump of more than 10 percent from a year ago, according to Zillow, the real estate marketplace. In San Jose, an hour south, it was $3,453, a rise of 8 percent.

Economists pin that rising rent, in part, on more people moving to the Bay Area to work in the tech industry, which pressures an already constricted supply of housing inventory.

San Francisco, Oakland and Berkeley have programs that limit rent increases and forbid evictions without cause. Tenant activists argue that cities across Silicon Valley should now adopt such policies.

Tech turmoil spreads to San Francisco real estate
High-end real estate slump in SF

"People love it here, and they want to contribute to the community," said Aimee Inglis of Tenants Together, a nonprofit organization that advocates for California tenants. "If we think we want a diverse Bay Area, both economically and racially, we need these kinds of policies to keep people here."

What's the role of tech companies in this debate?

Analysts say giants like Google, which had $73.6 billion in cash as of the end of 2015, should do more to ease pressure in the rental market.

"Tech companies should work with cities to build sufficient housing for their labor force," said Miriam Zuk, director of UC Berkeley's Center for Community Innovation, which focuses on housing, community and economic development. "They should try and accommodate their job growth."

"They should recognize that they do not employ only higher-income employees. They employ a lot of low-income people like service workers. Housing them is a priority as well," Zuk said.

Detail of do not walk sign against high rise buildings in San Francisco.
San Francisco's frustration with tech
San Francisco is first US city to set fully paid parental leave

Google counters that it has invested in affordable housing, including $6 million for families in Mountain View and $25 million for seniors in nearby Sunnyvale.

Some economists also disagree with tenant activists. They say rent control leads to tighter housing supply and rundown residences as landlords delay improvements because the return on investment is capped. The solution isn't rent control, they say, but building more housing.

"One possible way to address this situation of rapidly rising rents is to simply build more, and not just luxury housing but really across all price points," said Svenja Gudell, Zillow's chief economist. "Cities can start a discussion about what it means to build affordable housing, mid-range housing and high-end housing to ease these price pressures in the rental market."

As for California's recent decision to gradually raise the minimum wage to $15 an hour, Gudell says that new law's impact on the housing problem will be limited.

She estimated that a single earner would require an hourly wage of nearly $70 to reasonably afford rent in the Bay Area.