In SF's Tight Rental Market, Paying Just to Look
Application fees are the new reality in an overheated rental climate
At a “nice” $3,500-per-month loft in the Mission, “80 people showed up for the open house,” said Lamas, 23, who recently began working at a tech company in SoMa. “And the landlord said to me that he’d gotten 250 applications.”
The cost of applying was $40, so if the landlord wasn’t exaggerating, he grossed $10,000 in application fees.
Call it a deposit with no return.
Two years ago, during the recession, landlords had to lure applicants with deals, like a free month’s rent. Today fees just to apply have become part of the city’s overheated rental climate, where dubious behavior — by both landlords and renters — appears to be increasing.
Lamas searched hundreds of vacancy listings and ultimately visited 20 apartments, many charging an application fee. After four months, she finally secured a $2,500-per-month, 600-square-foot, one-bedroom in the Mission.
“Everything was overpriced,” she said.
In a city with a chronic housing shortage, a confluence of recent trends has created one of the tightest rental markets in years. The vacancy rate is just 3.7 percent, and the average rent has skyrocketed to $2,572.
Experts cite various factors: a population increase of nearly 30,000 since 2000; an influx of affluent tech workers; traditional buyers becoming renters due to housing prices and financing uncertainties; and a surge in apartments converted into vacation rentals to skirt rent control laws.
Andrew Poon, 30, said that 15 out of 20 apartments he visited during his apartment hunt this summer charged application fees. “Some of them required a fee outright and charged it immediately,” he said. Others asked for a fee only if he became a finalist.
Determining the exact prevalence of application fees is difficult, since few landlords and brokers are transparent about the charges in their advertising.
A Bay Citizen analysis of recent listings on Craigslist — the city’s leading rental listing resource — showed that only 4 percent of apartment rental ads (80 of 2,053) disclosed a fee and the amount required. Charges ranged from $20 to $45, averaging $32. (The analysis was conducted Nov. 9 of listings from Nov. 2 to 9.)
Only 3 of 2,053 listings specifically stated there was no application fee.
Janan New, director of the San Francisco Apartment Association, a group representing landlords, said landlords were allowed to charge fees to cover processing costs and for credit and background checks. When asked about charging fees to dozens or hundreds of applicants when only a few would be genuine finalists, New said, “We discourage that.”
The competition for apartments has also led to bid-up prices. Poon eventually rented a 600-square-foot, one-bedroom near Duboce Triangle after offering $100 over the original $1,750-per-month price. “There were 40 applicants,” he said.
But as landlords push for more, some renters are pushing back.
Marc Levinson, a Realtor in the city since 1991, said that in recent weeks some frustrated renters had apparently figured out how to remove listings after reading them on Craigslist by misusing the website’s system for deleting inappropriate content. Presumably, their goal is to prevent others from seeing the ads — and to reduce potential competition.
“There’s so much anger at the rental market,” Levinson said.
To thwart this tactic, Levinson’s listings now instruct applicants to call for open-house details. On Monday, a listing he placed at 9:20 a.m. had generated 40 calls in two hours.
Levinson expressed concern about the explosion in application fees, and said landlords and brokers should charge only finalists — and limit the fee to the actual cost of a professional credit report, about $20. Applicants should ask for copies of their reports, he said, to be sure they had not been exploited.
For those who feel cheated it is unclear what steps to take. The city’s Rent Board, which otherwise vigorously defends tenants’ rights, has no jurisdiction and could not recommend a course of action.
Scott Wiener, a city supervisor who serves on the Land Use and Economic Development Committee, which oversees housing matters, agreed that application fees should be charged only to finalists.
Wiener said the fees were symptomatic of a larger issue: a dearth of affordable housing to meet growing demand.
“We have a very, very tiny amount of land,” he said, “and it’s the best city on the planet.”
Indeed, despite the frustrations and expense, those who have prevailed in the latest rental machinations feel victorious.
“Ultimately,” Lamas said, “it was all worth it.”
This article also appears in the Bay Area edition of The New York Times.
Mission Rosalind
Re: the photo
Looks pretty monochromatic there. I guess whoever gets that place will be adding to the oversupply of hipsters in my part o' town.
roscoe zahn
It pays to shop around for a mortgage refinance. Mortgage rates have gone down like anything. My brother in law just got a 30-year fixed loan at 3.76% He told me search online for 123 Refinance for the lowest rate.
Zouaf _
I've heard of landlords keeping apartments empty and profiting from the cash flow (this from a realtor, by the way). I would be in favor of outlawing credit check fees completely. It seems like one of the costs of doing business that landlords should be expected to cover.
Gordon
people are nuts to do this, just take BART into the City if you can...
"Michelle Kohlhaas"
“We have a very, very tiny amount of land,” he said, “and it’s the best city on the planet.”
Provincialism rules!!! If you're from Bakersfield or Michigan, San Francisco sure is fancy. Otherwise, I think Weiner might want to consider the London, Rome, Paris and New York have greater claim to the title of "best city on the planet."
Seriously, Cleveland is more culturally literate than the bulk of Mission hipster residents. It's also more progressive. Then again, if attending a cocktail party at Google is your idea of civilization, SF may suit you.
Lawrence Rosenfeld
I'm pretty sure this is covered by anti-discrimination laws and the process those laws require. I can't find a web link to substantiate my claim, but someone who feels that they are getting ripped-off ought to do some research.
My understanding is that applications are supposed to be reviewed in the order they are received, including the credit and reference checks. An incomplete application can be skipped over. If the applicant so reviewed passes, they are supposed to be offered the apartment. If they do not pass, on to the next application in time-stamp order.
It wouldn't be the rent board, but the fair housing people who enforce this, and I'm not sure that the fee can be substantially more than the cost of the credit check. At least that's the way the people who manage the building I live in do it. Maybe I'm just lucky.
billcostley
& I thot Manhattan was bad!
Brad Johnson
I'm glad somebody is writing about this. I had the exact same experience in 2006 looking for housing in the City. It seemed to be worse in the Mission. The agent literally turned his back on us because we didn't have our $40 check *already filled out*. Other people were shoving checks at him.
We started looking in Berkeley after that, and haven't left.
Jim Reilley
Why I moved to Sac after being born & raised in Berkeley. $1700 mortgage on a 1300sf craftsman, 15 minute bike ride to my cushy govt job, that I'll retire from at 55.
Equidistant from Tahoe, Yosemite, Napa & The Bay; I visit on the weekend, when I have actual time to enjoy it & because I live in Sac I can afford to.
My belief is that over half of the people under 50 years old rely mostly, if not completely, upon their family to afford Bay living. Without the parental bailouts and inheritances no one but the 1% would afford it.
Eric Baird
If a landlord gets 250 applications on a single unit thats not infested with bed bugs or some other quirk, it is EXTREMELY underpriced and a steal for the person who finally gets it. Unlike most urban cities, San Francisco tenants almost never need to pay a leasing broker to rent an apartment... Why? Because the marketing and advertising costs/fees are paid for by the landlord. A govt regulated screening fee is cheap compared to what the landlord is paying to advertise, check references and pay for a reputable credit report( $30, $40 or the maximum of $42.06) is a steal.
Collecting application screen fees is clearly outlined within state law, specifically California Civil Code Section 1950.6. If you are concerned about what is happening with the money or if you want to understand your rights, including your rights for a refund, check out this publication. http://www.dca.ca.gov/publications/landlordbook/catenant.pdf
I own/operate a local leasing brokerage in San Francisco and if we don't run your credit, the applicant is fully refunded. If you dealing with an agent or landlord, ask them what their policy is before giving them your money.
Terrrie Frye
I do believe that those apartments converted to vacation or other short term rentals is illegal and no one is doing anything about it.
Scott James
Hi Terrrie,
Thanks for commenting.
You're right. Here's a story we published about vacation rentals last year.
http://www.baycitizen.org/columns/scott-james/vacation-apartment-rentals-lucrative-and/
Despite promises made at the time, nothing has changed.
Best,
Scott
justine charenton
It's disgusting to hear Scott Weiner reiterating the elitist political stance about the lack of affordable housing in SF being due to the limited space. San Francisco poses as a world class city, but upon closer examination resembles more a 3rd World town in its financial demographics. Compare SF to our world class sister city, Paris. We are both comparable in size; San Francisco has a land area of about 47 square miles, Paris has a land area of about 41 square miles. The population of San Francisco, however is only about 750,000 while Paris has a population of close to 3 times that. Whenever the question of increasing population density is broached, opponents complain that they don't want to alter the character of the city by putting up high rise structures. A comparison to Paris reveals this as a ridiculous argument. San Francisco has a Financial district overflowing with skyscrapers while Paris proper has one solo high rise office skyscraper; Tour Montparnasse, and one sky-scraping monument; The Eiffel Tower.
I don't wish to imply that San Francisco should try to be Paris. But we should borrow from others what can support our own health and survival. San Francisco is obliged to be itself. But this bias toward pruning our growth to make the city a play ground for the rich is a San Francisco trying to be an urban Club Med instead of a city. It is time for San Francisco to invest in long term planning that will allow it to grow from a collection of parochial villages all inhabiting the same real estate to a real world class city.
M C
I just threw up in my mouth. "it’s the best city on the planet.” Yes, if you're from one of the worst. It's something landlords, realtors, homeowners, and tenants all keep echoing. Landlords and realtors to keep the money flowing, renters to make themselves feel good about getting gouged. Homeowners for both. SF has never been more expensive and more dull - full of vapid, easily impressed folks who slave to pay their city rent/mortgage, thus barely going out to enjoy it. As Michelle pointed out, "If going to a Google cocktail party is your idea of civilization, SF may suit you." (Or culture, for that matter.) Techboom mediocrity and self-flattery still going strong. Until people who are supposedly so much smarter then those everywhere else quit swallowing the hype and realize that THEY are the market and stand up for themselves as much as they (pretend to) do everyone else, they'll keep being taken advantage of and will well deserve it. (Landlords and realtors cannot get what is not agreed to.) Unless folks get a clue and a spine, it will continue to be this way. Rest assured, with folks who will pay $2500 for a 1-bedroom box and think it worthwhile, it will continue to be this way...
M C
PS. I thought this publication, The Bay Citizen, was supposed to be hard hitting. This is the 2nd article I've read and probably my last. Not much different than the others. Extremely poor journalism pretending to be quality, "hard hitting", and other self-flattering things it is the antithesis of. Kind of like San Francisco. Shame...