BERKELEY, Calif. (CN) — The city of Berkeley joins a growing list of California cities planning to ask voters whether property owners with vacant homes should be taxed to relieve unprecedented pressure on the housing market.
San Francisco, Napa, Santa Cruz and other cities all rank high in desirability and median rent rates, and are moving forward with vacancy tax measures to address a worsening housing availability crisis. Voters this November will weigh claims the strategy will free up revenue to create more affordable housing and push more units onto the strained market amid widespread home bidding wars.
Some city leaders say forcing vacant homes onto the market via tax or fine will help prevent valuable units from standing unused for long periods of time. But others argue committing to building more housing would be more effective.
The 2020 UCLA Affordable Housing Brief found 17% of homeowners and 30% of renters pay more than half of their household income for housing, while the state’s population grows faster than the housing supply. Meanwhile, the California Association of Realtors estimated that around 1.2 million units, apartments and single-family homes may sit vacant around California.
Berkeley City Council Vice Mayor Kate Harrison pushed her colleagues for an empty home tax ordinance on this year’s ballot on June 14. It was finally approved for November’s ballot on Wednesday, with many calls of both support and opposition coming from the community.
‘’Unfortunately, Alameda County’s housing remains unaffordable for many of its residents, and this burden does not fall evenly across income and racial groups,” Harrison’s report said. “While 47% of renters in Alameda County are rent burdened, the rate is 58% for Black renters and 87% for extremely low-income renters. Meanwhile, as this crisis continues to unfold, Berkeley Rent Stabilization Board data indicates that 1,128 fully or partially regulated units have been classified by their owners as not available to rent.’’
Harrison cited a report in San Francisco finding vacancies are disproportionately in multi-family apartment complexes and in areas with older housing stock and higher rates of new construction. She said this suggests property owners are holding older units vacant to capitalize on new construction, and she wants a tax to send a message to these owners and “out of towners” who let property sit empty in a city they may not live in.
Berkeley, where 55% of residents are renters, saw median rents increase by more than 50% between 2005 to 2019, hitting $3,165 — not affordable to people earning under $130,000 per year. Zillow shows that median has dropped to about $2,975 this year. Like most Bay Area cities, there is plenty of housing priced above the median income, but not enough for any other categories of income earners.
“The extraordinary gap between the housing needs of residents and the availability of housing can only be bridged through the use of numerous policy interventions, including a vacancy tax intended to incentivize owners of housing property to bring units back on the market and discourage speculation,” city staff wrote.
Across the bay, San Francisco also approved a measure asking for a vote on whether to tax empty units and add revenue to an affordable housing fund.
The proposed tax would launch in 2024 and start applying to owners of buildings with three or more units vacant for more than 182 days per year, taxing them between $2,500 to $5,000. The strategy could bring 4,500 units back on the market and generate as much as $38 million annually for affordable housing, according to city staff.
This policy is unique from other cities by keeping vacant single family homes and duplexes exempt. Supervisor Dean Preston told the San Francisco Chronicle that’s because he is targeting real estate speculators who operate high end downtown developments currently standing empty.