UC Berkeley should address lack of affordable student housing

Olivia Staser/Staff

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As is true every fall, UC Berkeley students are returning to classes and are hoping to live near campus. What they are discovering (or already know) is that in the last several years, rents have skyrocketed in the city of Berkeley. The campus has expanded enrollment without a commensurate increase in the number of units provided by the university. While the campus is slated to open a new, privately developed residence hall with about 770 beds in fall 2018 and is researching housing potential at nine other nearby sites, the number of planned new units nevertheless falls short of the number needed to house all its students.

The city of Berkeley has been home to its UC for almost 150 years, and the campus’s existence has influenced the city since its establishment. Why now is there a housing crisis for students?  

Though there are a myriad of answers, the most significant is Berkeley’s desirability, an intersection of convenience and comfort. Three BART stops are located here, supplemented by a reasonably good bus service. Berkeley’s location and amenities attract millennials who have landed high-paying jobs in the greater Bay Area and can afford to rent units in new housing, but students are often priced out of them.

Some observers point to a supposed dry spell in new construction for the past 25 years to blame for our housing crisis. The number of units recently completed, under construction, or recently permitted continue to steadily increase, however. Berkeley’s zoning board approved 353 units in mixed-use buildings of at least four stories in 2014, 476 in 2015 and 509 in 2016. In the last month, there have been an additional 19 projects with an approximate total of 1,200 units that have come before the board, or are slated to do so in the near future.

Despite these attempts to alleviate high rents, prices continues to rise at an alarming rate. Developers of market-rate housing use these higher rents so that their projects “pencil out,” making the probability of more affordable rents unlikely, at least in the near-term.

Even with city ordinances regulating the amount renting tenants can be charged for their housing, it is difficult to know exactly how rent control has impacted the available housing supply. Tenants who live in units under strict rent control pay below-market-rate rents. Though the occasional roommate can benefit from a rent-stabilized unit, countless other tenants cannot avail this privilege. As these units are removed from the market through owner-move in evictions, Berkeley’s supply of about 19,500 rent-controlled units continues to dwindle. Furthermore, tenants in rent-controlled units who graduate campus may not move out, even if their rising income allows them to, making the search for current students even more competitive.

In other cases rent-controlled units are withdrawn to make way for new construction, as was the case with a former 18-unit apartment building at 2631 Durant Ave., which was demolished to make way for new market-rate housing. After the enactment of the Costa-Hawkins Act in 1995, landlords of rent-controlled units can also reset the units to market rates once the last original tenant vacate. Over time, this has contributed to a dramatic increase in median rents in Berkeley. A pending bill in the state legislature, AB 1506, seeks to repeal Costa-Hawkins, but will not be heard in committee until next year. Even so, rent control is an anti-displacement tool, not a complete solution.

There are additional explanations for the lack of affordable student housing. In some instances, rental property owners purposely leave units vacant. Owners may wish to convert their rental units to ownership units or sell their properties to other owners that would like to undertake these conversions. Such conversion is easier if there are no tenants in the building.  

Then what can be done now, for the benefit of current students who are desperate to find housing that they can afford? Ultimately, it is the campus that should address the lack of affordable housing near campus. They should look towards other institutions; Columbia University offers its students guaranteed housing for all four years amidst a tough housing market. UC Berkeley has made attempts to follow in these footsteps by master-leasing privately built apartment buildings to accommodate for the dearth in campus-built student housing. But because these buildings were not constructed as residence halls, they do not have the amenities that the standard residence hall buildings provide to students. Only time will tell if this new strategy will be worth pursuing in years to come.

In the meantime, we suggest the following strategy for students – lobby the campus and advocate for more housing. We urge students to be involved in a critical discussion about the issue of housing affordability and will do whatever we can to support their engagement on this topic. Together, we can work toward a Berkeley that we can all call home.

Igor Tregub and Marian Wolfe are, respectively, the chair and vice chair of Berkeley’s Housing Advisory Commission. Opinions are their own and not necessarily those of the commission.

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  • 安德森保罗克文

    Leasing older properties is a pretty good solution. It also has drawbacks as it can displace nonstudent renters. That is something that can be at least partially addressed. Solving the problem in common with other low income renter communities seems essential. There is a “build at all costs” mentality that has been circulating with no regard to how much new construction costs relative to old. Students are being treated like low heeled tourists, fleeced and credentialed then expected to disappear into distant places because they won’t be able to afford to live here. Real Estate prices are inelastic, i.e., they don’t respond to building a few more units here and there. They don’t even respond to the hostile environment against immigration. They will respond to cooling the economy, but obviously at a cost to some.

  • Tizzie Lish

    I used to be an attorney in the real estate development field, with my focus on bank financing. Student dorms should be fairly easy to universities to develop, as the president of my daughter’s first college told me when we met. He said it was easy for his college to finance dorm-building because the dorms had guaranteed income, so construction financing and then long term mortgages were easy to get.

    I think it is outrageous that UC has taken to allowing private developers to rent whole buildings to UC or even, as UC is doing with the new housing on Bancroft, leasing university land to a private developer who will make huge profits off the students who will live there on taxpayer funded land leased below market to the private developer. Outrageous.

    the university should have its own in-house real estate staff that can get construction loans, manage construction projects, then staff to property manage the dorms once built. There is no good reason to let private businesses skim profits off housing that should be nonprofit and as inexpensive as possible.

    No one could convince me that the private developer of the new housing due to be inhabited by Fall 2018 is doing a better job than the UC could do if it simply invested in the salaries of a few staffers knowledgable about financing, construction . . .and, one hopes, UC must already know how to manage student housing so such staff must already exist.

  • The authors assert that:

    Developers of market-rate housing use these higher rents so that their projects “pencil out,” making the probability of more affordable rents unlikely, at least in the near-term.

    The authors falsely suggest that future rents are determined by past lending decisions. In other words, the authors suggest that the rent on a unit will not be lowered because the unit has been leveraged with the assumption of a high rent.

    First, that puts the cart before the horse. The finance decision is not the cause of high rents, it is the consequence. Financiers are reacting to their risk-adjusted expectations of what the future market will bear.

    Second, when prices do crash for exogenous reasons, leaving some properties over-leveraged, it is true that landlords will tend to cut back on maintenance and otherwise disinvest before allowing rents to fall, but this is a self-limiting process that can not continue for very long.

    If the authors wish to be serious about housing policy, they need a better explanation of rent prices than “developers need to make their projects pencil out.”

    Similarly, the authors offer that:

    “additional explanations for the lack of affordable student housing… owners purposely leave units vacant.”

    Well, not quite. It is true that the size of housing unit supply varies over time because units may go unused, or used for some purpose other than housing services (such other purposes as, for example, short-term lodging). Each landlords optimal vacancy rate, however, is determined by the complex interplay of how long it takes to fill an expensive unit, compared to how quickly it would be filled if market rate asking rents were lower. For this reason, it is not uncommon to see vacancy rates increase when asking rents are steadily rising — overall, the landlords are still getting a larger net income even though the vacancy rate is larger.

    I will leave it to students to decide if they believe the authors that the Regents and Cal administration are really on their side or are susceptible to lobbying. If the past decades of worsening housing conditions for students aren’t evidence enough against that idea, nothing I say could change that.

  • Man with Axe

    I’m not certain the authors understand completely the nefarious role that rent control plays in creating a housing shortage. They point out some of the unintended consequences, but not all.

    Besides creating incentives for tenants to stay long after they would have left in an organic market, and besides creating incentives for landlords to convert rental housing to owner-occupied or condos, and besides creating disincentives for builders to create more rental housing, it also creates disincentives for landlords to maintain properties in good condition or to improve them, because the costs of doing so cannot be recouped in the form of higher rents.

  • LSZ

    In this farce of an article, Igor and Marian have completely ignored the huge jobs/housing imbalance that Berkeley keeps punting to other areas like Oakland. In this ABAG survey linked below, Berkeley has held on to a 1.7 ratio of Jobs to Housing. Approving 1000 units won’t solve anything because there needs to be 10,000 units approved! As long as Berkeley decides it wants to be a city that people commute to, the students will need to commute there as well (even as the University approves housing). This will be problematic for environmental quality and for the success of UC Berkeley. Do yourself a favor and hold people like Igor and Marian accountable for this misrepresentation of the facts.