San Francisco Poised to Pass Tax on $5 Million Mansion Salesby
Measure targets luxury properties amid affordability crisis
Increase will generate about $45 million in revenue for city
San Francisco voters were poised to increase transfer taxes on homes that sell for more than $5 million in a bid to make wealthy residents pay more in response to the income-inequality crisis they’re blamed for creating.
The ballot measure appeared to be winning, according to a final summary of unofficial results posted on the San Francisco Department of Elections website with 100 percent of precincts reporting. The department will release final election results by Dec. 8.
“We know that we have an over-driven luxury market in San Francisco,” Supervisor Jane Kim said before the vote. “And while we cannot stop it, we can certainly ask those that drive it to pay a little bit more to make our city more affordable."
The initiative boosts the tax paid on properties sold for $5 million to $10 million by a quarter-point, to 2.25 percent. The levy for real estate sales of $10 million to $25 million would climb to at least $225,000 -- while the levy on transactions of more than $25 million would be a minimum of $750,000.
The technology boom that spawned companies such as Uber Technologies Inc. and Twitter Inc. has transformed California’s fourth-largest city, doubling the median home price in the past five years to more than $1 million. That’s fueled public outcry from low- and middle-income earners who blame the industry for the rise in evictions and homelessness.
Realtors opposed the measure and have said it will hurt the market, which is already slowing at the highest end.
“As with all transfer taxes, at a certain point it diminishes the incentive to purchase, improve or sell the properties,” said Nina Hatvany, a broker at Pacific Union in San Francisco. The measure “will depress property values rather than accomplish its stated goals.”
The measure will raise an average of $45 million in revenue annually, according to an August letter from Ben Rosenfield, the city’s controller. Most of the funds will come from transfer taxes on downtown office buildings, since homes selling for more than $25 million are relatively rare, according to a June report from the city’s Office of Economic Analysis.
There’s one home listed for at least $25 million in San Francisco, out of 405 across the U.S., according to Zillow data. The city has 53 listings for homes from $5 million to $25 million.
While the levy will be steered to the city’s general fund, the Board of Supervisors in July approved a non-binding resolution saying they’d like to use an estimated $13 million to cover free tuition for residents at the City College of San Francisco.
In neighboring Oakland, which has benefited from spillover from San Francisco home hunters and renters in search of affordability, measures to strengthen rent control and issue bonds for affordable housing appeared to be winning.