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While San Francisco rents spike, Stanford residential fees remain level

The Daily examines trends in housing prices over the last 45 years

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A plan to pair a regional rent cap with new property taxes and eviction and zoning regulations was passed on Tuesday by the Association of Bay Area Governments, in an effort to curb the Bay Area’s longtime housing crisis. The plan’s approval follows a year in which the number of new residents in San Francisco was nearly triple the number of new homes constructed.

San Francisco rents, facing sharp fluctuations over the last 45 years, exhibit the symptoms of this housing crisis. But nearby, Stanford’s residential fees have remained steady over the same time period.

Shifting costs

Currently, rent for a San Francisco apartment costs $17,000 more than fees for an undergraduate dorm room at Stanford. The San Francisco nine-month median rent stands at $32,922, whereas the average price tag for Stanford room and board is $15,763.

This discrepancy has not always been so large. From 1974 to 1995, San Francisco nine-month rent and Stanford residential fees hovered around the same ballpark of $8,000 to $12,000 — with Stanford residential fees priced around 75 percent of San Francisco rent — before San Francisco rent began increasing sharply in 1995.

Notably, San Francisco rent increased before 2005, then sharply decreased until 2010, reaching a peak rent of $27,439 in 2007. Like many U.S. cities of the time, San Francisco likely experienced the effects of the U.S. housing bubble and subsequent market crash. Stanford residential fees, however, did not experience a fluctuation in housing fees around the same time period.

University spokesperson E.J. Miranda noted in an email to The Daily that Stanford’s residential fees are derived in large part from fees incurred by debt on all housing and dining facility renovations as well as new construction, labor and benefits and asset renewal.

“While Stanford rents are driven by actual costs, market rents are driven by supply and demand,” he wrote. “As the economy thrives and demand increases, rates tend to rise in the local market. If the economy experiences a downturn — as it did in 2008 — demand drops, and rents are lowered to attract tenants.”

San Francisco, like other cities in California, is under the jurisdiction of the Costa-Hawkins Rental Housing Act of 1995, which limits the rent control measures that California cities can place onto their housing units. The timing of this law’s passage lines up with the fluctuations in rental price that San Francisco experiences from 1995 to the present, especially in the past five years. Nevertheless, San Francisco does enforce strict rent control measures on their housing units; an estimated 75 percent of San Francisco rental units are under rent control.

However, a 2017 paper by Stanford economists Rebecca Diamond, Tim McQuade and Franklin Qian found that rent-controlled San Francisco apartments are more likely to be converted or redeveloped; the decrease in available rental housing has also been correlated with the spike in overall San Francisco rent since 1995.

Meanwhile, the propagation of technology companies in the Bay Area and its resulting gentrification of San Francisco neighborhoods also line up with the rise in San Francisco rent. While Proposition 10 in the 2018 California general election aimed to repeal the Costa-Hawkins Rental Housing Act in order to “give the cities the ability to expand rent control, including potentially to more buildings,” the Proposition was ultimately unsuccessful and did not pass.

While the true cause of the spike remains unclear, analysts told The Mercury News that the upward trend of San Francisco rent is predicted to continue. Meanwhile, Stanford avoids such spikes due to its nonprofit status, Miranda noted.

“Most landlords in the housing market are profit-based, so they generate supplemental revenues in good times to offset loss of revenue in bad times and still make sufficient returns for their investors,” he wrote. “Stanford charges the minimum necessary to cover costs and attempts to maintain those costs somewhat level over time through effective planning and management.”

The dollar value of Stanford residential fees has steadily increased by a roughly constant amount over time — residential fees amounted to $1,425 in 1974, but have since increased to $18,000 in 2018. However, when adjusted for inflation, the pricing of Stanford residences has only a slight upward trend beginning from 1996. Before 1996, adjusted Stanford residential fees fluctuated from a low of just under $8,300 to a high of just above $11,600 in 1990. From 1973 to 2018, the inflation-adjusted percentage increase of Stanford residential fees was roughly 90 percent.

As Residential & Dining Enterprises’ (R&DE) costs to provide housing have increased, R&DE has found new ways to maintain costs, Miranda wrote, such as introducing an automated utility-monitoring system to reduce expenses. R&DE is also piloting new service models for custodians and maintenance, while increasing the use of automation and technology.

 

Qualifying the data

The datasets examined have been adjusted according to the length of time that a Stanford undergraduate student generally stays on campus: late September to early June. Accordingly, the median San Francisco rent for each year covers nine months; however, the San Francisco dataset doesn’t necessarily reflect the median rent during the time that Stanford undergraduates are in classes.

Additionally, while the San Francisco dataset tracks the median rent in each calendar year, Stanford calculates residential fees based on each academic year. Nevertheless, the San Francisco dataset — which calculates the median rent for each month starting from January 2011 and ending in October 2018 — reveals that the median rent does not fluctuate significantly from month to month.

Although the nine-month median rent for San Francisco apartments was primarily obtained from the Census, a new dataset from RentJungle was inserted into the visualization beginning from 2011. The dataset used for San Francisco nine-month median apartment rent uses the median rent of all apartments in San Francisco, ranging from studio apartments to two-bedroom apartments.

Stanford’s undergraduate residential fees were obtained from the University, as reported by the Board of Trustees. While most Stanford dormitories are more comparable to a studio apartment, Stanford residential fees also incorporate communal spaces — common rooms, computer clusters and lounges, for instance. Stanford residential fees also fluctuate from residence to residence: For instance, room rates on The Row tend to be a few thousand dollars less than room rates for other undergraduate dormitories, and meal plans can differ from residence to residence and student to student.

 

Contact Lily Zhou at lilyzhou ‘at’ stanford.edu.

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