Category : housing

What’s wrong with shipping container housing? Everything.

What’s wrong with shipping container buildings? Nothing, if they’re used for the right purpose. For a temporary facility, where an owner desires the shipping container aesthetic, they can be a good fit (look, I’ve even done a container project!). For sites where on-site construction is not feasible or desirable, fitting a container out in the factory can be a sensible option, even though you’ll still have to do things like pour foundations on site. It probably won’t save you any money over conventional construction (and very well might cost more), but it can solve some other problems.

The place where containers really don’t make any sense is housing. I know you’ve seen all the proposals, often done with an humanitarian angle (building slum housing, housing for refugees etc) that promise a factory-built “solution” to the housing “problem” but often positioned as a luxury product as well.

This post on ArchDaily got me started on a Twitter rant about the unsuitability of containers for these projects, and the larger trend of online design publications not bothering to ask any questions and run these press releases as “news”. Not to mention the architects themselves presenting this idea as a feasible solution to a major problem.

This is the project that got me started, a recent competition winner by GA Designs, which proposes it as a solution to slum housing conditions in India. There are a number of glaring problems with this idea (some of which Llyod Alter takes on in a post on Treehugger) :

© Ganti + Associates, via Treehugger

This is a particularly colorful version from OVA Studio (this is for a hotel):

Hotel proposal by OVA Studio via Laughing Squid

Another slum housing “solution” reported in Dezeen:

CRG Architects container skyscraper proposal via Dezeen

A short list of why shipping containers are not a “solution” for mass housing:

  1. Housing is usually not a technology problem. All parts of the world have vernacular housing, and it usually works quite well for the local climate. There are certainly places with material shortages, or situations where factory built housing might be appropriate- especially when an area is recovering from a disaster. In this case prefab buildings would make sense- but doing them in containers does not.

  2. If you are going through the trouble of building in factory, why not build to a dimension that is appropriate for human habitation? With only 7’ clear (2.1 m) inside a built-out container, you are left with the building code minimum room width as your typical condition. It’s hardly an ideal width, and it is not difficult to ship wider modular units: modular home builders do it all the time.

  3. Insulation. All surfaces of the container need to be insulated, and this means either building a new set of walls on the inside or outside of the container. If walls are furred out on the interior, this is convenient for plumbing and electrical lines but it narrows the usable space of an already small box. It also allows for a huge amount of thermal bridging unless the floor is built up with insulation on the inside (which brings up a host of other problems).  If the exterior is insulated it no longer looks like a container, and then you have to pay to clad the entire thing over the insulation. In either scenario you’re duplicating all of the walls that you started with. Improper insulation will result in heavy condensation on the inside of the metal exterior walls.

  4. Structure. You’ve seen the proposals with cantilevers everywhere. Containers stacked like Lego building blocks, or with one layer perpendicular to the next. Architects love stuff like this, just like they throw around usually misleading/meaningless phrases like “kit of parts.” Guess what- the second you don’t stack the containers on their corners, the structure that is built into the containers needs to be duplicated with heavy steel reinforcing. The rails at the top and the roof of the container are not structural at all (the roof of a container is light gauge steel, and will dent easily if you step on it). If you cut openings in the container walls, the entire structure starts to deflect and needs to be reinforced because the corrugated sides act like the flange of beam and once big pieces are removed, the beam stops working. All of this steel reinforcing is very expensive, and it’s the only way you can build a “double-wide.”

  5. Stacking. One recent competition boasted that because containers can be stacked 9-high, concrete floors could be provided every 9th floor with stacks of containers in between. That load still needs to travel down through the building, and still then requires columns. Those floors every ninth floor need to hold the entire weight of 9-stories of building above, which makes it dubious that you’d really be saving much on structure. The foundation also needs to be built similarly to a “regular” site-built building, and this is one of the most expensive pieces. Stacking also requires a large crane and an area for staging the prefabricated container modules, which can be hard to arrange on a dense urban infill site.

  6. Utilities and Mechanical Systems. In a large building, you’ll still need a lot of space to run utilities. Because of the problems with insulation mentioned above, you will need to install a very robust HVAC system to heat and cool the building (that Mumbai tower shown above would literally be a deathtrap without cooling). You will have a hard time taking advantage of passive strategies like thermal mass if you maintain the container aesthetic. You’ll also end up with low ceilings, as even high cube containers are only 9-’6” (2.9 m) in overall exterior height, so any ductwork or utilities start cutting in to headroom.

  7. Recycling. Part of the container narrative is that it’s “green” because we have a surplus of containers that can be reused. This is somewhat true, but in reality many existing container projects use brand new containers from China (which are still very cheap to buy). Used containers need to be thoroughly cleaned because there is a risk they may have been used to transport something toxic in the past.

What you get with a container is cheap structure, if you can use the box-basically as-is. As soon as you remove anything (including the ends) you need to hire welders and buy steel. Architecture is more than structure though and structure on its own is not particularly expensive- especially when you are building a space as small as a shipping container, so the savings here are minimal. Relatively untrained people can build a room that size of simple wood framing in a day without needing to rent a crane or learning how to weld for about the same cost (or less) than buying a used container.

 

Are San Francisco’s “famed progressive politics” really to blame for the housing crisis?

Perhaps you have read Gabe Metcalf’s piece for CityLab titled ‘What’s the Matter With San Francisco? The city’s devastating affordability crisis has an unlikely villain—its famed progressive politics.’ It goes into depth about how policies in San Francisco have lead to the current situation where one bedroom apartments are renting for $82,000 per year. Yes, policies in San Francisco and the surrounding area have lead to very high housing prices. Who is to blame? I have a hard time blaming Progressives (whatever that means these days).

I would argue that in the Bay Area, wealthy single family homeowners have had FAR more sway on maintaining exclusionary zoning and blocking new housing than San Francisco’s progressive politicians. This piece dramatically understates the role of other towns and cities in the region, many of which are located on transit lines, to provide increased density. Yes, it’s not NYC, but BART and Caltrain are better than what most of the country has to work with. Many of the stations on the peninsula are surrounded by one and two story buildings. Even within the City of San Francisco, the majority of residential land is zoned for single family homes. Look at the map my firm worked on with CCA’s Urban Works Agency for a show at SPUR a few months ago, the large light gray areas that dominate the southern and western portion of the city are essentially suburban:

Zoning in San Francisco by Jeffrey Maeshiro and Cesar Lopez of The Urban Works Agency at CCA

Chris Daly (arguably one of the most “Progressive” politicians San Francisco has had in recent years) helped pave the way for the massive number of new units in SOMA by brokering a community impact deal in 2005, and these units are the majority of the housing that has been created in the last 10 years. The Eastern Neighborhoods Plan, which upzoned large areas on the east side of the City, was approved by a Progressive-majority Board of Supervisors. It should also be noted that most of the areas that have been upzoned are less wealthy and more dominated by renters than the areas that are primarily single family.

The line that keeps getting repeated that we should have been building 5,000 units a year is absurd taking into account the realities of development. The math makes sense in the simplest way possible, but we all know that no developer is going to build those units at the bottom of a recession (and the economy is always cyclical), and nobody 25 years ago would have predicted the level of in-migration and income inequality we have right now- even taking the population boom that started in 1980 into account. Far more units than that have been permitted in each boom and in most cases developers have declined to build them (or deferred them until the next cycle). The fact that they haven’t been built has more to do with economics than obstructionism.

I’m not saying that everything in this piece is wrong- it’s clearly not – but blaming Progressives for our current situation is misdirected. There need to be regional changes to allow additional housing all over the Bay Area if we are ever going to have a serious impact on affordability. There needs to be a change similar to what is being studied in Seattle to re-think single family zoning, and this can’t happen in San Francisco alone.

 

 

San Francisco’s Housing Crisis: Let’s try everything

Unless you’re already a property owner, things are not getting any easier in San Francisco.

San Francisco: Not affordable, not many permits.

 

Why is housing getting so expensive? There are a number of theories floating around out there. A few popular ones:

  • Airbnb is tying up thousands of units as rentals
  • New housing is all being sold purely as investments to Russian and Chinese millionaires/billionaires
  • Our housing is being bought up as pieds-à-terres by out-of-towners

SPUR commissioned a study of these lines of thinking and the results were pretty underwhelming (I know, I know, a lot of people espousing these three beliefs will argue that SPUR is biased but hold on a second). They found that only about 2.4% of San Francisco’s rental stock was being used for “seasonal, occasional and recreational use.”  They found that it was not a significant cause of housing price escalation but came up with the following three policy considerations:

  1. There are pieds-à-terre in both new and old buildings.
  2. New buildings do not create demand for pieds-à-terre.
  3. Recent legislation to limit short-term rentals to units that are someone’s primary residence is going to be important.

Their main conclusion? “San Francisco will need to do a better job collecting this data in the future.” It’s hard to craft policy when the data required is so difficult to collect. This is very important. I would also encourage SPUR and others to look at the effect that platforms have on apartment sharing. Room rentals in shared apartments (historically via newspaper ads, and then Craigslist) make the the biggest pool of affordable housing stock in San Francisco and there is reason to believe Airbnb is having an increasingly large effect on this housing pool. The Chronicle’s research showed that there were about 5,000 rentals available on a given night on Airbnb alone

That all being said, this is still not an enormous part of the housing market, and with so much new housing being built as rental apartments there isn’t even the opportunity for foreign investors to buy them and leave them vacant.

Okay, so if those aren’t the MAIN reasons why it is so expensive to live here, what on Earth else could it be?

San Francisco population

A more staggering statistic: the number of employed people has increased by 25% in just five years.

The city has grown by over 100,000 people in just 20 years, and the rate of growth has jumped dramatically since the end of the recession. It’s as if (almost) everyone from Berkeley moved to San Francisco but we didn’t build anywhere to put them.

As indicated in the data at the beginning, housing construction has not kept up. The roughly 10,000 units being kept off the market that were noted in the SPUR study don’t even come close to having the effect of having 45,000 people move here in the last few years, especially when only a few thousand (less than 2,000 net in 2013 for example) units are being built.  You can call me a  supply-sider if you’d like, but it is pretty obvious that we don’t have enough places for people to live. If there is a beer shortage and it’s really hot outside, people with money are going to be willing to pay A LOT more for the last few cans of Coors.

What types of solutions are being looked at now?

A Housing Bond

There is the housing bond mentioned above. The mayor is proposing a $250 million bond, some people think it should be twice that.  With $500 million, the City of San Francisco would have (from the Examiner piece by Cohen and Marti):

  • $100 million to establish a neighborhood stabilization trust large enough to fund the acquisition of 600 or more units at risk of displacement over the next five years;
  • $200 million to build up to 1,000 additional affordable units to keep pace with the runaway scale of market-rate and “luxury” developments in the neighborhoods most impacted by gentrification;
  • $100 million to “land-bank” up to 15 new sites before they become lost opportunities;
  • $80 million to fill the gap in the HopeSF public housing rebuild;
  • and $20 million to expand the downpayment assistance program for teachers and other first-time homebuyers.

A Moratorium on Market Rate Housing in the Mission

Wait, I thought there was a shortage of housing… don’t we need more?  That’s not what District 9 Supervisor David Campos thinks (read Bernalwood’s coverage here). Despite the fact that very little market rate housing has been built in the Mission, Campos thinks that putting a Moratorium on new development is somehow going to stop gentrification and evictions.  All of those people we hear about getting evicted in the Mission (and believe me, it is a problem) are not living in new buildings. They are living in old buildings, which is where new residents end up living because we’re not building anywhere else to put them.

We can’t stop people from moving to San Francisco, as much as some people would like to, and we can’t stop centrally-located neighborhoods with tons of amenities (like the Mission) from being attractive to newcomers. Especially rich newcomers who can live wherever they’d like to.

What we can do, as a city, is not support policy ideas that do nothing to address a critical shortage of housing affordable to people who already live here while increasing the pressure on the existing housing stock (where people already live) to accommodate a population boom.

A few more ideas

Maybe a market rate development at 16th & Mission would be more palatable if the developer paid to get two nearby affordable buildings built?

San Francisco has risen to huge challenges in the past. The city recovered in a few years from being burned to ground, and managed to house a huge wartime population boom in the 1940s. We need to do anything and everything to solve the housing crisis.

San Francisco rebuilt from the ’06 earthquake faster than we can install a bus turning lane today.

Ed Lee’s plans for “middle class” home buying & the math

Ed Lee touted San Francisco’s down payment assistance program in his State of the City address this week. How well does it really work in an incredibly expensive real estate market like San Francisco?

  • Assume a couple with no kids is making 120% of the median income, which is the maximum you can make to take advantage of this program.  That is $93,250 for two people.
  • Monthly that works out to $7,771 per month. Let’s go over to bankrate.com and see what they can afford to buy.
  • Let’s assume they can max out the down payment assistance at $200,000 and plug that in as the down payment.
  • I assumed no other debts. This is pretty unlikely as most people have a car payment, credit card bill or a student a loan (or all three).
  • I made assumptions about rates (4%), taxes ($7,000/yr) and homeowners insurance ($1200/yr) that may or not be perfect but are close enough.
  • You can buy a $ 642,773.13 home (in this very simplified calculation). 

Under $650k homes, Jan 15, 2015

How many properties are there in this category? Redfin shows 49. Many are either TICs studio units (good luck getting your financing to work out on that if you are trying to get financial assistance from the city) or vacant land. There are admittedly a few actual homes for that price, but it’s slim pickings.

What are the other catches to this program?

  • You must be a first time home buyer.
  • There is a minimum of 1 person for bedroom, so if I couple can only find a 3 bedroom house that meets their criteria they are out of luck.
  • The buyer must contribute 5% of their own funds to the purchase price ($32,000 for the example above)
  • The buyer must have three months of reserve funds after purchasing.

There are also other problems- it is very difficult to get a mortgage on a property that is considered a “fixer” in San Francisco (which many of the properties in this price range are) and your offer will not be very competitive on a property with multiple bids. That other couple that isn’t getting down payment assistance will most likely be able to offer more money.

This doesn’t seem like a realistic solution to help solve a housing crisis in its current state, but perhaps part of the program to offer more funding could also change the terms?

 

 

Leaving San Francisco. What’s your backup plan?

Yesterday on Twitter, I posted the question to San Franciscans of what their backup plans were if they had to leave for financial reasons. As rents and housing prices accelerate it’s something I think about almost every day. Even moving to the East Bay is seeming to be less and less of an option as convenient locations near BART are seeing price increases even higher than those in San Francisco proper. I’ve assembled many of the responses (there were a lot!) in my first attempt at using Storify:

 

30,000 units of housing by 2020 and James Baldwin looks at race relations in 1963 San Francisco

Last December, SF Mayor Ed Lee announced a Mayoral Executive Directive ordering all city departments with jurisdiction over housing permitting to prioritize housing construction, particularly for affordable housing, and his state of the city address in January called for 30,000 units of new housing by 2020 with 1/3 of them built as permanently affordable. Come hear about the effort  and the new policies that have been put into place. I know you have questions, so please stay until the end when the panel will take inquiries from the audience.

I will be moderating and the panel will include:

  • Jeff Buckley / Senior Adviser on Housing to Mayor Ed Lee
  • Tom Hui / Director, San Francisco Department of Building Inspection
  • John Rahaim/ Director, San Francisco Planning Department

Also, I urge you to watch this public television documentary on race relations in San Francisco filmed in 1963 as author James Baldwin is toured around the city as Redevelopment of several city neighborhoods is underway. Here is part of the description from Vimeo:

KQED’s mobile film unit follows author and activist James Baldwin in the spring of 1963, as he’s driven around San Francisco to meet with members of the local African-American community. He is escorted by Youth For Service’s Executive Director Orville Luster and intent on discovering: “The real situation of Negroes in the city, as opposed to the image San Francisco would like to present.” He declares: “There is no moral distance … between the facts of life in San Francisco and the facts of life in Birmingham. Someone’s got to tell it like it is.”

Take This Hammer from SF Bayview on Vimeo.

After the Mission Bay fire: Construction types explained

The Mission Bay construction site fire on March 11, 2014 as seen from a BART train in West Oakland (photo by author).

Yesterday’s huge fire on a construction site in San Francisco left people with a lot of questions, some of which were circulating on Twitter as the fire was still burning. The six-story, eighty foot tall uncompleted structure burned out of control for several hours as nearly 150 firefighters fought to contain the flames and keep the fire from spreading to occupied buildings nearby. The apartment building across the street faced heat so intense, 30 windows facing the blaze cracked from the heat.

Many people were surprised that a 180 unit apartment building would be constructed out of wood. This is actually the most common way to build apartments in California, in anything but a high rise. As I’ve pointed out before, housing construction costs are very high and wood construction is usually the most economical way to build condos or apartments up to six stories tall. In some cases, with very large buildings, economies of scale will dictate concrete construction with metal stud walls, but in most cases developers choose to build in wood over a concrete “podium,” which is the platform structure the wood building goes on top of. It usually contains parking, retail, common spaces and sometimes additional housing units. In California, wood construction also has the benefit of performing very well in earthquakes. It is lightweight and its resistance to lateral movement (side to side wind or seismic forces) can be easily increased with plywood shear walls. Unreinforced masonry (brick or concrete block) on the other hand is a disaster in earthquakes– those are the buildings that are required to have warning labels next to the front door (you can’t build those buildings any more under current codes, for obvious reasons).

What is the building code?

The California Building Code (CBC) is based on the International Building Code, which is used all over the United States. It is concerned with prescribing safe methods of designing buildings, and is particularly concerned with safety and accessibility (although there is also a Fire Code that buildings must comply with). There used to be a larger variety of  “model codes,” which are codes that the state codes are based upon, but in the late 1990s the various codes were phased out and the IBC was promoted as a national standard. California lagged behind and took longer than the rest of country  to decide to adopt it, but the current CBC is based on it with some differences. It is worth pointing out that building construction is also regulated at the local level, for instance San Francisco has its own amendments that are published online. Additionally, there are many other codes that effect construction. The printed versions fill an entire bookshelf or more, covering plumbing, electrical, mechanical, energy use, wildland/urban interface zones, etc. Every building built within a particular jurisdiction has to comply with all of them.

So what are the various types of construction that can be used under the building code?

Every building is designed to fit the requirements of a construction type, of which there are five. The building can be designed out of the materials of a higher type for other reasons, but be evaluated based upon a lower type of construction if desired (i.e. a concrete building evaluated as Type V). There are also subtypes of each of these types:

Types I and II. Types I and II construction are those types of construction in which the building elements  are of noncombustible materials, which means steel or concrete.

Type III. Type III construction is that type of construction in which the exterior walls are of noncombustible materials and the interior building elements are of any material permitted by the code. Fire-retardant-treated wood framing is usually used for exterior walls, but traditional brick buildings with wood framing inside are also of this type.

Type IV- (Heavy Timber) Type IV exterior walls are of noncombustible materials and the interior building elements are of solid or laminated wood without concealed spaces. This is typical for old mill buildings, it is based upon the concept that once wood building elements are larger than a certain size they will char and not burn all the way through. Large wood beams and columns of this type are made out of laminated pieces of smaller wood today.

Type V. Type V construction is that type of construction in which the structural elements, exterior walls and interior walls are of any materials permitted by the code. This is the most common type of construction for residential building in the United States. It is usually wood studs covered with sheathing of plywood and gypsum board (drywall) and finish materials. Type VA is common for larger buildings, which requires 1-hour rated load bearing and exterior walls, and 1 hour rated floors and ceilings. Hour-ratings are based on the amount of type an element can withstand sustained fire. New York City has banned Type V construction in Manhattan, the Bronx, Brooklyn, and some portions of Queens and Staten Island. This article helps to explain how codes have evolved over time.

Construction types and compartments can be combined to make up a larger structure. There are area limitations in the code for each construction type and uses that are only allowed in certain types. Fire rated walls must be used to enclose things with higher fire risks, like parking or transformers. The code allows for a ground floor parking garage to be built out of concrete (Type I) with a wood (Type V) building on top of it. This can allow for each portion of the building to be treated as a separate structure. The code allows maximum sizes (areas and heights) for each construction type, and the area get larger as fire resistance goes up (a wood building has to be smaller than a concrete building).

Bonus area is given for certain factors. Including sprinklers and having fire department access on all sides of a building are two things that would allow for additional area of a building under the code. This is done to encourage safer buildings.

Type V construction is actually very safe, once it is finished.

All residential buildings are now required to have sprinklers in new construction in California, even private homes. Large fires are basically unheard of in sprinklered buildings, assuming the system is working. Fire treated walls with drywall on them are very good at stopping the spread of flames. However, when a  building is under construction (like we saw yesterday) there is still a big risk of fire until the sprinkler system is installed. There will always be a lag because the building obviously needs to be framed before pipes can be put in.

Fire safety is very important on construction sites, and despite all of the construction that has gone on in San Francisco in the past ten years there has been very few fires (the Santana Row fire in San Jose in 2002 comes to mind). Often, construction site fires are the result of arson, as we saw in Oakland a few years ago. Fire departments are heavily involved in the permitting process and it would be good to get more feedback on how to increase fire safety on construction sites without drastically increasing cost. An innovative new construction type, cross-laminated timber, holds a lot of promise (and that’s something I’ll cover in a future post).

Housing links for January 22, 2014

Thanks to everyone that came to SPUR yesterday for the forum on housing construction costs, we’ll be having more events at SPUR on this topic including one that looks reducing the costs of providing housing on February 11. 

Just a quick post with a few things I’ve been reading and looking at this week:

Why have the tech buses invaded San Francisco?

Oh boy. There is no easy answer to this question, but protests in front of buses are certainly not going to solve the problem because it’s a problem that goes beyond the boundaries of the City of San Francisco. Saying that tech companies owe a billion dollars for doing curbside pickup are completely ignoring reality and making themselves look as out of touch as Ed Lee. Street usage fees paid on the same basis as curbside parking would make sense as would some more restrictions on vehicle size for some areas where double-decker buses don’t really fit. Anyway, the buses are not really a problem- they are a symptom of much larger local and state government dysfunction, which is where peoples’ anger should really be directed.

Google, for one, would love to build housing near its campus in Mountain View. They have tried to get it permitted and it has been rejected, while at the same time the city has approved additional office space. In fact, the city of Mountain View expressly forbade housing in its citywide general plan for the area around the Bayshore Campus. This would have put large numbers of Google employees walking distance from work, while also providing a walkable neighborhood near a light rail station. Google has also started investing in affordable housing, including one project in Mountain View, but unfortunately it’s only 51 units. The truth is that suburban communities don’t want to build more housing, and Prop 13 gives existing owners little reason to care about increasing housing prices.

Additionally, many communities set limits for vehicular traffic that employers need to comply with as part of transportation management plans. Aside from being a recruiting tool, company shuttles are the primary way of complying with these regulations. Why not subsidize existing transit? For most people public transit to the peninsula is incredibly time-consuming, and it also lacks the capacity to take that many additional riders. Caltrain will be upgrading in the coming years with high speed rail funds, but that is still a ways off.

Why didn’t all those tech companies just get offices in San Francisco? Aside from the fact that a lot of their employees still live on the peninsula or in the South Bay, there isn’t enough office space in San Francisco to accommodate them. San Francisco currently has the lowest office vacancy rate in the United States and it doesn’t have room for 15,000 Google employees to relocate north.  Office space construction was severely limited in the 1980s over concerns of Manhattanization, and this has only recently changed as development has been permitted south of Market Street downtown.

I’m not sure we’d be that much better off from a housing perspective if Facebook, Google and Apple were all located in downtown San Francisco, though it would remove the need for shuttle buses (Google’s downtown San Francisco office on the Embarcadero is already very popular with Google employees, most of whom bike or take transit to work). There is no easy solution to these problems, but a total lack of coordination between municipalities with different priorities is the crux of the problem. Maybe the protests should move to the suburban communities that don’t want to allow rental housing construction?

Housing Costs Controversy and the Math of BMR Ownership

My posts on housing costs have gained a lot of attention in the last week or two, and there have been a lot of comments. I decided to respond to Peter Cohen’s comments in this post, because his comments are similar to others I have heard on Twitter and elsewhere from people in the housing advocacy and progressive community in San Francisco. Peter is the Executive Director of the Council of Community Housing Organizations in San Francisco.

His comments are in italics.

Mark

Your calculations of cost for producing a 800-s.f. housing unit are revealing (previous blog post), and clearly demonstrate that even at most stripped down expenses and minimum developer and equity-investor IRRs, typical market rate housing in SF simply can’t be made affordable to middle-income residents.

If you subtract the cost of the BMR subsidy out, most of the other numbers look exactly the same for building subsidized affordable housing units (and in reality affordable housing projects often cost more because of increased common area requirements and larger accessible facilities). This means that if we cut the cost of construction by 30% we could potentially build 30% more affordable units with the same pot of money. I should also point out that those costs accurately reflect a 640 square foot unit once building efficiency is accounted for, which I updated in a later post.

However, you still then advocate for de-regulation as the primary “solutions” for the structural unaffordability of SF real estate — streamlining the public process for entitlements, eliminating the share of responsibility for affordable housing on developers, upzoning without extracting public benefits. These proposals may be beneficial for market rate developers, but they will do nothing to increase affordable housing or housing affordability.

How will they do nothing for housing affordability? If we actually built a sustained amount of housing, affordability would be improved over time. Supply and demand exists, even in San Francisco. If you don’t believe it, look what happened in the early 2000s when the last tech bubble crashed:  rental housing prices dropped over 40% when demand dropped. Market rate housing being built now will be with us for a long time, and the more we can build now the better. When the economy isn’t as good, we will still have that housing in the market.

The way we produce affordable housing in this high-priced real estate town is through locally funded housing development for low and very-low income residents and through developer requirements to contribute middle-income “inclusionary” housing in their market-rate projects. That’s pretty much it. The irony is that the beautiful picture at the top of this blog post is of Richardson Apartments which is a 100% affordable project by Community Housing Partnership that serves formerly homeless residents. I’m glad you are proud to display such an attractive and successful housing project, but using that image to headline an article arguing for de-regulation and incentives to build more market-rate housing is, at minimum, an odd juxtaposition.

I am very familiar with Richardson Apartments, I was working at David Baker’s office while it was being designed and built and I have visited it several times and know about the funding process and the demographics of the residents. I am completely in favor of building housing for formerly homeless people, but I also believe that building much more market rate housing should be a goal for the city. Increasing housing supply in a time of increased demand has little downside- especially since increased market rate development means more money for affordable housing and more tax revenue for the city. Also, it may be a small point, but the majority of the post was not about de-regulation (“find other ways to fund subsidized affordable housing” was the last item on a list of 7).

You are also incorrect in statement that “the affordable housing requirement for new construction is the biggest source of affordable units.” The inclusionary requirement is but a portion of local resources for affordable housing, and moreover and most importantly, the inclusionary requirement on market rate projects is intended to compel developers to build the units on-site as mixed-income housing, it is not at all intended as an in-lieu fee program (unfortunately that is how developers treat it–just another check to write to the City rather than seeing their role in being able to actually produce affordable units for middle income people).

In the previous paragraph you argued that affordable housing was produced “through developer requirements to contribute middle-income “inclusionary” housing in their market-rate projects. That’s pretty much it... ” but now you’re saying I’m incorrect when I make the same assertion? Fees from market rate construction are the biggest source if I am reading this presentation given by the Mayor’s Office of Housing correctly. Luckily, Proposition C passed last year (which you and I both worked on together) so that will help replace the portion that has disappeared with the elimination of the Redevelopment Agencies and will create a fund of approximately $50 million/year once it is fully implemented.

I know that on-site inclusionary housing is a goal for many housing advocates, but I am not convinced it is necessarily any better than off-site BMR units. One of the biggest complaints I have heard from BMR buyers is that the market rate owners in that the building don’t mind expensive HOA dues and vote to increase them without caring whether or not the owners of the affordable units can pay for them. It is a small city, I just want to see housing built somewhere.

It is great that you have creative ideas for market rate housing–prefab, construction technology, small units, zero-parking, etc. Architects are the creative thinkers about the built environment and typologies of housing. But it is a different agenda when these interesting ideas masquerade as “solutions” for affordable housing needs. These are simply new ideas for market rate housing, and market rate housing is very expensive both to build (as you have demonstrated) and to buy/rent. It is unfortunate that you see the need to challenge and undermine current public policy in laying out your ideas for how market rate developers can build cheaper urban housing.

Regards,
Peter

In my mind our currenet public policy efforts to produce “affordable” housing in San Francisco have been a dismal failure for middle-income people seeing as we now live in the most expensive city in the United States, even edging out New York. Seattle has seen a similar boom in high tech jobs, but has also done a great deal more to encourage market rate housing production, and they have seen a lower increase in housing costs than San Francisco by addressing demand (they still make the list of the ten most expensive cities, but the average studio apartment there is about $1,000 cheaper). Subsidies are not going to solve this housing market, especially for people making near the median income. A combination of subsidized housing, particularly for low and very-low income people, and a sustained boom in housing construction would do a lot more that our current system.

I would love to hear additional ideas for funding subsidized affordable housing, it doesn’t have to be an either/or with market rate housing. If we think affordable housing is important, why not levy a progressive city income tax that diverts money to the Mayor’s Office of Housing which could be used to fund future affordable housing development? Why not tear down I-280 and put the land into a housing trust to eliminate the land cost from the construction proforma? Better and cheaper regional transportation would also make housing cheaper, as people could choose to live in cheaper housing further away from where they work. How about re-inventing the housing authority and building government-owned rental housing that would be open to anyone with monthly rent charged based on income (common in some other countries)?

Making home buyers shoulder most of the cost of the BMR program does not make sense to me, and it makes market-rate housing more expensive. It produces too few units for middle income people and it is only marginally better financially (if at all) for many people than renting a rent-controlled apartment. I challenge current public policy because I don’t think it is working for a large part of our city’s population. At least part of the solution for addressing our housing shortage has to come from the market. 

While we are discussing the current system, let’s look at how a big part of the City’s efforts to produce middle income housing actually works:

The Math of BMR Ownership

This BMR unit for a single person making up to 90% of the Area Median Income costs $311,752

5% downpayment (there are also some down payment assistance programs): $15,587

30 yr montly mortgage payment based on mortgage of $296,164: $1,562

Monthly HOA dues: $393

Subtotal $1955

Property taxes (approximate): $3,100 yearly or $258/month

Insurance (approximate): $1,000 yearly or $83/ month

Total montly cost of an “affordable” BMR unit: $2296/ month

A person making $70,000 a year would just be able to qualify under the limit for this unit (the cutoff is at $70,850), yet  it would cost $27,552 a year to live in it- nearly 40% of the buyer’s income! This is to own a unit that needs to be sold back to another BMR buyer, meaning the amount you can sell it for tracks inflation. Your downpayment, which could have been invested in a more lucrative investment for retirement, is also tied in to essentially tracking inflation of the duration of ownership. If you rented a market rate apartment for that same price (yes, it’s still possible in my neighborhood) you would be protected by rent control, you would have more flexibility if you needed to move, and you would also not have to tie up your savings in a non-investment. I looked in to buying a BMR unit myself two years ago and once I ran those numbers, why bother?

 

 

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