Unless you’re already a property owner, things are not getting any easier in San Francisco.
- Rents rose nearly 14.9 percent from January 2014 to January 2015.
- San Francisco permitted just 193 new units for every 1,000 new residents from 2012 to 2013, according to Zillow.
- Only 16% of the current development pipeline is “affordable” affordable-, low- and moderate-income housing (this stat is buried in this article by Peter Cohen and Fernando Marti about why we need a bigger housing bond on the ballot)
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:
- There are pieds-à-terre in both new and old buildings.
- New buildings do not create demand for pieds-à-terre.
- 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
- Open up the entire city to accessory dwelling units, not just Supervisor Weiner’s district where there is a trial program. These units are more affordable by design and can be built much more quickly than market rate projects.
- Accelerate the development of housing, at a very high level of affordability, on city-owned sites. The city has a program to develop city-owned parcels but the timelines are slow. The Balboa Reservoir is one such site and they are still going to be in the “community planning workshops” phase two years from now. This is a crisis decades in the making, we need to figure out how to get things done faster.
- Upzone transit corridors in outlying neighborhoods where land is cheaper and smaller sites are more attractive to smaller developers. The Sunset District Blueprint looked at this, but only recommended a 5% increase (1,300 units) in housing stock. Allowing a lot more housing in a lot more locations is the only thing that will, over the long term, add enough stock to make a difference in affordability and of the new housing in the city can’t go in a handful of neighborhoods on the east side.
- Mandate information collection from Airbnb and other vacation rental services, and make it easier for hosts to register with the city. The Planning Department should know how many people are using the service, and what impact it has on the housing market. There are a number of pending legislative issues now.
- Use existing city funds to move stalled affordable housing projects forward, or direct affordable housing fees from new affordable projects to stalled projects in the same neighborhood. Things are finally moving now on some of these parcels, but why not partner up market-rate developers with the non-profits and find creative ways to get more affordable projects out of the ground as quickly as possible? Mission Local wrote a great piece about stalled affordable projects last year. There are a lot of other projects around the city (not just the Mission) that have affordable housing planned but there isn’t quite enough money to start construction.
- Moratoriums and calls for every project to be 100% affordable are not going to solve our current slate of problems, and in all honesty I am not sure anything will in light of global economic forces that are all coming to a head in the Bay Area. However, there are some things we should try and we need leaders who are willing to support them. A lot of these housing issues are going to end up on the ballot this year, Randy Shaw takes a look at two of these measures here.
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.