San Francisco housing shortage

Starting in the 1990s, the city of San Francisco and the surrounding San Francisco Bay Area have faced a serious housing shortage. The Bay Area's housing shortage is part of the broader California housing shortage.

In October 2015, San Francisco had the highest rents of any major US city.^[2] The nearby city of San Jose had the fourth highest rents, and adjacent Oakland had the sixth highest.^[2] Over the period April 2012 to December 2017, the median house price in most counties in the Bay Area nearly doubled.^[3]

Causes

A number of causes have been identified for the housing shortage in San Francisco.

Zoning

Strict zoning regulations are a primary cause behind the housing shortage in San Francisco.^{[citation needed]}^[4]^[5] Historically, zoning regulations were implemented to separate residential districts from commercial districts, to restrict housing construction in wealthy neighborhoods, and to prevent minorities from moving into white neighborhoods.^[6]^[7]^[8] When explicit racial discrimination was prohibited with the 1968 Fair Housing Act, white neighborhoods began instituting zoning regulations that heavily prioritized single-family housing and prohibited construction of the kinds of housing that poor minorities could afford.^{[citation needed]}

Since the 1960s, San Francisco and the surrounding Bay Area have enacted strict zoning regulations.^[9] Among other restrictions, San Francisco does not allow buildings over 40 feet tall in most of the city, and has passed laws making it easier for neighbors to block developments.^[10] Partly as a result of these codes, from 2007 to 2014, Bay Area cities have issued building permits for only half the number of needed houses, based on the area's population growth.^[11]

A 2021 study by housing economists Joseph Gyourko and Jacob Krimmel estimated that artificially inflated land prices—referred to as a "zoning tax", or the cost for the "right to build"—brought on by tight residential zoning rules amounted to more than $400,000 per home in San Francisco.^[12]^[13]

In 2024, zoning remains a much-discussed avenue to alleviate the housing shortage.^[14] Mayor Breed proposed in July 2024 rezoning for more housing in areas that currently require a high percentage of office space.^[15] And there were a number of state led bills to loosen zoning restrictions near public transit.^[16]

Permit process

As of 2022, San Francisco had the slowest permitting process of any large city in the United States, with the first stage taking an average of 450 calendar days, and the second stage can take 630 days for typical multi-family housing, or 860 days for a single-family house.^[17] In July of 2024, San Francisco became the first city in California to have its permit process dramatically streamlined by the state as a result of not being on track to meet its state-mandated housing targets, which could take it from the longest approval process to one of the shortest.^[18]

Non-profit organizations, unions, and other advocacy groups may leverage the permitting process to negotiate concessions from developers, which can lead to additional delays in construction and increased project costs.^[19] For example, the redevelopment of a laundromat in San Francisco into residential housing was delayed for several years due to California Environmental Quality Act (CEQA) requirements and shadow study requests after the developer opted not to enter negotiations with local non-profit organizations.^[20]

Increased demand

Rapid economic growth of the high tech industry in San Francisco and nearby Silicon Valley created hundreds of thousands of new jobs. The higher demand for housing, combined with the lack of supply, (caused by severe restrictions on the building of new housing units)^[21] caused dramatic increases in rents and extremely high housing prices.^[22]^[23]^[24] For example, from 2012 to 2016, the San Francisco metropolitan area added 373,000 new jobs, but permitted only 58,000 new housing units.^[25]

Construction costs

San Francisco also had the second-most expensive construction costs in the world ($473 / sq. ft.) as of 2023.^[26]

Rent Control

The San Francisco Rent Ordinance imposed rent control and eviction protection on residential units built before June 13, 1979.^[27] A 2019 study has estimated that rent control has "reduced the supply of available rental housing by 15 percent" which "increased rents in the long run."^[28]

Effects

Due to the advances of the city's economy from the increase of tourism, the boom of innovative tech companies, and insufficient new housing production, the rent increased by more than 50 percent by the 1990s.^[29]^[30] Many affluent tech workers migrated to San Francisco in pursuit of job opportunities and the lack of housing in the South Bay.^[30] Until the end of the 1960s, San Francisco had affordable housing, which allowed people from many different backgrounds to settle down, but the economic shift impacted the city's demographics.^[29] All of this resulted in gentrification in many neighborhoods.^[31] By 1995, residents of areas such as the Tenderloin and the Mission District, which house many immigrants and low-income families, were faced with the possibility of eviction, in order to develop low-income housing into housing for high-income residents.^[31] For example, residents of the Mission District, constituting 5 percent of the city's population, experienced 14 percent of the citywide evictions in the year 2000.^[32]

The effect of housing policies has been to discourage migration to California, especially San Francisco and other coastal areas, as the California Legislative Analyst's Office 2015 report "California's High Housing Costs - Causes and Consequences" details: [From 1980-2010]

"If California had added 210,000 new housing units each year over the past three decades (as opposed to 120,000), [enough to keep California's housing prices no more than 80% higher than the median for the U.S. as a whole--the price differential which existed in 1980] population would be much greater than it is today.
We estimate that around 7 million additional people would be living in California.
In some areas, particularly the Bay Area, population increases would be dramatic. For example,
San Francisco's population would be more than twice as large (1.7 million people versus around 800,000)."^[33]

Responses

Late San Francisco mayor Ed Lee called the shortage a "housing crisis",^[34] and news reports stated that addressing the shortage was the mayor's "top priority".^[35] Mayor Ed Lee responded to the shortage by calling for the construction of 30,000 new housing units by 2020, and proposing a $310 million city bond to fund below-market-rate housing units.^[36] The goal of 30,000 new units was approved by San Francisco voters in 2014's Proposition K,^[37] and the affordable housing bond was passed in 2015 as Proposition A.^[38]

In 2015, then City Supervisor Scott Wiener (D8) criticized the advocates of anti-development laws, writing an article titled "Yes, Supply & Demand Apply to Housing, Even in San Francisco" in response to Proposition I. Wiener called for greatly increasing the supply of all housing, including both subsidized housing and housing at market rate.^[39]

In 2017, almost 75% of all city land zoned residential allowed only single-family homes or duplexes.^[40]^[41] David Garcia, policy director of the Terner Center for Housing Innovation at UC Berkeley, said that a proposal to allow fourplexes everywhere would be a more equitable proposal, and that research shows that the housing shortage is so large that limiting new housing to specific areas would not sufficiently address the shortage.^[40]^[41]

New York Times opinion writer Farhad Manjoo stated in 2019: "What Republicans want to do with I.C.E. and border walls, wealthy progressive Democrats are doing with zoning and Nimbyism. Preserving 'local character,' maintaining 'local control,' keeping housing scarce and inaccessible — the goals of both sides are really the same: to keep people out."^[42]

In October 2021, the Board of Supervisors passed a proposal to allow slightly greater density by legalizing fourplexes for each lot and six unit complexes on corner lots.^[43] While the policy has limited impact on streamlining the housing approval process, the bill's sponsor, Board of Supervisor Rafael Mandelman called it "an important step in the right direction to increase [housing] density in San Francisco".^[43]^{[needs update]}

In 2024, San Francisco became the first city in California to have its permit process dramatically streamlined by the state as a result of not being on track to meet its state-mandated housing targets, which could take it from the longest approval process to one of the shortest.^[18]^[44]^[45]

References

^ Ioannou, Filipa (2018-06-28). "It'll take this Bay Area city 966 years to meet its 22-year housing goal". San Francisco Chronicle. Archived from the original on 2018-07-06. Retrieved 2018-08-20.
^ ^a ^b Elsen, Tracy (September 3, 2015). "San Francisco's Median Rent Hits Yet Another New High". SF Curbed. Archived from the original on 2016-02-26. Retrieved 23 December 2015.
^ "Bay Area homes deliver record-breaking returns". The Mercury News. 2018-02-28. Retrieved 2018-03-01.
^ "What's Really to Blame for San Francisco's Housing Crisis". Bloomberg.com. 2016-03-11. Retrieved 2021-04-02.
^ Oatman-Stanford, Hunter (2018-09-28). "The bad design that created one of America's worst housing crises". Fast Company. Retrieved 2021-04-02.
^ Trounstine, Jessica (2018). Segregation by Design: Local Politics and Inequality in American Cities. Cambridge: Cambridge University Press. pp. 31, 77, 82. doi:10.1017/9781108555722. ISBN 978-1-108-42995-5. S2CID 158682691.
^ Pandell, Lexi (2019-05-31). "The Racist Origins of San Francisco's Housing Crisis". The New Republic. ISSN 0028-6583. Retrieved 2021-04-02.
^ "54% of San Francisco homes would be illegal to build today". sfzoning.deapthoughts.com. Retrieved 2021-04-02.
^ Smith, Matt (August 18, 1999). "Welcome Home". SF Weekly. Archived from the original on October 1, 2000. Retrieved 23 December 2015.
^ Russel, Kyle (April 8, 2014). "This One Intersection Explains Why Housing Is So Expensive In San Francisco". Business Insider. Retrieved 23 December 2015.
^ Weinberg, Cory (Apr 13, 2015). "Did your city fail the Bay Area's housing supply test? Probably". San Francisco Business Times. Retrieved 23 December 2015.
^ Gyourko, Joseph; Krimmel, Jacob (2021-07-01). "THE IMPACT OF LOCAL RESIDENTIAL LAND USE RESTRICTIONS ON LAND VALUES ACROSS AND WITHIN SINGLE FAMILY HOUSING MARKETS" (PDF). Retrieved 2023-08-09.
^ Meyersohn, Nathaniel (2023). "The invisible laws that led to America's housing crisis". CNN. Restrictive zoning has impacted housing supply and affordability. A 2021 study found that in San Francisco, the "zoning tax" -— the amount land prices are artificially inflated due to restrictive residential zoning laws — was estimated at more than $400,000 per house.
^ "Angry San Francisco homeowners plot to kill city's rezoning plan". The San Francisco Standard. 2024-06-07. Retrieved 2024-08-09.
^ Johnson, Sydney (2024-07-24). "Breed Aims to Rezone Downtown San Francisco for More Housing, Fewer Offices | KQED". www.kqed.org. Retrieved 2024-08-09.
^ "California's Most Controversial Homebuilding Bill, SB50, Just Died. What's Next?: LAist". 2020-02-01. Archived from the original on 2020-02-01. Retrieved 2024-10-28.
^ Gardiner, Dustin; Neilson, Susie (2022-12-14). "627 days, just for the permit: This data shows the staggering timeline to build homes in S.F." San Francisco Chronicle. To build housing in San Francisco, developers must first receive planning approval, known as entitlement, to ensure the city supports the type, size and design of housing proposed for a site. This part of the process took an average of 450 days over the last 18 months, according to recent data from the state. Then comes post-entitlement — the focus of The Chronicle's analysis ... The typical applicant currently waits a staggering 627 calendar days before obtaining a full building permit from the city to construct a multifamily housing project, and 861 days before gaining the same approval for a single-family residence, the analysis found.
^ ^a ^b "After Missing Housing Goals, SF Has Permit Process Slashed Under New State Law | KQED". KQED. 2024-07-01. Retrieved 2024-08-09. Under SB 423, which passed last year, cities that miss their state goals on planning for new housing must provide an expedited path for approving permits for new developments that meet existing planning standards.
^ Gray, M. Nolan (2021-03-12). "How Californians Are Weaponizing Environmental Law". The Atlantic. Retrieved 2024-10-27.
^ Monticello, Christian Britschgi, Justin (2019-03-19). "The Most Contested Apartment Building in America". Reason.com. Retrieved 2024-10-27.{{cite web}}: CS1 maint: multiple names: authors list (link)
^ Torres, Blanca (2017-04-28). "Housing's tale of two cities: Seattle builds, S.F. lags". San Francisco Business Times. Archived from the original on 2017-05-02. Retrieved 2017-12-04. So how can smaller Seattle make so much more housing happen than San Francisco? Developers active in both cities and officials who have worked in both point to structural differences that outweigh the demographic similarities. In San Francisco, development issues are routinely subject to consideration by neighborhood bodies, approval by the city planning commission and often ratification by its board of supervisors, with opportunities for decisions to be appealed. Seattle's approval process is much more streamlined ... The city's planning commission is strictly a policy entity. It does not approve or reject projects. The city council weighs in on projects only in rare cases. [In S.F.] ... he thinks that the California Environmental Quality Act, known as CEQA, makes it too easy for residents to sue projects, effectively holding them up for years or blocking them.
^ Lee, Wendy (September 21, 2015). "Tech bus drivers forced to live in cars to make ends meet". SF Chronicle. Retrieved 23 December 2015.
^ Cutler, Kim-Mai (Apr 14, 2014). "How Burrowing Owls Lead To Vomiting Anarchists (Or SF's Housing Crisis Explained)". TechCrunch. Retrieved 23 December 2015.
^ Cutler, Kim-Mai (Nov 2, 2014). "So You Want To Fix The Housing Crisis". TechCrunch. Retrieved 23 December 2015.
^ Clark, Patrick (2017-06-23). "Why Can't They Build More Homes Where the Jobs Are?". Bloomberg. Archived from the original on 2017-08-28. Retrieved 2017-12-01.
San Francisco's metropolitan area added 373,000 net new jobs in the last five years—but issued permits for only 58,000 units of new housing. The lack of new construction has exacerbated housing costs in the Bay Area, making the San Francisco metro among the cruelest markets in the U.S. Over the same period, Houston added 346,000 jobs and permitted 260,000 new dwellings, five times as many units per new job as San Francisco.
^ Dickey, Megan Rose (August 23, 2023). "San Francisco metro area's new apartment construction on the decline". Axios.
^ "Rent Control". San Francisco Tenants Union. Retrieved 2024-10-27.
^ Tuccille, J. D. (2024-05-03). "Rent control remains the wrong solution to housing woes". Reason.com. Retrieved 2024-10-27.
^ ^a ^b Whittle, Henry J.; Palar, Kartika; Hufstedler, Lee Lemus; Seligman, Hilary K.; Frongillo, Edward A.; Weiser, Sheri D. (2015). "Food insecurity, chronic illness, and gentrification in the San Francisco Bay Area: An example of structural violence in United States public policy". Social Science & Medicine. 143: 154–161. doi:10.1016/j.socscimed.2015.08.027. PMID 26356827.
^ ^a ^b Shaw, Randy (2018). "Who Gets to Live in the New Urban America". Generation Priced Out: Who Gets to Live in the New Urban America (1 ed.). University of California Press. ISBN 9780520299122. JSTOR 10.1525/j.ctv5cgbsh.
^ ^a ^b Robinson, Tony (1995). "Gentrification and Grassroots Resistance in San Francisco's Tenderloin". Urban Affairs Quarterly. 30 (4): 483–513. doi:10.1177/107808749503000401. S2CID 153614015.
^ Pamuk, Ayse (2004-06-01). "Geography of immigrant clusters in global cities: a case study of San Francisco". International Journal of Urban and Regional Research. 28 (2): 287–307. doi:10.1111/j.0309-1317.2004.00520.x. ISSN 1468-2427.
^ Taylor, Mac (2015-03-17). California's High Housing Costs - Causes and Consequences (PDF) (Report). CA Legislative Analysts Office. pp. 20, 23. Archived (PDF) from the original on 2015-04-06. Retrieved 2017-10-26.
^ Coté, John (January 17, 2014). "Sneak peek: Mayor Ed Lee has a housing solution". San Francisco Chronicle. Archived from the original on 2014-02-03. Retrieved 23 December 2015.
^ Tyler, Carolyn (January 15, 2015). "San Francisco mayor focuses on housing crisis in State of City speech". ABC 7 News. Archived from the original on 2015-03-25. Retrieved 23 December 2015.
^ Johnson, Lizzie (October 2, 2015). "Is Mayor Lee's housing bond enough to crack this S.F. crisis?". SF Chronicle. Retrieved 23 December 2015.
^ "California Election Watch 2014: Bay Area Measures We're Following". KQED News. November 5, 2014. Retrieved 23 December 2015.
^ Brooks, John (November 4, 2015). "S.F. Election: Lee Re-elected, Peskin Wins, Airbnb Curbs Fail". KQED News. Retrieved 23 December 2015.
^ Wiener, Scott (2015-02-20). "Yes, Supply & Demand Apply to Housing, Even in San Francisco". Medium. Retrieved 23 December 2015.
^ ^a ^b Baldassari, Erin (2021-02-16). "California Cities Rethink the Single-Family Neighborhood". KQED.
^ ^a ^b Knight, Heather (2021-01-30). "S.F. supervisor's creative proposal: Make it hard to build McMansions, easier to build small apartments". San Francisco Chronicle. He actually thinks Mandelman would have a better chance of ensuring equity if he followed Sacramento's path and allowed fourplexes everywhere. Then large parts of the west side that have been frozen in time would finally have to carry their weight, alleviating the crush on the east side. ... "There's a lot of research on the need to increase housing supply in all in-fill areas, not just near transit," Garcia said. "San Francisco has some robust transit, but certainly not to the degree where limiting new housing to those areas is going to have as big of an impact as we need to address the full shortage."
^ Manjoo, Farhad (2019-05-22). "America's Cities Are Unlivable. Blame Wealthy Liberals. - The demise of a California housing measure shows how progressives abandon progressive values in their own backyards". The New York Times. Archived from the original on 2019-06-01. It was another chapter in a dismal saga of Nimbyist urban mismanagement that is crushing American cities. Not-in-my-backyardism is a bipartisan sentiment, but because the largest American cities are populated and run by Democrats — many in states under complete Democratic control — this sort of nakedly exclusionary urban restrictionism is a particular shame of the left.
^ ^a ^b Kukura, Joe (2022-10-19). "Fourplex Legislation Finally Passes Board of Supervisors on Mandelman's Third Try". SFist - San Francisco News, Restaurants, Events, & Sports. Retrieved 2023-03-15.
^ Greschler, Gabe (2024-07-01). "SF failed its housing goal. A new law could surge production". The San Francisco Standard. Retrieved 2024-08-09. Wiener's bill is an extension of one of his previous pieces of legislation, Senate Bill 35, which streamlined affordable housing. Officials said the new law impacts a much broader swath of projects: roughly three-fourths of permitting applications....The bill still doesn't address certain impediments to building more housing in the city, such as eye-popping construction and materials costs. Other barriers are the high interest rates that are out of the city's control. However, officials maintained Monday that SB 423 helps to chip away at the housing crisis.
^ Wiley, Hannah (2024-07-04). "California just cut the red tape on housing in San Francisco. Is L.A. next?". Los Angeles Times. Still, San Francisco has fallen woefully short of its housing goals by tens of thousands of units. Last year, the city adopted what's known as a "housing element," or a blueprint for how it plans to build 82,069 units over an eight-year period. The city has approved only 3,870 new units since 2023, according to the Planning Department. That sluggish start kicked SB 423's broader rules into effect, which include more frequent reviews of the city's compliance with its housing goals. Builders in San Francisco are now allowed to speed through the approval process for market-rate projects too, as long as they set aside at least 10% of the homes for low-income families and adhere to certain union-approved labor requirements.