Explaining why SF has a housing crisis — and who’s at fault. In ten minutes

1. […] and “some people” in his piece, he does include a link to a site that criticizes arguments I have made here at […]

2. Enough give us resolution to housing solutions of “gentrification Thelpa ProS.F and SFAA deciding policies! Endure theories now 30,000 Ed enjoy’s 3’s demolishing existing homes, for high density San Franhattan entangled lobby gentrify! London Breed or Scott for mayor soon when 2020!

3. You don’t need to watch this past 45 seconds. The very first statistic Calvin quotes…”San Francisco is building 4 times the amount of luxury housing it needs” is a flat out lie. In the 2007/14 Regional Housing Needs Allocation cycle San Francisco permitted (not built) just 86% of the market rate housing needed to meet projected growth. In one 3 month period during that 7 year span, san Francisco did have a blip (probably 1 big project) where it over permitted market rate and that’s the data point Calvin is quoting. Selectively quoting data to obscure the truth is lying in my book.

4. https://medium.com/@Scott_Wiener/yes-supply-demand-apply-to-housing-even-in-san-francisco-193c1b0c190f

5. Thank you for posting this video. It is very interesting and it would be interesting to have a counter argument/perspective also presented. It is without a doubt that community activist in San Francisco and New York City stopped destructive “redevelopment” practices of freeway insertion into neighborhoods, the destruction of thriving working class neighborhoods, and the preservation of historic buildings. We should be thankful that we don’t have freeways running through the Haight and the West Village in New York City. These preserving measures did drive up real estate prices as evidenced in both cities. Any property owner should be thanking these community activist!
   Can someone please do a report on Prop. 13 and how it impacts the housing market in SF? I feel that it keeps property off the market and contributes to the lack of supply. As landlords get tax subsidies via lower property taxes, they don’t have incentive to sell as their property increases in value. They get a rise in equity which they can leverage via refinancing but their taxes do not increase. So basically they can get tax free capital and further their investment portfolio with artificially low property taxes.

6. Does anyone know of any specific names of policies that were used in SF’s history?

7. Wrong again, “Eleen”. The facts are not in dispute here. We all agree on them, more or less. The question is more how to interpret them.

   Welch looks at the data and blame corporatism. I look at the same data and blame progressive policies. Why? Because corporations produce and governments take – it’s really that simple.

   Rent comtrol doesn’t help the poor. It helps the lucky and the assertive regardless of need. The main beneficiaries are white middle-aged people. The main losers are anyone who moves here and anyone who gets evicted.

   Zoning rules and setasides deter construction.

   Both policies suppress supply and drive up costs. There is no way around that. If your polices haven’t given us affordable housing after 35 years of trying, why would anyone believe that will change?

   No contradictions there. I’ve been entirely consistent. Welch is the one who needs a leap of faith. The truth requires no such deception.

8. Yes, I think your analysis reveals poignantly why the Redmond/Welch faction are in such a hissy state here. It is not logical to oppose market-rate housing as that takes some of the pressure off demand for the existing housing stock. But what it really heralds is a new demographic hegemony in the city.

   It won’t be conservative, and techies are socially liberal. But they are more economically conservative and, when they start voting in large numbers, the Progressive influence will decline further.

   We already saw this perfectly when Kim beat Walker in the tech-heavy D6. the old guard wanted one of their own – the hapless, hopeless Debra Walker. But the smart young voters of D6 were done with Dalyism and cronyism. Kim was also younger and cuter, which didn’t hurt. Kim is leftish but not a kneejerk socialist.

   Likewise with Breed taking over from Mirk.

   Mar, Avalos and Campos are al termed out next time and vulnerable from the center. And that has the old leftist guard scared shitless.

   It’s not about housing. It’s about voting.

9. Welch didn’t provide any sources. He provided a chalk board showing some population fluctuations and then claimed that proves a set of ideological opinions that just happen to agree with his.

   I looked at the same data and saw some totally different conclusions.

   People see what they want to see but if there id a critical factor in SF housing being so costly it is surely progressive policies like rent control and strict zoning which near guarantee that demand will always exceed supply.

   You cannot be both a NIMBY and an advocate for affordable housing unless you try and dance on a pinhead, and that is Welch’s dance here. It’s dishonest and disingenuous – HE is part of the problem.

10. Why not check Welch’s sources yourself?

    They are patently obvious to everyone else. You must be missing out.

    Consider it homework.

    You like homes. Why not work for them.

11. Once again no real data to back up your argument Sam.

    Rent control works for those who are in it’s advantage like any economic instrument. That is obvious.

    Prices controls are at the hands of those who control them.

    You don’t and well it begs the question what are you going to do about it?

    Who exactly has this residual concern about rent control? Misguided and misled RE “investors”?

    Your contradictions grow more bizarre by the hour.

12. Redmond’s “analysis” boils down to “developers-corporations-businesses are devils, leftists-activists-SFCCHO are angels.” Horse shit!

    Yes, 1950s BAC wanted a corporate town to service the Pacific Rim. So what? There was no preserving the 1930s or 1940s San Francisco once the war economy was over, ports were containerized and light industry disappeared. Capitalist economies are destructive-constructive, always in flux. BAC and the “urbane regime” DeLeon tracks built a new white collar economy and bulldozed the old.

    Given the fact SF was already fully built out residentially by 1950, it made perfect sense (from the BAC perspective) to build BART and put new corporate workers in suburbs where they wanted (at the time) to live anyway. Simultaneously the hippies, lefties and gays drove out the blue collar working stiffs in the Castro, Mission, Haight, Noe Valley, etc. I was there, I saw it.

    The 1950s and 1960s SF could not have planned for housing in the city. This is a straw man argument. There was no land. Planning was unsophisticated. There weren’t phalanxes of urbanistas graduating with degrees in architecture and planning. There weren’t the complex bureaucracies nor the legislation. There was just crude, bulldozer “urban renewal.”

    Posturing aside, what Redmond and his team are fundamentally pissed off about is that there is a new demographic wave hitting San Francisco. The Techies. The left has tried to put capitalism into a box in SF for decades, but they’ve only partly succeeded, with housing.

    Where in America are private property rights as weak as in SF? We should not abandon the SF system for market fundamentalism, that would create chaos— but the reality is that a combination of rent control, land use and planning policy, NIMBYism and housing construction by non-profits and the City has both constricted and partly socialized housing. That’s the left-supply half of the housing problem.

    The right-demand half of the “problem” is the dynamic power of capitalism. The Left socialized property in SF but was never able to socialize the economy. Capitalism has created huge surges of new wealth and Techies now fill the office towers and PDR lofts and are pushing the old men with gray ponytails out of their rent-controlled apartments. And the misfits, the poor, the black and brown out of the Mission and Tenderloin.

    Welch and Redmond’s Left in SF is bankrupt. Occupy might have been a new New Left, but disintegrated quickly. Progressives have run out of moral vision. Now they’re just protecting turf, principally their housing wins of previous decades, to a lesser extent their transit vision, on life support, and their nonprofit social service empires.

    Politics in SF are transactional when not corrupt. The Supes are mostly milquetoast careerists. The Mayor was tapped by power brokers for his innocuous malleability. The bureaucracies run things, piss poorly. We’re on political autopilot, snarled in hypocrisy and absurdity.

    What WILL happen soon enough is the winding down of the 60s Redmond-Welch progressives and the coming of age of the Techies. SF WILL look more like Vancouver, Hong Kong, Singapore, etc. because Techies are ok with Spartan boxes and density makes ecological sense.

    And soon enough, SF politics will morph, political disruption following economic disruption and invasion, same as it did in the 60s when the ponytail crowd came to town.

13. No, Tim, a “mess” is somewhere like Detroit. What we have here is not a huge failure but a huge success.

    But it’s not really a SF success story but rather a Bay Area success story. If Silicon Valley had happened instead in another place., SF would probably be more like Oakland is now, and Oakland would be dire.

    On some level I think that is what you really want. You and Welch fawn nostalgically for some bygone age when there were no tower office buildings, not so much technology and some dirty hippy from Ohio who wanted to “find himself” could come here and never grow up. Too bad.

    Employers are not in the business of building homes and governments should not be in the business of telling people where to live. Housing is a Bay Area issue and trying to solve it one city at a time is futile.

    Finally, every day 500,000 workers commute into SF. Far less go the other way. The burbs provide more homes than jobs. SF, being essentially the downtown of the Bay Area, produces far too few homes for the jobs here. The burbs do not owe us. We owe them. They bail us out of our own NIMBYism.

    As for wanting to live in SF, that’s a privilege not a right. Shelter is essential but a bijou apartment in Pacific Heights is not. If you can’t afford SF then move to Oakland. It’s a much shorter commute than a wind-swept shack in the outer Sunset.

    Not everyone can afford to live in the world’s favorite city.

14. There were, of course, a number of factors in the decline in SF’s population in the 1960s and 1970s. One was the suburban exodus, sometimes called “white flight,” although in SF’s case, the families that left were not all white. But that’s part of what Calvin is saying: The BAC wanted to turn SF into a corporate HQ city, and have more people live in the suburbs, which is why BART was built (NOT as a San Francisco subway system, like New York or Philly have but as a suburbs-to-downtown feeder). The simultaneous destruction of urban housing in SF and the massive growth of suburban development in the East Bay — and BART — convinced a lot of people to leave the city.

    In the 1980s, when I left college, nobody my age wanted to live in the suburbs; we all moved to cities. That was part of the demographic trend that changed, and is changing, urban America. The Energy Crisis that drove gas prices from $20 cents a gallon to $1 a gallon didn’t do much for the burbs, either.

    But the overwhelming fact here, which can’t be denied, is that CITY POLICY encouraged the growth of OFFICE BUILDINGS for 30 years, with NO PLANNING AT ALL for where the new workers would live if — and as it turned out, when, they had no interest in the suburbs and wanted to live in the city.

    Those of us on the left talked constantly in that era about the need to build housing. At one point, we talked about a plan that said every developer who built a building that created 1000 jobs should have to build 1000 housing units. That, of course, went nowhere — but you get the point. The ones who DIDN’T want to build housing were the developers (more money in offices back then) and the planners who just assumed that the East Bay would handle our housing-jobs imbalance.

    That’s why we’re in this mess today.

    — Tim Redmond

15. I’ve seen estimates that anything between 10,000 and 30,000 rent-controlled units are held off the market in SF. And since almost no units that are exempt from rent control are held off the market, clearly the effect is profound and widespread. Add in the units that are TIC’ed, condo’ed or Airbnb’ed and that effect is even more significant.

    And that is really all that Cato is saying i.e. that if you artificially constrain the rent then property owners choose a different use for the building. That reduces supply which drives up rents.

    If rent control really worked, then why are there almost no vacancies and a 1BR now costs 4K? Rent control protects some existing renters but only by screwing over everyone else, including new arrivals.

    Price controls are for times of war, emergency and natural disaster. They have never worked long-term and they never will.

    Finally, although new development is exempt from rent control, there is always a residual concern that they might be later brought under rent control. 2-4 units were also originally made exempt but that was later changed. Throw in insane zoning restrictions and it is clear that new build rentals are inferior to the construction of condos.

16. So abolishing rent control would lead to higher rents but building more new homes leads to higher home prices?

    There is nothing “dated” about price controls driving up prices. Basic economic axioms are timeless.

    But if your argument is that liberal housing policies in SF have worked, then why are you whining that we have a housing crisis? I thought your claim was that these policies worked?

    But don’t make the mistake of thinking that I want to convince anyone to change. I’ve done very well out of SF RE and I have people with flawed ideas like you to thank for it.

    So, thank you.

17. My point is that they are both very clearly self-serving.

    Calvin Welch chose his points and you choose a well known right-wing, libertarian “think tank” institute piece of research that others have mentioned does nothing but point out the obvious.

    I fear you really underestimate the intellectual ability and knowledge of San Franciscans.

    The research doesn’t & couldn’t specifically address the complexity and nuances of the issue in San Francisco.

    It’s the usual econ 101 class stuff we hand out to students hoping they see the flaws in generalization.

    You must agree that It is terribly dated and generalized. A huge red flag for any data-driven argument.

    It doesn’t address the issues of technology and the effects they have on both market, availability and the push-pull mechanics on population. It fails to acknowledge any influence of construction methods and technologies pre and post Loma Prieta in the Bay Area and Northridge in Los Angeles. Nor the differences in available land. NY > SF.

    It doesn’t, most remarkably, understand and acknowledge the effects and aftermath of a centralized technology market with a financial bubble “dotcom one” on local market availability, transient populations and pricing.

    I totally understand the dogmatism of your libertarian viewpoint.

    If you want to abolish rent control to prevent high rents as you suggest – go ahead. I lustily await your measure on the ballot!

    I’m confidant that any group of intelligent, compassionate and thoughtful *voters* living in the City and County of San Francisco will reject it.

    What most libertarians fiscal and otherwise, seem to forget is that the appeal of policy isn’t factual, mathematical or intellectual but human.

    You will always lose no matter how smart or clever you may think you are unless you can actually motivate individuals to the polls on election day with a measure that satisfies that human need. An infuriatingly abstract need.

    If you’re not engaged on that level then you’re simply wasting your time and energy on intellectual masturbation on the internet.

    But don’t ever stop just like Ayn Rand said:
    “The question isn’t who is going to let me; it’s who is going to stop me.”

18. If only it were so easy to delineate the situation decades in the making. I personally believe Welch is a crackpot who uses facts and figures to his advantage. I’m not sure developers are any better. However, I do think that we need more housing in this city. If that means transforming the skyline, so be it.

    BTW — here’s the best article I’ve read on the subject:
    http://techcrunch.com/2014/04/14/sf-housing/

    It’s long read, but worth every word. No easy solution, unfortunately, but that’s life!

19. All the CATO Institute study shows is a correlation between cities with rent control and higher-than-average market rate rents, especially relative to median rents. Duh. That’s the phenomenon that led to the establishment of rent control. While common sense would dictate that rent control would result in some units being held off the market by financially secure landlords who don’t want the trouble, no study has shown that’s a significant enough number to affect the supply-and-demand set price. Since rent control doesn’t apply to new buildings it shouldn’t have an effect on development.

    Everyone is biased from CATO to Welch — except me, I’m not biased. 😉 Better to look at the data than make ad hominem arguments.

20. This is a bizarrely selective view of the history. Of course housing was demolished between 1960 and 1980- the population of the city was declining, as was the population of most cities in the United States. San Francisco had serious problems, urban living was not generally popular with the middle class and property values were falling. By only focusing on the evils of Redevelopment (which I completely agree was responsible for some horrible things), Welch leaves out the role of obstructionists of all stripes in restricting new housing since 1990 when the population of the city had begun to rebound.

    While (almost) nobody thinks Redevelopment was a good idea, continuing to blame it for the current state of our housing market fifty years later leaves out a huge number of other factors- some of which are the fault of NIMBYs. Manhattanization acually was a good idea in many ways, but suburban communities never really wanted to allow dense housing near the BART stations when they could have park and ride lots for existing residents instead.

    This video, like a lot of Calvin Welch’s other work, does a very good job of mixing up cause and effect in a way that supports whatever point he is trying to make. Our current shortage is not the fault of any one group, but saying we are building too much high end housing is absurd if you look at the demographics of the people who are moving here to take the type of jobs that are currently being created both in San Francisco and in the region. We are definitely building too little affordable housing, I agree on that, but we need a massive influx of housing at all levels- it’s not a zero sum game.

21. So your point is that Welch isn’t just as biased?

    And if all this alleged evidence exists that supports him, then why have you conveniently omitted all of it?

22. Eleen, so your point is that Cato is biased but Calvin Welch is not? Good luck with that.

    The Cato study cites evidence and facts. Welch just spouts opinions and limits his “facts” to a board with population figures, as if that is even relevant.

    Why not actually reading the link rather than whining about the source? Is your contention that rent control has led to low rents? The evidence indicates otherwise.

23. While there are a selective number of good points in Calvin’s tale (eg freeway revolt, activism leading to appropriate impact and linkage fees), his tale of population decline due to local housing destruction is a farce. Urban de-population and flight from central cities was a massive widespread national phenomena that far surpassed any urban renewal housing demolition or local SF factors. It affected pretty much every single older urban center in the country, from New York to San Francisco to Chicago and every place in between. Suburbanization and flight from deteriorating cities was the norm. And the turnaround in the City’s population has also not been inseparable from the broader trends, where re-urbanization and population increase of central cities is the rule these days across the nation, rather than the exception. Suburbanization has peaked, and people have come to realize the value, pleasure, convenience, and environmental benefit of living in cities. The decline was not due to policies or trends unique to SF and the rise is also the same. The problem in the Bay Area is that there is not enough good urbanism to go around, so the only real choice people have to live in a functional urban setting is to move to SF.

24. Really the Cato Institiute?

    LOL Talk about self-serving!

25. I stopped once I heard him claim that the population decrease from 1960-1980 was somehow a reflection of the success of the Bay Area Council’s proposed local policies. What disingenuous nonsense. Urban populations decreased all over the nation in this time; the mechanics of white flight are very well understood.

    Welch is yet another old-timer rationalizing why the rest of SF must be dedicated entirely to keeping existing residents comfortable, and screw the next generation.

26. Sure, Sam, CATO is the definitive unbiased source we should all pay attention and give 10,000 kowtows to. There is far more than just CATO that gives confirmation and affirmation to Welch’s findings. It’s not his own but an accounting of factual history and current events. Time for you to move on, Sam.

27. Thank you Calvin–and my thanks to all of you who have strived for affordability in housing in our fair City. Have you seen Yerba Buena Commons? Louis Belmonti wants to build more 100% affordable/100% for profit projects, making for a larger unit (ie.30×30). This requires a public subsidy of some type, either in Tax Credits or public land (ie.corner lots of public schools or even public parks). Yerba Buena Commons turned out to be true Workforce Housing (hospitality industry given its proximity to Downtown). By building 100 such projects, we could build 25,000 units of affordable housing–but no one speaks of this 100% affordable/100 for-profit project as Condo Developers prefer their current 85-15% split. So: Hush. Don’t pass this template on…
    Belmonti, by the way, in Recovery, seeks to give back…as he has so magnificently done and hopes to do in the future. And the right Mayor with a smaller Office of Housing–we can do this!

28. No, John, Welch’s account is highly selective, spurious and self-serving. If you want to understand how rent control drives out affordable housing then there is no better analysis than here:

    http://www.cato.org/pubs/pas/pa-274es.html

    While the idea that building less homes might somehow lead to more expensive homes is hardly rocket science. It is mind-blowingly obvious.

    In a nutshell, if you over-regulate X then X will always become more expensive. Luckily we have the rest of the Bay Area to bail us out.

29. thank you calvin.

    let’s not forget the epic fights over district elections of supervisors and what happened to the city following diane feinsteins’s protoge -dan white’s, timely massacre of george and harvey….everything just seemed to go according to corporate plan. i still think she put him up to it!

30. Sam is Sam, but I just listened to the Calvin Welch video and certainly didn’t hear the facts that you were looking for. Just a bit of selective history and the enunciation of his theories as facts.

    There was one fact…behind Calvin is a white board with San Francisco population growth, from 740K in 1960 to 805K today. A 9% increase! Meanwhile, California has grown from 16 Million to 38 Million, or 137%. San Francisco hasn’t grown geographically, and we CERTAINLY don’t want to build more housing, so why are people surprised that there is competition to live in one of the most desirable spots in a rapidly growing state?

31. Welch is half, half right and Sam is also. Welch condenses Richard DeLeon’s excellent modern history of the SF Left “Left Coast City” and Chester Hartman’s “City for Sale” into an apologia for the intransigent housing policy of the left… as if the left activists are angels and the corporations-developers devils. Any time you see Manichean politics, beware!

    IMHO, we all got into this mess together. But as a native San Franciscan, born and raised here in the 1950s I’ve got a longer view. San Francisco was a sleepy town in my boyhood… driving across the Bay Bridge home from by Berkeley grandparents, Coit Tower was the biggest thing you saw.

    Yes, the Bay Area Council and SPUR intentionally corporatized SF through what DeLeon calls an “urban regime,” top down, business and development oriented, but supported by ordinary citizens voting for the mayors and supervisors who Manhattanized an old-fashioned city.

    What Welch ignores is that a massive wave of immigrants began to arrive in the 60s and 70s with a new kind of left politics and new social mores. I was a 16 year old kid in the Haight when the hippies arrived, I joined them and inhaled. I was an 18 year old kid living directly behind the Castro theater when the gays arrived pushing out the ethnic blue collar.

    Harvey Milk and Moscone were elected in tight races, changing the politics of SF from old school Catholic, Italian-Irish-German-Polish and working class machines (with elites running things behind the curtain) to the wild politics of liberation. Until the Dan White assassinations.

    The invasion-displacement of the 60s and 70s created a titanic clash between the corporate SPUR “urban regime” and the new left and social activists on a range of housing issues. Rent control, public financing of housing, the homeless “solutions”, etc. resulted.

    But bottom line: we live in a regulated-market-capitalist system where supply-demand does mostly operate. Massive constriction of supply is a large part of what has driven housing costs through the roof, notwithstanding Fernando Marti’s SFCCHO’s proto-Marxist contrarian views.

    And now, with an invasion of techies we are headed towards a housing war in SF unless a new, hybrid politics develops with clarity both on causes and on potential solutions. The old men with gray ponytails will not show us the way forward.

32. Hey Sam. The guy cites pretty standard history of what has happened to affordable housing over the past several decades in SF. If he’s lied, please point out which facts are wrong and correct. If you disagree with his analysis, then offer something better and back it up with facts. Let’s start by being sure your comment is not bs: Could you link or cite at least one study that demonstrates removing residential rent control increases housing affordability over time? It will help make your dissent more convincing. Thanks.

33. Well Sam living here i welcome your opinion but you need to have some facts to back it up. The above is emotionally wrought drivel, and completely unhelpful, which i doubt is your intent.

34. I don’t think i have ever heard such a misguided, flawed and self-serving analysis in al my time in SF. It should probably surprise nobody that one of the two people most responsible for the current housing crisis (Sue Hestor being the other) would somehow try and spin their home-destroying policy ideas into a good thing. But to try and do so so transparently is a shock anyway.

    There are two factors that at are the heart of SF’s affordability crisis. The first is rent control which deters landlords and causes them to convert their units to non-rental use. And the second is the NIMBY’s (of which Welch is the worst) who deter developers and builders.

    The rest, frankly, is noise. Those two policies, foisted upon us by Welch and his self-absorbed trustafarian acolytes have removed far more potential and actual homes then the odd project and development here and there.

    And then he has the gall to claim that the local population is growing because of SF’s “liveability”. No, the population is growing because of the very same growth of the corporate sector that he hates and fights.

    His other huge mistake is looking at Sf in isolation, as if it isn’t just a part of a much larger city – the Bay Area. The population of the burbs has massively increased even while SF’s population has moved sideways. So SF’s still can house its growing need for workers because it does not need to house them. In fact, well over half of SF’s workers live elsewhere and that seems to work just fine.

    Will nobody call this aging hippie NIMBY out on his BS?

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