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News + PoliticsDebunking the trickle-down housing fallacy
News + Politics

Debunking the trickle-down housing fallacy

Before you decide that building more market-rate housing is the answer, check this out.

By Tim Redmond
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The Council of Community Housing Organization has a nice chart that explains why the concept of trick-down, or “filtering” housing, makes little sense. Check it out below, and download a full-size PDF here.)

48hillsfiltering

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Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.
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73 COMMENTS

  3. … [Trackback]

    […] Informations on that Topic: 48hills.org/2016/09/13/debunking-trickle-housing-fallacy/ […]

  38. The premise of this infographic is ludicrous. Nobody believes in the idea of filtering as presented, which speaks to the ignorance of the authors.

    The city of Tokyo builds 75% more housing than our entire state, despite having just 1/3 the population. They’ve had a similar influx of residents as SF, yet their housing costs have been stable since the mid 90s. Building to keep housing costs down is not just a theory, it’s a proven strategy.

    Don’t believe the Nimby propaganda.

  39. Tokyo builds ~150k units per year, or 75% more than the entire state of California despite having 1/3rd the population. So yes, it is possible.

    Additionally, prices in Tokyo have remained flat since 1995, despite having similar population gains as the bay area.

    Denying supply and demand is about as intelligent as claiming the earth is flat.

  47. I gave you numbers, with a source. If you have a better one (Google quarterly reports or whatever), give me a link to it, and your preferred numbers, and then we’ll discuss them. How many tech jobs do you think are coming to the Bay Area yearly?
    Until you do that, I will call you “Trump”. Fair?

  49. Huh?

    Nonsense. Your absurd claim presumes that the 3K employees will all be new, from outside the Bay Area and looking for housing.

    Your inability to understand basic math and logic isn’t helping your argument.

  50. I propose that we actually begin building close to 15K housing units/year in SF. That would be a start.

    Are you going to get tech workers to pay for the wall?

  51. I’ll stop making the more-than-obvious comparison to Trump’s wall when you offer something approaching evidence that if we were building 15K units/year in SF, rents would be the same.

    Rather than providing any such evidence, you provide a red herring: Google is hiring!

    But let’s get down to brass tacks: the numbers you provide about Google are objectively untrue according to their own disclosures (the ones they provide at quarterly earnings calls). Your numbers also presume that all new hires for that company will come from outside of the Bay Area and will live in San Francisco. In order, your claims are: false, absurd and impossible.

    Literally none of what you cited bears even a passing resemblance to truth. Do you honestly expect it to pass as evidence for your claims?

    I’m still waiting.

  52. “f we were building 15K units/year, how would SF rents continue to be where they are now?”

    This, from 2014: “insiders familiar with Google’s hiring plans say the tech titan intends to hire 5,000 workers in the Bay Area a year for at least the next five years.” That’s Google alone, mind you.

    If 15K people were hired every year earning $150K/yr, they’d be filling these units and able to pay $4K/month for a studio, and there would be no reason for landlords to lower the price.

    (P.S., can you engage in conversation without commenting about “Trump”, “complete misunderstanding of mathematics” or “I’ll go get my popcorn”? It’s cheesy.)

  54. The building is said in the official press release to accommodate 3,000 employees. If they are spending the money on a building of that size, they mean to fill it. Not all of them will be new arrivals. Some will be brougfht from the old office or from other companies, which will then fill bring people in to fill them. The total balance will be 3,000 more people looking for housing.

  55. Ahhh, now I see. Your plan is to build a wall around the city and only allow new jobs when we have dedicated housing for those workers.

    Will you be chairing Trump’s campaign for mayor?

  56. Uh, no. Show me how the approval of this office building means 3K new arrivals to SF, all in search of housing.

    I’ll wait. I’ll go get my popcorn.

  57. Show me how this is true. If we were building 15K units/year, how would SF rents continue to be where they are now?

    This “argument” requires either belief in some supernatural power (the “magic wand you cite) or a complete misunderstanding of mathematics.

  58. More mental gymnastics to dance around the fact that SF – and every other community in the Bay Area – is failing to build housing in sufficient quantities.

    What is wrong with this writer? Of course we need more housing – more market rate housing and more affordable housing. We need 10X the amount of housing that’s been built in the past year.

    Why do we need stories like this?

  61. OK “Y.” — You’re assigned to “guard the gates” and keep people from coming in.

    And whomever is “bringing in people”; it’s your job — and the job of your militia — to stop them as well.

    Better yet we could build a Wall. We could even make these threatening migrants pay for it.

    Problem solved until you tell us when we should start building more housing so we’ll know how they’ll be housed.

  62. There was an article in the Chronicle a week or two ago that rents were coming down due to the increase in units coming on line.

  64. The conclusion in the final panel is pure cognitive dissonance. The infographic includes, in the preceding panel, the quote “Even if we reached the LAO Report’s theoretical rate of 15,000 new
    units built every year, the rent would only drop about 0.3% annually”

    Rents would fall. That’s the whole point. Also, is that figure in nominal terms? Because if it is – that’d mean rents would be falling fast.

    A key data point that is conspicuously missing is the number of BMR units that have been built in any given recent year, or even the last decade. That number is no where close to accommodating the population growth, or even the current eviction rate. Using the percentage from 2011 is misleading and highly selective because market-rate construction was essentially halted following the ’08 crash.

  65. This graphic fails to mention that the only way we fund affordable housing is through fees on market rate developments or through inclusionary housing. There currently is no affordable housing without market rate development.

    If folks 30 years ago had done the opposite of what this info-graphic says, we wouldn’t need to worry about it. By heeding it today, we’re jeopardizing the lives of people 30 years from now (aka me in retirement).

  66. How about we stop bringing in people when we don’t know how they will be housed? Like, how about not putting any more on the credit card when you can’t even make the current payments?

  67. Why don’t we just tear down their old building then? There will be some expense involved but isn’t that preferable to having high paying jobs available in the city?

  68. They are going to move their existing staff there, and eventually hire more people to fill the building. They’ll vacate their old building which will become available for other companies to fill up with employees. However you shuffle it around, the jobs to housing imbalance is 3,000 more off.

  69. The infographic doesn’t debunk anything. It just describes dueling theories.

    One theory says that some people who move into new market rate units are vacating less desirable units elsewhere which will now be available.

    The infographic says that even those vacated units will be expensive.

    It doesn’t offer any alternatives (other than to wave a magic wand and build onlya subsidized housing in the city). And it ignores the fact that a new market rate unit takes at least one aggressive buyer/renter out of the system without displacing anyone.

    Yesterday even Campos, Avalos, Kim and Peskin had to admit that the Beast on Bryant was worth it because of the affordable that it subsidized. Tim is probably searching for new heroes today.

  70. Re: “it just approved increasing the housing deficit in the SF Area by 3,000 1br units’ worth. I suppose you could bulldoze a neighborhood somewhere to fit them all in”

    Let me see if I got this right. Uber is planning a new headquarters with 3,000 jobs. So your belief is that they are going to fire their existing staff and replace them entirely with staff taken from outside the Bay Area. In addition, anyone else they hire will be from outside the Bay Area. The local education systems will not produce a single candidate qualified for a job at Uber.

    Do I have that right????

  71. If you could build 15,000 units/yr (which no one has shown to be close to possible) and if the model worked (and at this point it’s unsupported theory), then the city would be still be where it is now, catastrophically unaffordable, and would be running short on public resources (transportation, schools, open spaces). So maybe an entirely different approach is needed, which is the point they are making.

  72. “Even if we reached the LAO Report’s theoretical rate of 15,000 new units built every year, the rent would only drop about 0.3% annually”

    Falling rents would be fantastic compared to the double digit percentage increases we’ve had every year. Why on earth would we turn that down?

  73. And in other news, the city just approved the construction of a new office building for Uber in Mission Bay, with a 3,000 employee capacity. In other words, it just approved increasing the housing deficit in the SF Area by 3,000 1br units’ worth. I suppose you could bulldoze a neighborhood somewhere to fit them all in.

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