What if the housing crisis is caused by too much growth?

Supes hearing shows that affordable housing numbers are cooked, the crisis isn't getting better -- and part of the problem is too many tech offices

The Board of Supes Land Use Committee heard the latest on the housing crisis today, in the form of data showing how far out of whack the balance between market-rate and affordable housing is. And in the process, we learned a few things – and heard Sup. Sandra Lee Fewer make one of the most important comments I’ve heard out of City Hall in a while.

Sup. Sandra Lee Fewer made the key point about the housing crisis

Fewer dared to challenge the official planning orthodoxy of decades, and ask: Is it possible that we grew and are growing too fast?

But first, the numbers.

The Planning Department presented a series of slides (you can get more details here) showing that over the past decade, about 21 percent of the new housing that’s been built is affordable. That’s about what we are going to see going forward, the department said.

Now: 21 percent is way, way less than we need (the city’s own General Plan calls for closer to 60 percent to meet the real workforce housing needs). But it doesn’t sound so bad – as long as you don’t dig a lot deeper.

The total number includes the number of new affordable units, plus the number of units the city has bought or otherwise taken off the private market – minus the number of rent-controlled units lost to evictions and speculation.

The loss is a big number: 4,182 units, which is almost certainly an underestimate, since it doesn’t include apartments where tenants were bought out and those buyouts were never reported.

But included in the plus-side figure is some 3,483 units of public housing that have been renovated. Good thing that the city is fixing up public housing, but as Sup. Aaron Peskin pointed out, that’s not new affordable housing. That’s existing affordable housing that we have repaired.

Some of those units, the department said, were in such bad shape they weren’t habitable, and again, it’s great they’re fixed up. But those should have been added in the past to the minus side; at this point, they are not new affordable housing.

If you take those out, by my math the total percentage of affordable housing drops to about 13 percent.

So why are they even included in the first place? Sup. Jane Kim explained that the Mayor’s Office insisted on it as part of a compromise that allowed the supes to hold hearings on the housing balance in the first place. “It was a political deal,” she said. 

The mayor, I gather, didn’t want the numbers to look as bad as they are.

The Rent Board’s data shows that 497 apartments were taken out of the affordable housing stock in the past two years when landlords bought-out tenants instead of evicting them. That, of course, only includes the past two years; before that, buyouts weren’t recorded. And many still aren’t.

Then, housing activist Calvin Welch noted, you really have to consider the 10,000 apartments that have been turned into short-term rentals with Airbnb. Since the city counts about 8,816 affordable units added to the housing stock, the Airbnb figures put us way, way in the red.

This is clearly not a sustainable situation.

The planners pointed to a few factors that have created this situation – and, in a remarkable nod to economic reality, one of the slides showed that a big part of the problem is the demand side, not the supply side. The city, and the region, have seen a huge influx of people making very high salaries; in fact, while the price of housing rose 98 percent, the total income in the city rose about 90 percent.

But as Fewer notes, those pay hikes didn’t trickle down to most local workers. Cops, teachers, and other city workers – the people who make the city function every day – saw about two percent pay hikes. Most of the new income came, she said, from “imported workers.”

Sup. Jane Kim – again, moving away from modern market orthodoxy, promoted by the Mayor’s Office and City Planning Department, argued that housing should be “fully regulated” and not seen as a commodity that can generate great wealth. “If you want to make a ton of money, don’t go into housing,” she said.

That was refreshing.

Fewer was even more refreshing.

“I am looking at these charts and it looks like we are making the problem worse,” she said. “Not everyone in the city is making more money. We are importing people who are displacing people. If we continue to build office buildings we are always going to be here.

“I don’t know who is going to teach your children, who is going to protect our streets?”

She asked the Planning Department: Does planning even use the housing balance to approve or disapprove projects (short answer: No).

Then she asked the question that so many city officials never even discuss:

“What if we just stopped building office space to attract high-wage workers who are imported by companies that don’t hire San Franciscans?”

What if we really looked at the demand for housing as much as we look at the supply of housing? What if we said: The Twitter Tax Break, the ongoing approval of office buildings, the conversion of industrial space to tech offices … what if that was all a mistake? What if we need to slow down the job growth, since much of it doesn’t, and never did, benefit existing unemployed San Franciscans?

The question, of course, was never answered. The Mayor’s Office and the Planning Department define growth as the city’s top economic development goal.

But if you look around at the misery we heard over and over at the hearing, the endless stories of long-time San Franciscans who are getting evicted, tossed out of their communities, their lives destroyed by the greed that comes with uncontrolled growth … you could easily get the message that the Mayor’s Office and the Planning Department are badly, brutally, painfully wrong.

253 COMMENTS

  1. Regarding the argument that lack of supply is the problem: A professor in Vancouver BC just published a working paper using data for cities in Canada. Check it out. Here’s a paragraph from the executive summary:

    The research findings indicate that there is little evidence to support claims that i) the supply of
    housing units is systematically more limited in expensive housing markets than in inexpensive
    ones, and that ii) the supply of housing units in expensive markets has been inadequate to keep
    up with growth in household numbers and maintain a healthy buffer stock of surplus housing
    units. In metropolitan Vancouver, especially, the imputed relationship among affordability,
    supply, and resident demand, has, in fact, been turned on its head: prices have skyrocketed at
    the same time as the proportion of surplus housing units, relative to the number of households,
    has increased over the 2001-2016 period.

  2. What a scam. Baby boomers and older Gen Xers like Tim and Sandra Lee Fewer bought into SF when it was cheap and then immediately turned around and erected every barrier they could towards new residents to fatten their own pockets. This city doesn’t belong to you it belongs to everyone and the desire to keep people out because you are afraid of change is ignorant at best and downright xenophobic at worst.

    • New residents are arriving all the time. SF has not been cheap for 50 years. It is true if you don’t have the job skills or the income you may not be able to afford San Francisco. Young people came to SF mostly for the lifestyle, not to fatten their pockets.

      • People move here because of the robust labor market and job opportunities. SF is more expensive than it has ever been before and the job market here is similarly more lucrative than ever before. Thats why people come here even though it is expensive but it also means that most people are shut out which is fundamentally inequitable because only the most privileged get access to the advantages provided by the Bay Area.

        The city needs to expand its housing stock to accommodate more people, especially more people of less means.

      • It is a chicken and egg question. Talented young people came first and employers with high paid jobs came for the talent pool; and employers with lower paying jobs left. The City does not need to expand the housing stock. It is doubtful it can be expanded enough to make much of a difference. Yes the more privileged, talented, intelligent, educated will have the advantage. Those less talented may not be able to find a place in the City and must look for other opportunities elsewhere. Since most of the employers who employed the less talented left the City there is less of a need to accommodate those of less means. Life is not fair or equitable.

  3. Thanks to the Supervisors for digging into the details on the housing crisis and exposing the truth. If the Mayor’s number one goal is growth, that is pretty broad, not well defined statement. What does he define as growth? Growth of what? He may have had a mandate to create jobs when he was first appointed, but that issue is not the problem we are grappling with today. The number one problem San Francisco is grappling with today is gentrification accompanied by massive inflation.

    • There was no “digging into the details of the housing crisis and exposing the truth” on the part of either Supervisor Fewer or Kim.

      With regard to this critical issue they exhibit the most superficial ideologically-driven thinking — unsubstantiated by any historical evidence or factual understanding.

      They’re just pandering to their unholy constituent alliance of NIMBY homeowners (protecting their rather narrow view of economic self-interest) and those “progressive-culture-warrior” renters that have zero understanding of the economic reality that is buffeting them right out of this City.

    • The growth of the economy is astounding here and housing hasn’t caught up. There are many parts of the country where they are still at 2009ish levels of poverty and unemployment, yet rent is 1/5th of what it is here. It’s the opposite problem. The huge difference is that SF and the Bay have had the means of preventing or at least reducing the severity of this problem by simply building enough housing but has fallen drastically short.

      • It is much quicker to rent an office and put in 100 desks than to build 100 apartment units. This is why Supervisor Lee’s question is a reasonable to stem the housing crisis.

      • It’s a reasonable question but it’s a question that gets answered on it’s own via the forces of the market. If it is true that it’s quicker, easier, or cheaper to build offices than it is housing then let’s make building housing easier, not make building offices more difficult.

        Any attempts to slow down growth or discourage developing the area is ridiculous. “Too many high paying jobs” is a wonderful problem to have and if enough housing were allowed to be built then the area would be proportionality prosperous for everyone.

      • “”Too many high paying jobs” is a wonderful problem to have…” is only true if you’re one of those people with a “high paying job.” Below 60 or 70% of AMI, not so much.

      • Unemployment is lower here than most places in the country. Wages are also some of the highest. Where else can a barista make $14/hr + tips? The problem is the cost of living, particularly housing. While I too think trickle down economics is a shoddy talking point, the fact is people are not clamoring for work around here and that’s a good thing. It’s much harder to attract jobs than it is to build housing, that’s why this is a “wonderful problem” to have. There are entire swaths of the country that are left behind job-wise and have rent at 1/5th of the Bay’s and their outlook is even bleaker than ours because while building a building is easy, attracting jobs to the area is not.

        That’s why I think trying to stem the demand by slowing job growth would just be us shooting ourselves in the foot.

      • “anotherneighborhoodactivist”s entire argument throughout this Comments Section can be summed up as follows:

        1. There are too many people.

        2. Due to this fact, the whole planet is going to hell,

        3. Therefore, we shouldn’t bother building housing for people.

      • 1. I never said that. I said the implications of continuous (and impossible beyond a yet-to-be-determined-point) growth should be acknowledged and acted on. The longer the wait, the worse the consequences for those alive at that point will be. We are seeing the beginnings of the global capitalist system unravelling, but most people have a difficult time seeing it.

        2. I never said that either. I said the impacts of humans’ failure to understand the biophysical limits to our numbers and resource consumption rates, and of the consequential impacts thereof, are not a good thing.

        3. And I never said that either. I said we cannot effectively address the problems of housing affordability until we understanding their causes. IMO, those cause have far more to do with capitalism and inequity than with the selfish motives of NIMBYs.

        I may be arrogant, but at least I know how to read.

      • I don’t think communism worked out too well in other places. When the population increase levels off sometime mid-century and then starts to decline, I wonder how they will deal with no growth and a declining population.

      • Communism (however you define it) is not the only alternative to the current form of capitalism.

        Hopefully humans will learn not to be so either:or in their thinking.

      • There are too many people but the Bay Area not the planet may be going to hell. There are other places in California or the nation that would be happy to have more people; they don’t need to come to the Bay Area.

      • In general, I agree that organic free market solutions are best. In this case however, the San Francisco real estate market is not a “free market”. Tech companies/developers have been given tax breaks to build. It is fundamentally unfair to the current residents to absorb all of the costs of growth. It is perfectly reasonable to push back on growth. The city is not “improved” if current residents are forced to move for higher income workers. That is a conquering invasion.

      • The Twitter Tax Break was, what, $35m? And what tax breaks do developers get for building residential housing? I’m not sure those are demonstrably devastating figures. What is the city budget, around $9bn?

        I’d argue it’s fundamentally unfair for the current residents to demand that their city not change. That new neighbors not move in because they already have homes. That businesses go elsewhere because they already have jobs. The city “improving” is an impossibly subjective metric. Had there just been enough housing built 10 years ago we’d be in a much better spot. If housing production tried to catch up today in 5 years we’d see some dividends from the huge increase in growth. Fighting it as if it were an invasion is counter productive, as we’ve seen already.

      • I don’t know the size of the Twitter tax break but it affects jobs and real estate demand. Since most of the employees were from other places, displacement increased. While I am not against economic and physical change when it occurs naturally, these corporate giveaways create huge distortions in the local market. How dare politicians give tax breaks to corporations that displace the taxpayers who are paying for them. It is positively immoral.

    • True the goal has been the growth of good jobs, and that has caused higher housing prices. But some don’t see gentrification as a problem but as a benefit. But I understand, if you don’t have the jobs skills or income it may be a problem for you.

  4. This is some dog-whistle xenophobic nonsense here. Attempts to keep “them” from coming here by restricting the housing supply has backfired, so let’s just hamper the economy so that “they” don’t even want to live here anymore. Tim glosses over the low unemployment in the area. Tim glosses over the wage increases that have outpaced most of the country. Trickle down economics may be bullshit but other parts of the country would die for some of these jobs.

    You know who else would agree that there’s a “Demand Problem” here in the US? The Trump supporters living on the southern border. They too fear the foreign invader relocating themselves for economic opportunity. They too twist logic and facts to justify their hatred of the other. The “refreshing” feeling that Tim experienced was the same “refreshing” feeling that Joe in Ft. Worth felt when he attended his first Trump rally. They too feel that they deserve their privilege because they were born where they live; it’s called nativism. The parallels here are astounding.

    This rhetoric is dangerous. Should the area continue to build office space without housing? No. Build both. Don’t cut off the nose to spite the face.

    “Finally, someone who agrees with me that the problem is the PEOPLE that are coming into this place, and not the economics that I do not understand!” The SF progressive is the new conservative. Calling it now.

      • If the parallels are not true, then please rebut them. I can draw similarities between the mentalities all day long. There are big differences, but they pale in comparison to the uncanny likeness of the Trump supporter’s arguments, fears, motivations, tactics and ideologies.

    • “They” continue to come, and will continue to come even without more housing. Some, of course will not be able to afford to come. I think you can have wage increases without a job increase. Rather than build both maybe we can build neither. Is nativism a bad thing?

      • “Is nativism a bad thing?.” — thus, the truth comes out.

        Nativism (i.e., discrimination based upon one’s place of origin) is a primitive impulse and, when practiced among the citizenry, it is not only a betrayal of American principles; it is illegal.

      • “Is nativism a bad thing?”

        I think it’s a dangerous ideology. It’s certainly not progressive, like many pretend to be.