The most remarkable element of the report by the city economist on the mayor’s Rich Family Zoning Plan is not what most of the news media have reported: That the zoning changes won’t lead to anywhere near the amount of housing the state wants to see.
The far more important conclusion is that, even if the city allows developers to build all they want everywhere they want, it won’t bring housing prices down.
That directly contradicts the central thesis of the Yimby agenda.
We are already hearing from Yimby activists that the city needs to do even more to “limit obstacles” to new market-rate housing:
Jane Natoli, San Francisco organizing director for YIMBY Action, said that while the group supports the Family Zoning Plan, it has tracked the removal of provisions that could have allowed for more housing.
“We’re in this to solve a housing shortage, not a math problem,” Natoli said.
They’re talking about more cuts in fees, even more upzoning, and all sorts of other ways to give public money and value to for-profit luxury developers so they can get enough return for the international speculative capital investors that they might decide to build a few units.
The Yimby group California Housing Defense fund says the city has to make sure 36,200 new luxury units are built, not just allowed in zoning:
“The City must rezone as promised in its housing element — it must upzone enough to produce (not merely attain capacity for) 36,282 units based on an analytical model that assesses the probability of development for rezoned parcels under current economic conditions,” the group stated.
More:
YIMBY Action wrote a letter Thursday to state housing officials urging them to “give San Francisco clear guidance on how to fix its housing plan to assure it’s in compliance with state law.” The group said the city should “look at policy changes that would make it significantly easier to build — like fee reductions, single stair reform, and pre-approved plans — or by doing more rezoning.”
That’s beyond silly: The city is already doing single stair reform and fee reductions. But nothing the city does can force private developers to build. Developers aren’t interested in housing, they’re interested in profits; you can eliminate all zoning, all fees, all hearings, and developers still won’t build if they can’t get financing, which depends on factors far beyond the ability of the City and County of San Francisco.
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But far more important: Ted Egan, the city’s economist, says what many other economists and planners have been saying for years now: More market-rate housing—even lots and lots of new market-rate housing—won’t bring down prices to the level that most local workers can afford.
Egan is not a lefty by any measure. If anything, he’s a Yimby. From the report:
When the City relaxes zoning controls, by reducing density restrictions or increasing allowable heights, more development projects will become financially feasible, and the supply of housing in the city will rise. This increased supply will put downward pressure on housing prices in the city. Cheaper housing benefits city residents who move within the city, and also makes San Francisco more affordable for new arrivals.
Classic Yimby stuff.
But here’s the real news: The best-case scenario, which he calls the “high growth” scenario, would lead to reductions in housing costs of 2.5 to 4.2 percent. That means that average apartment would cost $125 a month less than it would if the plan isn’t implemented.
That’s a tiny, tiny amount. It means a $3,000 a month apartment might instead cost $2,875. The median priced condo might be $820,000 instead of $900,000. The impact on affordability is so small that it’s not even worth measuring.
And that’s in the best-case scenario.
Meanwhile, the displacement of local business could cost the city a lot of money:
Annual business disruption and relocation costs range from $16 to $28 million, in today’s dollars.
That’s far more than the $8 million Sup. Myrna Melgar is proposing for business relocation expenses.
The bottom line: Allowing developers to build more luxury housing won’t do what the Yimbys say. It won’t make housing more affordable.
And that’s from the city’s relatively conservative economist.
Sup. Myrna Melgar told the Chron that “I am doing this job because I want to leave a better city for my daughters.” And she has done plenty of work in her five years to make this a better city.
But the mayor’s upzoning plan won’t make the city better for anyone. It will mean more displacement, more evictions, density that will overwhelm the existing infrastructure, including Muni—and housing prices will not come down to the level that most workers can afford.
Let’s say that again: Housing prices under this plan will not come down to the level most workers can afford.
I have listened to the supes argue over amendments to the Lurie bill, and some of them are critical to saving tenants. But nobody is saying the truth:
State Sen. Scott Wiener and his colleagues have forced on us a damaging plan that will harm tenants and small businesses—and that is based on a fundamentally false premise.
Density doesn’t mean affordability. The old neoclassical economic theory of supply and demand that I learned in Econ 101 in 1977 might have made sense in housing markets 50 years ago. But the data is clear that housing markets in an urban area like San Francisco don’t work that way in 2025.
We are letting Wiener and Lurie deeply damage the city—for no return.
Will someone, anyone, at City Hall please step up and tell the truth?
