A Bay Area writer, Kim-Mai Cutler, writes what she supposes is the definitive analysis of why housing in San Francisco is so expensive. Unfortunately, she left a few things out.
She blames expensive San Francisco housing on Google’s refusal to build housing on its own campus in Mountain View–which Google says it can’t do because of the need to protect a rare owl. But Cutler defends the right of “anyone–rich or poor–the chance to transform or be transformed by” living in San Francisco. How can the City of 800,000 people achieve that when there are another 2.5 million people at its doorstep most of whom wish they could live in the Paris of the West?
Cutler’s solution is to build “affordable housing.” That means subsidized housing. If everyone in the nation has a right to live in San Francisco regardless of income, who is going to pay the subsidies? It also means high-density housing. Just how attractive and hospitable will San Francisco be after all of its single-family neighborhoods have been replaced by mid- or high-rises?
In fact, there are two reasons why San Francisco housing is unaffordable. The big one, which Cutler never mentions, is the urban-growth boundaries that surround all of the city’s suburbs. As a result of these boundaries, less than 18 percent of the land in the nine-county region has been urbanized and the San Francisco-Oakland urban area is the second-densest (after Los Angeles) in the nation, while San Jose is the third-densest. Contrary to the claims of urban planners, that density does not translate to affordable housing.
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“Nobody thinks farms literally needed to be destroyed” to house people, Cutler claims. But the nation has a billion acres of agricultural lands and only uses 400 million of them for growing crops. Meanwhile, less than 60 million acres are urbanized, so developing a few more is not going to risk our agricultural productivity. Besides, most of the lands excluded from development by Bay Area urban-growth boundaries are hills used for forests and range, not growing crops.
The second problem San Francisco faces is rent control. This totally distorts the region’s housing market, taking away incentives for developers and property owners to provide affordable rental housing. Cutler doesn’t think rent control is a problem because it doesn’t apply to buildings constructed after 1979. But, if you were an investor in rental housing, would you build in a city that had taken rights away from all the people who had previously invested in that city? Only a quarter of the city’s rental stock is not rent controlled, meaning three-quarters of it is more than 35 years old.
San Francisco was the nation’s first major city to municipalize its private transit system. Today, lots of people ride transit in San Francisco because of its job-dense downtown. But the transit system itself is unhealthy, requiring huge subsidies, and tilted towards middle-class riders and against low-income residents.
Cutler’s notions that the city should subsidize more affordable housing would create similar problems. No developer would build at all in San Francisco unless they received subsidies. The subsidized housing would politically gravitate to the middle class, not low-income people. Plus subsidies to housing in the City wouldn’t address the real issue of the region’s growth-boundary constrained housing market. Far from a definitive analysis, Cutler’s article misses all of the real problems.
Actually, here are two graphics of probably the most widespread “urban growth boundaries” in the San Francisco Bay Area, at
http://en.wikipedia.org/wiki/File:View_of_Mount_Diablo_and_CA_Highway_24_from_Lafayette_Heights.jpg/
and this at :
http://en.wikipedia.org/wiki/File:BayareaUSGS.jpg.
Of course, these growth boundaries also enclose wide swaths of single family houses at 2-4 units per acre, often less. I also point out that “denial” ain’t a river in Egypt, but apparently somewhere in Central Oregon near Bend.
I also point out that “denial” ain’t a river in Egypt
And msetty ain’t a river in the Napa Valley.
If San Francisco is the Paris of the West, it’s Meth is absolutely extravagant.
http://www.youtube.com/watch?v=P99cF17zJs8
Mr Setty is of course correct that the American Dream is an important factor in causing the housing affordability crisis on the peninsula. Even if these porous UGBs were extended even further to a two-plus hour drive toward Stockton, stucco ranch homes as far as the eye can see won’t solve the issue. Many apartments need to be built, and starting 35-ish years ago.
DS
“Many apartments need to be built” says the planner living in a suburban single-family home.
Frank, turn your frown upside down! And don’t dissemble away from the topic because you are having another sads!
DS
Planners are so good at lying, twisting the truth, being supremely confident assholes, and being slippery moving targets, that I think they teach all this in planning school. Surely, the inane nonsense they masquerade as “scientific” planning doesn’t take 4 years.
I don’t have any experience with public housing program administration. My only experience is noticing how public housing stands out like a sore thumb in many cities and neighborhoods.
Does the government build housing and just give it away or sell it below market price? If it is rented out, does the government play landlord into the future?
Shorter Randal O’Toole: I know how tall buildings would affect SF much better than the market forces that clearly indicate there is demand for them to built.
Contrary to the claims of urban planners, that density does not translate to affordable housing.
Again with the flawed premise. The demand is so high (as Randal tries so hard to avoid mentioning) that the rents are through the roof. Demand drives prices, as we’ve mentioned here sooooooooooooooo many times. People are clamoring to build up, which increases supply, which will meet some of the demand.
And I guess it’s time for me to ask again, every time this comes up: where are the studies that show if only the peninsula and East Bay had built more homes here, here, here and on these X acres not able to be built upon cuz of the plannin’ home prices would be X much lower. I’ve been waiting for years for an answer, so I can wait a little longer, I guess.
DS
Many apartments need to be built, and starting 35-ish years ago.
So you admit that there is a supply-side problem?
Metrosucks, the Eliza-based trolling computer masquerading as a man, spewth:
And msetty ain’t a river in the Napa Valley.
I have never claimed to be a river, numbskull.
Here is a link to an issue much more interesting and fact-based than the boring, lame discussion started by The Antiplanner in this thread. Lots of additional facts to misinterpret and distort!
http://www.eia.gov/forecasts/aeo/section_issues.cfm#veh_demand.
Also, why massive development on hillsides–such as the many that exist in the Bay Area–is a really, really bad idea: http://www.theguardian.com/world/gallery/2014/apr/14/firestorm-in-valparaiso-chile-in-pictures.
Shades of the 1991 Oakland Hills firestorm: http://en.wikipedia.org/wiki/Oakland_firestorm_of_1991.
And, to “rub it in” there’s this: http://en.wikipedia.org/wiki/1923_Berkeley_Fire. Plus the hundreds of mudslides and brush fires in the hilly parts of Southern California over the past century…
msetty you are so dense it’s mind-boggling.
So you admit that there is a supply-side problem?
The demand far, far, far exceeds the supply. That much is clear. I’m also quite sure I’ve asked here several times where is the break-even point where too many dwelling units make the area less desirable.
That is: the area can hold only so many people. The rich will bid up rents to live there. That’s how it works.
DS
The demand far, far, far exceeds the supply. That much is clear. I’m also quite sure I’ve asked here several times where is the break-even point where too many dwelling units make the area less desirable.
That is: the area can hold only so many people. The rich will bid up rents to live there. That’s how it works.
So you believe there is some kind of fixed ‘carrying capacity’ of this area? Good thing Asian cities don’t think that way. Increases in demand would not cause skyrocketing prices in areas where supply was allowed to adjust. That is why house price increases in places like Houston have been relatively modest despite a tripling of the population over the past 50 years. By contrast, in places like San Francisco, where it is nearly impossible to build anything and people throw rocks at your bus because you dare to work at a high-tech firm outside the city limits, prices have exploded.
San Francisco will have to become denser in order to relieve the upward pressure on prices (or other Bay Area cities will have to become more accommodating), but either way something will have to give on the supply side, otherwise people will have to choose the only other option available to them — leaving the area.
Cutler’s solution is to build “affordable housing.” That means subsidized housing.
Affordable housing is not a market outcome, it is a judgment imposed on market outcomes by know-nothing journalists, politicians and others who think they can revoke or ignore the incentives that markets provide. Forcing down prices for new housing will either result in shortages in supply, or will make new market-rate units even more unaffordable (as in the case of ‘linkage’ requirements) for the exactly people Cutler is proposing to help.
So you believe there is some kind of fixed ‘carrying capacity’ of this area? Good thing Asian cities don’t think that way. Increases in demand would not cause skyrocketing prices in areas where supply was allowed to adjust.
Of course. There is a fixed capacity across scales – this is a finite planet. And San Francisco Bay is particularly fragile, and in a semi-arid area and limited space for additional sewer treatment, freshwater pipes, etc. I don’t believe the projections that say 55-60-70M people in CA, as the resources aren’t there. 50M maybe.
Nonetheless, at scales relative to this issue, if the publics were to allow relaxing height/zoning restrictions, I’m sure the developers would rush right in and build up. Some would build affordable housing too. And then later, the roads might catch up, and the infra might catch up maybe. It was best done a generation ago when we could tax and publicly plan without having nutters scream Agenda 21 like what is happening in the East Bay. It will be interesting to see SFO and SEA try and accomodate demand and completely upgrade infra to meet it. Popcorn futures!
DS
msetty said:
Of course, these growth boundaries also enclose wide swaths of single family houses at 2-4 units per acre, often less.
Not really true. Lot sizes like this may be common in the Northeast and Midwest, but not in California. Traditionally more likely to be around 8 units/acre, and even greater in recent years. When I lived in Sacramento, my 5,000 sq. ft. lot (about 1/8 ac.) was considered by the city to be a “large lot.” This is why LA and SF areas are the country’s densest metros.
Making more highrises is not gonna do much to bolster SF’s affordable housing. Skyscrapers have an ‘unhealthy’ link with impending financial collapse, according to banking experts. Researchers pointed to the fact the world’s first skyscraper, New York’s Equitable Life building, was finished in 1873 during a five-year recession, while the Empire State Building coincided with the Great Depression. 1929-1933, record breaking skyscrapers pop up over the Manhattan skyline, 40 Wall Street, Chrysler building, Empire State just the Great Depression settled in (to be fair, government involvement played a larger role in the Depression than economic forces). 1972, US currency speculation. Collapse of Bretton Woods system, OPEC prises skyrocket…..and Sears Tower. Early 90’s recession in the US when Savings and Loan crisis in the US, the UK finished Canary Wharf’s tower. Kuala Lumpur, Malaysia, 1998 finished what was at the time the tallest building in the world, the twin Petronas Towers, which coincided witht the Asian Crisis. The DOT_COM Bubble, Taipei 101 underwent completion, tallest building in the world at 1647 feet. Great Recession, whose effects still linger. Burj Khalifa completed in 2010. Is Dubai the next bust in the cycle.
China could be in particular trouble as the current biggest builder of skyscrapers, responsible for 53 per cent of those now under construction, according to research from Barclays and virtually a third of the Chinese workforce is in construction. India is also at risk, having 14 skyscrapers being built, with only two complete that reach higher than 240m. The pattern repeats itself throughout history, with Chicago’s Willis Tower (formerly known as the Sears Tower) built in 1974, just as there was an oil shock. One World Trade Centre in 1972 and Two World Trade Centre the year after came at this time of U.S. currency speculation and worldwide financial crisis.
Of course, these growth boundaries also enclose wide swaths of single family houses at 2-4 units per acre, often less.
Kens said:
Not really true.
Yes, really true. There are actually wide swaths of the Bay Area suburbs with residential densities typically between 1-4 units per acre. Much of Marin County particularly in hilly areas and north of downtown San Rafael, the fringes of Silicon Valley in places like Los Altos, Woodside, Portola Valley, Atherton, Los Altos Hills, Saratoga and Los Gatos, plus much of the East Bay east of the Berkeley Hills including Orinda, Moraga, Lafayette, Walnut Creek, parts of Martinez and Pleasant Hill, as well as the I-680 corridor south of Walnut Creek, Pleasanton and other development in the Livermore-Amador Valleys. These areas don’t have a large percentage of total Bay Area population, but they do constitute a large percentage of the Bay Area’s total built-up area.
Metrosucks, the Eliza Program that trolls(tm) spewith forth:
msetty you are so dense it’s mind-boggling.
Well, I didn’t expect a simple-minded computer program to have a mind to boggle, either.
One of the more recent writers of our times wrote….”People vastly overestimate the ability of central planners to improve on the independent action of diverse individuals. What I’ve learned watching regulators is that they almost always make things worse. If regulators did nothing, the self-correcting mechanisms of the market would mitigate most problems with more finesse. And less cost. ”
And if there is anything San Francisco is filled with….it’s diverse individuals.
One of the more recent writers of our times wrote…”self-correcting mechanisms of the market would mitigate most problems …”
Well done not to identify him nor misrepresent him as a “thought leader”, “leading light” or “public intellectual”.
Typing ideological tropes are one thing, describing those tropes as things not actually occurring on the ground on earth is another thing altogether.
DS
On some scales, SF might be a diverse city. But it is also a city of conformists and extreme political suppression of dissenting views.
Dan is so much more intellectual than Stossel and lazyreader. Commenting here must boost your self-esteem! That must be necessary as you live in your girlfriend’s mom’s house.
The fact remains that “successful” planning has driven the “undesirables” out of the central core – as planned. Lamenting the fact that many of the lower income cannot afford housing is noble but hypocritical at best. Now to be politically correct those planners, instead of celebrating their triumph over those “undesirable” lower income individuals, and families, that they purposely drove out, they are now addressing the faults of their philosophy, that should have been addressed decades ago. It seems to me that their stupidity, and ineptitude, is the only thing on display. The harm they have caused has caused permanent social and economic damage, and driven generations away.
Frank is having a sads and needs a hug! We know because his making up sh– is increasing in frequency! Someone give him a hug!
Frown upside down!!!!!!!!!!!!!!!!!!!!!!!!!!1 Heart!!!!!!
DS
The fact remains that “successful” planning has driven the “undesirables” out of the central core – as planned. Lamenting the fact that many of the lower income cannot afford housing is noble but hypocritical at best.
Is there real, tangible, actual evidence for this wish? Anyone? Anyone?
No?
DS
Poor, poor Dan. Won’t allow others to post evidence that he lives in girlfriend’s mommie’s house because he will tattle to blog admin.
Dan, who has same level of education as Stossel, knows so much more. Knows everything!
The planner who lives in spacious SFH wants you to live in an apartment. Do as planner Dan Staley says, not as he does.
Can we please just attack ideas and not attack people personally? Even if the miscreant makes lots of personal attacks, let’s not sink to a planner’s level of civility.
The only way to have level-headed conversations on this blog is to ban Dan and maybe msetty too.
The planner who lives in spacious SFH wants you to live in an apartment. Do as [all the planners they tell me to hate] says, not as he does.
So the voice in the head that tells them to say silly things reveals something we see on these types of threads: lots of made up, fear-evoking false premises are driving this discussion. Some cover them with pouty and craven made up stuff, but still.
That is: way back to the issue. Tons of demand is driving prices out of sight in SFO and Bay Area. Much of the space is built out, seismically-geologically unsuitable, or The Market has made open space.
So what to do to meet demand and lower prices? What to do? What to do….
Do you try to meet demand by building up, or do you preserve the character of the American Dream and leave it be? I’m sure developers are ready to go in there, tear down and build up as apartments and condos, but will these early projects actually lower prices. And where will The Market put the displaced?
When you actually do a reality-based examination, there are no easy answers.
DS
Sandy,
When two people make 16 comments on this thread and dominate many other threads and spew hate and venom and sanctimonious hypocrisy and attack others in attempts to squelch debate and have done so for seven years, then I will respond in kind until such time as trolls stop posting their venomous attacks or The Antiplanner installs discussion software with an ignore feature.
Frank, here’s a link to an article about us Libural Trolls(tm)’s Fearless Leader:
http://www.slate.com/articles/news_and_politics/politics/2014/04/barack_obama_trolls_the_gop_the_president_intentionally_baited_republicans.html.
Let me be clear: I enjoy being part of the reality-based community, mostly because it’s never on the wrong side of history, even when it’s immersed in the fog of war.
Also, reality has a liberal bias, and Faux News is a noise machine. The Koch Brothers are constantly moving the goalposts.
Additionally, I like to use the term “false equivalence” whenever I can.
Thanks
To again try and highlight the cognitive dissonance:
Do you try to meet demand by building up and making the dreaded density, or do you preserve the character of the American Dream and leave it be to have prices rise further, requiring hand-wringing about prices in a city you don’t live in?
I’m sure developers are ready to go in there, tear down and build up as apartments and condos, but will these early projects actually lower prices. And where will The Market put the displaced? And will the new residents eschew cars?!
When you actually do a reality-based examination, there are no easy answers.
DS
If only the “reality based community” knew how stupid it sounds to espouse cliches like “hand wringing” and “hand flapping” and whatever else those people do with their hands while looking at the computer screen.
“And will the new residents eschew cars?!”
Are you crazy?
They will have to be rich, and they will have at least two cars per household, your fantasies notwithstanding.