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San Francisco's Housing Crisis Explained 359

Posted by Soulskill
from the you-are-forgiven-for-tldr'ing-this-one dept.
An anonymous reader writes "We've heard a few brief accounts recently of the housing situation in San Francisco, and how it's leading to protests, gentrification, and bad blood between long-time residents and the newer tech crowd. It's a complicated issue, and none of the reports so far have really done it justice. Now, TechCrunch has posted a ludicrously long article explaining exactly what's going on, from regulations forbidding Google to move people into Mountain View instead, to the political battle to get more housing built, to the compromises that have already been made. It's a long read, but well-researched and interesting. It concludes: 'The crisis we're seeing is the result of decades of choices, and while the tech industry is a sexy, attention-grabbing target, it cannot shoulder blame for this alone. Unless a new direction emerges, this will keep getting worse until the next economic crash, and then it will re-surface again eight years later. Or it will keep spilling over into Oakland, which is a whole other Pandora's box of gentrification issues. The high housing costs aren't healthy for the city, nor are they healthy for the industry. Both thrive on a constant flow of ideas and people.'"
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San Francisco's Housing Crisis Explained

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  • Re:BS (Score:3, Interesting)

    by Tablizer (95088) on Tuesday April 15, 2014 @07:16PM (#46762581) Journal

    They Bay Area is one of the few economically active places in the USA, that's why housing is expensive there.

    If you want cheap housing, go to an economically dying area, like Detroit; or a place with no regulations such that chemicals leak into your house or explode in your face, like Texas.

  • by vancedecker (1336829) on Tuesday April 15, 2014 @07:22PM (#46762629)
    Why would they even bother with the Mission, when the Tenderloin has been a complete hole, even worse than Mission for years? It's a mystery how that area even exists. Clearly those tenants aren't paying any high rents.
  • by KingOfBLASH (620432) on Tuesday April 15, 2014 @08:03PM (#46762901) Journal

    This doesn't even need to mean high-rises; European cities manage population densities far higher than U.S. cities with buildings that are mostly 5 stories or less.

    I live in Europe and you might find our way of managing population density a bit, well, shall we say unamerican?

    In Amsterdam, the local municipality decides how much rent you're allowed to charge in flats. It goes by a points system. Say a shower will be one point, while a bathtub will be 5. Add up all the points and you determine whether you are in a luxury (free market) apartment or social housing.

    If you're luxury housing, you can charge whatever the market will bear, up to a point based on the luxury apartment formula.

    If you're social housing, only social housing tenants may live in the apartment. Social housing rents are subsidized and they are VERY low. Like say $400 for an apartment in city center. The social housing buildings are owned by non-profits whose sole purpose is to provide social housing.

    Now you might think this is similar to the US, but here's where it gets a little different than the US (and a bit unamerican).

    Social housing income thresholds are very high, something like the equivalent of $100k a year in the US. Yup, that's right, social housing is designed not just for the poor but the middle class. You might miss having a bathtub, but you won't mind when you live in the city center and don't have to pay ridiculous rent. Of course, to get in social housing you'll need to apply and wait a few years for a vacancy to open up. You can apply once you're 18, I suggest doing as the dutch do, applying once you go off to University. Then, by the time you look for a job, you'll already have a slot. Or you might find an emergency. For instance, if you were just divorced and living in your ex's house maybe you have a reason for priority.

    Of course maybe you don't want to pick the city you live in when you're in college, or you made a bad choice. You still have options. "Luxury" apartment rents are capped based on a certain formula. You can get a much higher rent from a luxury apartment, but you'll never be able to charge above a certain rate. So even though you might pay a lot of rent, you won't pay as much as in America. (My 2 bedroom "luxury apartment" rent in Amsterdam, walking distance to city center, is less than the rent on my 1 bedroom apartment was when I lived in Boston -- and I could only afford to live in a suburb, Malden, almost at the end of the orange line).

    And, if you were smart and applied when you were 18, you may be able to rent out your "social housing" apartment, and rent a new apartment in your new city with the money. It's technically illegal, but as any economist will tell you, when you apply artificial constraints to supply or price a booming black market is sure to follow.

    And "Living Fraud" is a big crime here and there's actually police who check to see if you're following the laws.

    Additionally, because of the artificial constraints on rent you can forget about property values reflecting what you could get without these controls. After all, who will pay $1 million for an apartment when you can rent an apartment for $400 a month?

    Still want to import European housing policies to the good old USA? The good news is you won't need to hire new police officers you can just maybe reassign DEA agents when you get a more sensible drug policy.

  • Gentrification? (Score:5, Interesting)

    by jgotts (2785) <jgotts&gmail,com> on Tuesday April 15, 2014 @08:04PM (#46762915)

    This isn't gentrification. This is super rich people pushing out very rich people, as compared to everybody else in the country.

    If you're paying more than $1,500/month rent to live in a one bedroom apartment anywhere in the US, you're very rich. If you're paying $2,500/month to live in a one bedroom apartment anywhere in the US, you're super rich. The last time any poor people lived in San Francisco was the 1960's.

    The rest of the US population not living in San Francisco doesn't have very much sympathy for you, except maybe the unfortunate souls living in Boston or New York.

    I use the terms very rich and super rich, but feel free to substitute "less affluent upper middle class" and "more affluent upper middle class," if it makes you feel any better.

  • by JDAustin (468180) on Tuesday April 15, 2014 @08:42PM (#46763177)

    California is only gaining population due to immigration from outside the US. You need to figure that those immigrants are lower educated, lower income people who are a net-drain on the system (for the first generation, not for the second+).

  • Why save? (Score:2, Interesting)

    by Anonymous Coward on Tuesday April 15, 2014 @09:04PM (#46763333)

    Seriously, a couple decades ago you could go to a bank an open an account where the rates were at least competitive with inflation. These days, the typical interest rate is well under 1% with the Fed purposefully keeping inflation above 2% on the belief that inflation is good. Well, inflation isn't good, having inflationary expectations discourages people from saving money. Granted, you don't want long stretches of deflation either, but we're getting exactly what should have been predicted.

    What's more, companies don't pay people based upon their value to the company these days, they pay the bare minimum they can get away with in most cases. Sure there are exceptions, but those exceptions have a harder time staying in business.

    And no, blue collar workers around here would have a really hard time saving for a house when rent alone is typically aroudn $12k per year.

  • by beelsebob (529313) on Tuesday April 15, 2014 @09:26PM (#46763463)

    s/black/poor/ and you might have a point.

    Unfortunately for you, creating ghettos for the benefit of the rich has had a history of being a pretty amazingly bad plan. SF needs to figure out how to deal with this properly and fast (generally, the answer is, build more houses, faster).

  • Re:Why save? (Score:3, Interesting)

    by The Grim Reefer (1162755) on Tuesday April 15, 2014 @09:43PM (#46763559)

    Seriously, a couple decades ago you could go to a bank an open an account where the rates were at least competitive with inflation. These days, the typical interest rate is well under 1% with the Fed purposefully keeping inflation above 2% on the belief that inflation is good.

    That also keeps mortgage interest rate extremely low. My first mortgage, several decades ago, was 8.5%, which was really good at the time. We moved last year and I think it's under 3.5% now. From 1975 to 1990 the average fixed rate 30 year mortgage barely dipped below 10% and was as high as 18%.

    Well, inflation isn't good, having inflationary expectations discourages people from saving money. Granted, you don't want long stretches of deflation either, but we're getting exactly what should have been predicted.

    Inflation in the 1970's is part of why the mortgage rates hit almost 20% in the late 70's through the early 80's.

    What's more, companies don't pay people based upon their value to the company these days, they pay the bare minimum they can get away with in most cases. Sure there are exceptions, but those exceptions have a harder time staying in business.

    That's always been the case. The difference is that there is no loyalty to anything anymore. Employees have no loyalty to the company they work for and will leave to go somewhere else for ten cents a day more. And employers will replace you for the dumbest of reasons. Replacing pensions with 401K's looked great on paper. But the unintended consequences weren't so great.

    And no, blue collar workers around here would have a really hard time saving for a house when rent alone is typically aroudn $12k per year.

    I don't know where you live. But that's pretty cheap from what I've seen rent wise.It could certainly be done on a blue collar salary. The bigger problem is, is that most blue collar jobs are disappearing.

  • Re:BS (Score:5, Interesting)

    by antifoidulus (807088) on Tuesday April 15, 2014 @09:44PM (#46763565) Homepage Journal
    Heh, actually SF-like phenomenons are happening pretty much anywhere these tech companies locate. As someone who was born and raised in Pittsburgh and now is living in Tokyo after a stint in Europe, I was just curious to see how condos in Pittsburgh compare to what there is in Tokyo...and I was shocked. I was expecting them to be much, much cheaper but the reality was quite different. Tokyo was more expensive, but not by that much. I was talking with a friend(another ex-Pittsburgher) and he reminded me that both Apple and Google have recently opened relatively large campuses in Pittsburgh. This is what probably sent housing prices sky-high, the owners of these housing complexes knew that a lot of money was going to come streaming in. I cannot imagine this is sitting well with a lot of the poorer residents of the city...
  • by Rinikusu (28164) on Tuesday April 15, 2014 @11:12PM (#46764031)

    Not to mention, a lot of those "rich areas" were "cheap areas" when those roots were laid down. Which is kinda what the people in SFO are bitching about: "It was cheap and perfectly fine before the .coms showed up. Now everyone wants to live in the cool part of town, and I'm part of the reason it's the cool part of town, but because they make so much money, they can price me out of my own home. So I move, but where? My job is down the street and I can't afford to live in the neighborhood, so where to? Oakland? HA!" And there's plenty of people who would say "tough titties, life's a bitch" to that. It's even worse when you've got someone living on fixed income and suddenly finds themselves having to move at age 80. Can you imagine apartment hunting at that age? I certainly can't.

  • Let me make it simpler on you.

    Rational choice [wikipedia.org] + Social disorganization [wikipedia.org] = Crime [wikipedia.org]

    Interestingly enough, when you break one or two of those two options, you're doing enough to break the classic situation which breeds criminal behavior. Reinforce it however, or do nothing, and it will continue to perpetuate itself.

  • by Animats (122034) on Wednesday April 16, 2014 @12:50AM (#46764379) Homepage

    It's happening. First, take a look at a map of the Tenderloin [virtualtourist.com], from "Areas to Avoid, San Francisco." Twitter HQ is in that area, between 9th and 10th on Market, and the long-standing "mid-Market area" around there is rapidly being rebuilt. In fact, just about everything south of McAlliister has been gentrified, except for parts of 6th St and a small section around 7th and the north side of Market. Rebuilding is underway along the Van Ness corridor too, and has more or less chopped a block off the Tenderloin on the west side. That's the old "Polk Gulch" area, once a gay rent-boy hangout.

    So the SF Tenderloin is about half the size it was a few years ago. Progress continues.

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