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San Francisco's Housing Crisis Explained 359

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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  • Back in the Ford administration. Or maybe Nixon.
    • Re: (Score:2, Funny)

      by Anonymous Coward

      Just the other day i was thinking about san fransisco...
      hah, no i wasn't.
      who thinks about san fransisco?, ever since i found out they really don't make rice-a-roni there i lost interest.

  • by vancedecker ( 1336829 ) on Tuesday April 15, 2014 @08:22PM (#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 Animats ( 122034 ) on Wednesday April 16, 2014 @01:50AM (#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.

  • by Anonymous Coward on Tuesday April 15, 2014 @08:23PM (#46762633)

    I'm going to go with 1. Limited resources. There just isn't enough space and more importantly WATER in the area. The water problem isn't just in a drought year like now. It's an on-going concern. 2. Regulations are off the chart. I heard it's $500k just for the paperwork to build in some of these areas. 3. Huge demand, duh. Tech and finance have high salaries, everybody wants to live near work, everybody knows these guys have money so they charge accordingly. Compare and contrast with Oakland and the East Bay in general. You're taking a "million dollar ride" across the bridge or through the tube. Yep, you spend a lot of time commuting but you've got to do what you've got to do. 4. Prop 13. Since there are some limits on taxes, the market accounts for that and charges higher prices accordingly. That explains the whole state being expensive. Since most people must finance their purchase, what was once paid out in taxes is now paid out to bankers in the form of interest. The bankers don't use it to build schools. Some people blame illegal immigrants for poor schools; but the decline began with prop 13, and it's not like there were no illegals before it.

  • by JDG1980 ( 2438906 ) on Tuesday April 15, 2014 @08:23PM (#46762635)

    The only way to fix the Bay Area housing crisis is to build more fucking housing. Anything else is just shifting the pain around. 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. But if people want to build skyscrapers, let them build skyscrapers unless there's a sound engineering reason not to.

    Fixing the problem requires that the NIMBYs be crushed and that all non-essential regulations be eliminated. Obviously the buildings need to meet safety standards, but in a crisis situation like this, everything other than that should go. No "historical preservation" crap, no ability of "neighborhood activists" to block development, no convoluted environmental impact statements. Let's face it, the Endangered Species Act was passed because people cared about charismatic megafauna, not snail darters or burrowing owls. As things currently stand it's primarily a tool of NIMBYs.

    This problem goes back decades. Up until the 1970s we could build like crazy. Empire State Building? Barely more than 1 year from groundbreaking to completion. Hoover Dam? 5 years. In contrast, the Big Dig took 15 fucking years to finish (1991-2006). And these examples are not atypical of the time periods in question. During the 1970s, we gave troublemakers of all stripes the ability to throw sand in the gears of development in a dozen different ways, and they all started to use it. Enough of this crap.

    • by Ichijo ( 607641 ) on Tuesday April 15, 2014 @08:56PM (#46762835) Journal

      The only way to fix the Bay Area housing crisis is to build more fucking housing.

      This map [imgur.com] (which shows the allowed building heights in San Francisco, where yellow is 4 stories. And Mountain View has forbidden Google from building more housing [mv-voice.com].

      So as you can see, developers won't build more housing because they aren't being allowed to.

      • This map [imgur.com] (which shows the allowed building heights in San Francisco, where yellow is 4 stories.

        I can understand that. San Francisco traffic is bad enough already, imagine if it had a million more people, with a lot of them wanting to drive.

        Increasing the building height limit without improving the roads would be a gigantic mess. You can't just raise the limit without planning for how the people will get around. And people in San Francisco don't really want to make it easier to move there.

        • by Ichijo ( 607641 ) on Tuesday April 15, 2014 @09:49PM (#46763219) Journal

          Increasing the building height limit without improving the roads would be a gigantic mess.

          Tall buildings don't cause congestion, parking garages do. [streetsblog.net] Solution: allow developers to build as little parking as they feel the market desires.

          • That's a good point
          • Streetsblog is an anti-car greenie propaganda site. When they say they want to share the roads, what they really mean is they want the private automobile gone.

            • by Ichijo ( 607641 )

              What would a truly level playing field for transportation look like to you? Would developers be forced, as they usually are today, to build more than the fiscally optimal amount of parking? ("Fiscally optimal" meaning the amount where the marginal cost of building another parking space (MC) equals the marginal revenue from building it (MR).)

        • So instead of walking across their own parking lot Google has to bus them in from the surrounding community. This is the solution to the traffic problem?
          • So instead of walking across their own parking lot Google has to bus them in from the surrounding community. This is the solution to the traffic problem?

            Or, you know, they could build offices in cities with free capacity.

    • by KingOfBLASH ( 620432 ) on Tuesday April 15, 2014 @09:03PM (#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.

      • by Rinikusu ( 28164 )

        Los Angelean here: I make pretty good money as a software engineer and I have a shower and 350 beautiful square feet. I don't pay a huge amount, comparatively speaking, but that's because I'd rather spend my money servicing my student loans and other debts and making sure my retirement is being taken care of. The "luxury" apartments don't appeal to me all that much.. I mean, they're nice, but not worth spending half or greater my income on it (I mean, what's the point of making a lot of money if you're jus

        • This is a similar reason why I would never live in NYC (and think twice about Boston). Housing just costs too damned much. And worse, if housing costs a lot all the other living expenses cost more. Groceries charge more because they pay higher rent, ditto for any other basic needs..

        • Hey Google X: Why don't you work on building the Google House: Affordable housing for middle class people? Update Frank Lloyd Wright's Usonian Automatic with modern building techniques and modern building codes (steel and concrete are still cheap, add some SIPS and maybe ICFs for modern versions), make the whole house "network aware", put a Tesla Charger in the carport, and subsidize the cost of building or buying and just collect the data. I'm sure people would love it. Build a whole subdivision of those i

        • Hey Google X: Why don't you work on building the Google House: Affordable housing for middle class people?

          There is is lots of affordable housing for middle class people all around the country.

          What you want is cheap housing for everybody in expensive neighborhoods, and that's logically impossible.

      • That's cool, but the problem in SF is that there's just not enough housing. We can set price controls, but there will still be the problem of not enough housing.
        • by grmoc ( 57943 )

          Price controls don't do anything to increase the amount of available housing. It just means that people cannot find housing at all, and that the buildings aren't updated.
          Eliminating Prop 13, and making the market more liquid and reasonable would help a bit..

          • by Cyberax ( 705495 )
            It will also displace lots of existing low-to-middle income tenants. Way to go. And it still won't increase supply by that much, though it will slow down the price growth. Read TFA.
        • by pete6677 ( 681676 ) on Tuesday April 15, 2014 @11:25PM (#46763821)

          Rent control is the CAUSE of housing shortages. Notice that all American cities with perpetual housing shortages have rent control, and heinous building regulations. What developer in their right mind would build something in this environment? You never hear about Chicago having citywide housing shortages. Why? Because there's no rent control. And rents are a hell of a lot cheaper than "market rent" in cities with a lot of rent controlled apartments.

      • You do realize that social housing does nothing to solve the housing problem, right? It actually does a worse job of divvying out scarce resources. I can't tell if you are in favor of it or in opposition.
    • NIMBY is an unavoidable phenomena in advanced economy. With enforcement of environment protection laws, you can be sure of hazard over development and pollution, like in China for up to now. Then once it became a significant problem, people would rise up and complaint and started creating/enforcing environment laws -- China is now at this stage. Then once there are sufficient laws, some people will then start abusing the laws to protect their own interest, thus NIMBY -- even China now has had quite many lar

    • High densities in Europe are reached by going quite a bit higher than the 4 stories you are allowed to go in most of San Francisco. Most of Madrid, for instance, goes to 10-15. 5 story areas are extremely expensive old buildings where any condo goes for well over a million dollars.

    • How about locate your fucking company somewhere other than San Francisco? Somewhere that has room to build more houses/apartments/condos and doesn't require a 3 hour commute to work. You know, there are other places. Even in California. Some of them even aren't on a major fault line too! Google's supposed to have so many smart people working there. Why can't they figure out a no brainer solution like this?
      • by Rich0 ( 548339 )

        Yup. I imagine lots of people would love to work for Google but are turned off by the fact that they tend to want people to come into the office, and they put all their offices in the middle of major urban areas. If I have a need to drive into work at all it only takes me 25min in the middle of rush hour, or 15-20min otherwise. I can also afford a modest house.

        Sure, working at Google would be more fun, but it just doesn't seem to be worth the hassle.

  • Many tech workers with kids and who want a house live down there where it's cheaper. Set up office down there (too) and hire the 30+ set. It will take some of the pressure off of their Mountain View facilities. And it was dumb to expand into SF. It was ridiculously expensive already and very hostile to big business, even ones that are liberal and cool.
  • Gentrification? (Score:5, Interesting)

    by jgotts ( 2785 ) <jgotts@gmail. c o m> on Tuesday April 15, 2014 @09:04PM (#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.

    • The rental market is a bit distorted is many areas at the moment due to people not being able to get a mortgage (still). Locally I have seen rents in the $1200-1500 range for a one bedroom here in Northern NJ, no wheres near NYC or a commuter rail line (those go in the $2000 range). That is quite high for this area considering there is no shortage of housing. Looking at the pricing of two-three bedrooms, you might as well buy a house as the mortgage payment will be lower or about the same each month.
      • by Rich0 ( 548339 )

        I'm not sure that getting a mortgage is all that hard. Well, assuming you're not trying to spend more than 1/3rd of your income on debt, and that you're not trying to finance more than 100% of what your home is likely worth. If your housing prices never returned to ~2003 levels after the crash then I could see why a bank wouldn't want to let you borrow 105% of that with a payment that requires 2/3rds of your income.

        The last time I refinanced I didn't find the process particularly difficult. Sure, it requ

    • by afgam28 ( 48611 )

      A cheap car (like a Toyota Corolla or Honda Fit) costs about $5000+/year to own. If you get rid of that car and live in a place where you don't need one (i.e. San Francisco) you've got about $400 extra per month that you can spend on rent. So you don't have to be rich to spend $1900/month, which is plenty if you want to share a 2 bedroom apartment with someone in SF.

      http://consumerreports.org/cro... [consumerreports.org]

      It's not for everyone but obviously a lot of people like it enough to do just that.

    • 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.

      A decade or so ago, I knew a number of graduate students living in Boston (mostly Cambridge) who were paying well over $1000/month for one-bedroom apartments -- while living on graduate stipends of something like $20k per year. Definitely a few paying $1200 or $1250. (Maybe they made $25k.) A decade later, I assume rents may have risen by a couple hundred dollars in places, so it gets to your range.

      Anyhow, these people were NOT "very rich" or even "rich." They were often struggling. BUT - If you were

    • by Rinikusu ( 28164 )

      Not really. I know a bunch of people who live in $2500/month apartments, that they have to share with 5 other people so they can afford it. Seriously, not even kidding. Girl I was dating paid $400/month to sleep on a couch in the living room with 3 other people, with 4 other people splitting the 2 bedrooms. I have friends in SFO who do similar. Just because the rent's $1500/month or $2500/month, don't assume circumstances...

    • I'll use Thomas Sowell's example: People like to live by water, on a shore.
      There is only X shoreline.
      There are two ways to apportion that shoreline.
      1) money: let people buy and sell it, or
      2) you can divide it up, and give a piece to everyone; of course, this results in uselessly small pieces (and you have to forbid transfers or you end up with #1), complications with inheritance (is it heritable? How do you deal with death? Marriage?)

      The problem with #1 is that as the resource is finite, the prices will b

  • I know absolutely nothing about these things; so I'm actually asking here. Why does the city, I'm not saying every city, but I am saying any city, need to support infinite growth? There's water, there're hills, maybe that's as many people as can fit. Period. You're welcome to live anywhere you like where there's room. I'm sorry, there's no more room here at the inn. Find another.

    I've zero interest in my city becoming a huge metropolitan core. I left the one that I was in to find fresh air, less traff

  • Instead of building a giant floating barge as a sales tool, perhaps Google should have think about building a giant floating apartment buildings out in the Pacific for their employees.

    The cost per square foot would probably be lower for their employees than a San Francisco apartment, and they wouldn't have to put up with San Francisco's ridiculous tax laws and building regulations. Besides, the commute to Mountain View by boat would beat taking a bus on the 101!

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