SF has plenty of opportunities to build upward, but as long as SF insists on being anti-development and anti-height, the housing supply problem is going to continue.
Bingo. This: http://www.slate.com/articles/business/moneybox/2012/05/face... is good further reading if you're interested in the issue.
I think we've now gotten to such an absurd place in coastal city building markets that more people are interested in learning about the fundamental forces at work. Matt Yglesias, who wrote the linked article above, is fond of pointing out that we can use complex, advanced technologies like elevators and steel to greatly ameliorate housing affordability problems.
1) the 'assessed value' of owned property (used to calculate property tax) can be raised ~2% per year[a], so over a decade a home owner's property tax may increase ~22%
2) Not all of SF has rent control. Any building constructed after 1979 does not. [b]
3) Not all renters are savvy enough to not get kicked out by greedy landlords, despite the laws protecting them. Apparently landlords often use 'renovations' as a way to do that. Just last week I overheard a conversation in Trader Joes about someone who had fallen pray to that [c]
TLDR: money is like water - it will find its way through the cracks to the place it wants to be (the pockets of those with capital).
c: time travel to TJ's on 8th, ~8.30am last Sunday.
In certain cases, yes, but personally I lived in SOMA in an apartment for 2 years and my rent was going to go from 2k to 3k because Google had asked the building if they could rent some of the units. So I mean, maybe it was illegal and I don't know about it, but I can certainly say I don't live in San Francisco anymore because I was priced out by new incoming tech employees.
That strategy results in large populations where poverty is highly concentrated. This leads to those areas becoming breeding grounds for crime and hopelessness. Over and over again in the US, large scale projects have exhibited this pattern of failure.
That's not to say that building affordable housing shouldn't be a priority. Indeed it should. But it might make more sense to build lots of small scale housing, with a focus on building viable community spaces rather than large scale ghettoes.
Also, rent control should be more widespread, instead of relentlessly fought against. This way, the housing that's created will have a chance to remain affordable, instead of constantly being at risk of gentrification.
You could always build upward to house the rich people instead. I'm sure a lot of the incoming startup-types are young and would be happy to live in a high-rise (The correlation between youth and high-rise-living coming, in my experience, from the fact that people with kids often want more space. But that's not a hard-and-fast rule, obviously.).
> But it might make more sense to build lots of small scale housing, with a focus on building viable community spaces rather large scale ghettoes.
I'm not sure if SF has the land space to build lots of small-scale housing. I totally agree about building nice community spaces, though, and I think high-rise building is compatible with that (e.g., Manhattan's pocket parks).
You have to remember that San Francisco is a prime earthquake zone. I'm not sure how many rich people would want to live in what is essentially a death trap if a major earthquake (which is supposedly long overdue) were to strike California.
Also, gentrification tends to happen when wealthier people decide to move in to "hip", "happening" areas with "character". In other words, areas that the poor artists and the blue-collar melting pot have managed to just lift out of being a hellhole, through their hard effort. That's when the yuppie and hipster colonization begins. Witness the fate of the Greenwich Village and Williamsburg in NYC, and what's described in the original article in respect to SF.
So, I'm not sure how attractive high rises built for the rich would be to the rich themselves, as they'd be cultureless islands. No, they much prefer to take over brownstones and victorians that poor artists have fixed up, in an area full of "character".
Have you seen what Tokyo looks like?
Don't give me that bullshit.
There are a variety of other reasons for Tokyo's urban sprawl, not least the presence of what is the world's most comprehensive public transportation system.
Also, go to the the hip neighborhoods in NYC (LES Williamsburg), notice the tall buildings being built. Units in these buildings are being bought for large amounts of money.
There are four units for sale at the (42-story) Infinity now, and the cheapest one has an asking price over $1.2 million. In my book, that's for rich people. If you consider a $1.2 million condo a middle-class dwelling, you may have lived in San Francisco for too long.
There are plenty of cities in the world that have built up without becoming ghettos. Singapore, Seoul, Tokyo, Hong Kong, New York to name a few. High rise housing != ghetto
From the article:
Again and again, you hear of teachers, nurses, firefighters, police
officers, artists, hotel and restaurant workers, and others with no
stake in the new digital gold rush being squeezed out of the city.
Bernal Heights in those years was a glorious urban mix of deeply
rooted blue-collar families, underground artists, radical activists,
and lesbian settlers
As for high rise apartments not necessarily being ghettoes. That's obviously true. High priced apartment complexes and skyscrapers housing businesses are what constitute much of the "building up" in the cities you mention. It's only when building up is combined with low-cost housing that problems begin. But building up isn't the problem per se, but rather it's the high concentration of poverty that such projects encourage.
1) leave it as is. Prices continue to climb
2) allow building up. Prices come down as supply meets demand
3) some how make sf less desirable lowering demand
The Bay Area's problem is that nobody wants the high-rises: putting them in the center or putting them near transit a bit outside the center would both work, but everyone, except to some extent Oakland, is anti-development, so they go nowhere. Heck, Palo Alto won't even allow mid-rise apartments near the Palo Alto Caltrain, so you actually have people "reverse commuting" from SF down to Stanford, because as crazy as living in SF is, trying to live in downtown Palo Alto is even crazier. A few livable, urbanized downtowns on the peninsula might siphon off some of the demand in SF, not solving the problem, but at least reducing it.
Other problems that seem like they exacerbate SF's problems: 1) poor intracity transit, e.g. lack of an east-west subway, concentrates demand in a handful of eastern districts; and 2) large areas of the city are not even mid-rise, but full of two-story houses (partly historical, partly anti-development, partly related to #1).
"f you look at San Francisco’s zoning map, you’ll see height and density restrictions everywhere. There are also citywide building caps — restrictions on the number of new buildings that can be started every year. And finally there are labyrinthine regulatory procedures. Here, for your amusement, is a flowchart put together by the San Francisco Planning Department that outlines the steps a developer needs to go through to obtain a building permit. Despite the department’s use of Comic Sans, this is not meant to be a joke."
Allowing building upwards would be seen as 'pandering' to 'special interests' by lots of locals --specially people who like to call themselves Xth-generation Franciscan.
SF is always about the short-term but made to look long-term so as to seem forward looking and progressive. The only thing SF is progressive about two things, sex, and some minority causes (both of which are good things but hardly encompassing of the term 'progressive'.)
SoMa probably ends up being the big-city, tall building part of SF in the future. It would take a big mind-set change for many other neighborhoods to build up anytime soon.
I presume that's mostly the reason.
A couple of months later, an acquaintance of mine got a gig as a software engineer at Apple. When i got in touch with him, he told me that he's dishing out $5K/month to pay rent for the house his family lives in. My jaw dropped.
I actually lived in 388 Beale, right by the Google towers. My rent went up exactly $1,000/month when Google started renting units at insane prices for their interns/traveling employees. So yeah, pretty familiar with this and this is why I no longer live in SF. Also, it really feels like shit to get pushed out of your apartment so some sales exec at Google can stay there once a week. Yay efficiency?
This article: http://www.manhattan-institute.org/html/cr_71.htm appeared on HN the other day and explains why and how California as a whole is losing native-born residents; housing costs are a huge component of the problem.
It wasn't a good apartment IMO. 14th and Dolores
That said, people do manage to find apartments. But yes, they are over priced. You can live in SF without a car so I suppose compared to most cities you could add the cost of a car minus the cost of public transportation to your rent.
If demand rises faster than supply, prices go up.
Demand is rising fast. Supply is being held down. Prices go up.
I come from Darwin, a wonderful little city clinging to the northern edge of the Australian continent. About 10 years ago a confluence of factors (expanded Defence presence and the early stirrings of the resources boom) meant that property prices took off.
At the same time, the hyper-local nature of politics in that part of the country (each member of parliament in the state-level government represents about 2500-3000 voters) means that infill doesn't happen because the margin of victory is easily less than two or three streets getting angry at you for authorising a new block of flats.
So: demand shot up, supply did not. Unsurprisingly, Darwin is now one of the most expensive places in Australia to live. If you can find an unoccupied flat, good luck renting a nice one for a price affordable on a normal middle-class income. And good luck finding a house for a price affordable on a normal middle-class income.
Supply and demand. It's the same everywhere for everyone. There are no exceptions. If SF wants to keep its middle class, it needs to make more housing available.
Especially high density housing for the wealthy, not the poor. Opening space at the high end of a market can have a disproportionate effect on a total market by removing massive amounts of bidding power. Every rich person who moves into a $2 million dollar apartment is a rich person who isn't bidding the price of an older building up and driving out the middle class, who in turn will drive out the poor.
Another dumb policy: giving money for deposits or loans. It just drives up effective demand. Every seller knows you can get the $X thousand dollars and then, surprise, surprise! The price of every house just rose but ~$X thousand dollars. Everything that gets given to the middle and poorer classes to subsidise housing is in fact a wealth transfer to the landlords, via good old-fashioned populist policy making.
Are there studies on this bit playing out in practice? My impression so far, mostly looking at Manhattan redevelopment, is that building high-end condos typically does not reduce prices for other buildings in the area, but rather raises them: the presence of new high-end housing increases demand in the immediate vicinity by more than the new building's own supply provides, assuming the area (like Manhattan or SF) is rather desirable in general terms to begin with. That may be good if you want to raise the housing values in an area (each building provides a multiplier effect that raises the prices of neighboring ones, making the whole area more desirable). But probably not good if you want to lower the prices. Good statistics either way would be interesting, though: are there cases where opening new high-end housing actually lowered the other prices in an expensive urban area? E.g. when new condo towers open in Manhattan, does it produce an observable downward move in prices?
(The main point I'm getting at is that demand and supply aren't independent variables: demand for living in an area depends quite strongly on the housing stock in that area, so building more housing stock affects both supply and demand, in possibly complex ways, which need empirical data to tease out.)
The thing I'm thinking of is the city-wide market, rather than in a particular locale. One way or the other, though, the wealthy will get to live where they want. The best thing you can do is to try and save the furniture by putting them into golden ghettos, rather than having them fan out and drive off people in multiple districts.
> Good statistics either way would be interesting, though: are there cases where opening new high-end housing actually lowered the other prices in an expensive urban area?
Good on you for calling me out on numbers. I'd be interested to see that too.
NYC is a poor case study; you have the confounding factor of widespread rent control. It both creates an artificial limit on housing supply and distorts your official statistics because people have a strong incentive to behave deceptively.
Some people hope to make the city stay unattractive to rich people, so they prefer to live on the Peninsula or North Bay (or in NYC, maybe some nice condo towers on Jersey's "gold coast"). So you still have the golden ghetto, so to speak, but you try to put it elsewhere. Even leaving aside whether that's a good goal, I think it's certainly a good question whether current policy will actually do that; it's quite possible anti-growth policies won't have that effect anyway (e.g. Paris's anti-growth policy has certainly not resulted in a non-gentrified Paris). The interconnections are pretty interesting though, and seem hard to model, especially with the existing data points (e.g. NYC) having, as you point out, their own oddities.
Also, I don't think if someone demolished a lower-class apartment in SoMa they will do anything but build the highest cost apartments (If your options were to build apartments that cost $1500/mo for locals or $3500/mo for new tech employees, which would you build?) and push those lower income people out, which is basically the problem we are discussing, so no, I don't agree with the above assertion. Sounds good in theory, wouldn't work that way in practice.
Moreover, I don't agree with the restrictions on high rises to SoMa. Why not allow them to be built elsewhere? And who says that you have a right to live in SoMa anyway? If it were allowed, high rises would go up in other parts of the city, and you could live there instead.
Okay, hypothetical from someone with an advanced degree in Economics, not because I'm bragging, but to save you the snark and insults:
Developer gets the green light to demolish 30 unit building and build a large high rise at say, 6th and Howard. Many of these people are on the lowest end of the income spectrum.
So you demolish the units and build a 150 unit, 15 story luxury apartment building, because you know Square is a block away and their employees can afford to pay ridiculous rents. As the owner of the building, how many units are you building to occupy the old, lower income tenants, and how many are you building to occupy the Square tenants, who will often be able to afford 3x the price?
This is the problem the article is pointing out. No matter how you build "more housing", it very certainly will be first built for the highest income people, thus pushing the lower income teachers, firefighters and policemen, out of San Francisco proper.
Clearly your "advanced degree in Economics" hasn't taught you any common sense.
Is anyone saying that the housing that is built first has to go to lower income people? Is anyone saying that you cannot just build more housing? Do you understand that there is not an infinite supply of tech workers looking to move into expensive apartments?
Anyway, all those theories are fine, but I don't believe the development that could physically be done in the next 3-5 years would outpace tech employees and I believe that it would, as the article says, push lower income SF residents out. This is the entire point of this article, and seems to be going over your head. Not to mention that the article actually addresses the idea of building high rises all over and talks about how poorer high rises will be crime ridden while the upper class high rises would push all the locals and culture out. But hey, why use common sense or rational thought or even bother to read when you can just act like an insufferable condescending asshole? Really, I'm never usually this harsh on people, but your path to "winning" an argument, seems to be hearsay and insulting people versus logic and reason. Fuck that.
I mean, assuming we're not talking about putting in 500,000 new units or something, Stalinist-apartment-blocks style: that would really produce enough supply to soak up any excess demand (which was precisely the point of Stalin's building programme). And their unattractiveness might reduce demand, too...
Based on what exactly? I don't think you can compare Manhattan to SF in this regard. Manhattan has general appeal and is well-known worldwide, whereas this issue with SF is specifically due to tech workers.
And I am not convinced that there are so many tech workers that you cannot accommodate everyone else as well. They definitely aren't going to be "pushed out of SF" if you allow high rise construction in all parts of the city.
One thing I do struggle with is making this a permanent home. I feel like right now, people are coming here (as I did) because frankly, this is where the money is. Even Y-Combinator advertises that if they invest in your company; They want you to move here and encourage you to stay here.
> If we invest in you, your group is expected to move to the Bay Area for January through March 2013. (You can of course leave afterward if you want, but it's a good place for a startup to be.)
I'm curious to see what happens when/if the bubble pops. Will people stay or will they go back home? For people that have been here 15+ years, could you shed some insight into what happend in between 1999 and 2003 as the last influx of innovation left the area? I feel like those were the years when giants such as Apple, Yahoo, Google, Sales Force, and Mozilla were essentially minted.
It does not help that back in the planning phases of BaRT, San Mateo co. in the late 1950s, opted out of the system. Now they are plagued by a mediocre public transit system and they're in a catch-22. They don't have the density to sustain a working public transit system, so one does not get built and they don't allow higher densities due to the adverse effects on traffic. Eventually BaRT will reach San Jose, via the East Bay.... the idiocy.
I think if SJ plays its cards right, it could take away the clout back from SF. Back in the 80-90s (the hardware days) SJ (the 237 triangle) was more or less the 'capital' of SV (as the peninsula was more amorphous and one could not annoint P.A. or Sunnyvale the capital of SV, for example)
But isn't this how it always is? You form one idea of how the locale is and if it improves a bit but keeps going, you want to somehow freeze it at your favorite time.
Travis McGee, in fact, many years ago, lamented something like this about San Francisco " . . . she now sells what she used to give away . . .". Florida too, if I am not mistaken. (Travis McGee is a fictional character, by the way).
My Oregon friends say it is wonderful there, but we don't want any more folk to move here.
My favorite quote so far:
"If San Francisco is swallowed whole by the digital elite, many city lovers fear, the once-lush urban landscape will become as flat as a computer screen."
Lush urban landscape eh? Is that from all the feces on the sidewalks? Who are these city lovers? Are they the same NIMBY types who are trying to prevent any kind of night club or live music scene from being established in the city (google the "War on Fun" for fun). Well, that nameless person made up by the author is boring and terrible and they should probably move out to the suburbs to make room for someone who actually enjoys what this city has to offer now instead of what it was back when you couldn't take your kids to the park, a story which you told us yourself!
"When I moved to this neighborhood in 1993, just before the first dot-com boom, I avoided taking my two toddlers to the playground across the street from the café, because local gangs sometimes stashed their guns in the sand."
Yeah... soo.... that's bad, right? I didn't live here back then but I visited frequently and it was awful! Your fake nostalgia for the grittiness of urban life can go burn in a fire made from hobo shit.
Another stupid quote:
"The unique urban features that have made San Francisco so appealing to a new generation of digital workers—its artistic ferment, its social diversity, its trailblazing progressive consciousness—are deteriorating, driven out of the city by the tech boom itself, and the rising real estate prices that go with it."
Wait, aren't techie types usually considered to be sort of trailblazing and progressive and friendly to the arts? What the hell are you talking about dude?
Okay, rents have gone up in my building by 50% in the last 2 years. It's bad. The building, that is. It's basically been a slum apartment for a hundred years and 3 families do live upstairs from me in one unit. I WISH they'd move out, because I can hear everything that goes on up there. Ugh. We have new employees who are trying to move to the city and there aren't any good options, most of them have ended up in Emeryville or Oakland. I certainly wouldn't recommend my own building. I only stay here because the rent is cheap because I moved here before this current boom. So here I am taking advantage of the very upside-down rental market that's contributing to the whole problem! I don't know what the long term fix is besides building a LOT more new buildings, which seems to be happening... But it's only happening because rents are high enough to justify new construction, which is good for non-tech jobs and city property tax revenue in the long term, right? Would you rather have a bunch of fenced off city blocks with nothing but empty holes in the ground on market street? There's a new Draft House Cinema moving into a theater that's been empty for like 20 years two blocks away from McSweeny's. You don't think that's awesome?
Eventually this mini-boom will end and that's going to suck WORSE than what's going on now. Oh man, it's going to suck. Maybe rents will go down then, but only if a lot of people lose jobs and move away. That's not good is it? In fact, that's a worst case scenario for the city. The cafe you were sitting in when you wrote that article will probably go out of business too. Is that what you'd prefer? Maybe one of those techies who moves to SF this year will invent an alternate fuel generator that runs off baby boomer hand wringing and then we'll all be amazed when you single handedly save the city.
Still, until recently there were dozens of empty city blocks that had no development at all on them. Many stalled projects are in progress now, and it is all going to be high priced brand new luxury stuff. 3 new buildings have been built within a block of my current location in the Mission just in the last year. Sure, they're small and overpriced, and maybe only rich techie types can afford them but I'm FINE with that. When the people who can afford it move in to those places, they'll free up space in the dumps they moved out of and things will probably equalize in a couple of years, and that's probably the best case scenario.
My family owns rental property in the city, so perhaps I can add a little more color here. The reasons that the housing market is so messed up in SF basically boil down to the following:
* Rent control - provides a huge disincentive for landlords to upgrade, invest in, (or for the unscrupulous) maintain their properties. It also artificially limits housing supply and saps liquidity, since people who've been in their units for long periods of time have distorted prices and very limited incentive to move or upgrade.
* Onerous city bureaucracy and regulatory environment - the myriad, overlapping, and draconian sets of rules governing property development and ownership have made new development unnecessarily time- and capital-intensive. Oh, and there's always the tenant's union and the ridiculously pro-tenant judiciary, but that's a story for another day.
* Prop 13 - basically this drives a distortion of property tax rates, with a disproportionate share of the tax burden falling on residential households and newcomers to the city/state.
Note that as (relatively) long-term owners in SF, we've done very well thanks to (2) and (3).