Bay Area Housing Forum Asks if San Francisco is Getting “Manhattanized”

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San-Francisco-real-estate-The-RegistryBy Michael Hopek

A room full of experts, advocates and political leaders aimed to tackle the tall order of alleviating the Bay Area housing crisis met in late February by asking what is the problem. The discussion took a novel direction when participants said that California’s exceptional housing history is to blame.

Hosted by the Bay Area Council in San Francisco, the forum centered around a state report authored by legislative analyst Brian Uhler on affordable housing in the context of an undersupplied housing market. Audience members represented multiple Bay Area municipalities including Berkeley and Santa Clara, as well as the counties of Marin and Alameda among others.

Uhler’s report suggested that California is an exception to national housing markets because of it lacks housing development to meet population and labor growth. And while metro regions like San Francisco and Los Angeles have increased housing construction, the rate does not nearly match regional job growth.

“We have made housing the enemy, and the enemy is us,” said developer and affordable housing advocate Denise Pinkston of TMG Partners referring to the Bay Area community opposition to development. Some audience members shared her opinion admitting that land costs for building are much too high and the process of obtaining a permit takes too long causing a slow rate of development with the end result being high rental prices to counter high building costs.

To address this problem, the report recommended that policy makers encourage market rate development to ease competition tensions. But some audience members adamantly questioned the exclusion of affordable housing stating that low-income earners will never see the benefits of market rate housing. One audience member suggested that San Francisco was becoming “Manhattanized” given the level of lower income earners displaced from the city comparable to that of Manhattan.

According to the report coastal housing costs are 2.5 times higher than the national average, which prices out those on the low-income buyer end of the spectrum. “Low income families unquestionably feel this the worst,” said Bay Area Council CEO Jim Wunderman speaking to the adverse effects of current market rate housing.

“California will always be more expensive than elsewhere, the question is how much?” asserted Brian Uhler. Land ordinances add about 50 percent to building costs in addition to the record high costs of land. Communities charge high development fees to finance affordable housing projects and require some multi-unit buildings to dedicate units to affordable housing. This has the consequence of discouraging building altogether.

“There’s so much more displacement that occurs from not building housing than occurs from building a building in the Mission District, or a building in Oakland” said Pinkston. But displacement is only the immediate effect of slowing, or no development.

According to a recent study by University of California Berkeley and University of Chicago researchers, local land use restraints have significantly decreased GDP and labor growth. It suggests that lowering regulatory constraints in cities like New York, San Jose and San Francisco to the level of a median city would expand their workforce and increase the GDP by as much as 9.5 percent.

Some affordable housing advocates asked why the state would not make an investment in affordable and market rate housing. According to Uhler, there is currently a need to build 3 million low-income housing units that would cost the state, if it were to entertain such a proposal, approximately $250 billion. That is over double the state’s current budget. This, according to Uhler, is something that the state just couldn’t afford.

Toward the end of the forum, the discussion evolved into a realization that the entire building community faces the same challenges. Whether the discussion is about affordable or market rate developments, the solution must address all aspects of housing, and it requires communities to “gently peel the onion of the housing problem,” Pinkston added, by encouraging high density in existing single family neighborhoods.

West Coast Commercial Real Estate News