San Francisco’s “ambitious” and “bold” plan to increase housing production would produce less than half the number of housing units the state hopes San Francisco will build and only modest changes to affordability, according to a new report from the city controller’s office.
City Economist Ted Egan found in a report released Wednesday that, even in the best-case scenario, the upzoning plan being voted on by supervisors soon would usher in only around 14,600 additional units over the next 20 years.
That’s far fewer units and far more time than the state expects. California is requiring San Francisco to create a realistic pathway to 36,000 additional housing units by 2031.
While the state says the current plan does create capacity for those units, Egan’s report predicts less than half those units are likely to be built without other market or regulatory changes.
Egan also found that while increasing supply would decrease prices, effects were modest: Monthly rents would go down by between $75 and $125 dollars, for example.
YIMBYs are already up in arms.
“Family zoning is both necessary, but not sufficient,” Jane Natoli of YIMBY Action said. Because the city is too deep in the upzoning process to make significant changes, “we’re going to have to start looking at other levers,” she added.
The California Housing Defense Fund, a legal group that sues cities and counties for breaking housing laws, said on Wednesday that it would take the city to court for failing to comply with state law if they proceed with the zoning as-is.
They argue that the models that the city used to evaluate the capacity created by its rezoning are flawed, and cite Egan’s approach as a better alternative.
The city must either change its rezoning plan so that it can realistically produce about 36,000 homes, or make other policy changes, like cutting fees and taxes, to reach that number, the group argued in a letter to the Board of Supervisors.
Mayor Daniel Lurie’s office, which has been spearheading the rezoning, said the current zoning plan would “help build the housing we need and meet our obligations under state law.”
Others said this proved what was already known: Zoning itself won’t be enough.
“Our housing crisis was not caused just by zoning,” said Supervisor Myrna Melgar, who chairs the Board of Supervisors Land Use Committee.
“In order to fix a problem that is so complicated, we’re going to need more than just zoning. We’re going to need financing for market-rate development. We’re going to need funding for affordable-housing development. There’s a whole bunch of things that we need to do.”
San Francisco is currently under a state mandate to upzone the city and let developers build taller, denser housing projects. The state has preliminarily approved San Francisco’s plan.
The state’s mandate only requires the city to plan for more units, not to actually build them. That is left up to private developers.
And developers would build under the rezoning. The report found that between 10,098 and 17,845 are likely to be built in the western and northern parts of the city in the next 20 years if the upzoning passes. Without it, only between 1,594 and 3,199 units would be built.
These new units would result in modest effects on affordability: a $25,000 to $40,500 decrease in the price of a condo, for instance, or a $75 to $125 decrease in monthly rent.
Critics of the plan have worried that residents and businesses would be displaced by construction, though. The report predicts that over 20 years, 500 to 1,000 additional units would be demolished under the new upzoning.
The numbers range because there many factors affect how much housing is built, including how much it costs to build and how much the new units will rent or sell for.
So Egan modeled two different scenarios. In the “low-growth” scenario, Egan assumed that San Francisco’s housing prices, which are still below pre-pandemic levels, continue to slowly increase.
In those circumstances, developers would have a harder time turning a profit, and would have less incentive to build, resulting in fewer effects.
But it’s also possible that San Francisco’s housing and rent prices increase far more quickly, as they have been doing the last few months. If that happens, San Francisco would be more likely to see results on the higher ends of the ranges.
Egan noted that, without construction, a more limited housing supply would fail to satisfy demand, driving prices even higher without an eventual decrease.
“If you don’t do the rezoning, you don’t build the housing, and you don’t get this benefit,” Egan said.
Outside the two scenarios, though, Egan explained that there is still a lot of uncertainty; no one has a crystal ball.
For one, officials in City Hall and state government are looking to make other reforms to speed up housing production. The predictions in this report are based on current construction rules, but new regulations could change the game.
There is also the question of the national economy. Since housing production requires taking out loans, if interest rates remain high, building housing gets tougher. But that could change in the future.
Ultimately, though, Egan emphasized in his report that any level of housing production would lead to benefits to San Francisco’s economy.
While business disruptions and relocation costs would lead to $16 to $28 million in losses on average, the housing production would also lead to a growing population and more jobs in the city, benefitting the city’s economy. The city’s GDP would grow by $560 million to $940 million per year on average, the report predicts.
“There’s a lot of uncertainty about how much housing we’ll actually get,” Egan said. “There’s actually a lot less uncertainty about the economic impact.”
Shouldn’t the title emphasize that upzoning as planned comes up short on units vs this framing which leaves open the interpretation that upzoning as a policy would be ineffective at taming prices? It’s clear enough if you read the piece that the modest rent reduction is due to the paltry scale but the headline could be clearer.
It’s not just the scale. There would be plenty more difference if that was at all mandated, forced, urged, directed or even nudged towards affordability by the so-called YIMBY futurist class who think SF = Paris and Paris = Utopia, facts unseen.
It’s a lie.
Furthermore once they get the “Wiener Remedy” of unfettered yuppie condo towers, they won’t need the YIMBY tools anymore – they’ll have bypassed all local input, regulation, and common sense development. It’s a complete sellout and once it’s complete the YIMBY tools will be superfluous once-useful *diots, cast off to be cheerleaders for the next big sellout with Billionaire funding.
Interesting choice of headline. I would suggest considering:
City Plows Forward With Illegal Rezoning Plan
City Continues To Plan For Fewer New Homes Than Babies Born In Its Borders
Even Minimal Increases In Zoned Capacity Can Have Measurable Decreases in Rents
“Even Minimal Increases In Zoned Capacity Can Have Measurable Decreases in Rents”
Is horsesh!t from the source.
I don’t know, $25k off the price of a condo doesn’t seem so paltry to me. Depends on what we trade for that decrease, right?
Are my fellow commenters who are RAGING ABOUT YIMBY LIES IN ALL CAPS concerned about displacement of low income San Franciscans, about “neighborhood character” (none worthy of preservation on Geary if you ask me, I won’t pretend to have an opinion on every street covered by the plan) or about something else? I honestly can’t tell.
“Just” $75 to $125 less in rent a month? Just? That’s worth a Muni A-Pass! Is there any tenant in the 7×7 city limits disappointed during the renewal of their lease that their rent is going down rather than increasing? We only get declining or stagnant rents during recessions and mass unemployment.
These comments full of Mission NIMBYs make as much sense as Latinos for Trump. Good luck with housing prices when you don’t build anything new!
You don’t understand supply and demand. The demand is infinite at the top end, and that’s NOT the housing crisis. That’s YIMBY yuppies gentrifying existing neighborhoods full of working class families and charging 3x what they’re currently paying, all while pretending to be at all concerned about the issue.
Get real.
Housing prices are set at the high margins of demand. Today’s high margins in SF include AI engineers pulling down hefty six figure incomes that often don’t start with a ‘1’ or a ‘2.’
Learn how economics actually works trickle-down apologists.
There’s nothing here about what affordability level the units need to be. The largest deficit in SF in as far as RHNA numbers are in the low income category – 20,300 units. While market rate (7,500) can be met w even these conservative numbers. Yet you have Natoli arguing elsewhere that this report means we need to cut inclusionary fees to harm that low income production even further. Her cry for higher profits to developers couldn’t be more transparent.
Ted Egan also had zero to say about income and affordability levels in the report. What is the purpose of having a city housing policy if there is no attempt to match it to the actually needs of the residents? Could we please focus on the humans in those units rather than raw numbers?
Pretty cool
This article is EXTREMELY misleading. “increasing supply would decrease prices, effects were modest: Monthly rents would go down by between $75 and $125 dollars, for example.” The documentation expressly states that this is an average and does not designate “who” gets the decrease. Meaning, if 80-90% of the new residential buildings are luxury condos (as every single major study agrees upon), then it is extraordinarily unlikely that there will be ANY rent decrease for low cost housing, but rather luxury condo rentals may be at less of a premium.
So, given an *EXPECTED INCREASE OF RENTS* the *increase* maybe less for some rentals, which will almost exclusively be applied to the luxury rentals.
For the love of God people. Let’s not fall for this BS where we prove Trickle Down Economics really works. If we split up “savings” of a million dollars by giving me $999k and you $1 we can’t say “We’re getting an average savings of $500k!! with my plan!”
Thank you. YIMBYism = Trickle down BS.
YES! YIMBY LIES MUST BE HELD TO ACCOUNT.
Yes — any analysis that does consider rent impacts by housing submarkets (stratified by rent level and geography) fails to report that rent changes and vacancy vary dramatically- benefits and vacancy always accruing on the high end! The key question is not whether overall rent drops slightly but *for whom* and who is displaced
Exactly right.
What happened to the 82,000 number that been floated as the city requirement? (I think that number was so over inflated just to get 20k built). City probably wants more tax dollars to fund its already giant pot.
RE values for condos have been falling 2-3%/yr for the last 4yrs, so a 40k reduction in value is pretty huge, it would put may owners underwater.
Definitely bad for existing homeowners, small property owners. Rising operating costs are all ready out of control making values harder to sustain. This doesn’t make it much cheaper for anyone.
Mostly because they’re not building low income housing. They’re building NO INCOME housing. Can’t lower zero by much
IF YOU BELIEVE THE YIMBY BS, YOU GET 125$. ONCE.
IF.
um, what? the headline clearly says $125 per month. it’s not a one-time thing.
can you explain (without shouting..) why you disagree with the City Economist? i’m genuinely curious but i care about facts, not rhetoric.
“Um, what?”
Looking at the idle sites of the old Touchless car wash on Divisadero, or Lucky 13 on Market, there’s only one conclusion: There’s little demand for new housing at the $1.5mio condo or $4500/month 1BRs level. And that’s not even getting into family housing, i.e. 3BRs.
If the state was truly interested in the construction of attainable workforce family housing, they’d find the money to cover the difference, or at least show an effort towards that end.
Which leads us to the question: What interest is the state (Scott Wiener) so adamantly pursuing then? Could it be perhaps the construction of ultra luxury prestige projects for his billionaire/RE developer backers out in North Beach and the Embarcadero? What is it, really?
Yes, they need to fund low income housing by taxing the Billionaire class.
PERIOD.
Upzoning has as much of a chance of pushing rents and sales prices down towards affordability as the Egyptian pyramids had of ushering in the Pharaohs to the afterlife.
That said, the northern and western neighborhoods upzoned the east side and now it is time for turnabout so that all neighborhoods can bear the burdens of building pyramids.
Ultimately it does not matter if 100,000 new housing units fail to reduce rents. What matters is that there are homes for those who are moving to the City.
Unless we want newly arriving AI engineers and other high-paid knowledge workers doing OMIs and Ellis evictions en masse across the Mission, we’d better build some high quality new homes for them,
San Francisco’s population has been stable if not falling over the past decade. This is all about building pyramids.
“Ultimately it does not matter if 100,000 new housing units fail to reduce rents.”
YIMBY tool walks away from oft-touted YIMBY lie?
Yeah we knew you would, but so early in the game?
The real lie is thinking that the purpose of building new homes is so that you can save some rent. It isn’t. It is so that all the people moving to SF who make better money than you have a new home to move to, rather than doing an OMI on your NIMBY ass.
That said a large amount of new supply of homes will mitigate future increases in housing costs. So you will benefit indirectly.
He walks away from the lie because he’s actually thinking about it and talking out loud.
Or we can defend our neighbors by floating tax exempt mortgage revenue bonds to purchase housing units where our neighbors are at risk of being evicted, or at vacancy time before rent resets to market via eminent domain.
Market rate housing only can produce at scale while rents and prices are rising. YIMBY tell us that we must see higher housing prices in order to see lower housing prices. That is neoliberal economic gobbledygook.
No investor will want to buy revenue bonds when the income is inadequate and capped, and where the collateral is poorly maintained buildings.
We need new housing at all price points. That won’t reduce rents but so what? These developments have to be viable. But it will stop rents from rising more quickly. And prevent the tidal wave of evictions that will happen if newly arriving six figure knowledge workers cannot buy new units.
Marcos, ah, so you admit that such bonds would not be attractive to investors without a city subsidy?
Good because that was exactly my point. Taxes would have to go up to provide such a subsidy.
Anyone who at all pretends to be concerned about the housing crisis will buy them, because that’s the only way to actually affect the issue.
Not you, David. We know you don’t pretend to be concerned.
Tax exempt mortgage revenue bonds are floated by the City and must have a provable revenue stream to service those notes. Resident rental payment + city gap subsidy to pay down the notes does the trick.
YIMBY has no clue as to what they’re talking about but they spout nonsense anyway. Just like Charlie Kirk.
“I think I’ll spend my $75 bucks on a taxi to the airport. Thanks YIMBY liars.”
“I’m so rich I wouldn’t notice an extra $1200 a year” Also the problem is this doesn’t go far enough, you want bigger gains then we need to go bigger.
If by bigger you mean actually building a modicum of low-income housing for those ACTUALLY AFFECTED BY THE HOUSING CRISIS, then I’d agree. Giving carte blanche to developer groups to build yuppie condos is exactly 10000% the wrong direction.
Market rate housing production can only possibly scale when rents are rising. Capital dries up when rents are falling or flat.
There is no way that a mode of housing production that only works during 1/4 of the biz cycle can ever produce housing to scale.
Economics 101.
It’s folly to trash a city for housing it will never be able to fully satisfy demand for.
People can live in Brisbane, Richmond, Emeryville, etc.
Not everyone gets to live where they want. I don’t know why we are driving these policy changes at the expense of what made this city special.
Yes we should build more, but preservation has its place, for good reasons.
Everyone can live where they want…they just have to have the resources to pay the going rate, that the community has agreed the place they want to live is valued at. The community has made that the rate, by their participation in the market and nothing could be more FAIR than that ! The definition of ‘RENTING” is temporary. It’s never a permanent situation, like neo-marxists are trying to redefine it ! If you want more choices, acquire the resources to make them. Stop thinking supporting parasites is a good thing… It is not, is ever healthy for a city and San Francisco’s current decline is PROOF of this!
” It’s never a permanent situation, like neo-marxists are trying to redefine it ! ”
Do big-C Capitalists like you value keeping your contracts, the terms of which are undersigned as YOUR WORD? Yes or no?
Renting is temporary but it’s still a managed contract – you can’t just do whatever you want, you follow the rules and the law is there to protect you when a landlord decides not to. Period.
Whining about Marxism of all things has no bearing.
Agreed, we need to ban the parasites in the political class, lobbyists, consultants, nonprofits and public sector unions from politics and restore democracy exclusively to the people.