So You Want To Fix The Housing Crisis

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So 15 of the 30 cities with the highest rents in the country are all in the San Francisco Bay Area, with Palo Alto topping the list, according to this lovely report from Lovely that came out last week.

Part of this is cyclical. We don’t know where we are in the cycle or when it definitively turns. However, there are lots of structural forces at play that have accumulated over the last 40 years to get us where we are today including growth controls from back in the 1960s and 1970s, the emergence of the tech industry as an economic powerhouse and fragmented governance that often pits the Bay Area’s 101 municipal governments against each other. Here’s an overview I wrote back in the spring. These forces will almost certainly persist into the next economic cycle.

Unfortunately, there isn’t a startup or a piece of tech that’s going to solve the housing crisis, unless Oculus Rift is so good that we all decide to decamp to sparsely populated rural areas and “commute” to work in our virtual tees. (Hah, even Google CEO Larry Page seems to think houses in Palo Alto should cost $50,000.)

Actually, no. After geography, the constraints to more housing are largely political.

They will not get addressed unless there is a broad-based, regional movement of people who consistently turn out to vote in favor of inclusive, in-fill development and deep investment in mass transit. The reason the San Francisco city government won’t fix things that seem obvious like the appeals process for housing development, which leads to ridiculous situations like this, is because it fears a backlash from the hundreds of neighborhood associations that blanket the city and can reliably turn people out to the polls. On the other hand, the tech industry, which has 56,000 people in San Francisco, doesn’t.

If you need an example of how intense this is, over the summer, 71,421 people, or 8 percent of San Franciscans, decided that we should all vote on every single project over the existing height limits on the waterfront by passing a ballot initiative. It was funded primarily by a single wealthy couple that didn’t want to lose their views, and they put it through in one of the lowest turnout elections in city history.

It means that a mixed-use development from Forest City on Pier 70, which will create up to 2,000 housing units and preserve an artists’ warehouse after collaborating with 10,000 community members and undergoing a three-year design process, has to go to ballot this week. The San Francisco Giants, which have their own plans for a lot next to AT&T Park are closely watching this election, and they’ve already downscaled their ambitions about building a few housing buildings. Any delays and the cost of running all these political marketing campaigns will get passed onto buyers.

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