Since 2002, more than 10,000 new housing units were created in San Francisco, but the added supply has not reduced the price; the cost to buy a home, aswell as rent, is reaching levels experienced during The City’s dot-com days, according to a city report.
“This report is the smoking gun that explains why housing costs so much in San Francisco,” said Gabriel Metcalf, executive director of San Francisco Planning and Urban Research Association, a public policy think tank. “We should be building 5,000 units a year.”
The price to rent a two-bedroom unit increased from $2,229 a month in 2005 to $2,400 in 2006. A two-bedroom unit averaged between $2,500 and $2,750 in 2000, according to a new “housing inventory” report recently released by The City.
Similarly, the cost to buy a three-bedroom house has constantly increased during the same time period, from $543,059 in 2000, to $846,640 in 2005 and $849,750 in 2006.
“When we under produce housing every year we force people to compete with each other for the scarce supply,” Metcalf said, adding that the scarcity drives housing costs up.
San Francisco’s Housing Element, a planning document required by the state to outline how a city’s housing needs will be met, notes that The City should create about 3,000 housing units annually with 1,000 at affordable levels.
Of the 10,317 new units constructed in San Francisco between 2002 and 2006, 3,039 were priced at “affordable,” below-market rates, according to the report.
The number of new housing units is too low, said Matt Franklin, director of the Mayor’s Officeof Housing, who blamed it on a “dearth of investment” in housing in 2002 and 2003. Since then, Franklin said, The City has invested more, and the 2006 numbers are still low because it takes about four years for affordable housing projects to be realized.
Franklin said that in a year and a half, 1,396 affordable-housing units will be constructed. Additionally, there are about 4,800 affordable-housing units in the planning stages, he said, which are likely to be constructed in two to four years.
In an attempt to address the housing need, elected officials this year have put forth several ballot measures related to housing in San Francisco: Supervisor Chris Daly has put a measure on the November ballot that would require that The City spend about $2.7 billion toward affordable housing during the next 15 years.
The way to help solve the problem is “to be aggressively building more affordable housing,” Daly said, adding that he disagreed with the assumption that “hyper-construction” would drive down prices. Daly has also championed a ballot measure that would require 50 percent of a new Bayview-Hunters Point development to be affordable, up from the current plan to offer 30 percent of the housing at below-market rates.