Mike Koozmin/S.F. Examiner file photoMore than half the homes under construction in early 2013 were in developments of at least 250 units

Mike Koozmin/S.F. Examiner file photoMore than half the homes under construction in early 2013 were in developments of at least 250 units

San Francisco at 1 million: Can city’s housing supply keep up with demand?

The signs have been there for a couple of years, and there’s no mistaking it now: We are living in Dot-Com Boom 2.0.

That’s given rise to a fully formed rent war that’s creating eye-popping rates for even small apartments while forcing many San Franciscans to skip town for good.

Among each of the skirmish’s regiments — developers, city planners, landlords and renters themselves — there is plenty of prognostication and blame, but few solutions. The City, no stranger to superlatives, is now the most expensive real estate and rental market in the U.S.

Earlier speculation that housing costs would have reached a plateau by now has not come true — not even close.

U.S. Census Bureau figures put the median of The City’s rental rates — the midpoint on the spectrum of rental prices — at $1,463 per month. Almost 40 percent of San Francisco rental properties demand at least 35 percent of tenants’ total income. The Trulia real estate listings website shows the median cost of buying a home is $850,000, which is nearly $200,000 more than five years ago and more than double what it was in 2000.

Traditional economics might hold that the high price would eventually curb growth over the long term. Not so, according to an upcoming report by the Association of Bay Area Governments, which projects that The City’s 2010 population of 805,263 will grow 35 percent by 2040 — the fastest 30-year rate of increase in nearly a century. By 2032, 1 million residents will make San Francisco their home, the report predicts.

Unsurprisingly, the first reaction to high rents in this supply-and-demand problem has been simply to create more supply — and fast. After a “reservoir” of stalled projects built up following the 2008 housing crisis, the proverbial dam has now opened, according to the Planning Department’s most recent development “pipeline report.”

As of the second quarter of 2013, more than 5,000 housing units were listed as under construction, with an additional 15,500 units in some stage of the planning process. Of the properties under construction, more than half included at least 250 units each, suggesting taller buildings are on the way for new workers flooding into the area to get a piece of the recent healthy job growth.

But here in the densest urban landscape west of the Mississippi, even small projects come with conflict from neighbors, leading some to question whether The City’s Byzantine development approval process is nimble enough to meet demand. Anti-growth movements have permeated city politics for decades, contributing to the low housing supply and high prices, says Gabriel Metcalf, executive director of the think tank SPUR.

“The desire to keep The City intact is leading to the hyper-gentrification of our neighborhoods,” Metcalf said. “If you’re going to be in the middle of a region that’s creating jobs, but you make it really difficult to add a supply of housing because you want it to look the same, then you are de facto choosing to make The City super-expensive.”

Richard DeLeon — a San Francisco State University political science professor and close observer of The City’s “anti-Manhattanization” movement of the 1980s and ’90s — isn’t so sure that more housing supply will solve affordability issues, especially if most of the new units fall into the price range of the wealthy and only a small percentage are required by The City to be below market rate.

“Housing advocates have been talking for years about this kind of permanent colonization of The City,” DeLeon said, noting that the high-tech sector, although prolific, makes up less than 10 percent of the total economy. “All of this, in some sense, is still the tail wagging the dog.”

San Francisco at 1 million

The City is poised to hit the mark in less than two decades. This five-part series explores the challenges San Francisco faces in handling this population milestone.

SUNDAY: What will San Francisco look like with 1 million residents?

MONDAY: Utility operators prepare for the population crush

TUESDAY: More people means more work for police and fire personnel

THURSDAY: Muni will need big changes to handle big boost in passengers

FRIDAY: Housing philosophy of “build more now” sure to be tested in the futureBay Area NewsSan FranciscoSan Francisco at 1 millionSan Francisco housing

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