Let’s try sup­ply-side hous­ing pol­icy

A mo­ra­to­rium on build­ing won’t solve the af­ford­abil­ity is­sue.

Los Angeles Times - - OP-ED - By Jamelle Bouie e all Jamelle Bouie is a staff writer for

Wknow that San Fran­cisco is boom­ing, but it’s still stun­ning to see the num­bers. Ac­cord­ing to the Cen­sus Bu­reau, in just 20 years, from 1995 to 2015, the city added 100,000 peo­ple for a to­tal pop­u­la­tion of al­most 850,000. For com­par­i­son’s sake, Wash­ing­ton, D.C. — another boom­town — added 78,000 peo­ple over the same pe­riod. More dra­matic is the growth of the la­bor force, which in­creased 25% over the last five years.

For the over­all econ­omy, this is good. Pop­u­la­tion growth fu­els jobs and op­por­tu­nity. But not ev­ery­one ben­e­fits equally. The work­ing­class res­i­dents of San Fran­cisco are strain­ing un­der the weight of ex­plo­sive hous­ing costs. Tak­ing into ac­count lux­ury rentals as well as older de­vel­op­ments and rent­con­trolled units, the Fur­man Cen­ter for Real Es­tate and Ur­ban Pol­icy at New York Univer­sity found that, in 2013, the me­dian rent in San Fran­cisco was $1,491, the high­est in the na­tion.

Limit your view to newer, mar­ket-rate units, and the num­bers are even more dis­cour­ag­ing: Ac­cord­ing to the real es­tate start-up Zumper, me­dian rent for a stu­dio is $2,650, while a one-bed­room goes for $3,500. For land­lords, these high costs make ren­o­va­tions at­trac­tive, lead­ing to more and more evic­tions. A 2013 report from the city’s bud­get an­a­lyst found a 38% in­crease in all evic­tions and a 170% in­crease in El­lis Act evic­tions — a state law al­low­ing land­lords to force out rent-con­trolled ten­ants so long as they sell or de­mol­ish the build­ing, con­vert the units into con­do­mini­ums, or let the prop­erty sit va­cant for at least five years.

The bulk of these evic­tions have been in the Mis­sion District, a his­tor­i­cally Latino area of the city. Des­per­ate to stem this dis­place­ment, area lead­ers, in­clud­ing Su­per­vi­sor David Campos, have tried to limit lux­ury con­do­mini­ums — the most vis­i­ble sign of the change — with a 45-day mo­ra­to­rium on con­struc­tion.

On Tues­day, the Board of Su­per­vi­sors voted 7 to 4 in fa­vor of the mo­ra­to­rium. But the mea­sured needed 9 votes to pass, so it failed.

This was the right out­come. For as much as it may calm fears — one backer said it was about “sav­ing the Mis­sion District, sav­ing San Fran­cisco and sav­ing the heart and soul of our city” — a mo­ra­to­rium doesn’t solve the prob­lem at hand.

Let’s go back to the city’s pop­u­la­tion growth. Since 1995, San Fran­cisco has grown by 100,000 peo­ple, and al­most half that growth has been since 2010. None­the­less, ac­cord­ing to a re­cent report from Paragon Real Es­tate, the city has seen just 7,500 new hous­ing units since 2010, and just 33,000 since 2000.

What hap­pens when de­mand out­strips sup­ply? Prices go up, of course. And that’s what we’ve seen in the city. Con­trary to what some ad­vo­cates seem to be­lieve, San Fran­cisco can’t es­cape this ax­iom.

It’s the same in D.C., where there are more peo­ple and tough build­ing lim­its. The re­sult is ex­plo­sive gen­tri­fi­ca­tion.

At just 45 days, it’s hard to say that the San Fran­cisco mo­ra­to­rium would have mat­tered, one way or the other. Still, that ap­proach — plac­ing new lim­its — is coun­ter­pro­duc­tive.

There are re­ally only two ways of deal­ing with high hous­ing costs and sub­se­quent evic­tions. You can try to make San Fran­cisco less de­sir­able, or you can ac­com­mo­date de­mand, which has to mean more build­ing, and greater den­sity in high-in­come and de­sir­able neigh­bor­hoods.

Not that let­ting the mar­ket do its work is a panacea. The sad fact is that high de­mand hous­ing mar­kets aren’t too keen on af­ford­able units.

To make head­way, cities will have to use the fruits of new build­ings and new res­i­dents — more tax rev­enue — to pre­serve a place for low-in­come res­i­dents.

With more rev­enue, the govern­ment can move on new or stalled pub­lic hous­ing plans, pur­chase va­cant units for af­ford­able hous­ing and strengthen the city safety net. And it can en­hance those ef­forts with new man­dates, like af­ford­able set-asides in lux­ury build­ings. In short, it can throw the kitchen sink at the hous­ing prob­lem.

Some may ar­gue that this so­lu­tion is a form of trickle-down economics: Let the rich get their con­dos, and even­tu­ally the poor will get shel­ter, too. But it isn’t. It’s about lo­cal govern­ment us­ing the mar­ket as a tool to help low-in­come peo­ple pre­serve a place in their cities. New York City’s pop­ulist Mayor Bill de Bla­sio un­der­stands that con­cept, which is why he has com­mit­ted to a pro­gram of new con­struc­tion.

Many Euro­pean coun­tries ap­ply a sales tax — called a val­ueadded tax — to al­most ev­ery trans­ac­tion. On its face, this is re­gres­sive: Be­cause work­ing peo­ple spend most of their in­come on goods, they’re hit hard­est. But so long as these coun­tries di­vert rev­enue to as­sist the needy, they can achieve pro­gres­sive goals.

Like­wise, when it comes to hous­ing pol­icy, govern­ment can har­ness means that may not seem pro­gres­sive for ends that ben­e­fit ev­ery­one.


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