A clear-eyed report on the housing crisis
The cost and availability of housing is one of the Bay Area’s biggest headaches, and everyone seems to have an opinion about how to fix it. It’s more important than ever for policymakers to choose the right ones. What’s at stake, after all, is the region’s future. The Bay Area Council Economic Institute released a report last week that considers 20 different state and local policies related to housing, and analyzes their impacts on affordability. Some of the policies are long-standing, others are merely up for consideration.
What’s useful about the report is the way it avoids ideological dogma.
The institute is a pro-business think tank, and many of its recommendations reflect a common refrain in supply-side economics: Lowering costs will require the Bay Area to increase supply.
This is a common refrain because it’s true. The top two policies the council found that would increase housing affordability are expediting new housing developments and reducing the length of permitting time. Gov. Jerry Brown suggested a plan to do just that in his most recent budget — a smart plan that was repulsed by furious local officials in coastal metropoles all over the state.
Yet: “The Legislative Analyst’s Office found that California’s coastal metros take about two and a half months longer, on average, to issue a building permit than in a typical California inland community or the typical U.S. metro,” the report admits. The result is housing gridlock. Fixing those two policies alone would create affordability for more than 30,000 households in San Francisco.
The 2014 San Francisco initiative requiring voter approval for any future waterfront developments that want to build higher than the city’s existing height limits is hurting us, too.
Voters’ desire for micromanagement may prevent the construction of 6,144 housing units over the next 20 years. Fortunately, San Francisco voters were wise enough to defeat 2015’s moratorium on housing development in the Mission. An indefinite moratorium would have pushed 9,377 households into unaffordable housing.
Banning Airbnb? Also a bad idea, the study’s authors
found. Middle-income San Francisco households indeed use the platform to earn extra money for themselves, not to remove units from the rental housing supply.
These stats won’t please San Francisco’s more progressive Democrats. But they’ll find things to like in the report, too.
For one thing, it admits that there are limits to a supply-only solution. Just building, willy-nilly, won’t help the most vulnerable Bay Area residents.
“The type of housing supply that a policy creates is critical,” the report says.
Rent-controlled apartments and below-market-rate housing design — two flagship concerns of the progressive cause — are both critical for the affordability needs of thousands of households.
The report’s authors also applaud further reduction of parking requirements for new construction — a development model that will increase affordability but also begs for a robust public transit system.
Perhaps its most controversial point of analysis, meanwhile, is for a policy to restrict all non-primary residences in San Francisco. Some regions with high housing costs (Denmark, Norway, Switzerland) limit second-home ownership. The report notes that San Francisco banning secondary residences would increase the housing supply by nearly 7,500 units.
Everyone who cares about housing costs in the Bay Area has a problem with someone else’s housing policy — whether it’s developers blaming local policymakers for regulations or community advocates blaming new housing developments for increased prices. Studies like this one help policymakers understand which ideas will make housing more affordable — and which ones are nothing but empty rhetoric.