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Bringing Down the Housing: How Builders Game the System 

Wednesday, Dec 19 2012
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"If you look at housing production in San Francisco, the more we produce, the higher prices go," says Teresa Ojeda, the manager of the Planning Department's information and analysis group. A near-insatiable demand for high-end housing has crowded out those seeking any other kind. "Prices are pretty much determined by ability to pay. If people have money to pay, prices will go up."

People have money. People have so much money, John Pollard says, they're paying millions for century-old cottages, outbidding builders like him who'd blow those shacks up into luxury homes for people with even more money. A bidding war between profligates willing to pay through the nose for the San Francisco lifestyle and house-flipping entrepreneurial builders is just the latest factor driving the teachers, bus drivers, and other salt-of-the-earth types referred to in local politicians' speeches out of this city. As San Francisco becomes the bike-friendly, walkable, green metropolis it aims to be, housing costs will further skyrocket. For decades, however, the city has served as a virtual test case on how to price real estate out of the reach of ordinary people.

Even in the 1970s, San Francisco was still one of the cheapest places to live in the Bay Area. But the demise of the city's industrial economy flipped the script. San Francisco became a corporate hub of the FIRE economy (finance, insurance, real estate), and has now laid out the tax-incentivized red carpet for tech and biotech firms and their well-compensated workforces. In The Transformation of San Francisco, Chester Hartman noted that the typical price of a San Francisco home in 1965 was only $3,000 more than the national average — but $53,000 more by 1980. According to the real-estate website Trulia, the median San Francisco home sale price hit $735,000 in late 2012. The U.S. median is $178,000, per the National Association of Realtors.

The city's indignant nudists recently claimed that an ordinance requiring them to cover their genitalia in public marked the loss of the free-spirited San Francisco of yore. The stark numbers above reveal that city was lost long ago. Unlike development-friendly, sprawling towns like Phoenix, Houston, or even San Jose, vast swaths of San Francisco look roughly similar to how they did generations ago. But looks can be deceiving. This city isn't just inhabited by different people than it used to be, but different kinds of people doing different kinds of jobs and using the city and its housing stock in different kinds of ways. Between the 1960 census and the 2010 edition, San Francisco gained 65,000 residents while losing 31,000 families. All the while, the ratio of renters to homeowners remained constant at 65:35 — though San Francisco is now the nation's most expensive rental market, catering to a far different crowd. It brings to mind, once again, the Ship of Theseus: Does a city remain the same when its residents are replaced in this way? In San Francisco's case, it's hard to argue that's so.


Despite clearly prevailing trends, San Francisco's civic boosters like to claim that ours is a city of socioeconomic diversity. There's even something about valuing that in the General Plan, along with preserving affordable housing. Census data, however, reveals the heavy majority of San Franciscans — some 58 percent — are now impoverished or wealthy. Wealthy people seem to be doing fine and, to its credit, city government has been aggressive about providing housing for the needy. Since 1985, some 1,100 units have been generated via fees paid by office developers. Since 1992, residential developers have been mandated to build or fund an "affordable" unit for every 10 they construct; this has led to 1,600 units. Nice — but 2,700 units represent 0.7 percent of the city's housing stock. And the teachers and bus drivers aren't staying — a thirtysomething couple with those professions might earn in the neighborhood of $130,000 or $140,000 per year. That's too much to qualify for the city's affordable housing programs — but too low to outbid the nouveau riche or developers jockeying for a modest home.

Those who aren't affluent or in abject poverty will find it increasingly difficult to establish roots here — and abject poverty is hardly an aspirational state. Much of the family-sized housing in this city is being built by Pollard and his colleagues, atop the ruins of the city's starter homes. "Families with three kids won't buy a 1,000-square-foot house," he says, "unless they have someone like me to turn it into a 3,000-square-foot house." Soon enough, every homeowner in San Francisco will have a million-dollar view.

The city's semantic games and logic puzzles regarding home demolitions haven't prevented the wealthy from consuming the city's most available real estate and hawking it to the wealthier.

It's their world — and everyone else is just paying rent.

About The Author

Joe Eskenazi

Joe Eskenazi

Bio:
Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" was a staff writer and columnist for SF Weekly from 2007 to 2015. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers.

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