Increasing Affordable Housing Requirement Sparks Debate in San Francisco

Since it was you who initially made the statement that, by implication, San Francisco had “… many foreclosures… many vacant properties, houses and apartments for which there are no "buyers." (Your comments were in response to an article in the SF CHRONICLE regarding various new developments being proposed in San Francisco.)

So I shall turn the question around and direct the following to you. What made you make that statement in connection with San Francisco in the first place…? Where are your numbers…? What is your familiarity with the SF housing market…? Do you know something that Lennar (the developer at Hunters Point) doesn’t know…? I live in SF and I can assure you that there are precious few vacant houses or condos anywhere in this city, even in “bad” neighbourhoods (excepting those associated with normal turnover in the RE market). If I were to put my own condo here on the market today (at an asking price you may well consider absurd), I can assure you that I would have half a dozen full-price purchase offers within a week. Most houses and condos in my neighbourhood are still selling for over-asking price. How is that for demand...? (There was a very good map-graphic in the SF CHRONICLE yesterday which shows, by Zip Code, the year-over-year price changes for houses and condos throughout the SF Bay Area... most of SF city was up 0-15% while some outlying areas, like Fairfield and Antioch-Brentwood, were down as much as 20%).

Geographically, SF is a virtual island, which sets it apart from most US cities from the standpoint of development, property values, and housing demand… this isn’t Houston or Phoenix, where you can keep building houses all the way to the horizon and then some. Other island cities include Manhattan and Miami Beach (places where I used to live, so have personal familiarity); these places exhibit similar market conditions to San Francisco, with housing demand permanently outstripping supply, causing perennially high prices. (Like San Francisco, much of Miami Beach remains an island of expensive houses and condos; even during the current Real Estate meltdown, price reductions have so far been relatively modest compared to what is happening across the causeway in the much larger Miami metro area, where there is much more buildable land). In all these places (and you can perhaps add Vancouver BC and Honolulu to my short list here) there is little or no developable vacant land, so that the supply of housing is always constricted, resulting in high prices characteristic of such places. Perhaps the most extreme example of constricted supply is Key West, two-square miles of the just about the most expensive housing in America (how about $750k for 600-sq.ft. conch house on a 20-ft.-wide lot...?). In the case of San Francisco, onerous planning, building, and environmental regulations and/or restrictions also conspire to drive up the cost of housing.

What I am saying here is that not all cities are created equal; even during the present real estate market “crash,” there are many local market anomalies which make your broad-brush dismissal of the need for new development meaningless. The skyrocketing number of foreclosures, vacant buildings, etc., tend to be heavily concentrated in a handful of urban areas around the country, while other areas still prosper. Here in the SF Bay Area, foreclosures, etc., are indeed way up, but are heavily concentrated in a number of outlying suburbs, such as in the aforementioned Fairfield and Antioch-Brentwood, where many "affordable" “starter” homes were built during the recent boom. Ever expensive SF (city) is experiencing very very few foreclosures, in fact. (The fact that San Francisco housing has long been expensive is, somewhat ironically, its saving grace; it was always too expensive for flippers and speculators).

I’m not here to advocate nor attempt to explain what should be done about lack of affordability in San Francisco. That’s a tough and perhaps intractable problem. One could even say: Who says this city should be affordable for all comers…? Central London, most of Manhattan, and much of Paris are unaffordable to most as well; that hasn’t made any of them less attractive or vibrant as urban places. San Francisco may indeed just become a high-income enclave catering only to those who can afford it. Is that so terrible...?

I know, of course, a lot of what I just said is terribly un-PC, especially in a planning forum. I was merely trying to build a case to refute your implication that SF was full of foreclosures and vacant properties… again, it ain’t so.

Christopher C.