Can the tech boom solve our housing crisis? No, but it can make it worse

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HAC's mantra.

 San Francisco Housing Action Coalition and San Francisco Magazine posed an intriguing question at a forum they sponsored last night in the W Hotel: “San Francisco’s Housing Crisis: Can the Tech Boom Help Us?” Unfortunately, it wasn’t a question they ever really addressed at an event of, by, and for developers and their most ardent supporters.

Instead, the event was mostly just pro-development boosterism supporting HAC’s goal of building 100,000 new homes in SF over the next 20 years, and the discussion seems to show that the tech boom will exacerbate the housing crisis without ever addressing it, particularly given the local tax breaks and subsidies Mayor Ed Lee keeps giving the industry.

“San Francisco must radically increase its anemic housing production,” HAC Executive Director Tim Colen said during the introduction.

The pro-development cheerleading was slightly offset by the dose of reality offered by panelist Peter Cohen of the San Francisco Council of Community Housing Organizations, who noted that market rate developers aren’t building for today’s San Franciscans, 61 percent of whom make less than 120 percent of the Area Median Income. 

“We don’t believe the market will ever touch the 120 and lower,” Cohen said, later offering, “How do we build for the kind of San Francisco we have now?”

San Francisco Magazine Editor-in-Chief Jon Steinberg, who moderated the panel, said this event grew out of an important and widely acclaimed story that David Talbot wrote for the magazine last fall, “How Much Tech Can One City Take?” that raised critical questions about the wisdom of the big bet that San Francisco has placed on an industry driven by speculative bubbles.

“We got more responses from readers than anything we published in our history,” Steinberg said of the article, before shamefully expressing second thoughts on publishing it. “I felt the writer had been a little hard on our friends in the tech industry.”

He introduced UC Berkeley Economics Professor Enrico Moretti, whose 2012 book “The New Geography of Jobs” argues for reducing regulations that hinder housing production in cities, by saying that if he’d read it before publishing Talbot’s excellent article, “I think it would have had a little different tenor.”

Yet Moretti’s presentation was an overly simplistic Economics 101 argument that housing prices go up when demand is strong and supply is weak. “It doesn’t take a degree in economics to know those workers will bid up the price of housing,” Moretti said after noting San Francisco added 21,500 job but just 2,548 new housing units last year.

That’s the basic line we hear a lot these days, that only a massive housing construction boom will keep housing prices down and prevent mass displacement. “The only answer is to radically increase the supply,” said SPUR Executive Director Gabriel Metcalf, noting that means tossing out many of the city’s historic preservation and height and density restrictions. “All we have to do is get out of the way and allow housing to increase to make it normal again.”

Metcalf confidently predicted that housing prices and rents would drop if the city pursued that kind of unfettered housing boom, offering to buy Cohen a beer if he was wrong. Yet even Moretti’s research shows that Metcalf would probably lose that bet.

Moretti compared San Francisco to Seattle, which is also experiencing a comparable high-tech job boom that exacerbated a housing supply shortage, which Seattle responded to by following the prescription of HAC and building thousands of new condos in the downtown core.

The result was that rents in Seattle have increased 31 percent less than San Francisco’s, which he called significant, despite the fact that rents are still on the rise there even with a massive influx of new people and condos and all the infrastructure challenges that presents (it’s widely accepted that new development in San Francisco doesn’t pay for the full cost of infrastructure needed to serve it, which is a huge issue in the transportation sector alone).

Nobody had a good answer to Cohen’s point that building tons of market rate housing won’t actually do much to prevent the displacement of a majority of current city residents. As he put it, “What’s missing is who is that housing for, who is it actually serving?”

Metcalf welcomes the wholesale transformation of San Francisco – “It will be a change, a total change, and guess what? That could be great.” – but even he argues for the importance of policies that protect those on the bottom half of the economic scale, from rent control to more government-subsidized affordable housing production.

As Metcalf, one of the biggest market rate development cheerleaders in city, said, “If it were not for rent control, I would have been forced out of the city by now.”

Comments

should house whose job skills no longer match what the city's economy needs? What other enterprise would suppress building the homes that our tech workers need simply because some other people might not be able to afford them?

It's obvious that both NIMBY'ism and rent control have dramatically failed to keep housing prices down in SF, and the question has to be asked as to why we persist with policies that seemingly both actually drive up the cost of housing.

In any event, we do not need a SF-based solution, but a BayArea based solution. Most tech jobs are outside of SF and most tech workers live outside SF. A parochial view that only considers SF misses the point. And in fact there is much more cheap housing across the Bay.

Not everyone can afford to live in the downtown area of the Bay Area. That's why God invented the suburbs and BART.

Posted by Guest on May. 15, 2013 @ 10:54 am

Low-paid workers in restaurants and the service sector ARE this city's economy, far more than just tech workers, and these workers need places to live. As Moretti made clear in his presentation, every new tech job creates five service sector jobs, most of whom don't make enough to afford a market rate home. While it might be good to have a booming economy and low unemployment rate, this city needs to ensure that we have enough affordable housing and money for infrastructure improvements to accomodate that growth. So I'll pose the same question this forum tried to: What is the tech sector going to do to help solve this problem? Lots of rich investors are getting richer, and they're being joined in their tax bracket by a handful of young people who had good ideas, but where's their sense of civic responsibility? So far, all they've done is demand low taxes and other subsidies from city taxpayers, which only makes the affordable housing crisis worse.

Posted by steven on May. 15, 2013 @ 12:11 pm

NOT imply in any way that they have to live in SF.

They can live in other parts of the Bay Area - that's why we built BART.

Posted by Guest on May. 15, 2013 @ 12:31 pm

If you follow Steven's twisted logic then you would never see a waiter or janitor within the city limits of Aspen or Greenwich or Shaker Heights.

And there would be no such thing as a commuter railway because everyone who works in a city would be able to live there.

The concept that a city needs to provide affordable housing for everyone who works there is really bizarre. Would it be nice? Sure. But essential? Who makes this stuff up? Is the term "urban area" unknown to the SFBG?

Posted by Troll on May. 15, 2013 @ 1:24 pm

There is zero need for the average SF worker to be able to afford the average SF home.

Posted by Guest on May. 15, 2013 @ 1:40 pm

There's a lot of empty space in Mission Bay. Why don't they just make a bunch of expensive condos there, put in some upmarket strip malls with craft beer and gourmet tacos? There are literally blocks and blocks that could be turned into a trendy tech ghetto. This would be nice because it would sort of keep them all in one place, and they wouldn't menace as much of the rest of the city. We could even build them their own park to lure more of them away from Dolores. Everyone wins.

I think that was supposed to be what South Park was supposed to do during the last tech bubble, but it wound up feeling to stuffy. These bubble heads want their ghetto to feel hip, not like Ally McBeal would live there.

So let's turn Mission Bay into an upscale, Vegas version of Valencia, and get the bubbleheads to move there and keep 'em from roaming free as much as possible.

Posted by So what? on May. 25, 2013 @ 8:45 am

then why do you suggest that it won't work in SF?

It's painfully obvious that if each year we create 20,000 new jobs and build 2,000 new homes, then rents and home prices will continue to rise quickly. Why do you wish to perpetuate that situation?

You've criticized the developers but have offered no solutions yourself.

Posted by anon on May. 15, 2013 @ 11:09 am

One, what do you mean by "worked"? Seattle let developers build tons of new housing and still rents and housing prices increased, and now that city and state are struggling to meet the needs of this growing population.

Two, the Guardian has offered many, many solutions to the problems our city is facing, but they start with a very simple idea that has wide political support: tax the rich. Successful downtown corporations should be supporting Muni, which their employees rely on, with a Transit Assessment District. We shouldn't be cutting taxes on the booming tech industry. Read the Guardian, we're offering good ideas all the time.

Posted by steven on May. 15, 2013 @ 12:31 pm

a massive 31% less than SF, which didn't build in that way.

You're arguing with yourself.

Posted by Guest on May. 15, 2013 @ 12:47 pm

If my barely affordable rent goes up by $138 per month instead of $200, does that really make a "massive" difference? I don't think so, particularly if the city is also increasing the sales tax and public transit rates to accomodate all the new growth. The point is that market rate rents will never come down in San Francisco, no matter much we built or how fervently the developer shills say they will. Yes, we should build more housing, but it's foolish to think we can let market rate developers build our way out of this problem and still retain San Francisco's diverse character.

Also, to those who say we can simply bus, drive, or train in an increasing number of service workers into our growing city, how would you fund a massive expansion of our transportation infrastructure? BART, Muni, and the roadways are all at capacity during peak hours now, and fueling economic growth with more tax breaks is not a good recipe for overcoming that challenge.

Bottom line: beware of bumper sticker solutions by self-interested developers.

Posted by steven on May. 17, 2013 @ 2:08 pm

1) You write: "Yes, we should build more housing, but it's foolish to think we can let market rate developers build our way out of this problem and still retain San Francisco's diverse character."

The more we build, the cheaper our housing wil be. Or, at least, it will be less expensive than it otherwise would have been as your Seattle citation appears to indicate.

So to preserve the "diversity" that you appear to like, we need some housing to be cheaper, and the best way to achieve or preserve that is to have more housing, and that means building more.

2) You write: "BART, Muni, and the roadways are all at capacity during peak hours now, and fueling economic growth with more tax breaks is not a good recipe for overcoming that challenge."

It's only at capacity at peak times, so the most obvious solution is to stagger working hours, to increase travel numbers without increasing investment. We're already seeing that with knowledge workers who can often choose their own hours, work flex-time and work at home some of the time.

While economic growth leads to better paid jobs which can help meet any increases in housing and other costs.

Posted by Guest on May. 17, 2013 @ 2:29 pm

Re: "fueling economic growth with more tax breaks is not a good recipe for overcoming that challenge."

What tax breaks? Some are a good idea, some aren't. Not sure what you are referring to.

And on the second part about transit, anything you see or read about the history of New York City, including the Ken Burns thing, talks about the creation of the subway being a tremendous catalyst for growth. Because people could live in the outer boroughs and get to work in Manhattan. It didn't destroy any of New York's diverse melting pot social fabric. The concept that San Francisco is going to participate in the 21st century without ever looking at its transportation infrastructure is absurd. And in this case San Francisco isn't going it alone. If it becomes the great center of wealth that Steven fears it will provide for a lot of people paying state and federal income tax. And it will directly benefit the areas of San Mateo and Alameda.

The reason that Progressives aren't allowed to govern is that they just wring their hands when they see a challenge. In New York they are still digging subway and water tunnels rather than just saying "We can't".

Posted by Guest on May. 17, 2013 @ 3:08 pm

Market rate rents will never come down, even if we build more housing? That's a sad and hopeless point of view.

Posted by Guest on May. 17, 2013 @ 2:54 pm

It isn't sad or hopeless to acknowledge reality, it's a necessary first step toward addressing the problem. San Francisco is a great city, which is why we have an insatiable demand for housing. We should build more market rate housing to keep costs from going up too high, but as Cohen said at the forum, that does little to meet the needs of more than 60 percent of city residents. For them, we need subsidized affordable housing, which this city of great wealth can do a much better job of building if we decide to finally decide to fairly tax those with the wealth, which we also need to improve our transportation system and other crucial infrastructure. It's about achieving balance, and retaining the values of St. Francis as we growth, rather than just letting market rate developers build as much as they want.

Posted by steven on May. 17, 2013 @ 3:38 pm

but it is naive to think that we can save (what you cite as) the 60% who cannot afford that. If it were 6%, then, maybe.

SF is changing and not everyone who would like to live here, or already lives here, can afford to be here. Moreover, no city can afford to have 60% who can't make it here. It's too many to save or build subsidized housing for, so the only real choice is for many of them to leave.

In some cases, that can mean as little as moving a few miles to places like Oakland and Daly City, and the East Bay in particular has lots of space. In other cases, folks may need to move further away, but that is not a bad thing, and I know a number of people who have moved to cheaper States and have no regrets.

I cannot afford Aspen and I accept that. Others need to accept that they lack the earning skills to live here.

Posted by Guest on May. 17, 2013 @ 3:47 pm

and still rents and housing prices increased in Seattle. So why bother buidling so much more here in SF if the prediction is that rents and housing costs are still going to be high? Isn't there a value in having open space and sunlight? Isn't there value in keeping some SF charm and not becoming Manhattanized, as the SFBG puts it?

Posted by Guest on May. 15, 2013 @ 3:14 pm

There's nothing anyone can do about either the tech boom or the boom in the stock market or the rise in housing prices. Not a damn thing. Don't you get tired of spinning your wheels endlessly over problems on which your pathetic polemics have ZERO impact?

Repeat - Steven Jones can't do shit about global warming, the tech boom, gentrification, housing prices or anything else. Maybe he can help remove a car lane from the Wiggle though - they can put that shit on his tombstone.

Posted by Lucretia Snapples on May. 15, 2013 @ 11:20 am

his acknowledgement that he is powerless to influence the way this city progresses. It's his outlet to express his frustration at the futility of his endeavors.

Those who can, do. Those who cannot, whine about it.

Posted by Guest on May. 15, 2013 @ 11:38 am

My role as a journalist is to highlight problems and inequities in the system. Your role as a citizens is to recognize the problems and demand action. The role of our elected officials is to do something about it and see to the interests of this city, not simply their campaign contributors. That's the system we live under.

Posted by steven on May. 15, 2013 @ 12:40 pm

But instead merely whine from the gallery?

Posted by Guest on May. 15, 2013 @ 12:53 pm

I realize that Todd Vogt gives Steven a paycheck so I guess by that low standard Steven qualifies as a journalist.

But this article shows you why he has zero credibility. Vogt has embarrassingly low standards.

In this article Steven says that Ed Lee 'keeps giving' subsidies and breaks to text companies and when I ask him for examples he points to things that Newsom did. Or things that the voters did. Or the absurd notion that Ed Lee should be the only mayor on the planet who forces AirBNB to pay hotel taxes.

Steven gets a lot of ridicule, perhaps if he tried to stick to the truth a bit more than things might work out better for him and his bosses. People who cash a paycheck as a 'journalist' but just make stuff up deserve our ridicule and laughter.

Posted by Troll on May. 15, 2013 @ 1:14 pm

The Executive Director of SPUR should not be receiving affordable housing subsidies (rent control).

Posted by Guest on May. 15, 2013 @ 11:38 am

It makes no sense to give rent control to everyone regardless of financial situation.

Posted by Guest on May. 15, 2013 @ 11:50 am

This is an example of why I have trouble giving Steven any credibility:

"the tech boom will exacerbate the housing crisis without ever addressing it, particularly given the local tax breaks and subsidies Mayor Ed Lee keeps giving the industry."

What tax breaks and subsidies does Ed Lee keep giving to the tech industry?

I'm aware of a deal that he worked out with Twitter awhile back, one that is largely credited with drawing a number of companies to an underutilized section of the city.

I know that Ed Lee does not press AirBNB to pay hotel taxes. Nor does any other Mayor on planet earth.

But really, when Steven says something like that he should offer some type of explanation, because without it it just seems like the type of hyperbole and exaggeration that gets him laughed at so consistently.

Posted by Troll on May. 15, 2013 @ 12:19 pm

He just took some cheap shots at others who did offer solutions.

Posted by Guest on May. 15, 2013 @ 12:36 pm

You named two, Troll, so that's a start. There's also the repeal of the city's tax on stock options, ending a law that was signed by Mayor Newsom, who isn't exactly a flaming socialist. And then there's the big one: last year's business tax reform measure, which cuts taxes on the tech sector across the board.

Posted by steven on May. 15, 2013 @ 12:37 pm

Often they are called enterprise zones.

Cities do it because it works and is good for the taxbase.

Fighting to get companies to move and expand here is good policy.

Posted by Guest on May. 15, 2013 @ 12:51 pm

OK..like I said, Steven makes things up, his credibility is in the toilet for a reason.

Ed Lee provides a subsidy because he isn't the only mayor in the world to demand that AirBNB pay hotel taxes. Nothing there that deserves any ridicule, no.

And BTW, last year's business tax reform did not specifically address the tech sector, and it was also approved by a group called the 'voters'.

And the will of the voters does take precedent over the will of the SFBG. A sad state of affairs, I know, but one that we must accept and try to live with.

Posted by Troll on May. 15, 2013 @ 12:58 pm

I gave you four examples, that you ignored and misrepresented. There are also enterprise zones, a new police substation, various MOEWD financing mechanisms, and other subsides that I didn't get into that benefit tech, not to mention a lack of enforcement when tech firms violate local laws and tax codes. Honestly, anyone who can claim with a straight face that Lee isn't helping tech has zero credibility (yes, I'm talking to you, Troll/Tony Winnicker, the Mayor's Office liaison to the tech industry). 

Voters didn't design the business tax reform, they simply responded to the complex formulas that Lee negotiated, which just happened to lower taxes on the tech industry that funds his campaigns. Big surprise. It was only because it finally raised overall taxes on the finance and real estate sectors (which Lee opposed and was forced to accept by Avalos and progressive constituencies) that the Guardian and other progressives supported it. It's a complex world, but the only simple, recurring, predictable truth in this city is that Mayor Lee is in bed with the tech industry and does its bidding, time and time again.

Posted by steven on May. 16, 2013 @ 4:48 pm

I never said that Lee doesn't support tech. Of course he does. He ran on that platform and it is one of the reasons that he has a 61% approval rating.

I was reacting to your statement about "the local tax breaks and subsidies Mayor Ed Lee keeps giving the industry" and asked for examples. You came back with things that Newsom did. So where did the term "keeps giving" come from other than you thought that you could get in yet another cheap shot?

A little history on the tax reform that you use as an example. It was put on the ballot by an 11-0 vote of the Board of Supervisors. The voters approved it 70-30%.

And you use it as an example of something that Lee did improperly. Wow.

Of course Lee supports local business. That's his job. Which he is doing well. Which is why he is so popular.

Or do you want to tell us again how Ranked Choice Voting doesn't really work and falsely inflated his popularity? That was a good one.

Maybe you should stick to focus on your own problem that you frequently get caught saying things that aren't true.

Posted by Troll on May. 16, 2013 @ 5:24 pm

Steve: seriously, if we are not going to build more housing, how do we determine who gets to live in San Francisco?

1. You can have what we have now, which is:
A. Rent Control protecting people who happen to be here already at the expense of people in other places, and
B. Vacancy de-control meaning that when a unit becomes available, there is a jump in price as high as the market will bear, so new residents tend to be wealthier.
So you can protect the current waiters and janitors, but not the next generation of lower-income workers in SF.

B. If you could actually require some or all housing to be offered at a below-market rate, then you would have more people who want the units than there are units. So you need some sort of selection or lottery, where winners get to live in a home of great value for a low price, and others get nothing.

C. The city could allow more housing but keep the existing stock under rent control (and if any new construction wants to demolish a rent-controlled unit, some affordable rate units could be part of the bargain). This could preserve the homes of existing lower-wage workers and residents on fixed incomes who are already here, avoid the lottery effect, and restrain the growth of higher prices.

C sounds like the best option. I'll listen to arguments against.

Posted by GuestA on May. 15, 2013 @ 2:37 pm

From my observations, all the new residential buildings going up are called, "Luxury Designer Homes." Translation: Condos for the pretentious wealthy---mostly white---snots. Change the signs coming into the city to read: "Welcome to Tiburon 2."

Only one new building going up labels them, "Residential Units." But it will be the same pretentious wealthy snots buying the cheaply-made dumps.

Posted by Guest on May. 15, 2013 @ 2:51 pm

You won't be buying them though - and that seems to be the main source of your anger and frustration. Rather than sit around and rant at the "white snots" who can afford these units why don't you buy across the Bay in Oakland or Fremont or get on the city's list for subsidized housing? After all - it's progressive policies which have led to this situation - if you get on the city's list now you should be able to get something in 10-15 years unless your last name is Chinese, in which case Rose Pak can ensure you're handed something right away.

Posted by Lucretia Snapples on May. 15, 2013 @ 3:09 pm

But I'll bet he's not black or hispanic.

He's just a failed white.

Posted by anon on May. 15, 2013 @ 3:13 pm

"You won't be buying them though..."

That's true, troll, because I wouldn't buy a cheaply-made dump. And secondly, I would not want to own a home here. I did own one and sold it. But thanks for asking.

Posted by Guest on May. 15, 2013 @ 3:29 pm

And not because that is way out of your league? Now I understand all your nager - you resent that the communist Chinese can afford what you cannot. Got it.

Posted by Guest on May. 15, 2013 @ 3:38 pm

Every single permitted build or remodel in San Francisco is overseen by our hallowed building department and its legion of honest inspectors - who represent the highest essence of professionalism and expertise. Nothing escapes their eyes! Nothing!!

Posted by Lucretia Snapples on May. 15, 2013 @ 3:47 pm

Yeah well. Now back to reality. My partner is a contractor and from his many years of successful experience, he's says they are cheaply made:

They are using low-quality items such as single-paned windows and cheaply-constructed walls with very little insulation. The amount of concrete used in the concrete buildings is pathetically small with undersized columns. We'll find out what kind of carpeting and appliances are put in these dumps later. Probably very low quality as well. But of course they will try to sell them by talking about the granite counters in the kitchen (and so many people cook these days! ha!)
I hope this answers your question.

The inspectors are of the highest of quality? What substance are you on?

Posted by Guest on May. 15, 2013 @ 4:05 pm

Sorry - try again.

Clearly you didn't see the sarcasm in my statement about SF's inspectors.

Posted by Lucretia Snapples on May. 15, 2013 @ 4:15 pm

Then you don't live in San Francisco because double-paned windows are not required here. But I suspect you're just trolling for attention and I'm responding for the benefit of others, not for you.

Posted by Guest on May. 15, 2013 @ 4:31 pm

you, me and Lucratia. Your tedious posts about double-glazing and incessant whining about people with more money than you have driven everyone else away

Posted by Guest on May. 15, 2013 @ 4:45 pm

are mandatory in all new construction in SF and when replacing older windows.

Sorry - try again.

Posted by Lucretia Snapples on May. 15, 2013 @ 7:38 pm

Not true, big Talker.

Why don't you give it up.

Posted by Guest on May. 16, 2013 @ 4:44 am

knows someone else and that third-hand respodnent claims that every home built in SF is cheaply made?

Oh well, it must be true then!

Posted by Guest on May. 15, 2013 @ 4:16 pm

when "Guest", anon and Lucretia say they know "many people" who do such and such a thing as a way of backing up their claims.

Posted by Guest on May. 15, 2013 @ 10:27 pm

Your need for certainty makes little sense here. It's a debating chamber not a science experiment.

Posted by Guest on May. 16, 2013 @ 6:45 am
Posted by Guest on May. 17, 2013 @ 7:12 am
Posted by anon on May. 17, 2013 @ 7:36 am

Lucretia, irony is lost on the panicky and earnest.

Posted by Hortencia on May. 16, 2013 @ 5:25 pm

Down with Prop13! That will increase the tax base enough to support MUNI. If renters are supposed to be at the mercy of the free market ... property owners should be as well.

Posted by Guest on May. 15, 2013 @ 3:48 pm

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