As we outlined at the end of last year, with values dropping, the cost of capital having jumped, sales down and developers getting squeezed or even foreclosed upon, the number of housing units under construction across San Francisco was nearing a decade low, a mark which it has now hit as the number of units actively being built has slipped to under 5,000.
At the same time, while developers have slowed their building roll, the net number of units which have been approved by Planning (i.e., entitled) but for which the permitting process has yet to be initiated by a developer is approaching an all-time high, having ticked back over 35,000, which is around 40 percent higher than average over the past two decades.
As such, there are still over 70,000 units of housing in various stages of development across San Francisco, which is 10 percent above average over the past decade, including fully approved and permitted plans for around 5,000 units of housing which have yet to break ground and plans for another 13,000 units of housing which have been proposed and are currently under review by the City versus under 8,000 units under review by the City a decade ago.
The State of California is demanding that San Francisco build 82,000 new units or face severe penalties. Yet according to the article, there are currently over 70,000 units in the pipeline. Shouldn’t that reduce the number of required new units to around 10,000? If not, why not?
You’ve likely been reading, or listening to, sloppy reporting from local media outlets. Take for example How can SF build more homes in one of most densest US cities after affordable housing bond passed?, bylined by Lyanne Melendez at ABC7 from two months ago:
The story ends by stating flatly that “In order to meet the goal of 82,000 units in the next seven years, the city must build close to 12,000 units a year.”
Ms. Melendez should have known that in January 2023 The City adopted and the State’s Department of Housing and Community Development (HCD) certified a new Housing Element setting forth San Francisco’s plan for approving the State-mandated new housing units over the next eight years.
As former U.S. Treasury Secretary Steven Mnuchin was so fond of saying, “we live in a capitalistic society”. Private sector developers do the vast majority of the actual building of housing, and if they don’t feel like they can make money building more housing, the number of housing units actually being built will not be increased. Neither The City nor The State, nor the local YIMBY yakkers can do anything to force private sector developers to actually build any new housing if those developers want to sit on their hindquarters.
As I understand it, none of those units “count” with the state unless building permits have been issued for those units. Entitlement of the units isn’t enough.
So not only is SF nowhere near meeting the goal of 82,000 units, we are on track to fail and have the state take over the entitlement processes and subject us to the “builder’s remedy”, in which essentially anything proposed is automatically approved by the state.
Maybe that’s the “builder’s plan”
Let’s be honest here the city has never been pro active when it comes to housing. They only react when thing are all screwed up.
It didn’t take a genius to see population growth in the 70’s, 80’s and 90’s and what did the city do? restrict the amount of units a parcel could hold. The 25X100 lots along Taraval Street at one time could take a building 60 to 70 feet deep with 6 units on it. See the buildings on Taraval between 38th and 39th. In the 70’s this same size lots were only good for 4 units (see 41st and Taraval).
The city of SF, its planning commission and supervisors are the guilty parties here. Listening to every group that wanted to cry about something, if you have a code enforce it. Builders are easy to blame they, they are willing to speculate to make money, while the city just plains steals it in fees and taxes.
The population did not grow in the 70s or 80s (or, for that matter, the 60s).
From The Chron, S.F. becomes first California city to miss its housing goals. The impact will be massive, date lined July 01, 2024:
The Chron’s story ends by stating that developer Chris Foley plans to take advantage of SB423 by submitting an application for a 200-unit, 23-story tower proposed for the edge of the Castro neighborhood at 1965 Market St.. I am not holding my breath for him to actually break ground, however.
Per SS, SF lost 57k working residents since the pandemic, that would equal 30k housing units that freed up (assuming an average household of 2 to be conservative). Since there is no uptick in jobs and WFH/hybrid is here to stay, and no influx of new folks, why should the city be subjected to building 82k more units if the need has changed, would this need to be revised?. It makes no sense. We do not have the population or job growth to support the existing housing stock. Rents have fallen the last few years.
I’m not even factoring in financing as that clearly doesn’t event pencil out.
Does anyone know what the mechanism would be for getting those numbers (which I read were 5x the real need anyway) revoked. Serious q if anyone in the policy/ legal side knows. TY
The housing mandate is a Sacto legislative thing. To roll this back, ideally, it’s a matter of state level legislation. (At risk of pointing out the obvious, forget about calling Scott Wiener’s office) At any rate, nothing’s even remotely in the works as far as I know, not that I would.
Meanwhile, a smattering of mayors up and down the state seem to be highly p.ssed, (Add Peskin in case he gets elected later this year). They’re banding together to see if they can ramp some organized pushback. Finding Sen. Steve Glazer as an ally who just recently has been able to kick off an audit at state level. According to the Orange County Register, in an effort to “examine whether the state is doing enough to help local governments satisfy the requirements and plan for many more homes than ever before.” Opinion/speculation: They’re working a passive-aggressive angle, at least for now: I suppose this audit might be more of a fishing expedition to unearth materials to support possible future threats of litigating the matter, city by city, depending on how they feel they may have been wronged.
You are mistaking the effect for the cause. People flee a city they can’t afford. Due to a century-long trend toward smaller households, a city like SF that builds nothing must lose population. Due to longevity, the passage of time naturally leads to fewer workers as the city ages. What you are proposing is that if a city is extremely successful in its NIMBYism then that stands as evidence against the need to build anything, which is perverse.
>Since there is no uptick in jobs and WFH/hybrid is here to stay, and no influx of new folks, why should the city be subjected to building 82k more units if the need has changed, would this need to be revised?
People in SF can work anywhere in the Bay Area, which is a huge source of jobs. SF also has the best public transport of any city in the region. A more salient question is why are you so opposed to building new housing, it wouldn’t be that it devalues your own holdings, would it?
“SF also has the best public transport of any city in the region”. That’s a rather low bar, and Muni doesn’t cut the mustard regardless. As an example, and as Taraval’s been mentioned in this thread: During rush hour, the L Taraval, like the rest of the LRV service, is running woefully inadequate two car trains. Pre-pandemic, standing room only from 30th Ave in the mornings. But hey, at least it’s not the N Judah. If they can avoid it, workers (i.e. commuters-to-be) are not going back to packed-like-sardines conditions there, on BART, or elsewhere. All that transit oriented development boosting needs to incorporate a solid perspective for considerable public transportation upgrades around town.
Daniel, although I agree with your assesment that “workers are not going back to packed-like-sardines conditions on MUNI or BART”, I’d be interested to know what public transport agency you think is doing an adequate job, given the circumstances. The specific problems with MUNI that you mentioned are a completely understandable consequence of their ongoing budget deficit. From Weigh in on the SFMTA’s FY 2024-2025 and FY 2025-2026 Budget, in February of this year:
And yes, this will tend to feed on itself going forward. If MUNI service is unsatisfying and inconvenient, people who have the financial means will opt out by working remotely, which will in itself reduce revenues, necessitating even more service cuts, which will incentivize (more) people to opt out of commuting by public transit.
This phenomenon is exactly what the folk pundits on Twitter are talking about when they use the phrase doom loop.
I’m not so sure WFH will be bad for SF. If one can work in the neighborhoods and only go downtown once a week, SF would be a pretty great place to live. MUNI has never been great, but if you only have to take it once or twice a week, the city looks better and better. (Except for downtown, which has huge problems.)
This is assuming we end up with a Mayor who cares about living conditions here. Which is an open question.
the average number of people per household in SF is 2.3 . You’re pretty close, but not being “conservative”
Seems to me the straightforward logical error that FriscoDisco is making in their first sentence is the explicit assumption that, because San Francisco “lost 57k working residents since the pandemic”, that “30k housing units” those working residents lived in have been or would be “freed up”. Sure, some working people have left and their formerly occupied housing has been added to the local housing inventory. However, San Francisco has a relatively large population of residents working in “the informal economy” whose employment status isn’t going to show up in The State Employment Development Department (EDD) statistics. Add to that the population that is living here or newly arrived who are in the country without authorization (undocumented workers never get counted by EDD as unemployed because they are not legally eligible for work). And some folks who lost their jobs are still here, looking for another job and occupying housing while they do so.
We can argue about the percentage, but not all of the housing that people formerly employed here lived in suddenly became vacant when the number of “on the books” employed residents decreased.
Also people moved into bigger / less dense units as a result of COVID and the demand for office space which soaked up some – what we should be looking at is households, not individuals
Australian developer giving up on 47 floor project Hayes Point, as per sf chron.
Appears to be the same development that this site described in the Summer of 2022 as “still on track be ready for occupancy by 2025”. HA, Ha, ha.
From the Laura Waxmann bylined story of May 29, 2024 referenced by ‘Fact’, fifth ‘graph:
Translation: we’re going to leave this site as a hole in the ground in the city’s Hub District for as long as it takes to find some gullible investor to take this bag of odorous excrement off our hands.
Sometimes developers are juggling multiple deals at the same time, and are prepared to drop the one that’s more difficult, and focus on the easier ones.
Agreed. Just based on interested observation as someone not working in the industry, I’d say firms with the annual run rate and/or number of employees as Lendlease operate with multiple projects going on most of the time. But they pull back more often than people think, not just due to exogenous shocks such as the COVID-19 pandemic. Which is yet another reason why I think regulatory concessions will never, in real world San Francisco, ever suffice to prod private sector developers to actually produce enough housing to “build our way out of the affordable housing crisis”.
This “pipeline” is always deceptive. What matters is the actual number of units built.
agree, or at a minimum use only ones that are under active construction.