Can we build our way to housing affordability in San Francisco?
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Can we build our way to housing affordability in San Francisco? • • • • • • • • •
Econ 101 Buildings & Units, Historical Production Population Change vs. Unit Change Entitlements vs. Actual Production New Units vs. Condo Value Housing Element Goals vs. Production Rents, SF vs. Seattle Building Size vs. Price Land Supply and Housing Potential
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Econ 101
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Econ 101: the Supply and Demand Curves
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Increasing Supply creates greater quantity and lower price The model may work for widgets… But does it work for housing, and does it work for housing in SF?
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Econ 101: the Supply and Demand Curves
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The Supply and Demand model has an internal logic Does it need to be supported by Empirical evidence?
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San Francisco Buildings and Units, Historical Production
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Buildings built, 1900-2010
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Majority of production has been in small buildings Historical highs in 1930 and 1950 Production by buildings dropping since 1950
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Source: Housing Action Coalition, SF Planning Dept.
Units built by building size, 1900-2010
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Upsurges occur after 1906 Earthquake, during WWII, 1960s urban renewal, and today Latest upsurge related to units in larger buildings
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Source: Housing Action Coalition, SF Planning Dept.
Population Change vs. Unit Change
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Population Change vs. Unit Change, 1840-2010
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Population peaks in 1950, then doesn’t return to peak until 2000 Population drops during suburban expansion and “white flight” Unit production continues despite drop in population
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Source: Census
Population Change vs. Unit Change, 1960-2010
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From 1960 to 2010, we built roughly 1.4 units per person
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Source: Census Population, SF Housing Inventory
New construction by decade, 1967-2012
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Since 1977, annual production has increased each decade Current annual production rate is 1,900 units/year
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Source: SF Housing Inventory
Population Change vs. Unit Change, 2000-2010
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In the last decade, we added 23,000 units and 16,646 households We built about 1.4 units per new household
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Source: Census Population, SF Housing Inventory
Entitlements vs. Actual Production, 1970-2010
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Units Entitled vs. Built, 1960-2010
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SF entitles more units than are actually produced In last decade, peak annual entitlements was 5,571 in 2005 In last decade, peak annual construction was 3,366 in 2009
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Source: SF Planning Dept.
New Units vs. Condo Value, 1997-2012
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New Units vs. Condo Value, 1997-2012
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Construction of units tracks condo prices High supply does not seem to result in lower price Low supply does not seem to equal higher price
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Source: SF Office of Economic Analysis
“New Construction” vs. “Total Sold,” 2000-2012
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New construction units account for 18% of total sales
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Source: www.rereport.com, Housing Inventory
Housing Element Goals vs. Actual Production, 2000-2010
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Housing Element Goal vs. Entitled & Built, 2000-2010
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In the last decade, SF produced 71% of Housing Element goal of total units produced to meet regional job growth predictions SF did entitle 80% of Housing Element goal
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Source: SF Planning Dept. Housing Element, Housing Inventory
Housing Element Goal vs. Actual Built, 1999-2006
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For the 1999-2006 period, SF produced twice as much Marketrate Housing as was needed to meet its Housing Element goals, and only half of the Affordable Housing goal
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Source: SF Planning Dept. 2009 Housing Element
Housing Element Goal vs. Actual Built, 1999-2006
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For the 1999-2006 period, SF produced only 12.9% of its Moderate-income housing goal
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Source: Housing Element 2009
Market-rate (>120% AMI), Housing Element vs. Actual, 2000-2010
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In the last decade, SF produced 140% of its Housing Element Market-rate (over 120% median income) housing goal Market-rate is over $97,150 two-person household, 2013
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Source: SF Planning Dept. Housing Element, Housing Inventory
Affordable (<120% AMI), Housing Element vs. Actual, 2000-2010
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In the last decade, SF produced 30% of its Housing Element Affordable (all persons under 120% median income) goal “All affordable” is under $97,150 two-person household, 2013
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Source: SF Planning Dept. Housing Element, Housing Inventory
Moderate Income (80%-120% AMI), Housing Element vs. on-site BMR, 2000-2010
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SF produces moderate income units through its Inclusionary requirements If expressed as Inclusionary, “Moderate” would be 35-43% of Market In last decade, on-site BMR production averaged 8.7% vs. 12-15% San Francisco Information Clearinghouse
Source: SF Planning Dept. Housing Element, Housing Inventory
Rents, SF vs. Seattle, 2012
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Monthly Rents vs. Monthly Mortgage by Unit Size
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Institutional rents tend to be higher than resale monthly payments Transfer of wealth from renters to owners
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Source: SPUR
Monthly Rent by Unit Size, SF vs. Bay Area and Seattle
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Trends are similar in Bay Area and urban Seattle San Francisco rents are higher than Bay Area or Seattle
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Source: SPUR
Construction Trends, 2001-2012
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Construction Type and Height, Trends 2001-2012
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Construction of small (up to 55’) wood buildings has dropped 3% Construction of medium (65’ and 85’) buildings has risen 5% Construction of high-rises has risen 9%
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Source: Inclusionary Analysis, Seifel 2012
Return on Cost and Sales Price by Construction Type and Height, 2012
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Small buildings get 15-20% Return on Cost, have lower sale prices, average $750/ sq.ft. High-rises, with longer construction times and investor “risk,” demand 28-30% Return on Cost, have higher hards costs and sales prices, average $990 / sq.ft.
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Source: Inclusionary Analysis, Seifel 2012
Land Supply and Housing Potential, Housing Element 2004 vs. 2009
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Land Supply in “Soft” Sites, 2004 SF Housing Element
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2004 Housing Element estimated 29,190 units housing potential This included 6,000 units in Mission Bay
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Source: 2004 Housing Element
Land Supply in “Soft” Sites, 2009 SF Housing Element
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2009 Housing Element estimated 73,728 units housing potential Includes rezoning Eastern Neighbs, Market-Octavia, Rincon Hill
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Source: 2009 Housing Element
Land Supply in “Soft” Sites, 2009 Housing Element • Residential is yellow (10,788) • Neighborhood Commercial is purple (21,895) • Downtown is red (6,648) • Industrial is blue/gray (12,507) • Mixed use is light orange (10,790) • Redevelopment Areas (11,100) San Francisco Information Clearinghouse
Source: Planning Dept. web site