Recent reporting by J.K. Dineen in local real estate trade journal the San Francisco Chronicle heralds a new era of housing development arriving in San Francisco as "developers race to build apartments again." With median rents up 23% since just last year, the nation's most expensive urban housing market finally has real estate investors reaching for their pocketbooks. Dineen notes that developers have recently announced plans to break ground on 1,000 new units of housing and concedes that this total barely moves the needle toward the state-mandated goal of 82,000 new units by 2031 and represents about 1/56th of the total number of approved units still waiting for financing. But, the Chronicle insists, the tides are changing. Mission accomplished!
Dineen compiles a greatest hits of recent developer announcements as proof of the trend. The most tendentious line in the piece is "[A] building boom should eventually help drive down rents."
This core belief is inherent in every argument put forward by the YIMBY movement: build more housing, and the rent will come down. It's Econ 101, they claim. Supply and demand (as long as you ignore the demand side). Build, baby, build!
From City Hall to Sacramento, legislators have enshrined these YIMBY truisms in housing policy by removing fees, regulations and local control from housing production, appeasing the real estate industry by making development more profitable. Government has gotten out of the way (or more accurately, government has gotten any community demands and public benefits out of the way), and now the market and the powerful real estate interests that shape it are even more free to determine the future of housing development. Will they choose to produce so much new housing that existing assets are devalued?
Dineen points out that the first of these newly announced units won't be available until at least 2028. After ten years of YIMBY dominance, San Francisco has the highest and fastest-growing rents in the land. How long do we wait until we can evaluate the success of the YIMBY policy approach? What if the decisive development boom remains forever just around the corner? It's quite possible for real estate developers to build new housing and make new profits while rents and home prices stay prohibitively high for working San Franciscans. In fact, that's a best-case scenario for the real estate industry. Can developers be lured into building beyond their own best interest? Are they being fooled, or are we?
We could be using available money to build affordable housing without waiting for a mythical set of market conditions that promise developers a sufficiently high rate of return for providing new housing at a lower cost. And we can remove already existing housing from the speculative market by expanding programs that already exist in San Francisco. We could repeal state impediments and expand rent control. We could freeze the rent. But the current crop of elected leadership in San Francisco will never do that, and will instead continue to provide the real estate industry with massive giveaways and incentives, and will cheer them on whenever they build a thing. And if they don't build, they will blame any remaining public benefits and push for more deregulation.
