With so many issues facing our City at the moment, the housing crisis is not getting as much attention as it used to. Issues such as COVID-19, homelessness, crime, recall campaigns for the Board of Education and the DA all are in the news more often than housing issues. However, the housing crisis is real and has gotten worse in the last few years.

 How did we get to this point? Coming out of the last recession, we put an emphasis on job creation by reducing taxes to attract companies to San Francisco. With jobs come people with money who can afford to buy or rent more expensive homes, thus driving sales and rental prices up.

 Also with jobs, there is population growth as employees naturally want to live closer to where they work to minimize their commute time. Since our housing growth has not kept up with population and income growth, creating a situation where demand far exceeds supply, simple economic theory dictates that prices must go up – and they did!

 With this latest wave of jobs, most of them were in the high-tech or biotech industries which means the people with that type of skill set are getting rewarded, but others are getting left behind. Thus, we are creating a society of haves and have nots, which leads to more class disparity. And as a result, we have seen a backlash against people who have done well financially.

 Then COVID-19 hit in early 2020. Many thought this would be the catalyst to drive down home prices, as uncertainty almost always leads to price declines. Think of the earthquake in 1989, or Sept. 11 in 2001. Catastrophic events lead to inaction, and usually it is bad for the market. But this time it was different. 

 The first two months of the pandemic were bad because everything was shut down. But shortly after that, people begin to think about where they wanted to live and what type of living arrangements they needed to make. Many opted to move from high-density living, such as condos and downtown, to single-family home neighborhoods or into the suburbs. And since most people who can afford homes are working remotely anyway, the “commute” was not as much of an issue anymore. 

 In addition, the government was printing money and providing lots of financial support along the way to keep the economy going strong. It feels like this further separates out the economic disparity between the groups.

 Everyone believes that San Francisco is a better place because of its diversity, not only in terms of ethnicity, but also people from all socioeconomic levels. The question facing us is how to house everyone so that we can all afford to live in the City.

 The mayor, Board of Supervisors and other community groups are all proposing different solutions to attack this problem. It is complicated – everyone has a different opinion as to what is necessary to resolve this housing crisis and how to go about it. I really wish that everyone gets on the same page and not have their own interests to protect.

 First and foremost is to build more housing! We have made some good progress the last five years. However, the planning and permit process is still so difficult, constantly delaying projects and adding cost to development. The sooner we can build housing, the faster we can ease the inventory problem. In San Francisco, going through the permit process is like navigating through a mine field with many people and groups opposing projects. It is not uncommon to see delays as long as 8-10 years on a project, which adds cost to the developers, and ultimately results in higher prices to the buyers. So, if the process can be streamlined, we can have more inventory and better pricing.

 Put the affordable housing funds to work sooner! We keep passing housing bonds to finance the construction, development and acquisition of housing for low- and middle-income households. We also have other funds for affordable housing accumulating from different sources, taxes and developer inclusionary fees, which can be utilized sooner to accomplish its purpose of building more housing.

Review city zoning plans and revise for higher density along transit corridors. As more people move into the City, the tendency is for them to live closer to public transit. This also alleviates parking and traffic issues. Even though laws have been passed in this area, putting them into practice has been more difficult as evidenced by the denials of a few recent high-profile housing projects.

Make it easier for owners to legally add in-laws to their properties. The City has made some good progress on this issue. This has been a controversial one over the years with arguments on both sides. However, the fact is that in-laws are more affordable and provide rentals to people who can least afford to live in San Francisco and can be a viable option for many. With the soft story retrofit on buildings with five units and up, the City has allowed more in-laws or what they call accessory dwelling units (ADU’s) into buildings. 

So, is there a housing crisis? I would venture to say it is worse now than ever, but the other problems the City has are overshadowing this housing problem. But if left unattended, it will just continue to get worse.

John M. Lee is a broker with Compass specializing in the Richmond and Sunset districts. If you have any real estate questions, call him at 415-465-0505 or email at johnlee@isellsf.com.