Housing in 2015: Experts Expect the Boom to Continue
By the end of 2014, more housing will have been built in San Francisco than in any other single year for the past two decades. But what can we expect for the future? To answer this question, the SFHAC, in conjunction with SPUR and SF AIA, hosted a forum to analyze the current housing climate.
Setting the stage: Chris Foley, Polaris Pacific San Francisco has a shortfall of 15,175 homes. Rents increased an average of 9.4 percent annually over the past couple years, with the average apartment now at $3,229 a month. Condo prices rose faster, yet mortgage rates remain very low by historic standards. Only 2.1 months of condo inventory are currently on the market, evidence of a very tight supply – six months is considered a stable supply. Mr. Foley pointed out that our housing crisis is not just a San Francisco problem, but rather a regional problem. Oakland and Emeryville have even less inventory and continue to see prices escalate, with average rent over $2,400. Rapidly rising construction costs make building there a challenge, but just wait. The two cities combined have almost 8,000 homes in the pipeline.
Regulatory and political framework: Tim Colen, SF Housing Action Coalition (sitting in for Sarah Dennis-Phillips of OEWD) Unemployment dropped from 9.5 percent in 2009 to 4.7 percent today. Our economy remains strong, job growth continues and the City’s population will grow to over one million residents by 2040. If we continue to build at our historical average of 1,500 homes per year, our supply will lag and prices will continue to rise at unsustainable rates. However, the City has 25,000 units in some stage of the pipeline and we’ve built over 3,500 homes as of September. The City currently has $96 million to invest in subsidized housing for the next two years, but we need more.
Demographic shifts: Libby Seifel, Seifel Consulting Our middle-income residents cannot afford to stay in the city. San Francisco succeeds at building for the wealthy and actually does better than most cities at serving low-income residents, but hugely struggles to provide for those earning between 50 and 150% of the area median income (AMI). As market prices continue to accelerate, this affordability gap only grows. Homebuyers have mixed experiences. Unless you’ve owned for several years, it’s unlikely you can build enough equity to purchase a new home. Sixty-four percent of San Franciscans rent, with unrelated individuals sharing a large fraction of our housing.
Market-rate development perspective: Meg Spriggs, Shorenstein Residential Building in San Francisco remains attractive because interest rates are still low. However, Ms. Spriggs noted more opportunities lie outside the City these days. When asked what concessions would make a density bonus enticing, she simply stated, “height.” (CA law says any development that provides as little as 5 percent on-site affordable housing is entitled to a density bonus. Read more here.)
So what can we expect? Expect housing production to stay at a relatively fast pace for at least the next two or three years. But it will take strong political will and robust advocacy to implement the solutions needed to effectively address our affordability crisis. As Mr. Foley pointed out at the end of the event, “We have to think outside the box.”
Housing Action Coalition
The Housing Action Coalition is a member-supported non-profit that advocates for the creation of well designed, well-located housing at all levels of affordability. We believe more housing means more choices and better solutions. View all posts by Housing Action Coalition
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