Report on Housing Affordability Falls Short of Solutions

Last week, the California Housing Partnership Corporation (CHPC) published an important analysis titled, “HOW SAN FRANCISCO COUNTY’S HOUSING MARKET IS FAILING TO MEET THE NEEDS OF LOW-INCOME FAMILIES.”  Chock-full of statistics, graphs and recommendations, this report is certainly worth reviewing for a perspective on today’s housing market.

CHPC’s reports:

– San Francisco currently has a shortfall of about 41,000 homes for residents with extremely-low to very-low incomes

– Median rents in SF increased by 22 percent between 2000 and 2012 while median incomes declined by 2 percent

– Almost 60 percent of folks with very-low incomes spent more than 50 percent of their income paying rent

San Francisco is not alone. While these are not comforting numbers and do not bode well for a city trying to remain a diverse, inclusive place, they largely mirror the housing problems faced by both the region and the state. The report paints a grim picture on the collapsing state and federal funding for housing affordability – down a stark 69 percent since 2008, or a $28M annual loss in San Francisco. Like many others in the housing world, CHPC is not optimistic that this funding will be restored any time soon.

Since 2006, more than 26,000 new renter households have entered the SF market, far outpacing housing production. The report states, “Unless more affordable rental homes are added to the housing stock, rents will likely continue to rise.” The CHPC, along with the SF Housing Action Coalition, believes the rise in rents are in response to increased demand. The silver lining for this problem is that during our current housing boom, a high percentage of homes coming on the market are rentals. This supply increase will help slow the price explosion for rental housing.

CHPC included the Council of Community Housing Organizations’ (CCHO’s) latest recommendations as their local solutions. Of their six proposed solutions, the SFHAC supports November’s Prop K, the need for new density bonus rules and for developing housing on publicly owned property. But, we don’t think they go far enough.

The SFHAC’s members strongly believe that more funding is needed to subsidize local affordable housing. However, CCHO’s suggestions do not seem to recognize that housing subsidies alone are insufficient to solve a demand-driven housing affordability crisis. Relative to the large economic forces at play, without streamlining the building process and sharply increasing our housing supply, we will continue to face a situation where demand outmatches supply at all levels.

The SFHAC believes CHPC’s state policy recommendations deserve strong support:

– Replace the exhausted bond funding from Props 46 and 1C

– Give local jurisdictions the tools they need, such as reducing the voter threshold for approving infrastructure and housing bonds from two-thirds to 55 percent, as is now done for school bonds. In addition, create a new tax increment financing (TIF) tool to support housing and infrastructure funding.

– Continue to invest 10 percent of the state’s cap-and-trade auction funds into affordable housing as a strategy to reduce greenhouse gases.

All in all, we must make it easier to add supply at all levels affordability and be open to experimentation. There is no silver bullet to fix this issue, which is why we need to pursue multiple solutions, many of which are addressed in the SFHAC’s 2014 Housing Action Plan. We look forward to the legislation coming out of the Mayor’s housing working group on which we’re an active member.

Image credit: BRIDGE Housing