The Housing Market in San Francisco and Ideas to Fix It

Housing in SF is an incredibly powerful illustration of the danger of letting things get so bad that the usual remedies no longer apply.

Basically:

- Traditionally, the proper fix for a shortage of housing is to build more houses. Just lift the existing regulations, and let the free market do what it does best: take care of the demand at an efficient price.

- However, after years and years of very slow building, the amount of pent up demand is such that even if builders were allowed to construct houses, the houses would almost all be built for the very well off. The amount of houses you'd have to build before you started constructing truly affordable housing is immense.

- People that are in rent regulated apartments have absolutely nothing to gain from more construction. However, even poor people that have no stable housing also have almost nothing to gain from new construction because their only realistic chance of having affordable rent is through subsidies or semi-public housing in the medium term.

- The people that have the most to gain are the moderately well off who can afford SF rents, but cannot find housing at the existing market rate.

Basically - politicians and residents let the situation with housing in SF get so absolutely bad that free-market based solutions would take a crazy amount of time to create affordable housing for poor people. At this point, I'm not sure there even are good solutions, especially if you limit yourself to what is politically feasable.

The lesson to draw from this is that you should never let the situation get so bad that people at the bottom stop caring completely about improving policy. In this case, the right policy (build A LOT more houses) would barely help poor people because the supply/demand curve is so out of wack. The very people that should benefit the most from improving the housing situation are instead opposing it - for fairly rational reasons.

In theory, this could alleviate some of the issues you are seeing in SF, but in practice this is not something many tech companies founded here would do. Most new tech companies are being started by people already working in the industry, and the industry is located in Silicon Valley, with epicenter now being in SF. So it just doesn't make sense from a competitive perspective for most companies to move out of the Bay when there's no better place for "tech".

To me, the most logical conclusion is to organize and create the political will to create the housing necessary to alleviate prices. This could be on a regional level - building more housing throughout the east bay and peninsula, or organizing on the city level to re-zone and re-develop parts of the city that can most easily support denser development.

Not everyone will like it but as long as you have more people than the anti-more-housing crowd and are organized to vote, it can be done.

Instead of taxing people (negative reinforcement), build better (or at least function) transit with the absurd amount of tax dollars already generated(positive reinforcement).

Taxing parking(which is already done) is something only 2 groups of people will/can support:

1) Those without a car ( can afford to live close to work,take uber, rent cars - high income people)

2) Those who can afford the tax (high income people)

So no, this is most definitely not the solution.

BART now designates high-cost areas. You can see it in the tri-valley, the new Whole Foods in Dublin is a good indicator. Now they want to build an IKEA next to it.

Poorer, non-tech people are getting pushed out to Tracy and made-from-scratch exurbs like Mountain House.

SF is just the center, Oakland/Berkley is getting hit hard now. The Uber acquisition of that large office complex in Oak has set off a bonanza. The hipster brigade is already popping up in weird places in Oakland. Really not sure where all the poor people will go.

There is one, weird, and very not pc observation though: old home owners get pushed out, but in the East Bay you see a lot of Indian newcomers moving in - and not highly paid executives, but Indian fresh out of rural areas in India, men in sandals (no socks, ever) and women in full garb. Where is that money coming from?