Last week I wrote a post on my personal blog about housing policy in San Francisco. My argument was that the backlash against the tech community (for allegedly driving up real estate prices) is actually misdirected and that housing policy should be the target.
The reasoning behind this is simple: More people are moving to San Francisco than new housing is being provided. And so regardless of whether you have tech workers or not, you have an environment where the rich are always going to outbid the poor for housing.
If you look at the numbers from the past 2 decades, San Francisco on average builds
Last week I wrote a post on my personal blog about housing policy in San Francisco. My argument was that the backlash against the tech community (for allegedly driving up real estate prices) is actually misdirected and that housing policy should be the target.
The reasoning behind this is simple: More people are moving to San Francisco than new housing is being provided. And so regardless of whether you have tech workers or not, you have an environment where the rich are always going to outbid the poor for housing.
If you look at the numbers from the past 2 decades, San Francisco on average builds
1,500 new housing units a year
. And yet the city gained approximately 25,000 new people between 2010-2012 (that’s roughly 8,300 people per year). So what you have is a perpetual housing supply shortage.
To correct this problem, San Francisco needs to start building. And I’m stealing this idea from Harvard economist Edward Glaeser, who wrote an article on this very same topic back in December of last year for Bloomberg (and a book called Triumph of the City). His argument was that “the surest way to a more equitable housing market is to reduce the barriers to building.”
Now, if you compare San Francisco’s situation to Toronto’s, we’re almost on the opposite end of the spectrum. Toronto doesn’t have a problem building. We’re building lots. So much so that it’s become fashionable to joke around and complain about all the condos going up in this city.
But it’s important to remember that all of these condos are making us a relatively affordable city by global standards. We have more people moving to this city every year than San Francisco and yet home prices are less. We’re also less expensive than Vancouver, where there are strong natural barriers to building, namely water and mountains.
So rather than complain, I’m going to be the contrarian. I like seeing new housing built. I like knowing that the neighborhoods I love in this city are becoming home to more and more people.
At one point, my home (which is in the St. Lawrence Market) was a “new development” and somebody could have fought and opposed it. But it was allowed to be built and I was allowed to move in. I’m thankful for that. And so my plan is to be just as gracious to the next person who wants to join the neighborhood.
The app allows you to click on a location within one of these cities (or enter an address) and then receive a visual representation of travel times from that location.
Both public transit and walking are factored in, and the fastest of the two is then modeled. The public transit data is taken from each respective authority and is similar to the data used by Google Maps.
With these sorts of applications, I always wonder what it might look like overlaid with additional data points, such as home prices. Intuitively I would expect the best connected neighborhoods to also have some of the highest real estate values.
The tech community has been receiving a lot of backslash in San Francisco as of late. And Peter Shih’s infamous 10 things I hate about San Francisco post certainly didn’t help. But I think there’s a bigger issue than just rich tech people driving up the price of real estate.
I was reading Quartz this morning and I think they nailed it:
"But the blame shouldn’t go to the tech companies or their employees moving to San Francisco, however despicable some might be. Blame San Francisco for being pleasant, and its policymakers for being foolish: When a lot of people are moving to your city—San Francisco the city gained 50,000 new residents between 2000 and 2012, including some 25,000 between 2010-2012 and likely more since—home prices are going to increase unless you build a lot more housing."
If San Francisco, the city, gained 25,000 people between 2010-2012, let’s say that the city gained roughly 8,300 people per year. I just divided by 3. However, if you look at the rate of new housing supply, you get a 10-year average of 2,350 housing units a year (from the Quartz article) and an even lower amount according to Atlantic Cities.
Regardless, what you end up with is a pretty simple phenomenon: More people are moving to the city than new housing is being provided and that’s driving up the price of real estate. In fact, San Francisco allegedly only created 269 housing units in 2011! That’s the equivalent of only one fairly typical Toronto condo building going up (and we have hundreds under construction). No wonder there’s upward pressure on prices.
So rather than just blame the tech community for the city’s housing problems, I think there needs to be a broader look at housing policy. If you really want to help affordability, here’s one simple solution: start building.
1,500 new housing units a year
. And yet the city gained approximately 25,000 new people between 2010-2012 (that’s roughly 8,300 people per year). So what you have is a perpetual housing supply shortage.
To correct this problem, San Francisco needs to start building. And I’m stealing this idea from Harvard economist Edward Glaeser, who wrote an article on this very same topic back in December of last year for Bloomberg (and a book called Triumph of the City). His argument was that “the surest way to a more equitable housing market is to reduce the barriers to building.”
Now, if you compare San Francisco’s situation to Toronto’s, we’re almost on the opposite end of the spectrum. Toronto doesn’t have a problem building. We’re building lots. So much so that it’s become fashionable to joke around and complain about all the condos going up in this city.
But it’s important to remember that all of these condos are making us a relatively affordable city by global standards. We have more people moving to this city every year than San Francisco and yet home prices are less. We’re also less expensive than Vancouver, where there are strong natural barriers to building, namely water and mountains.
So rather than complain, I’m going to be the contrarian. I like seeing new housing built. I like knowing that the neighborhoods I love in this city are becoming home to more and more people.
At one point, my home (which is in the St. Lawrence Market) was a “new development” and somebody could have fought and opposed it. But it was allowed to be built and I was allowed to move in. I’m thankful for that. And so my plan is to be just as gracious to the next person who wants to join the neighborhood.
The app allows you to click on a location within one of these cities (or enter an address) and then receive a visual representation of travel times from that location.
Both public transit and walking are factored in, and the fastest of the two is then modeled. The public transit data is taken from each respective authority and is similar to the data used by Google Maps.
With these sorts of applications, I always wonder what it might look like overlaid with additional data points, such as home prices. Intuitively I would expect the best connected neighborhoods to also have some of the highest real estate values.
The tech community has been receiving a lot of backslash in San Francisco as of late. And Peter Shih’s infamous 10 things I hate about San Francisco post certainly didn’t help. But I think there’s a bigger issue than just rich tech people driving up the price of real estate.
I was reading Quartz this morning and I think they nailed it:
"But the blame shouldn’t go to the tech companies or their employees moving to San Francisco, however despicable some might be. Blame San Francisco for being pleasant, and its policymakers for being foolish: When a lot of people are moving to your city—San Francisco the city gained 50,000 new residents between 2000 and 2012, including some 25,000 between 2010-2012 and likely more since—home prices are going to increase unless you build a lot more housing."
If San Francisco, the city, gained 25,000 people between 2010-2012, let’s say that the city gained roughly 8,300 people per year. I just divided by 3. However, if you look at the rate of new housing supply, you get a 10-year average of 2,350 housing units a year (from the Quartz article) and an even lower amount according to Atlantic Cities.
Regardless, what you end up with is a pretty simple phenomenon: More people are moving to the city than new housing is being provided and that’s driving up the price of real estate. In fact, San Francisco allegedly only created 269 housing units in 2011! That’s the equivalent of only one fairly typical Toronto condo building going up (and we have hundreds under construction). No wonder there’s upward pressure on prices.
So rather than just blame the tech community for the city’s housing problems, I think there needs to be a broader look at housing policy. If you really want to help affordability, here’s one simple solution: start building.
