Bay City Housing Costs Drive Residents Away
Tourists visiting San Francisco see the picturesque city as the home of the football champion 49ers, the Golden Gate Bridge, Fisherman’s Wharf and bohemian life styles.
But the realities faced by today’s residents are filled with a growing housing shortage and a rising cost of living that has pushed home ownership out of the reach of many members of the middle class.
The 44-square-mile city, bounded on three sides by the Pacific Ocean and San Francisco Bay, was recently rated the most expensive place to live in the country. Housing, both rental and owner occupied, takes a bigger and bigger chunk out of workers’ paychecks.
While the city has expanded into just about every available nook and cranny, the flow of new residents continues as more and more people line up to live here.
‘Not Much Housing Being Built’
“Two factors make this the most expensive housing in the country: a lot of people want to live in San Francisco and there is not much housing being built,” said Bradford Paul, executive director of the North of Market Planning Coalition. “There is increasing demand and limited supply.”
A lot of the overflow is going to suburban communities along the Bay Area Rapid Transit line, which stretches across the bay to the northeast into Contra Costa County and to the southeast into Alameda County. Bedroom communities also pop up along U.S. 101 as it runs south into the Silicon Valley and north into Marin County.
Median housing prices, which are among the highest in the nation, have grown to $130,000. Rental property is also hard to come by with an occupancy rate of more than 99%.
Steep Price Tag
Even in the less chic parts of the metropolitan area, residential real estate carries a hefty price tag.
“There are incredibly high land prices,” Paul said. “You go to Pittsburgh and Detroit and look at Victorian houses with three stories and they sell for $50,000, $60,000 or $70,000. Here, you are talking about $500,000 or $750,000 for the same house.
“You can’t buy a studio condominium for under $100,000,” he said. “In Pacific Heights, there are garage condos that sell for $16,000 to $20,000. That’s just for a garage.”
Charles Moore, president of McGuire Real Estate, sees many homeowners who transfer to San Francisco from other parts of the country recoil in horror when they learn about the huge price differences.
“We get people from the South and East who say it’s good to be here working with IBM or Bechtel. They sit down with a sales agent and say, ‘Of course we’d like to get a Colonial style home with a yard and a little space. It would be nice to get a view and an area for a pool.’
“And then they say that want it all for what they paid at home, $65,000,” Moore said. “It’s just not possible.”
Rental rates have also skyrocketed.
“In the Tenderloin, the last low-income area downtown, the rents at a residential hotel--this is for an 10-by-8-foot room with a sink--used to be $125. Now, it’s $250 a month,” Paul said. “The alternative is a studio apartment, which rents between $350 and $450. If you are a senior citizen on supplemental Social Security that pays $550 a month, which would you pick?”
There are too many barriers to new apartment construction and conversion of existing apartments to condominiums, according to Moore.
Building Restrictions
“The way the existing housing policies are today, there are so many governors on development and developers. There are so many disincentives to build in San Francisco. Things like height and zoning restrictions and red tape at City Hall,” he said. “It’s virtually impossible and more trouble than it’s worth.”
Moore said most developers are taking their business outside the city and that trend bodes badly for the future.
“If that continues, this will be a city of the very, very rich and the very poor,” he said. “It’s unfortunately very true.”
Moore sees a solution in condominium conversion, but that answer does not come without a few drawbacks of its own.
“Here is the dilemma: What do you do with renters?” he said. “Philosophically, is housing a right or a privilege? It is a basic human need, but is it a right? If it is a right, who subsidizes it, private sector or government? That is ultimately the question.”
Paul blames a big part of the housing problem on the growth of the downtown area, which has been the site of one of the biggest high-rise booms in the nation.
“To give you a rough idea how that works, between 1965 and 1980--forget about the last five years--there was something like 35 million square feet of office space built. When two Transamerica pyramids make 1 million square feet, you can see just how much space I’m talking about.”
A Negative Side
While those buildings have brought in jobs and tax revenue, Paul does not see the additions as a completely positive force.
“Maybe they brought in 180,000 jobs, but how many of those jobs went to San Franciscans?” he asked. “The city’s own survey says 8% to 10%. They move into the city after they move into those jobs and then compete with and beat out existing residents, seniors and low-income people, for available housing.”
Paul estimates that in the last 20 years, close to 100,000 people moved into the city to work in the high-rises, but the city only built 6,000 or 7,000 housing units to accommodate the growth.
What typically happens, he said, is that younger couples or young urban professionals with the buying power of two incomes compete for housing with lower income Hispanic and Oriental families in places like the Mission District and Western Addition.
“They simply drive them out,” Paul said.
