Should SF stop building housing?

Building more housing is a popular goal in SF. Our city has fallen behind, the argument goes, and must do more to end the “housing crisis”.

On August 1, 2022, the Chronicle posted an article titled “Here’s why Austin and Seattle are building way more housing than San Francisco“. It was another thump in the drumbeat of media coverage showing SF is a laggard here.

With this piece as a guide, let’s see if more housing really does make sense.

Have we built our share of housing?

The Chronicle article states that:

Yet even when compared to other fast-growing tech hubs like Austin and Seattle, San Francisco’s housing production lags far behind.

Does it? Compare the number of housing units Austin, Seattle, and SF have built per square mile:

From the chart, we see SF is a homebuilding superstar, with 6,900 units/sq mile. To catch up, Seattle would have to double its housing stock, and Austin would have to build four more homes for every one it has now.

But we should still keep building, right?

The article reaches its conclusion by focusing only on units built recently, between 2015-2021. It shows, correctly, that SF has produced fewer homes over the past few years than other cities.

And, maybe that matters to you. Or maybe you think SF should still build more housing, regardless of the larger environment.

Maybe. But there are considerations you should be aware of. One is cost. From the article:

According to Elmendorf, the point remains that it is extremely expensive to build housing in San Francisco, especially when accounting for labor costs, regulatory requirements, fees and permitting delays.

Right. The higher the density of an area, the more it costs to build there, as the inputs – land, labor, regulatory and permitting issues, etc. become more expensive or complex:

Land costs are obvious – you can get an acre of land in rural America for $2,000, while a single MacDonald’s parking lot in SF costs $11,500,000.

Construction labor costs are especially high in SF, at $90 per hour.

And building up increases costs exponentially – here’s one Bay Area developer explaining how a four story, 26 unit building costs twice as much in both labor and materials per square foot to construct as a single family home.

I link here to a San Jose builder explaining how an 18 story project costs $50M to build in most of the US, $100M in San Jose, and $150M in San Francisco.

Eventually, a place gets so dense that building costs put home prices out of reach for many. At this point – if residents are determined to further ratchet up density – new buildings must be subsidized by tax dollars or other means. Proponents call this “affordable housing”, and it’s a sign your area may be sufficiently populated.

Given that resources are fixed, and that there’s plenty of land for cheap growth in most of the US, it’s hard to conclude building in the very highest density areas maximizes the greater good.

Beyond cost, resources available must be considered, as more housing means more people. Any city planner will tell you that more people must be accompanied by more roads, hospitals, schools, public transportation, etc. For example, when New York City greatly increased its population, without expanding transit, the results were disastrous:

The major cause of subway delays is a factor that basically did not exist 15 years ago: overcrowding. The subway is a victim of its own success and the city’s resurgence. Large crowds slow down trains, which creates more crowding in a vicious circle that takes hours to unwind during every rush.

New York Times, 6/28/2017

There are also natural resources. Seattle and Austin have plenty of water for an increased population, for example. California does not. The vast majority of the renewable energy potential in the US is in the Midwest, and shipping that to the coasts is difficult, as John Oliver explains here.

None of this is to say more housing can’t be built in SF. Responsible growth that attracts responsible people may make sense. But I take issue with those who believe a) we haven’t built our share of housing, and b) some immediate crisis demands an explosion of careless new construction. Call me a GRIMBY (Grow Responsibly In My Backyard).

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