"Priced Out" Is Local Radio's Exploration Of The Bay Area Housing Crisis
The first in a series of shows about the what, why, and waah! of the San Francisco real estate market took a dim view of the immediate future.
Unless you've been living under a rock (in which case you should be advised – it's probably a very expensive rock), you're aware that the San Francisco Bay Area is in the throes of a full-on housing crisis. Asking prices are a mere suggestion, and often a launching pad for stratospheric bidding wars. Renting an apartment has become something out of the Hunger Games. Evictions are busting out all over.
What's less clear is why this is happening and what, if anything, can (or should) be done about it. To unpack the various issues and unravel some of the mysteries, KQED, San Francisco's public radio station, has started a series called "Priced Out" that will span several local shows over the coming months. To follow it, you can bookmark the tagged link on their website and look for #pricedout on social media.
The series launched last week with an episode of Forum, a call-in show hosted by Michael Krasny, featuring two experts: Carolyn Said, who covers real estate for the San Francisco Chronicle, and Jed Kolko, the chief economist for Trulia. They gave an overview of the housing situation as it stands now and responded to calls, emails, and comments on the KQED Facebook and Web pages.
Here's a little rundown of this first show, and keep an eye on this page for recaps of the rest as they happen.
Krasny introduced the subject, saying that both rent and home prices are soaring and citing Oakland as an example, with a 23% jump just in the past year. We live in the second least affordable rental market, with Bay Area cities dominating "most expensive cities" lists. With a strong tech market creating jobs galore, demand shows no signs of stopping – and prices are bound to keep pace.
Said pointed out that though there are pockets of affordability in Solano and Contra Costa counties (where the foreclosure crisis did the most damage), factoring in commute prices often erases the benefit of cheaper housing. Meanwhile, San Francisco and Silicon Valley prices are "stratospheric." San Francisco is in danger of becoming a "snowglobe city," populated only with the wealthy and tourists (shudder).
As for rentals, evictions are spiking (shyeah, tell me about it). There is a concomitant building boom, and the luxury housing being created by that may cause prices to drop in older buildings. To keep up with demand, San Francisco would need 5,000 new units per year. Most years, it hovers around 1,500.
Kolko added that the only other place where rent is as high is in New York City, with two scary differences: (a) rents are continuing to rise here, though they have leveled off in New York; (b) The outlying areas of NYC are less expensive than the outlying areas of San Francisco.
Why, Krazny asks, is it so hideously expensive here? Kolko jokes that "God wanted it that way," citing the ocean, mountains and bay hemming in the available land to build on. Add the pleasant climate and regulatory burdens caused by earthquakes and you get crazy housing prices.
Blaming the tech boom is a straw man, Kolko adds. San Francisco has been more expensive than the rest of the country since the 1970s – long before "Yahoo" was anything but another name for a slack-jawed yokel and "hacking" was what you did to firewood.
So why, they dared to ask (just to be devil's advocates), is it so bad for the city to be populated only by those with six-figure salaries? "What makes the city so lively and charming is the artists, musicians, bohemians and young people, and we've basically put up a fence keeping those people out," Said mourned. Kolko added that a more homogenous population damages a city's economic competitiveness. "Even skilled workers who can better afford the cost of living leave in years when housing prices spike," he says, which means businesses have a more difficult time keeping top talent on board.
Cash buyers were cited as another factor driving the market. "Deep-pocket investors" hoping to make a killing on the rental market "are outbidding young families," Said pointed out.
So where will any relief come from? Perhaps more inventory being built, though callers summarily rejected the idea that luxury housing doesn't trickle down to any kind of common-people benefit. Perhaps it'll become easier to get mortgages.
But one distressing data point has to do with the below-market-rate housing that has been such a blessing to many middle-income families. In typical Krasny fashion, he interrupted Said before listeners could parse how she explained the situation, but in a follow-up email, she explained that redevelopment agencies – local entities that oversaw building and improvement of affordable housing, sports facilities, and public transit – were defunded by Governor Brown during a budget crisis two years ago.
Kolko added that as a political cause, affordable housing suffers from NIMBY fever. "Many people worry that housing could lower home prices." Affordable housing is only "good for people wanting to buy," and bad for those who already own (and, one might add, who are so selfish they can't see how insane that attitude is). And though the same sorts of people will argue that lowering taxes will make folks want to stay, Kolko cites research saying that home prices are a more accurate predictor of flight.
Does rent control help? Kolko posited that though it might keep some units affordable, it may also discourage upkeep and construction (though why he would think that is beyond me, since new construction is exempt from rent-control restrictions). Though it helps preserve diversity, it doesn't necessarily lead to affordability if you're not already in a rent-controlled unit.
The call-in section of the show yielded several salient points:
Dean Preston of Tenants Together objected strenuously to the suggestion that "you can buy your way out of an affordability crisis by building market-rate [housing]." The only thing that helps are rent-control and inclusionary-housing legislation and tax-credit projects: "Government intervention has been the only thing creating affordable housing." Kolko agreed - to a point: Only if there's money for those interventions. Right now, he says, we cant rely on that.
Frustratingly, several callers only called to boast about their own housing situations, sanctimoniously suggesting that the rest of us just aren't trying hard enough. Another sunflower suggested that a good earthquake would shake up the market – literally.
A poignant moment came when a caller described being displaced as a child (during the first tech boom, in 2002), and mourning that no policies were put in place to protect families like hers during this boom. But Kolko advised us not to focus too much on tech: San Francisco is uncomfortably expensive even during tech-bust times, with affordability remaining an issue even during the foreclosure crisis. "The underlying reasons are bigger and longer term than the tech boom."
Said agreed, but sees a slowdown coming, and urged observers to play the long game: "Looking further afield is the only real strategy here," she said.
So that was depressing but informative. Keep watching this space to hear about the next show.