Wednesday, June 03, 2015


This is a hot word right now in the San Francisco Bay Area, where you have to be a multi-millionaire to be able to rent an apartment.  Well, in San Francisco, anyway.  Farther out, not so much.

In San Francisco a supervisor actually proposed an ordinance that would ban all new housing development in the Mission District, where poor-to-middle class Latino families are being pushed out by new, much richer residents who want to live close to the action.  It failed, the other supervisors having some common sense; but the proponents haven't given up.  They don't want "gentrification."

In Oakland, currently full of people who aren't quite rich enough to buy or rent in S.F. but who would still like to live a short trip from the action, a city council meeting was not quite interrupted recently by a group of protesters who don't want the city to sell a block of public land near Lake Merritt to a housing developer. They want the land used to build affordable housing (not that I've heard them suggesting a funding source for this).  They don't want "gentrification" either.

The argument behind both of these movements is:  new housing is always market-rate (which means, "I can't afford it").  We need more affordable housing ("stuff I can afford", actual rents not specifically defined).  The best way to make this happen is to stop those awful people from building expensive luxury condos and apartments, and make them build more stuff we can afford.

Consider Super Bowl tickets.  There are a fixed number of them.  Many more people want to buy them, than there are tickets.  The net result, as we all know, is that the price of scalped Super Bowl tickets goes through the roof.  This is what happens every time there is a limited supply of a very desirable commodity:  the price goes through the roof.  Got that?

This is what's happening in the Bay Area.  All over the Bay Area, actually.  More people want to live here than there is housing for them to live in, so the incomers are bidding up the price of the places that exist, even crummy places that formerly only the poor could afford.  Yes, they are driving out people who can't afford to pay the higher rents, or the higher home prices.  That is how the real estate market works; that's how any market works.  Money talks.  Rent control ordinances are the only reason there are any relatively poor folks left in any of the inner Bay Area towns.  Everyone else commutes from Antioch, or Tracy.

I know of only one way to drive down the price of housing, in any area.  Build more housing.  Build housing on every square foot of land you can find.  And build tall housing, lots of floors, lots of apartments and condos.  Because the prices will continue to skyrocket until there are more homes available for rent or sale than there are people wanting to buy or rent them.  Prices never go down in a seller's market; only in a buyer's market.

But - we can't have that!  That will ruin our beautiful city! 

Yeah, it will ruin our beautiful city.  That attitude is exactly why we have this situation. The entire Bay Area should have been building thousands of units of housing every year for the last ten.  But we didn't, because of any one of a number of reasons which all boil down to this:

We don't want the area to change. We want it to stay just the way it is, without apartment buildings higher than 4 stories, with single-family residences on nice lots.  And in Oakland we want to be able to see across the bay.  The amount of housing needed to make it "affordable" for anybody would interfere with all of that, which is why it hasn't happened.  Since we didn't accommodate the market, the market has taken over, and driven up housing prices.   Stopping the building of new housing will just make the situation get worse, faster. 

There isn't any pretty, convenient solution to all of this.  And given that it takes years to build any housing, what with permitting and hearings from people who don't want it to happen, the situation will not improve.  It will get worse.