Employment, construction, and the cost of San Francisco apartments
Everyone agrees that housing in San Francisco is expensive, and that the high costs are hurting the city. But there is a lot of disagreement about why the rent is so expensive, and what to do about it.
Sonja Trauss of SFBARF has argued that costs are high because there is not enough housing to go around and that the answer is to build more. Tim Redmond of 48 Hills has argued that building more housing would make the problem worse because the people who would move into it are likely to be wealthy newcomers whose demand for services will increase low-income employment, putting further pressure on older, lower-cost housing.
Who is right? Is anyone?
In the 1940s there were very few apartments advertised for rent. It is not clear whether this was because there were extreme shortages of housing lingering from World War II or whether people typically found their apartments some other way. Nevertheless, there is at least some rough evidence that prices were dropping every year until they briefly stabilized in 1954.
After this lull, in 1956, apartments began to be listed in increasing numbers, but their prices also began to rise. Overall, they went up 6.6% every year. Today's outrageous prices are exactly in line with the 6.6% trend that began 60 years ago.
There have, however, been a few deviations from this overall trend. In 1978, prices began to rise and did not return to the trend line until they stabilized for a few years in the early 1990s. Then in 1995 they rose sharply again, remaining above the trend line until 2005. Prices rose again in 2007 and dropped in 2009 before returning to the trend line.
Sonja Trauss of SFBARF has argued that costs are high because there is not enough housing to go around and that the answer is to build more. Tim Redmond of 48 Hills has argued that building more housing would make the problem worse because the people who would move into it are likely to be wealthy newcomers whose demand for services will increase low-income employment, putting further pressure on older, lower-cost housing.
Who is right? Is anyone?
Housing cost trends over the years
To understand what causes high housing costs, we must first have an idea of how high costs are, and how high they have been over time.In the 1940s there were very few apartments advertised for rent. It is not clear whether this was because there were extreme shortages of housing lingering from World War II or whether people typically found their apartments some other way. Nevertheless, there is at least some rough evidence that prices were dropping every year until they briefly stabilized in 1954.
After this lull, in 1956, apartments began to be listed in increasing numbers, but their prices also began to rise. Overall, they went up 6.6% every year. Today's outrageous prices are exactly in line with the 6.6% trend that began 60 years ago.
There have, however, been a few deviations from this overall trend. In 1978, prices began to rise and did not return to the trend line until they stabilized for a few years in the early 1990s. Then in 1995 they rose sharply again, remaining above the trend line until 2005. Prices rose again in 2007 and dropped in 2009 before returning to the trend line.
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