Why Housing

Michael Siliski
11 min readDec 10, 2018

In 2018 I became obsessed with housing policy. I think it’s the most important state and local issue in California. This is why.

We have a housing crisis

This probably isn’t news to you, but it’s even worse than you think.

Home prices are out of control
The median-priced house in San Francisco sells for $1,620,000, more than 5 times the national average and 6 times mid-90s prices. The household income needed to afford this is $333,270, while median income in San Francisco is $90,530. Only 15% of households can afford a typical home, the lowest share in the country. Our affordability crisis is growing far faster than the California-wide crisis, which itself is out of line with the nationwide trend.

Bay Area Market Reports

Rents are astronomical
San Francisco has the highest rent in the world at around $3,500 per month, up 48% since 2005 (double the overall US growth rate). The same size apartment costs about twice as much here as in London, Paris, Vancouver, or Tokyo. You need to make $140,000 to afford the median rent, which is more than two thirds of San Franciscans make and is more than double the typical teacher’s salary. If you want to be able to afford two bedrooms, you’ll need to make over $185,000.

Bay Area Market Reports

There aren’t enough homes for everyone
Our high home prices are the direct result of a supply/demand imbalance. California has a 3.5M home deficit, equal to the deficit of the entire rest of the country combined, while demand to live here is strong: it’s estimated that 7 million more people would live in California if we had enough homes for them, and twice as many people in San Francisco. San Francisco itself has added just one home for every 8 jobs created this decade, and has averaged only 1,900 new homes each year since 1990, far below the estimated 5,000 new homes needed annually to stabilize prices. The Bay Area as a whole has added 11 jobs for every home since 1990. 97% of California cities aren’t meeting their housing goals, and the state estimates that coastal California needs to build close to 100,000 more homes each year to keep home prices from rising faster than the rest of the country. With demand so high and supply restricted, it’s no wonder that prices continue to rise.

We could build more homes if we chose to
Our combination of high prices and limited number of homes is a choice, not an accident or a necessity. High home prices should act as a signal to the market to produce more homes, absorbing the demand and bringing prices back down. This works for housing in general, and it could work here: the city estimates that every 1% increase in homes reduces market rents by 0.7%, and we have a long ways to go before we reach the density of Paris (3 times denser than San Francisco), let alone Manhattan (3.7 times). The same applies to the entire San Francisco metro area: even sprawling Los Angeles is 44% denser.

The problem isn’t our geography, nor our vacancy rates (among the lowest in the country). The problem is that we’ve simply chosen not to build homes. New apartments are illegal in almost 75% of San Francisco due to zoning restrictions. Where it is legal to build, new housing is delayed, made unprofitable, or killed outright through arbitrary bureaucratic processes, frivolous reviews, and $100,000+ per unit fees. It takes 3.8 years on average to permit a 10+ unit building. The result is too few new homes for the demand, and continued upwards price pressure.


Who gets to have a home?

With not enough homes for everyone who wants to live here, who gets the homes? Those who are able to afford the highest rents in the world. It’s like a game of cruel musical chairs: someone is going to be left out in the cold, and it’s going to be the one with the least money.

Long-time residents get displaced
For every person who moves to San Francisco, someone has to move out. Since population size is essentially capped by number of homes, in- and out-migration is a zero sum game. Who comes? Those with high incomes who can afford the cost of living. Who leaves? Those struggling with the cost of living. San Francisco was 13.4% African-American in 1970 but is down to 5.5% now, and 1 in 10 African-Americans leave the city every year. This isn’t a simple story of gentrification by tech bros and bearded hipsters making the city more homogenous, though: the number of white people in San Francisco is also declining. The city, like the entire Bay Area, is becoming more Asian and more Hispanic. If we want to welcome these new residents without pushing out those who already live here, we need to create enough homes for both.

US Census

Immigrants & refugees are turned away
Many Californians pride themselves on being welcoming towards immigrants and refugees. San Francisco has made a big deal of declaring itself a sanctuary city. While these values are to be celebrated, they’re empty words unless there are homes affordable to newcomers. Only the wealthiest, best-educated immigrants move here, and most refugee resettlement agencies no longer place families in San Francisco because of the city’s high housing costs. The city accepts 95% fewer refugees than just a few years ago. Who actually welcome immigrants and refugees? Cities like Houston, Phoenix, and Atlanta that have lower costs of living.

U.S. Department of State Refugee Processing Center

There’s no room for children
Families with children, who have increased expenses and need more living space, feel extra burden from the cost of living. Consider that a middle-class family in Houston can earn $10,000 less than a family in a city like San Francisco or New York and still have over 50% higher real income. A mere 9% of available homes are suitable for families earning the median family income. Most homes with three bedrooms are occupied by households with two or fewer people (thanks in part to Prop 13 and rent control). The share of children in San Francisco is half what it was in 1970, and is now the lowest in the country. This isn’t entirely due to home prices — our public schools are dramatically underfunded, also thanks to Prop 13— but it is a huge factor.

Californians born in the 1980s and 1990s are far less likely to own their own home, and spend far more of their income on housing, than earlier generations. As our children grow up, they too will need to compete with older residents and immigrants for the limited number of homes. We should ask ourselves: where are our children, and our grandchildren, going to live? As it is, they will have to move away or displace someone else. And how many life paths are closed off to them if they need to earn $185,000 to make rent on a 2-bedroom apartment? You can rule out dreams of being a teacher, firefighter, nurse, artist, or astronaut. Even our mayor, the highest-paid in the country, cannot afford the median house.

US Census: American Community Survey

Homelessness is not having a home
The more expensive housing is, the more people will be homeless. The cities with the highest homelessness rates are the cities with the most expensive housing. While common myths tell us that homeless people flock to California for our temperate weather and public services, in fact 85% of our homeless population previously had a home in the Bay Area.

As high prices drive more homelessness, they also make it more expensive to support each homeless person. We’ve allocated 6% of our city budget to homelessness, three times as much as typical cities like New York and only 2% less than we spend on K-12 education. About 2/3 of that spending goes to housing. The higher home prices, the more people end up homeless and the more expensive it is to house them, which is why we’re treading water on homelessness despite continually increasing spending. If we want to solve homelessness, making housing affordable is primary.

San Francisco City Controller

Those with homes also pay the costs

For those who are lucky enough to secure a home here, life is severely impacted by our housing crisis.

High home prices create poverty
Those who do manage to find homes also pay the costs. California has the highest poverty rate in the country when cost of living, driven by home prices, is taken into account. Our home prices are responsible for 2.5 million Californians living in poverty. 80% of them are in working families. The impact is even more severe where house prices are most imbalanced, like in San Francisco, where cost of living doubles the number of people living in poverty.

California Legislative Analyst’s Office, Bay Area Market Reports

Housing is at the root of inequity
Even for those not living in poverty, the housing crisis exacerbates inequality and limits opportunity. Who benefits from rising home prices? Those who already own a home. Everyone else loses. Levels of wealth inequality in the US have been rising since the mid-20th century, with the accumulation of wealth driven by home values. White families now have 10 times the wealth of black families (and 8 times that of hispanic families), with housing as the single largest asset for most families. White families are far more likely to own homes than black families (73% vs 45%), and those homes are worth 61% more. While it’s hard to draw clear causal lines here, government policies like the mortgage-income tax deduction certainly don’t help: it increases prices and suppresses homeownership in urban areas while distributing its benefits disproportionately to the white & already-wealthy.

Local policies that restrict home building also have negative effects on equity, and on net, housing inequality is mainly within cities, not across them. Decades of policy have created racially- and wealth-segregated neighborhoods, reinforcing inequality. In San Francisco, neighborhoods like the Western Addition and the Mission were redlined and systematically disadvantaged by the government, as they were considered “a constant threat of undesirable racial infiltration.” Today’s housing policies contain development to largely the same areas, exempting the wealthy.

The wealth gap, unaffordable housing, and geographic segregation all contribute to limiting economic mobility. 92% of the Bay Area neighborhoods that a family of two minimum-wage workers can afford to live in are considered “very low” opportunity. And a San Francisco map of upward mobility looks a like a government redlining map or a current zoning map. Excluding our poorer, black and hispanic residents from our wealthier neighborhoods keeps them poor.

Opportunity Insights

Quality of life suffers
Even for those able to get by, sky-high home prices make for significant quality of life issues. One job doesn’t pay the rent, so people work multiple jobs, take on debt, or live far from work. San Francisco has added jobs 8 times faster than homes this decade, and the surrounding suburbs are no better, but the people working those jobs need to live somewhere. The result is that the Bay Area leads the country in 90-minute+ supercommutes.

The Mercury News

Housing is an environmental issue

As high home prices and supply constraints force us to sprawl outward, we reduce open spaces, lengthening commutes, and exacerbating climate change. Our densest cities emit 70% less carbon per capita than the national average, and suburbs are particularly bad emitters. San Francisco’s urban core has a carbon footprint of around 25-30 metric tons per household, about half that of Bay Area suburbs like Menlo Park (52, the national average), Mill Valley (54), or Lafayette (61). The difference comes down to transportation, which accounts for 46% of California’s carbon emissions, and housing—the average single-family home uses 88% more electricity than the average apartment in a 5 unit building. If we want to reduce carbon emissions, mandates for rooftop solar panels on new houses aren’t going to cut it. The California Air Resources Board finds that we cannot achieve the necessary greenhouse gas emissions reductions “without significant changes to how communities and transportation systems are planned, funded and built.” But urban densification alone could contribute half of the necessary carbon emission reductions for the whole country.

While the California climate becomes hotter and drier over the decades, we build over 60% of new housing at the wildland-urban interface. The combination of these two trends accounts for the recent increase in frequency and intensity of devastating wildfires. The solution is to mitigate climate change and reduce sprawl into fire-prone areas. Urban housing development is important to both.

UC Berkeley CoolClimate Network

A matter of political will

So that’s the crisis. We have the highest housing costs in the world due to strong demand and a huge, and growing, supply deficit. We don’t have enough homes for everyone who wants to live here, so we have to choose who doesn’t get one: long-term residents, immigrants & refugees, families & children, those currently homeless or at risk of becoming so. Those who do have a home are burdened by the costs, with many pushed into poverty. They experience deep wealth and racial inequities. They face significant quality of life compromises, including the worst commutes in the country. And our sprawl and commuting does far more to exacerbate climate change than we can offset with any marginal improvements made by our urban households.

The solution is clear: build more homes in our coastal cities, especially near job centers and public transportation, enabling more people of all backgrounds and circumstances to live where they want to. The good news is, if we are willing to put the focus on protecting people, rather than buildings, we know how to do it. It’s simply a matter of political will.

Legislators like Scott Wiener and groups like YIMBY Action are working hard to make housing a reality. You can help by signing the More H.O.M.E.S. petition, as well as by voting for pro-housing representatives at the local and state level—and convincing your friends and neighbors to do so as well.

I believe we need dense, diverse, dynamic, and equitable cities. Here’s my take on what policies can deliver on that promise: A Housing Platform.



Michael Siliski

products, software, data, cities, housing, mobility, San Francisco, Boston sports, minds, music, coffee, spirits, funny stuff, beautiful stuff, amazing stuff