Posted by on July 13, 2017 11:20 pm
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Categories: Affordable housing Affordable housing in Canada Board of Supervisors Economy housing Housing Prices Housing Starts Inclusionary zoning KIM Mayor's Office NYU's Furman Center for Real Estate Public housing Real estate Reason Public Policy Institute Social Issues Southern California Supreme Court Urban planning Workforce housing

You know the economics of your city are a bit distorted when a married couple earning roughly 3x the national median income can’t even afford to put a roof over their head.  Oddly enough, that seems to be exactly the case in San Francisco where the Board of Supervisors has just approved a piece of legislation that would allow couples earning up to $138,000 a year to qualify for “affordable housing.”  Per SFGate:

A family of at least two people who collectively earn $138,000 or less per year will likely soon qualify for one tier of San Francisco’s affordable housing that would allow them to buy a home unit, following Tuesday’s Board of Supervisors meeting.

Under the city’s previous policy, last updated in 2002, only those who earned 55 percent of the typical San Francisco median household income or less were able to utilize the option to buy affordable housing, per ABC. With the new proposal, families of at least two who are together earning up to 150 percent of San Francisco’s median income can take advantage of that amendment.

Based on the Mayor’s Office of Housing and Community Development median salary outlines, that means any family of at least two earning less than $138,400 qualifies.


As the San Francisco Examiner noted, the new income targets were all a part of legislation considered by the Board of Supervisors that would require developers to set aside a portion of their developments to be sold to low-income families at below market rates.

A debate over affordable housing requirements began last year when voters approved Proposition C, put on the ballot by supervisors Aaron Peskin and Kim, that for the first time added a middle-income below-market-rate requirement to the affordable housing laws and set the total percent required at 25 percent — 15 percent for low-income earners and 10 percent for middle-income earners. Previously only low-income units were required.

The changes approved Tuesday amend the Prop. C requirements to create three eligible income tiers and sets new percentage requirements. The total percentage of units required for below-market-rate units was set at 18 percent for rental projects of 25 units or more, with 10 percent for low-income earners, 4 percent for moderate-income households and 4 percent for middle-income households.

“This policy is expected to generate between 800 and 2,000 affordable units over the next three years, along with many more market-rate units,” reads a statement issued by the office of Supervisor Ahsha Safai, who introduced legislation in February to set new affordable housing requirements.

“This law helps ensure that San Francisco’s ‘missing middle,’ those who make too much to qualify for housing subsidies but not enough to afford market-rate prices, can find housing they can afford,” the statement reads.

Of course, as usual, such a policy simply demonstrates how little our elected officials actually understand about basic mathematics and economics.  It’s simply fascinating that these folks could convince themselves that adding new regulations specifically designed to make it more difficult and more expensive to add housing supply…will actually turn out to be a good thing for housing supply.  It’s the equivalent of saying ‘we’re going to massively penalize you for building new houses, now go build new houses’.  Even the Los Angeles Times managed to figure this one out:

This is hardly a solution to a housing affordability crisis. It’s also an unconstitutional government taking of private property without just compensation, and a violation of several precedents specifically, which is why the San Jose case deserves consideration by the Supreme Court.

If you think affordable housing mandates can’t do much harm in regions where home prices are already among the highest in the nation, think again. In a Reason Public Policy Institute study that investigated the impact of housing set-asides in the San Francisco Bay Area from 2003 to 2007, economists Benjamin Powell and Edward Stringham found that the volume of new home construction dropped on average 30% in the first year after such a law passed, and prices rose 8%.

In a study looking at Southern California, Stringham and Powell found that housing starts in eight cities dropped off significantly after the inclusionary zoning went into effect. In the seven years before the law, over 28,000 new homes were built. In the seven years after? Only 11,000. Yes, 770 “affordable” units were constructed, but what’s more important is the 17,000 homes that weren’t built at all, making the housing shortage more acute and pushing up prices.

A different set of researchers from NYU’s Furman Center for Real Estate and Public Policy found that inclusionary zoning programs in the Bay Area produced relatively few affordable units compared with other low-income housing policies. And their statistical analysis of California and Massachusetts laws found that inclusionary zoning laws “contribute to increased sales prices of existing single-family homes during rising regional markets, and may depress local housing prices when regional prices decline.”

Oh well, when it all fails miserably you can always just ask taxpayers for more…that’s always the answer in the end.

The legislation can be viewed here:

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