“The Next Mayor’s Housing Challenge”
The housing challenge for the next San Francisco mayor will be not only to expand Mayor Ed Lee’s successes in building affordable housing, but also to address the increasing mismatch between housing affordability and the job growth generated by the economic boom that unfolded under Lee’s watch.
The week Lee passed away in December, the Planning Department published its annual Commerce and Industry and Housing Inventory reports, wonky publications that generally disappear without a blip in the media. The two reports — one about jobs and the other about housing — didn’t speak to each other in the least.
Anyone can tell you there is a link between jobs and housing need, but it’s more than a simple supply-and-demand relationship. We need to understand how incomes from jobs relate to housing prices and examine whether housing construction is meeting real need. Without an intentional match between newly created jobs and new housing affordability, many San Franciscans are left behind.
The Commerce and Industry report shows that, over the last 10 years, the San Francisco job market grew by 127,700 workers. That translates to a housing need of about 100,000 new units. Couple that data point with the Housing Inventory report showing that 28,300 new units were built in San Francisco over the same period, and we see that less than a third of the total housing need was built. On this point, most sides of the political spectrum can agree.
However, equally as important as comparing the ratio of jobs to housing units is considering the actual incomes that were generated by job growth. This is known as “jobs-housing fit” and essentially comes down to a simple question: Does the affordability of new housing “fit” the incomes of new workers? Could someone who got one of those new jobs actually live in one of those new homes?
An analysis of state and local data gives a pretty good sense of the number of jobs generated with low-income salaries (such as restaurant workers and baristas), moderate and middle-income salaries (education, health care, construction and even many workers in tech) and higher-income salaries.
The bottom line? Only about a third of those 127,700 new workers could afford market-rate housing. The majority — the remaining two thirds — needed housing at below-market rates.
Yet, only about 10 percent of the need generated by new low- to middle-income jobs was met with affordable units.
Market-rate housing, on the other hand, met more than 80 percent of the need generated by higher-income jobs over the last 10 years. If you break those higher-income jobs into finer income categories, private development has met more than 100 percent of the need for new worker households earning more than 150 percent of median income (more than $120,000 per year for a single person).
Some may argue with our numbers — of course, San Francisco housing is also meeting a demand from regional jobs (all those Google buses down to the Peninsula) and for global investors looking to park their cash in San Francisco pieds-a-terre they don’t live in. So there is a regional high-income housing demand to consider as well. It’s also important to acknowledge, though, that new construction is a small fraction of the supply available for those households earning more than 150 percent of the average median income. Much of that is met by existing housing on the resale and rental market.
Details aside, the facts are clear: If we are to house our growing number of city residents, a much better “fit” is needed between the housing being produced and the jobs being created. We need more housing and, specifically, much more low- and middle-income housing.
So where does that leave us?
The consequences of not creating housing to meet actual worker incomes will be the difference between having a home or having entire communities displaced outside San Francisco. Addressing this jobs-housing-fit is what we should expect of a new mayor.
All five major candidates will have an opportunity to share how they plan to address the relationship between jobs growth, wages and housing need at a Housing Town Hall on Saturday, March 17, at 4 p.m. at the Kelly Cullen Community House in the Tenderloin. Come ask your housing questions and hear what they have to say.
Peter Cohen and Fernando Marti are co-directors of San Francisco’s Council of Community Housing Organizations.