BUSINESS
06/02/2016 07:48 pm ET Updated Oct 02, 2017

There's A Profoundly Simple Explanation For San Francisco's Housing Crisis

Eric Fischer looked at thousands of old apartment listings to try to understand how the Bay Area's rents got so high.
A view of San Francisco. The city's housing crisis goes back decades and has been marked by consistently rising rents, accord
Credit: richliy/Getty Images
A view of San Francisco. The city's housing crisis goes back decades and has been marked by consistently rising rents, according to data analysis by Eric Fischer.

This is an apartment listing San Francisco residents can only dream about: $150 for a brand new, three-room apartment with a “tremendous fireplace.” Yes, it’s real ― or it was in 1961. Today, a one-bedroom at the same address rents for $2,800 a month.  

A 1961 listing for an apartment found in the San Francisco Chronicle.
Credit: Eric Fischer
A 1961 listing for an apartment found in the San Francisco Chronicle.

In recent years, there’s been growing concern about San Francisco’s skyrocketing housing prices, fueled by the tech industry’s boom and too-small supply for the growing population. It’s the most expensive rental market in the country, with the median one-bedroom apartment renting for over $3,500, according to this month’s report from real estate site Zumper. Residents have been beset by evictions and rent hikes (sometimes in the triple digits) ― making offbeat “solutions” like living in a truck, tent or wooden box almost seem reasonable.  

But the crisis can be traced back decades, as recently illustrated in a blog post that offers a data-driven perspective on the extent and length of the problem.    

Eric Fischer, a developer and data artist at Mapbox, analyzed thousands of apartment listings going back to 1948. Though there have been some deviations, he notes, rents have gone up about 6.6 percent annually since the 1950s, or 2.5 percent when inflation is taken into account.

“Today’s outrageous prices are exactly in line with the 6.6 percent trend that began 60 years ago,” Fischer wrote on his blog, Experimental Geography.

Prices began rising when the city ran out of large areas of vacant land, Fischer said.

Fischer’s analysis began with a conversation on Twitter about the number of kitchens allowed in apartments, which sent him to the library to look up an obscure zoning rule. While he was there, he came across other documents about neighborhood revitalization and housing.

“It was just remarkable reading this thing from 1968, basically about gentrification in the Mission,” he told The Huffington Post. “It just became apparent pretty quickly that these trends in housing prices and gentrification and all these issues, we think of them as new issues, but they’ve been going on for decades.”

Fischer used a combination of sources to track rent over the years. He modeled his data after the San Francisco Housing DataBook, which tracked rents advertised in the San Francisco Chronicle on one day each year between 1979 and 2001. He used archives of Craigslist postings for the later years, and, most impressively, scoured microfilm and page scans of the Chronicle from 1948 to 1979, transcribing prices from 12,000 ads. The below image shows a few listings for furnished apartments in a 1961 issue of the Chronicle.

 

 

Fischer also used city records to graph housing inventory, as well as federal data on wages and number of employees as a stand-in for the health of the economy and the pool of people who need housing. Comparing supply and employment with rents, his models show that rising housing costs are driven by increasing wages, but increasing housing supply appears to moderate rent growth.

Fischer analyzed how rents could hypothetically go down, based on his model. Assuming you don’t want to lower wages or employment, rolling back to the inflation-adjusted rents of 1995 (half of current costs) would require increasing the housing supply by 30 percent.

But that’s not realistic, he points out, “because the necessary construction rates were never achieved even when planning and zoning were considerably less restrictive than they are now.”

Keeping rents steady would currently require increasing the housing supply by 5,700 units, or 1.5 percent ― more than triple the rate of growth since 1975.

“Whatever the goal ought to be, it is a long way away,” he wrote.

Fischer stresses that his analysis is just a model (see more details on his blog) and that it still doesn’t explain a few outliers, like a 1998 dip in rents. But it’s a valuable look at a problem that has no clear solutions ― one report projects 10.5 percent rent growth by the end of the year ― and he provides the raw data for others to analyze.

While there are many people pushing for easing restrictions on development and for more housing to be built in the Bay Area, others oppose it. Some people believe that a wave of high-rises would transform the character of San Francisco. Other groups worry that new construction caters to the wealthy, and increasing housing density will displace lower-income residents

Fischer said his data predicts that, at the very least, increasing the supply of housing at any price point won’t make rents go up.

“I think that it’s getting people talking quantitatively about what the solution might be, which I think is as good of a [result] as I can hope,” he said. “I’m just trying to do my part to make information available. Hopefully, if we all pool our thoughts on this, then we can figure it out.” 

A proposed statewide plan aimed at increasing housing would eliminate some of the hurdles developers have to jump through, with particularly big changes to the process in San Francisco. The city is considering proposals to increase both density and affordability of housing.

Fischer has seen the effect of the housing crisis first-hand since he moved to California in 2000 ― first to San Francisco, then Oakland.

“Housing was shockingly expensive and unavailable in 2000 and feels like it has been getting worse ever since,” he wrote in an email. “I am insulated from the direct problem now myself, except that it’s hard to imagine how it would ever be possible to move again.”

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Kate Abbey-Lambertz covers sustainable cities, housing and inequality. Tips? Feedback? Send an email or follow her on Twitter.   

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