SALT LAKE CITY — Why is housing so expensive in San Francisco? It’s simple. The city doesn’t have enough homes for everyone who wants to live there. Demand is greater than supply; that pushes rents and property values up.
That’s Economics 101. It also explains why, if you live along the Wasatch Front, you may have noticed that friends and neighbors who put their houses up for sale these days don’t have to wait long until the offers start coming. For the first time in decades, this area is facing a housing shortage.
The question is, do we want to become like San Francisco?
I know, the question sounds silly. The Wasatch Front never will rival the Bay Area as a destination or as an economic and cultural center. But that is a separate matter from how San Francisco has managed its housing.
A lot of people choked this week when they read the latest low-income guidelines from the U.S. Department of Housing and Urban Development. HUD breaks this down by county. In San Francisco, a family of four earning $105,350 now qualifies for Section 8 housing.
That would be a decent salary here, but when you consider that the median home price there is $1.2 million, this poverty level makes sense.
San Franciscans are fighting over what to do about this. The New York Times recently wrote about Sonja Trauss, a Bay Area activist who founded the SF Bay Area Renters’ Federation, or SFBARF, for short. The group promotes more high-rise construction, whether subsidized or not. But zoning laws and other regulations stand in the way, as do people who think all that construction would ruin the city’s character or make rents even higher.
Blogger Eric Fischer, a developer and data artist, has researched the history of rising rents in San Francisco and calculates it would take an unrealistic 30 percent increase in housing to return them to 1995 levels. Just keeping costs steady would require a 1.5 percent increase, which is asking a lot.
Now consider the Wasatch Front. For the past 40 years, real estate here has had about an 11 percent cushion between supply and demand. Now, growth is booming, led by several successful tech startups and fueled by numerous national publications that rank the area as one of best places to do business.
A 2017 housing forecast by the Salt Lake Board of Realtors said Salt Lake County has its lowest apartment vacancy rate in more than 20 years despite a recent construction boom.
“In the new home market, homebuilders have virtually no unsold inventory and are producing at full capacity,” the forecast said. “Builders face three serious supply bottlenecks: labor shortage, high land prices, and municipal zoning, fees and regulations.”
Because of these “bottlenecks,” it would be difficult for construction to go at a faster pace, it said.
But even if it went faster, another problem looms. We’re running out of land. In a recent Deseret News report, an official with Envision Utah said Salt Lake County has about 40,000 acres of developable land left. In Davis County it’s 20,000; Weber County, 40,000; and while Utah County has 240,000, much of that is remote, far from freeways and other transportation outlets.
The other day I got a call from some robot wanting me to answer questions for a poll about issues in South Jordan, where I live. Among the questions was this: Did I think the amount of high-density housing currently in the city was too little, enough or too much? Clearly, cities along the Wasatch Front are beginning to have the same struggles, on a smaller scale, as cities in the Bay Area.
And, just as clearly, the answer should be to remove whatever stands in the way of more construction.
By the way, those HUD figures showed a family of four could earn $60,300 in Salt Lake County and qualify for subsidized housing. That doesn’t approach San Francisco levels, but it’s still fairly high.
With all the talk of a growing homeless population and a desire to preserve the area’s reputation as an inviting place for families, we shouldn’t want it to get much higher.