Tuesday, February 13, 2018

CA SB-827 Text 2018.02.13

PermaLink: https://meetingthetwain.blogspot.com/2018/02/ca-sb-827-text-20180213.html

The sole purpose of this post is to have the text of California Senate Bill 827 as of February 13, 2018.  SB 827 will likely be modified but another post of mine will refer to it in the original form and this post serves to preserve that form for the future reference.  This was retrieved from web site: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB827
on February 13, 2018.

------------------  begin SB-827 text  --------------------

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

SENATE BILLNo. 827


Introduced by Senator Wiener
(Principal coauthor: Senator Skinner)
(Principal coauthor: Assembly Member Ting)

January 03, 2018


An act to add Section 65917.7 to the Government Code, relating to land use.


LEGISLATIVE COUNSEL'S DIGEST


SB 827, as introduced, Wiener. Planning and zoning: transit-rich housing bonus.

The Planning and Zoning Law requires, when an applicant proposes a housing development within the jurisdiction of a local government, that the city, county, or city and county provide the developer with a density bonus and other incentives or concessions for the production of lower income housing units or for the donation of land within the development if the developer, among other things, agrees to construct a specified percentage of units for very low, low-, or moderate-income households or qualifying residents.
This bill would authorize a transit-rich housing project to receive a transit-rich housing bonus. The bill would define a transit-rich housing project as a residential development project the parcels of which are all within a 1/2 mile radius of a major transit stop or a 1/4 mile radius of a high-quality transit corridor, as those terms are further defined. The bill would exempt a project awarded a housing opportunity bonus from various requirements, including maximum controls on residential density or floor area ratio, minimum automobile parking requirements, design standards that restrict the applicant’s ability to construct the maximum number of units consistent with any applicable building code, and maximum height limitations, as provided.
The bill would declare that its provisions address a matter of statewide concern and apply equally to all cities and counties in this state, including a charter city.
By adding to the duties of local planning officials, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority   Appropriation: no   Fiscal Committee: yes   Local Program: yes  



THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1.

 The Legislature finds and declares that this act addresses a matter of statewide concern and shall apply equally to all cities and counties in this state, including charter cities.

SEC. 2.

 Section 65917.7 is added to the Government Code, to read:
65917.7.
 (a) As used in this section, the following definitions shall apply:
(1) “Block” has the same meaning as defined in subdivision (a) of Section 5870 of the Streets and Highways Code.
(2) “High-quality transit corridor” means a corridor with fixed route bus service that has service intervals of no more than 15 minutes during peak commute hours.
(3) “Transit-rich housing project” means a residential development project the parcels of which are all within a one-half mile radius of a major transit stop or a one-quarter mile radius of a high-quality transit corridor. A project shall be deemed to be within a one-half mile radius of a major transit stop or a one-quarter mile radius of a high-quality transit corridor if both of the following apply:
(A) All parcels within the project have no more than 25 percent of their area outside of a one-half mile radius of a major transit stop or a one-quarter mile radius of a high-quality transit corridor.
(B) No more than 10 percent of the residential units or 100 units, whichever is less, of the project are outside of a one-half mile radius of a major transit stop or a one-quarter mile radius of a high-quality transit corridor.
(4) “Major transit stop” has the same meaning as defined in Section 21064.3 of the Public Resources Code.
(b) Notwithstanding any local ordinance, general plan element, specific plan, charter, or other local law, policy, resolution, or regulation, a transit-rich housing project shall receive a transit-rich housing bonus which shall exempt the project from all of the following:
(1) Maximum controls on residential density or floor area ratio.
(2) Minimum automobile parking requirements.
(3) Any design standard that restricts the applicant’s ability to construct the maximum number of units consistent with any applicable building code.
(4) (A) If the transit-rich housing project is within either a one-quarter mile radius of a high-quality transit corridor or within one block of a major transit stop, any maximum height limitation that is less than 85 feet, except in cases where a parcel facing a street that is less than 45 feet wide from curb to curb, in which case the maximum height shall not be less than 55 feet. If the project is exempted from the local maximum height limitation, the governing height limitation for a transit-rich housing project shall be 85 feet or 55 feet, as provided in this subparagraph.
(B) If the transit-rich housing project is within one-half mile of a major transit stop, but does not meet the criteria specified in subparagraph (A), any maximum height limitation that is less than 55 feet, except in cases where a parcel facing a street that is less than 45 feet wide from curb to curb, in which case the maximum height shall not be less than 45 feet. If the project is exempted from the local maximum height limitation, the governing height limitation for a transit-rich housing project shall be 55 feet or 45 feet, as provided in this subparagraph.
(C) For purposes of this paragraph, if a parcel has street frontage on two or more different streets, the height maximum pursuant to this paragraph shall be based on the widest street.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.

SB-827 (CA) Analysis: Part 1 - 2/13/2018

SB-827 Examined - Part 1



California State Senators Wiener and Skinner with Assembly Member Ting have coauthored Senate Bill 827 in the California legislature.  The text of SB-827 as of 2/13/2018 is found here:
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB827

(Update 2/15/2018 - The San Francisco Planning Dept. issued an analysis of SB-827 here:
https://drive.google.com/file/d/1ym-kDtOlJccJtxpCTFEF0Rzj0osciV4G/view . It includes a point I overlooked.  All the buildings will get a "State Density Bonus" so the limits specified in the bill will all be higher in practice.)

The core of SB-827 is that within certain areas of transit stations or corridors, the state of California overrides any maximum height restriction that the local city or town can impose. 

If there is a neighborhood of single family homes within a half mile of a train station, the state mandates any future building there can be up to 8 stories high - 10 stories if they add in some "below market rate" housing.  There is no requirement for parking or consideration of blocking sunlight from houses or parks, increased traffic, or exterior appearance of the building.  It can be as ugly as sin, block the sun from all the neighboring houses, and cause constant traffic gridlock, but "too bad - deal with it" is what you get from SB-827.

There is no requirement that any savings in construction costs by the builder be passed on to the tenants.  Since rents are determined by "what the market will bear" this will not result in any reductions in rent.

These mandatory height increases depend on distance from a transit location and width of the street.  Those limits are 45 ft (4 story apartment building), 55 ft (5 story), or 85 ft. (8 story).  (Update: with the State Density Bonus these will be upped so that 45-ft becomes 65-ft, 55-ft becomes 75-ft, and 85-ft becomes 105-ft.)

https://drive.google.com/file/d/1ym-kDtOlJccJtxpCTFEF0Rzj0osciV4G/view
A building is allowed to be less than those heights should the builder so desire, but the local jurisdiction cannot impose any maximum heights less than those heights prescribed by the law.  Any builder would be passing up a lot of money if they build less than the maximum allowed by law.

SB-827 over-rides local control of height, parking requirements, setbacks, exterior appearance and any other requirements that would increase the cost of construction of apartments by any amount whatever.

The implication is that this will reduce the cost of housing in high housing cost areas but this simplistic misconception of how economics works is incorrect.  I discuss why it is incorrect here:  http://meetingthetwain.blogspot.com/2017/01/live-work-commute-2.html

This is part 1 of several explorations of the implications of the bill.

There is a companion bill SB-828 which will receive it's own examination.

No Zoning Limits:  SB-827 does not respect residential zoning limitations of any sort.  I have met people who think their town or block is safe from having ugly 6- to 10-story apartment buildings imposed on it because they are zoned 1-story residential.  This bill does not say anything whatever to indicate it only applies to areas zoned for apartments.  Blocks of one-story buildings zoned "single story overlay" are just as likely to have 6- to 10-story apartments built next door as anywhere else.

Quoting from the bill:

"(4) (A) If the transit-rich housing project is within either a one-quarter mile radius of a high-quality transit corridor or within one block of a major transit stop, any maximum height limitation that is less than 85 feet, except in cases where a parcel facing a street that is less than 45 feet wide from curb to curb, in which case the maximum height shall not be less than 55 feet. "

Estimate 10 feet per story so 55 feet is at least a 5-story apartment but with the State Density Bonus this becomes 75 ft. or a 7 story building (see "update" above).

Since El Camino Real is a major transit corridor, we can expect to see 7-story apartments imposed within 1/4 = 0.25 miles of El Camino on either side.  Here is a map of El Camino and Hollenbeck in Sunnyvale, CA.  The distance shown is 0.2 miles.  The red rectangle encompasses a street of one story homes that can have a 7-story apartment built among them.  No one can prevent it if SB-827 passes.


A street view of the area in the red rectangle above is shown below:
Cumberland Drive, Sunnyvale.  A K-5 public school is on the right side of the picture off camera

Under SB-827, a 7 story building can be built on Cumberland Dr. 
This is only a 6-story building.  SB-827 forbids any consideration of off street parking
Since Cumberland Drive is less than 45 feet across, it's maximum height may not be set by the city to less than 75 feet (7 stories) as seen above.  Since the builder will not need to put in parking spaces, that is a lot of parking on a few streets.
Danforth St. is the only way out of the neighborhood without going through many twisty local side streets

Looking at the map of that area again, we see all those new residents would have to get out of their area though one two lane street - Danforth shown below:
Does this look like it can handle rush hour traffic from a block of 6- or 7-story apartments?
 (Cumberland K-5 school on left edge of photo)

Issues:

1.  Time:  This is forever.  There is no time after which the law will cease to apply.  Were the "housing crisis" to be resolved after ten years so that thenceforth housing is cheap and plentiful it would make no difference, the law would remain in effect.  The law as proposed never removes any of the over-rides of local control for height, parking, or appearance.  They stay in effect after the situation they are supposed to address no longer applies.

2.  Geography:  There is no geographical limit to this.

Excerpt from the bill:  "The bill would declare that its provisions address a matter of statewide concern and apply equally to all cities and counties in this state, including a charter city."

It applies to Modesto, where housing is cheap, as well as to Beverly Hills where it is expensive.  (Click images to enlarge)
Modesto - buy a 1,946 sq. ft. house for $1100/month - not a "housing crisis"

Beverly Hills - $10,837/mo.  Not Cheap.
Will Beverly Hills get cheaper if you put up 10-story apartment buildings there?
It applies to San Luis Obispo which has lots of room to expand geographically, as much as to San Francisco where there is no room to expand except upwards.
San Luis Obispo -  lots of space
San Francisco - no space but up
This override of local control to solve a housing problem is imposed on areas where there is no housing problem to be solved.

3.  Transit Capacity: There is no attempt to link the construction of housing with the ability of the local transit system to accommodate the increase in traffic.  As long as two buses happen to go along a street separated by 15 minutes or less during morning and evening rush hours it is considered a transit corridor.  If the buses are making a run along a narrow side street connecting several main arteries there may not be room for much traffic but the apartment building of SB-827's specified height can be imposed without regard to the traffic capacity of the street.  No parking requirements may be imposed by the local city or town.  The building can have no off-street parking whatever.  There is no requirement that any savings from this be passed on to renters or buyers.

4.  Solar Shading:  There is no consideration for solar panels.  Suppose, for example, a nearby school has just spent $1,000,000 installing solar panels on their roof.  If someone wants to put up 105 foot high apartment buildings allowed by SB-827 no one can stop them.  If the buildings completely shade the new solar panels making the school's investment useless, there is nothing anyone can do.

Sorry High School - Senators Wiener and Skinner don't care if you have solar panels.
Get what you can for them on the used market and pay whatever the power company wants - forever.
5.  Parks:  There are no provisions for local conditions.  If a lot of 105-foot 10-story apartment buildings put a neighborhood park in permanent shade so that all trees die and no children want to play in such a dismal park, there is nothing anyone can do.
"I think that I shall never see, a tree.."
...ever again if Senator Wiener gets SB-827 through.
6.  Historic Preservation:  Some cities like Sunnyvale maintain a "Heritage District" near the train station protecting homes and small commercial buildings dating from the early agricultural days of Santa Clara Valley.  SB-827 would over-ride those protections.  SB-827 is quite clear that no imposition of any requirements regarding parking, set backs, or aesthetic considerations that cost any money whatever may be imposed on the builder.  This includes appearance.  Quote from the bill:

"(b) Notwithstanding any local ordinance, general plan element, specific plan, charter, or other local law, policy, resolution, or regulation, a transit-rich housing project shall receive a transit-rich housing bonus which shall exempt the project from all of the following:
(1) Maximum controls on residential density or floor area ratio.
(2) Minimum automobile parking requirements.
(3) Any design standard that restricts the applicant’s ability to construct the maximum number of units consistent with any applicable building code."
This means that any apartment building can be built as cheaply as possible with no consideration of looks or the neighborhood character.
This charming little section of Sunnyvale from the 1930's could become...
...this - apartments made from used shipping containers
7.  Broad Swath:  Quote from the bill:

(4) (A) If the transit-rich housing project is within either a one-quarter mile radius of a high-quality transit corridor or within one block of a major transit stop, any maximum height limitation that is less than 85 feet, except in cases where a parcel facing a street that is less than 45 feet wide from curb to curb..."

Another example - this time in Santa Clara, less than a quarter mile off of El Camino but right on Calabasaz Blvd.  Recall that with the State Density Bonus, 85-ft buildings can become 105 feet buildings.  Calabasaz is certainly more than 45 feet wide so someone can put in a 105-foot tall apartment building (10 stories).  First the map, then the street view:

 
Calabazas and Barkley, Santa Clara

With an 105 foot (10-story) apartment building.  (Crude image, but you get the idea.):

There is much more to say but this covers the basics.

Sunday, February 11, 2018

Mother Nature Bats Last

PermaLink: https://meetingthetwain.blogspot.com/2018/02/mother-nature-bats-last.html


Mother Nature Bats Last

...and she's coming out swinging!

Following up on a previous post on Sea Level Rise:
http://meetingthetwain.blogspot.com/2017/04/bye-bye-shanghai.html

Interesting article in the SF Chronicle on a Union of Concerned Scientists (UCS) paper regarding sea level rise.   The UCS report, titled "When Rising Seas Hit Home" details the communities affected, mostly along the eastern Sea Coast of the US.
https://www.ucsusa.org/sites/default/files/attach/2017/07/when-rising-seas-hit-home-full-report.pdf
There have been plenty of good maps showing sea level rise but until recently no one knew how to assign dates to when it would happen.  We have more information now and the UCS estimated dates for various levels of sea level rise.  The Chron had a map how it affects the SF Bay Area.


2045 on Left,                           2100 on Right
https://www.sfchronicle.com/bayarea/article/Scientists-expect-floods-in-Bay-Area-from-rising-11284750.php
You may notice in the above map that some cities like Foster City and East Palo Alto disappear entirely, while others, like Mountain View and Sunnyvale, lose major sections of their commercial development areas near the bay.

The report shows areas abandoned based on the idea that if an area is flooded 26 times a year (every other week, on average) it will be abandoned.  
Aftermath of Hurricane Sandy in Delaware
http://blogs.pjstar.com/eye/2012/11/02/aerial-photos-of-destruction-left-by-superstorm-sandy/
For the San Francisco Bay area this is just a return to what it used to be before Europeans started populating and filling in low lying land.  This is seen in the following map from Wikipedia of what the SF Bay looked like around 1800.  The land that will be flooded in the years to come was once marsh land. It was filled in for housing.  It should never have been built on.
https://en.wikipedia.org/wiki/San_Francisco_Bay
Sea level rise will not be like a bathtub filling up, slow and steady.  For a while nothing will appear to happen, then a King Tide will flood some underpasses and low-lying neighborhoods.  It will be noted in the papers but nothing will be done.
Mill Valley - 2012
Everyone forgets about it.  Then a storm floods the same low-lying places again.  There is some discussion of improving drainage or building better sea walls.  A study is done and a report issued but no action is taken.  Then nuisance flooding happens every month.
Nuisance Flooding
Charlotte, North Carolina
After the first few occasions, no one leaves.  Then after every successive flood, more people move away.
Rock Springs, San Jose, 2017
"California’s third-largest city remains swamped with contaminated water"
https://www.wsj.com/articles/floodwaters-linger-in-san-jose-1487865014
At some point no one will buy property in the affected area.  The last stragglers in the area hope for some government aid to help them relocate.  Finally it is officially abandoned and made into a protected marsh.

Sea Walls?

People always ask why can't we build sea walls like the Dutch.  I wonder if they are thinking of this levee in the Sacramento area?


New Orleans had lots of levees too.  Didn't do them much good.
http://www.theadvocate.com/baton_rouge/news/environment/article_13e4b4e8-dba0-11e7-b19a-db5cbb943c04.html
To protect the threatened areas with sea walls or levees the entire SF Bay needs to be enclosed.  If only one city, say Mountain View, is enclosed, then water from neighboring areas will come in around the walls.  So a large continuous sea wall will need to be properly maintained for 1,000 years - the expected duration of the sea level rise.  Care to trust your home to state and county infrastructure maintenance for 1,000 years??
Do you reaallyy want to trust gov maintenance of infrastructure for 1,000 years?

Oroville Dam?

"Oroville – It has been one year since water spilled down the Oroville Dam emergency spillway for the first time in history, spelling near-disaster for nearly 188,000 residents downstream.

As erosion on that unlined hillside intensified on Feb. 12, water headed upward toward the concrete weir and there was fear that uncontrollable releases from the reservoir behind it would come crashing down on the cities below. Residents were given just one hour to evacuate that afternoon."
Faulty construction and poor maintenance resulted in the evacuation of three counties.
https://www.mercurynews.com/2018/02/11/oroville-dam-one-year-after-crisis-distrust-lingers-big-questions-remain/

How Long?

Think of taking an ice cube out of your refrigerator and putting it in some warm water.  It melts in 10 or 20 minutes.  To refreeze it will take 10-12 hours.  Similarly, the ice melting from glaciers may take 150 years to raise the sea levels but it will take over 1,000 years to refreeze:

1941 (Left)         2004 (Right)
https://cpo.noaa.gov/warmingworld/glaciers.html
"There is a widespread consensus that substantial long-term sea-level rise will continue for centuries to come even if the temperature stabilizes" https://en.wikipedia.org/wiki/Sea_level_rise#After_2100


How Fierce?

Climatologist Dr. James Hansen of Columbia University explains the super-storms we will lively see in the future as the oceans heat up and release more energy into hurricanes and typhoons.  
https://www.youtube.com/watch?v=JP-cRqCQRc8
As explained in the video, the existing climate models have been underestimating the heat content that will be released in future storms.  The storms will have higher winds and become bigger.  In earlier times, when the earth was about 3 degrees Celsius warmer than it is now, storm waves tossed gigantic boulders weighing 1,000 tons (that's 1,000 x 2,000 lbs = 2,000,000 lbs) up on the shore in the Bahamas as seen below (excerpted from the 15 minute video cited above).  Note woman in lower right shown for scale.
1,000 ton boulder tossed onto land by storm waves.
For comparison, a large male African elephant weighs around 6 tons.  A 1,000 ton boulder is about 160 elephants.
One boulder weighing as much as 160 of these guys tossed though the air onto land.
As the energy stored in oceans in the form of heat increase, they will create ever bigger storms, such as Typhoon Tip, shown below overlaid on a map of the US for a sense of scale.
https://www.scientificamerican.com/article/earths-strongest-most-massive-storm-ever/
This typhoon (hurricanes in the Pacific are called typhoons) reached Japan resulting in 86 deaths.  It weakened by the time it hit Tokyo, but still caused tall skyscrapers to sway in the intense winds.

Here is Hurricane Irma (2017) overlaid on a map of Texas for comparison:

The effects of a large storm in Europe late 2017:
Sea Wall Destroyed

Train Car Blown Over
Over half of all the human produced Green House Gas CO2 emitted since the industrial revolution was emitted in the last 30 years.
https://www.ucsusa.org/publications/catalyst/su15-documenting-fossil-fuel-companies-climate-deception
So that's why we can't have nice things building sea walls won't work.

Wednesday, January 31, 2018

Housing - Jan. 2018

Housing Update 1/31/2018:


San Francisco Housing
This is a 1 year update of my earlier post:
http://meetingthetwain.blogspot.com/2017/02/is-there-housing-crisis.html
Everything in that earlier post is still relevant, but I thought I'd update some of the housing data and add more historical context.

Summary:

  • We are in the middle of a housing boom.  As booms go, it is not particularly unusual - bigger than the last one, but not as big as two earlier booms in the 1980's and 1990's.  Housing prices go up with employment.  They are still going up after almost 5 years of increases (they started increasing in 2013).  This followed 6 years of price declines (2007-2012).
  • Land is so expensive, only luxury housing can be built.
  • A lot of apartments and condos are in the pipeline nationwide and in the SF Bay area.  This should result in a halt to price increases.
  • SF Bay area housing costs over the last 32 years have gone through 4 boom-bust cycles.  During booms they went up as much as 100%.  During busts they have gone down 10% to 27%.  Currently they are up 75% from their 2013 lows.
  • Growth in high wage jobs causes housing inflation.

Discussion:

The rise of housing costs was starting to subside in the SF Bay Area last year as companies expanded elsewhere.  This seems to have been a temporary lull.  Hiring is still increasing faster than housing can be built in the SF Bay Area.  The geographical area occupied by tech employers is expanding in an ever-widening circle raising housing costs in increasingly remote areas.
Housing prices rose in last 18 months
15% in lowest 3rd of housing
10% in middle 3rd
6% in highest third
https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-a-baby
As housing booms go, this current boom is not all that exceptional.  The affordability across counties in the San Francisco Bay area is reminiscent of 1991 (far left of the following chart) when it started rising to 20% (of residents could afford to buy a house in SF) or 40% (far out in Sonoma County).  The chart below makes it clear that affordability goes up in recessions and goes down in economic growth periods.  Affordability is higher in further out counties like Sonoma than the job centers of San Francisco and San Mateo. (click chart to enlarge)
https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-a-baby
At no time in the last 26 years have more than 28% of San Francisco residents been able to afford a house in San Francisco.  Most of the time it has been bouncing around between 10% and 25%.  SF is expensive now, has been in the past, and will be in the future.  Even in Sonoma County the percentage of people who can afford a house has varied from 10% to, at the very most, 50%.  Usually affordability is around 30% meaning only 30% of residents can afford to buy a house.  This is not a crisis.  This is a permanent condition.

The affordability peaks occur during economic downturns and the low affordability points occur during economic booms (bubbles).

In other words,
Either: lots of high paying jobs and high housing costs
Or: jobs are hard to get and pay little, but housing is cheap(er).
Either way  - it's cheaper further out.
Possibly the least surprising economic correlations - ever.

Because of the increasing concentration of high paying jobs, land is becoming so expensive that it is the overwhelming part of housing costs.  The high price of land makes it impossible to build anything but luxury housing in or near Silicon Valley or most of the SF Bay Area.

As a result, housing prices are reaching new highs in the mid and high priced homes and the lowest 3rd of homes by price are close to their 2007 bubble highs as seen in the following chart.  (click to enlarge)
https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-a-baby
Consider, for example, the cost of a vacant plot of land in Sunnyvale (assuming you could find one).  Such a (hypothetical) vacant plot would cost about $1.6M.  Constructing a small cheap house costing $150,000 in labor and materials compared to building a large expensive house costing $250,000 is the difference between a $1.75M and $1.85M base cost - less than a 6% difference.


Might as well build the large house and while you're at it, add granite counters, and marble bathrooms for another $40K - it's just icing on the cake.  Those luxury touches make the large $1.85M house a $1.89M house.  Who cares about the third significant figure?  So all new housing becomes luxury housing.
What the heck - why not?
The land costs so much might as well go whole hog.
Building up doesn't make this better because the increase in rental income makes the land even more valuable.  Land costs and density are examined in detail here:
http://meetingthetwain.blogspot.com/2017/01/live-work-commute-2.html

The following chart shows that as you get further out from the center of economic activity, the lower the rents.  Sprawl happens because people can't afford to live close in.
The closer you are to the center of economic activity, the more expensive the land.  So Lower Manhattan is more expensive per acre than its far suburbs.  Lower Manhattan, Silicon Valley and San Francisco are centers of economic activity.  They will never be cheap.  Chart is from: http://MarronInstitute.NYU.edu/content/working-papers/the-spatial-distribution-of-land-prices-and-densities


We have seen these bubbles before as seen in the following chart covering the last 33 years back to 1984:
FANG refers to "Facebook Apple Netflix Google"
All growing very fast all at once.
https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-a-baby
In fact, for all the talk about "housing crisis" this is a relatively mild increase in housing compared to previous booms as seen in the following chart.  The percentage run up in prices in the previous two economic cycles in 1985-1995 and 1996-2001 (Dot-Com bubble) was significantly greater - 100% vs current 75%. The latest run up in prices is sort of average right now, though in dollar terms they are new highs.  Less than the earlier two bubbles but greater than the US sub-prime housing bubble that burst in 2007.
Last 5 years = increased housing costs
After 6 years of decreasing housing costs
https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-a-baby
The above chart points out the fallacy in the oft-repeated phrase "since 2010, [number] thousand jobs have been added and housing has not kept up."  2010 was the bottom of the "2007 Housing Bubble" recession.  Housing prices in the SF Bay area were declining from 2007 to 2012.
SF Housing Prices went down from 2007 to 2012

No one is going to build new housing if existing housing is losing value.  In that time period there were a lot of foreclosures, and mortgage defaults.
Blue line = Mortgages 90+ days past due
Red line = Foreclosures started
Worst since at least 1980
Housing construction could not reasonably be expected to start until builders were sure their units would sell at a profit - which means 2013.  Once all the paperwork is done and the land purchased and the house designed it still takes about 2 years to build new housing.  This means new employees added from 2010 to 2013 would not see any new housing until 2015 at the very earliest.


Builders won't build for people that aren't here yet.  As long as new jobs are being added, construction will always be playing "catch up".   There will always be a "shortage" as long as jobs keep forming faster than housing can keep up.

As the companies expand, the increase in housing prices near work spreads out in an ever widening circle - like a drop of ink on tissue paper - meaning people who aren't getting the higher tech salaries have to commute from further and further away.

People keep asking me for a solution to this "problem".  It's a problem only if you want two things that are incompatible, in which case, the problem is you.

If you want continued growth in high income jobs, then housing will keep rising in cost.
If you want housing costs to stay constant, then you can't have continued growth in high paying jobs.

One or the other, make up your mind.
You get to choose (or, maybe not)
The following chart shows how much you need in salary to buy a house in any of 50 US metro areas.  San Jose is at the far right at over $200K, San Francisco is next to it at $175K.  The average for all 50 metro areas (center maroon bar) is slightly above $50K.  (click graph to enlarge to readable size.)
Salary Needed to Buy a House in 50 US Cities.
San Jose (red) at far right, San Francisco (purple) next to it.
National average in middle (maroon)
Chart from Nov. 2017 data at
https://www.hsh.com/finance/mortgage/salary-home-buying-25-cities.html
Where more high salary jobs are added, the housing prices will reflect what (some) people can buy.  Those houses won't sell unless someone can buy them.  It may not be you, but someone has the money for that house.  Those that can't keep up need to figure out whether it it is worth staying or moving to one of the the many lovely other parts of America, the Beautiful.  Adults make choices and accept that there are trade-offs with any decision.
"O beautiful for spacious skies,
For amber waves of grain,"
1893 Poem by Katherine Lee Bates
Perhaps the anger floating around about housing costs can be directed at the companies that can't figure out how to create jobs outside the SF Bay area.  They can have R&D centers in India but not Indiana?
Purdue University
Indianapolis, Indiana
There is in fact an enormous amount of building going on around the country including the SF Bay area.  As a result, a huge number of single and multi-family housing units (more than 5 units per building) will becoming available soon.  Single family housing starts are near 10-year records.  See following charts:


Multi-family housing inventory is about to get it's biggest increase since 1975 (43 years ago).


Housing price swings are a regular feature of the US economy as seen in the following chart from census data from 1963 through mid-2011 (click on graph to enlarge):


So how is this boom different?  Mainly in the builders' PR.  By terming this, not particularly exceptional boom, a "housing crisis" and getting everyone to accept that term, they create a panic-driven urge to over-ride all reasonable zoning limits.  And ignore the problems of getting people to and from work.
So you build lots of housing everywhere.
How do you get people in and out?
Well, many people are honest and trusting and aren't prepared to deal with profit-driven attempts to panic them.  A little cynicism is in order.  When you wake up and realize you've been manipulated it feels really awful.