San Francisco bans affordable housing

"San Francisco bans affordable housing," is the spot-on conclusion of a lovely post by Vadim Graboys (link to twitter). 

The post is titled "54% of San Francisco homes are in buildings that would be illegal to build today" with an interactive graph of those homes. 

Or, put another way, "To comply with today's [zoning] laws, 130,748 homes would have to be destroyed, evicting around 310,000 people."

The latter statistic is fun, but actually severely understates the damage of San Francisco's (and Palo Alto's!) zoning laws. The only reason current homes are illegal is that they were built under slightly less restrictive zoning laws. So that measures how much zoning laws have gotten stricter over time. It does not measure the much larger number of homes and apartments that were never built.

Now, how does San Francisco, ground zero of progressive governance, and a city whose politicians can't get out of bed in the morning, or sign permission to build anything without saying "affordable housing" about 10 times, in fact "ban affordable housing?" 

If your goal is to make housing as expensive as possible, the best way to do it is to require lots of land per home, because land in cities is very expensive. San Francisco does this in a multitude of ways, but I decided to focus on 3 of them:

Minimum lot size: San Francisco mandates that a lot must be at least 2,500 square feet (or 4,000 sqft in some cases) in order to build a home on it. Since a decent single-family home could be built on a 500 sqft lot, and a very nice single-family home can be built on a 1,200 sqft lot, the minimum lot size requirement greatly reduces the amount of homes that could be built in San Francisco and increases the price of each home. 65,974 homes would be illegal to build today because the lot size is too small.

Density limits: San Francisco mandates explicit density limits, from prohibiting apartments entirely (in 76% of the city) to mandating a minimum lot size per apartment (almost everywhere else). The sole reason for these limits is to make housing more scarce and therefore more expensive. San Francisco limits density in many other ways, such as floor-to-area ratio, setback requirements, etc. but to keep things simple, I looked only at the minimum lot size per apartment for this map. 69,499 homes would be illegal to build today because of density limits.

Height limits: When land becomes expensive, developers can still create inexpensive homes by building multiple apartments on the same plot of land. Each apartment has to pay for only a fraction of the land cost, which can make apartments significantly cheaper than single-family homes. The taller the apartment building, the less significant the cost of the land becomes, so San Francisco limits this savings by limiting the height of new buildings to 40 feet in most of the city. 9,066 homes would be illegal to build today because of height limits. 

Whenever San Francisco creates a new restriction, homes that already exist are grandfathered in rather than demolished. That's where all these "homes illegal to build today" come from. 

That also is why so much of San Francisco has an ancient housing stock. Many of the houses were built cheaply in an earlier era, and don't match current needs. If a house is grandfathered, you can "remodel" it within existing perimeter but you can never tear it down and build something appropriate to today's realities. 

Graboys asks 

How can you say San Francisco purposely bans affordable housing? All its leaders constantly talk about building more affordable housing!

and concludes 

Sorry to break it to you, but politicians lie. 

I think a more nuanced view has better power to explain behavior.  Politicians like government-constructed or government-controlled new housing marked as "affordable" and rationed by politicians. They just don't like "developers," i.e. people in the business of building houses, to build houses and sell them without paying proper homage to politicians. Later: 

I notice there's a building built last year that you claim is illegal to build. How is that possible?

Well-connected developers can apply for a conditional use permit to get a per-project exemption from zoning laws. The city does not need consistent reasons for granting or rejecting these permits, so this is an easy way for politicians to grant special favors to friendly developers.

I gather from a friend who knows developers in New York that "affordable" units in new apartments are negotiated in this process. 

More importantly,  politicians in a democracy are sensitive to the demands, however incoherent, of their supporters. Talk to the voters of San Francisco. They want some virtue-signaling government mandated "affordable" housing, little museums of the poor, but they absolutely don't want any such housing in their neighborhood.  In my neighborhood, the same people with the BLM / no hate here signs in their front yards also have no new development signs and show up to city council meetings to make sure nothing gets built. 

A separate post documents that "Apartment buildings are illegal to build in 76% of San Francisco" with another lovely graph.

Why? Graboys offers

These buildings ... are only illegal due to regulations called zoning laws that San Francisco passed to restrict the density of housing in certain areas, originally to keep poor minorities out of white neighborhoods.

...Because minorities were poorer than whites and dense housing such as apartments is usually cheaper than single-family homes, the goal was to ban the construction of housing that poor minorities could afford.

These days, many people who don't have explicitly racist motivations support zoning laws because they like the status quo, even though the status quo bans the construction of affordable housing in most of the city....

... even if the intent of zoning laws isn't racist, their effect has racist impacts. San Francisco's Black population declined from 13% of the city in the 1970s to 5.5% today. In contrast, zoning-free Houston added 100,000 Black residents from 2010 to 2015, and Black people are now 23% of Houston's population. 

This is a little superficial. While I think it is useful to remind our progressive friends, as they look to the uncomfortable racial past of American institutions, perhaps they should look to the uncomfortable past and unintended-consequence present of institutions they support, (next up: unions) I also think we should all step back from the "you're a racist" witch hunts of the current moment. 

It is also likely that allowing more construction in San Francisco, will not today directly create "affordable" new houses. It will create affordable housing via the musical chairs effect: fancy new apartments and condos will be built for techies, "affordable" because they only cost $1 million not $3 million. They will vacate the existing housing stock, which will then become affordable for people of modest means. 

When zoning laws were introduced, they had a myriad of motivations. People who had bought new houses were aware that neighborhoods, like the ones they left, could fall in to decline. Yes, they wanted to keep Black people out, but they primarily wanted to keep poor people out, and Asians, and low income whites (grapes of wrath) and so on. This fundamental desire was tinged with the unthinking racism of the time, but I don't think it's a useful reading of history to say that anti-Black racism was the only motivation, as fun a rhetorical point as that may be. 

The irony is that laws to keep poor people out are now keeping wealthy young techies out, and stopping the same neighborhoods from becoming wealthier, and thus better serviced by business and taxes. The counter-irony is that this is exactly what many people in San Francisco now want. They don't want 300,000 new residents. Zoning laws are as handy a tool against gentrification as they are against intrusions of struggling low-income minorities. 

This all may be moot, and they may get their wish, good and hard as H.L. Mencken used to say. 

Update:

"Well, you wouldn't want someone to build a 100 story apartment next door to you, would you?" No, I wouldn't. Of course as usual this is an extreme example. Neighborhoods change slowly. Even in Houston, nobody builds 100 story apartments in the middle of a residential block. 

But let us take it seriously. There is an externality. How do we handle externalities? (Quiz question). 

Property rights. (Quiz answer). For example, as a transition measure, each house could have the transferable right to impose current zoning restrictions on the immediately adjacent houses. Then, sure, you can build an apartment building, but first you have to buy the right to do it from the neighbors. What if they say no? Then build it somewhere else where someone will sell the rights. 

Perhaps better, each homeowner can be granted the right to trash zoning laws on his or her property, but anyone including the neighboring houses can buy that right. Now if you don't want an apartment going up down the street you can put your money where your mouth is, without having as now to buy the whole house. Per Coase, it doesn't matter to the allocation who gets the right.