Housing prices in San Francisco are obscene. And, in large part, that’s because the city hasn’t permitted enough new construction. But that’s not the entire story. For as hard as San Francisco has resisted development, the Peninsula cities have resisted it even more. And in so doing they’ve pushed the responsibility of development onto their Northern neighbor. If San Francisco’s housing crisis is to be resolved, the Peninsula cities will have to quite literally grow up.
Bad Neighbors
San Francisco is synonymous with tech, but there’s plenty going on just down the road. Menlo Park has Facebook. Mountain View has both Google and Linkedin. These two cities alone are home to over 1,300 other tech companies and the story’s much the same elsewhere on the Peninsula. But where firms have sprung up and jobs have become abundant, housing has remained in short supply.
Tech companies bus an estimated 7,500 workers from San Francisco apartments to Peninsula offices every day. They don’t do this for fun. There’s simply not enough housing near major employers. And what is available is often unaffordable, even for tech workers.
But if housing prices are as bad or worse on the peninsula, one might ask why we only hear the word “crisis” in San Francisco. The reason is simple. What makes for crisis in San Francisco is nothing but windfall to the South.
According to the U.S. Census, San Francisco’s homeownership rate is 36.6%. Mountain View’s is 41.8%, San Mateo’s is 53.6%, Palo Alto’s is 55.4%, Menlo Park’s is 56.2%, and Cupertino’s is 63.7%. Homeowners in these cities aren’t faced with skyrocketing rent. And thanks to Prop 13, they also pay almost nothing in property tax–no matter how much their homes appreciate in value. They not only face no downside from the anti-development status quo, they financially benefit from it.
These populations also have a genuine preference for the suburban environment they’ve bought into. And they’re perfectly willing to defend that preference in planning meetings, at the ballot box, or even through the courts.
Median Single Family Home Value (Source: Zillow)
Tech workers are the first ones hit by Peninsula NIMBYism. But they grin and bear it. Spending obscene amounts of money on sub-par housing, having roommates later into life, and commuting across half the region are now just part of working in the Bay. Tech workers can pay what it takes to live here. So they do. And life goes on. Juxtapose that with low SES communities facing displacement and it’s easy to see why one group takes to the streets while the other takes it on the chin.
Next Steps, Conclusions, and Common Ground
For those already convinced that high demand and steep prices call for increased supply, the takeaway is consistency. The housing shortage is a region-wide problem with its epicenter on the Peninsula. The entire region needs to grow, and that includes the wealthy job centers.
For those concerned with displacement, not high housing prices per se, there’s something here for you, too. Stopping development in working class neighborhoods won’t slow displacement. Only development in wealthier areas can accomplish that. And if you’re willing to shut down a city hall meeting to protest market rate development, be willing to do the same in Mountain View or Menlo Park to advocate for it. We can still argue the merits of market rate construction in rapidly gentrifying neighborhoods while agreeing that we need more market rate development on the Peninsula.
San Francisco has a lot of catching up to do on its own. The City is growing in both population and wealth. And there’s no reason to think that’ll stop anytime soon. But this is a regional problem that requires a regional response. And if the Peninsula persists in rejecting the development that markets would otherwise bring about, San Francisco will be tasked with making up the difference. Whether it’s able to or not.
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