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Exclusive: Mission moratorium won’t help affordable housing strife, city report finds

September 10, 2015

By : bizjournals – excerpt – (slideshow of planned projects in the Mission)

In a much-anticipated study, San Francisco’s chief economist found no evidence that a temporary moratorium on building pricey apartments and condominiums in the Mission would stem evictions or slow gentrification, a draft obtained by the San Francisco Business Times shows.

Egan’s official report is scheduled for release Thursday… (more)

RELATED:
The problem with the Mission Moratorium report
City’s economist misses a few key points in his analysis of the impacts of the Mission Moratorium

For starters, Egan assumes that building new market-rate housing will have little or no impact on the value of neighboring property: The report also finds that new market rate housing tends to lower, rather than raise, the value of nearby properties, and therefore a moratorium on market-rate housing would not protect nearby existing housing from rising prices.

That makes sense in an abstract way: According to the Economics 101 textbooks, if there are 1,000 houses in a neighborhood, and you add 1,000 more, each existing house becomes less valuable. The same way that, if you’re selling beans at the market, and five more people come and set up next to you and start selling beans, your prices are going to come down.

But that’s not how it works in the real world, particularly not in a neighborhood like the Mission District in San Francisco.

Take the area around 16th and Mission. Gentrified, yes – but still not the same in terms of property value as, say, 22nd and Valencia. Is Ted Egan seriously saying that putting million-dollar condos at that corner won’t drive up property values in the surrounding areas?.

Many modern urban economists argue the opposite: that the price of beans doesn’t come down if having five stalls stalls instead of one turns the market into a destination for thousands of more wealthy artisan-bean-buyers, and that adding new high-end housing to a low-income neighborhood makes other wealthy people feel comfortable living there and drives up everyone’s costs. It also drives up the cost of retail space at the street level, driving out older community-serving businesses.

That’s kind of like Gentrification 101, which (sadly) they don’t teach in a lot of college economics programs.

Oh, and demand for housing in SF right now is pretty close to infinite – Egan himself says that it would take at least 100,000 new units to bring down prices. So building new market-rate housing in the Mission can’t possible reduce prices… (more)

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