Has San Francisco’s housing boom peaked? New project proposals drop along with rents
by: bizjournals – excerpt
San Francisco is seeing fewer market-rate housing proposals as rents have softened and a major policy change more than doubled the affordable housing requirement, according to an analysis of city planning data.
The slowdown is a sign that the city’s real estate boom may be fading even as the city pursues more concessions from developers to fund affordable housing. A backlash against projects, including lawsuits, rising construction costs, weakening rents and fewer available large sites are also factors that have made it more challenging to build.
major policy change that may be hurting the pipeline is Prop. C, which voters passed in June. The ballot measure raised the city’s requirement for new projects to include 25 percent affordable housing, a move that developers said would make some projects economically unfeasible. Following the new law, between June and the first week of September, new proposed housing units fell by 58 percent to 1,250 units, compared to 3,000 units proposed for the same period in the prior year, according to an analysis of preliminary project assessments by blog Bay Area Metropolitan Observer…
Prop. C’s requirements may eventually be changed by the Board of Supervisors. A study from the Controller’s office recommends lowering the rate to between 14 to 18 percent for rentals and gradually increasing it by 0.5 percent each year to not hurt development. Officials expect lower land values to eventually absorb the new requirements, but right now, the policy has discouraged property owners from selling, as the final requirements remains uncertain…(more)
If there is much doubt as to how Prop C might work, this should answer those questions.