Needs Assessment
San Francisco’s housing affordability crisis has affected residents in nearly every income group. Although the city has, on average, a relatively wealthy population, affordable housing remains out of reach for many San Francisco residents. San Francisco’s median income is $103,801, whereas that for the United States is $57,617 (Data USA, n.d.). Despite this high income, a household earning the area median income could not afford to either rent a median-priced 2-bedroom apartment for $4,500 per month or purchase a median-priced 2-bedroom home for $1,469,000 (San Francisco Planning Department, 2017; Thadani, 2017). As illustrated in Figure 1, for both renters and homeowners, there are more households at most income levels than units affordable to them. This indicates that many residents are forced to find housing outside of their affordability or are unable to find housing at all (ACS, 2017). A notable exception to this trend is the $150,000+ income bracket, where there are over 40,000 more available units than householders in that income range (ACS, 2017). It is likely that residents in a slightly lower income group ($100,000-$150,000) are occupying these units, so the affordability crisis is even impacting high earners.
San Francisco’s housing affordability crisis has affected residents in nearly every income group. Although the city has, on average, a relatively wealthy population, affordable housing remains out of reach for many San Francisco residents. San Francisco’s median income is $103,801, whereas that for the United States is $57,617 (Data USA, n.d.). Despite this high income, a household earning the area median income could not afford to either rent a median-priced 2-bedroom apartment for $4,500 per month or purchase a median-priced 2-bedroom home for $1,469,000 (San Francisco Planning Department, 2017; Thadani, 2017). As illustrated in Figure 1, for both renters and homeowners, there are more households at most income levels than units affordable to them. This indicates that many residents are forced to find housing outside of their affordability or are unable to find housing at all (ACS, 2017). A notable exception to this trend is the $150,000+ income bracket, where there are over 40,000 more available units than householders in that income range (ACS, 2017). It is likely that residents in a slightly lower income group ($100,000-$150,000) are occupying these units, so the affordability crisis is even impacting high earners.
Figure 1. Household Incomes vs. Units Affordable at Each Income Level
Figure 1. Household Incomes vs. Units Affordable at Each Income Level
Figure 2. Tenure by Household Income
Figure 2. Tenure by Household Income
The prevalence of renting in San Francisco is also linked to affordability. Among San Francisco residents, homeowners are more affluent than renters: owners’ median income is $110,816, whereas renters have a median income of $92,123 (ACS, 2017). As seen in Figure 2, the majority of San Francisco’s low-income residents are renters (ACS, 2017). Because renters typically have fewer financial resources than homeowners, they have less flexibility to spend a larger portion of their income on housing. However, there are nearly 30,000 more renters in San Francisco than available rental units that are affordable to them (ACS, 2017). While homeownership rates do increase with age and income, renting in San Francisco is very common at all ages and income levels (see Figure 4). Most of this demand for rental housing is accommodated through multi-family structures. The vast majority, 81.8%, of San Francisco’s multi-family housing is renter-occupied, as seen in Figure 5 (ACS, 2017). The proportion of San Francisco households that rent is expected to rise in every age cohort and at every income level by 2040, and this rising demand is likely to place additional pressures on rental unit affordability (ACS, 2017).
The prevalence of renting in San Francisco is also linked to affordability. Among San Francisco residents, homeowners are more affluent than renters: owners’ median income is $110,816, whereas renters have a median income of $92,123 (ACS, 2017). As seen in Figure 2, the majority of San Francisco’s low-income residents are renters (ACS, 2017). Because renters typically have fewer financial resources than homeowners, they have less flexibility to spend a larger portion of their income on housing. However, there are nearly 30,000 more renters in San Francisco than available rental units that are affordable to them (ACS, 2017). While homeownership rates do increase with age and income, renting in San Francisco is very common at all ages and income levels (see Figure 4). Most of this demand for rental housing is accommodated through multi-family structures. The vast majority, 81.8%, of San Francisco’s multi-family housing is renter-occupied, as seen in Figure 5 (ACS, 2017). The proportion of San Francisco households that rent is expected to rise in every age cohort and at every income level by 2040, and this rising demand is likely to place additional pressures on rental unit affordability (ACS, 2017).
Figure 3. Renter Household Incomes vs. Occupied Units Affordable at Each Income Level
Figure 3. Renter Household Incomes vs. Occupied Units Affordable at Each Income Level
Figure 4. Rental Rate by Age and Income
Figure 4. Rental Rate by Age and Income
New housing construction, as measured by building permits issued, increases the supply of housing available and is a major component in addressing San Francisco’s affordability crisis. As seen in Figure 6, a particularly low number of building permits were issued between 2009 and 2012, reflecting the time in which San Francisco was most affected by the great recession. This lack of permits issued severely limited the amount of newly constructed housing available to move into in the following years. Since then, however, the number of new building permits issued has risen dramatically in an attempt to make up for the prior lack of construction and address the needs of the market. With the exception of 2015, over 3,000 new units were permitted each year, mostly in multi-family structures (State of the Cities Data System, 2017). Although this spike in new units permitted is a positive step in addressing affordability, not nearly enough units are being permitted to accommodate the city’s population growth. Between 2010 and 2017, San Francisco’s population growth was 79,170 people (ACS, 2017). According to the United States Census Bureau, the city’s average household size is 2.33 people, meaning that this equates to about 33,979 households. During this same time period, 20,923 new housing units were permitted (State of the Cities Data System, 2017), so about 13,000 more households were added than housing units. To fully address the affordability crisis, the construction of multi-family rental housing must occur at a rate that keeps up with San Francisco’s population growth.
New housing construction, as measured by building permits issued, increases the supply of housing available and is a major component in addressing San Francisco’s affordability crisis. As seen in Figure 6, a particularly low number of building permits were issued between 2009 and 2012, reflecting the time in which San Francisco was most affected by the great recession. This lack of permits issued severely limited the amount of newly constructed housing available to move into in the following years. Since then, however, the number of new building permits issued has risen dramatically in an attempt to make up for the prior lack of construction and address the needs of the market. With the exception of 2015, over 3,000 new units were permitted each year, mostly in multi-family structures (State of the Cities Data System, 2017). Although this spike in new units permitted is a positive step in addressing affordability, not nearly enough units are being permitted to accommodate the city’s population growth. Between 2010 and 2017, San Francisco’s population growth was 79,170 people (ACS, 2017). According to the United States Census Bureau, the city’s average household size is 2.33 people, meaning that this equates to about 33,979 households. During this same time period, 20,923 new housing units were permitted (State of the Cities Data System, 2017), so about 13,000 more households were added than housing units. To fully address the affordability crisis, the construction of multi-family rental housing must occur at a rate that keeps up with San Francisco’s population growth.
Figure 5. Tenure by Housing Type
Figure 5. Tenure by Housing Type
Figure 6. Housing Units Permitted Annually
Figure 6. Housing Units Permitted Annually