Over the past year at the Planning Commission and Board of Supervisors, there are some constant arguments that I have heard from the development lobby that I think need to be challenged or at least better thought out. One such argument is that if you build more housing in San Francisco, prices will drop.
The wanna-be economists argue that the housing market in San Francisco subscribes to the basic economic theories of supply and demand. According to their simplistic reasoning, if you increase supply, prices will fall. Well, I too have taken economics, and it is my contention that their analysis of the housing market is incorrect. Building more housing in the City would not result in a decrease of the medium home price, at least not to a level that would make housing affordable to the majority of residents.
Moreover, I am also arguing that an increase in the housing stock, may actually increase the demand for housing (the housing market in SOMA is an example), thus increasing the price of homes.
Lets take the SOMA example. How many housing units have been built in SOMA over the past ten years? Thousands. Now, has the price of housing decreased in SOMA and the city overall since these thousands of units have been built?
No!
What these wannabe economists always fail to mention is the number of housing units that would actually have to be built in the city to decrease prices. The development lobby just wants to build housing and hope that prices fall.
One of my economics professors in graduate school once said that public policy is about winners and losers. If we add all this new market rate housing that the development lobby is asking for, and the price of housing increases, then who is really benefiting. If more and more San Francisco will be priced out, who will be winning and who will be losing.
This is a fight for the City, this is a fight for housing, this is a fight for a just housing policy.
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