Quick Guide: San Fran's Increase in Home Prices

Over the last few decades, the cost of living in San Francisco has risen steadily. There are various reasons for this rise in rent, but most locals find blaming the techies that have been moving into the area the easiest solution. This issue has led to tension between the “real” locals of San Francisco and the millennials who move into the city for work or to find more opportunities. Though, the city is quickly becoming too expensive, even for the software engineers.

What’s wrong?

There aren’t enough places for rent in the city, so the demand for an apartment is incredibly high. This consumer demand keeps driving up the prices of apartments, making it more and more difficult for the average San Franciscan to afford rent. Some residents have been driven to living in tents, cargo containers, and even boxes. San Francisco topped the list of most expensive US cities to live in, averaging around $2,000 for a tiny apartment.

Due to rent control, many residents avoid skyrocketing rent and can remain in their apartments. Unfortunately, a California state law, the Ellis Act, is the loophole landlords utilize to get around rent control in an attempt to keep up with the competitive rent market. The Ellis Act allows landlords to “close” their apartment building, kick all of their tenants out, change the designation of the apartment building to a “tenancy in common”, and then find new tenants that will rent the apartments at a much higher rate. The Ellis Act has been enacted hundreds of times, leading to the rising tensions between locals and techies.

Why did this happen?

The blame for the stalemate between tenants, landlords, and new arrivals lies with San Francisco’s zoning laws that prevent buildings in most districts of the city from being higher than 40 foot – and most buildings in those areas aren’t even that high! Because of San Francisco’s location on the bay, there is no room for outward growth, so the only solution is to grow upwards. Unfortunately, the zoning laws prevent that from happening.

The zoning laws were initially instituted due to the Fillmore project, which developed the district, displacing many of the city’s African-American inhabitants and crushing the local culture of the area. The city pushed back by passing their strict zoning regulations, in an effort to preserve the unique culture and stunning vistas of the city. While this goal has been achieved, it’s come at the cost of affordable rent for many locals and the possibility of housing development.

How can it be fixed?

The only solution that seems to realistically meet the housing demand would be repealing the zoning laws and commencing with constructing tall apartment buildings. While many residents are furious with the high rent and lack of space, locals are also opposed to developing the areas they live in because they fear it will take away the local flavor. It’s a difficult decision to make, so many people instead focus on reforming the Ellis Act. While this change could help many people, it still prevents landlords from competing in the housing economy, which could lead to the loss of apartments anyway, if the landlord can no longer afford to manage an entire apartment building. Many residents are trying to find alternative and cheaper methods of living in San Francisco, while some are flat-out leaving and moving to nearby cities, like San Jose. This complex issue will not likely be resolved soon, so it’ll take some savvy urban planners to find a viable solution.