California cities are facing a monster housing ultimatum: Greenlight the number of units the state says you need, or lose local control of real estate planning. New data compiled by The Standard shows just how deep of a hole San Francisco is in after sluggish development in 2024.
As of the end of December, San Francisco was not quite 9% of the way to meeting its January 2031 Housing Element goal of authorizing more than 82,000 units for construction — putting it far off pace and behind most cities in the region.
To meet the deadline in five years and nine months, the city would have to authorize more than 12,800 units for construction each year. It has not authorized even half as many in a single year in the past two decades. Last year, with just 1,074 units greenlit, was the worst since the 2009-10 slump after the housing bubble burst.
If something doesn’t shift soon, the city could be on a collision course with state regulators.
It is already much easier to build housing in San Francisco than it was five years ago, according to Planning Department Chief of Staff Dan Sider, and that trend is accelerating.
The state and, to a lesser degree, the city have spent years trimming the red tape that has held back building in San Francisco. One of Mayor Daniel Lurie’s signature programs is PermitSF, an initiative to radically reduce the amount of time it takes to get housing permits. And an upzoning plan is in the works that promises to open up swaths of the city that haven’t seen significant development for decades.
Sider bristles at the notion that San Francisco is falling behind its neighbors in housing production. After all, the nearly 7,300 housing units the city has authorized is more than any other Bay Area metro area, looking small only when compared with the goal of 82,000. That number is set by the Association of Bay Area Governments, which divided the state’s regional goal based on each city’s projected population growth and housing needs by 2050.
“I don’t want to suggest we don’t have a way to go,” said Sider. “We do. We need to do everything we can to enable housing production.”
But some things are simply out of the city’s control.
Inflation has driven up the cost of labor, and tariffs promise to send material prices up even more. The persistent economic uncertainty has stalled out many San Francisco projects in the planning stages, according to Corey Smith, executive director of the Housing Action Coalition.
“People don’t start housing projects if they expect the economy will be in the crapper when the project finishes,” Smith said.
When developers are thinking about building housing, they first submit paperwork to the Planning Department, which determines whether the project would be allowed under city regulations. With that thumbs-up in hand, the developers pitch investors to fund the construction.
For many years, national monied interests were willing to overlook the codes, fees, and regulations because of San Francisco’s golden reputation. That has changed since the pandemic, and lenders have backed away.
“Capital likes certainty,” said Bora Ozturk, cofounder of real estate firm March Capital.
Investors remain wary of rocky economic conditions and skeptical that San Francisco has truly changed its obstructionist ways.
“You really need to scrap the existing systems and really start from scratch,” said Ozturk.
For now, San Francisco’s housing pipeline is bursting, with hundreds of projects caught in permit purgatory, likely without the funding to be built and thus not counting toward the 2031 goal.
Each city’s big scary housing goal includes both market-rate and affordable units. Most Bay Area cities have made more progress in advancing market-rate projects than affordable ones.
Sam Moss, executive director of Mission Housing, believes San Francisco deserves credit for the more than 4,000 affordable housing units it has authorized toward the state goal.
“The city is doing the absolute best in the most shit of environments,” he said.
Affordable housing projects must be farther along the road of feasibility before developers file the paperwork with the Planning Department, according to Moss. But he predicts that there will be a swell of affordable housing developments entering the city’s pipeline in the near future, due in part to rezoning and other initiatives.
“So that, God willing, when the good times roll again, we’ll be able to build a significant amount of housing, as we have in the past,” Moss said.
