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An important thing to note is that of those 50,000 units being built in San Francisco, the vast majority are market rate, which are out of the price range of most people who want to live in the city. Developers are strong-armed into building a certain percentage of "affordable" units, but that's defined in relation to area median income for the city of San Francisco, which is unusually high. Take the massive development in Hunters Point. 35% of the 12,500 units being built are affordable, but affordable is defined as less than 150% of area median income -- that's AMI for the entire city, not the impoverished Bayview neighborhood the development is being built in. 150% of AMI in San Francisco is $107,050 for one person, or $152,850 for a family of four. A new unit that's priced for someone making six figures a year doesn't really meet the common sense definition of affordable. And with market rate housing, a lot of it is bought up as an investment property or vacation property for the ultra-wealthy, which means each new unit of housing is underutilized compared to a truly affordable unit bought by someone who lives and works in the city. If a developer builds 5,000 market rate units, that has less of a supply and demand effect than 5,000 truly affordable units, since they aren't even really the same kind of asset. Demand for market rate housing in major cities is largely driven by a need to shelter money, where truly affordable housing is driven by a need to shelter people. This means that the statistics for San Francisco are even worse than they look, since the 50,000 units being built will be unaffordable and underutilized. |
There's no market reason why the floor should be where it is. It's just artificial scarcity to benefit property owners.