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Despite reforms, San Francisco is building fewer homes now than before

Mayor London Breed chats with construction workers in the Mission Bay neighborhood of San Francisco before the State of the City on March 9, 2022 in San Francisco, Calif. | Camille Cohen/The Standard

Ending single-family zoning was supposed to help. So was speeding up the timeline for building new homes. 

Despite new state laws meant to encourage density, however, San Francisco is still falling far short of adding enough homes to meet demand or make much of a dent in its affordability crisis.

It’s actually faring worse now than it was before California enacted sweeping legislation designed to ramp up its housing stock. And with state-set targets set to increase in the years ahead, there’s little chance of the situation improving.

San Francisco is on pace to add under 3,000 units of housing this year, down from more than 4,000 in each of the past three years, according to the city’s planning department. The future doesn’t look promising either, with just 800 units permitted so far in 2022 with a projected 2,000 by the year’s end—or just about half of the 10-year average. 

At a presentation at the Planning Commission on Thursday, Land Use Program Manager Joshua Switzky said 2021 was a windfall year for development—still, this year’s numbers fall below historic levels. 

“The construction pace is still relatively healthy—it’s still bearing fruit from recent years of plans and rezoning activity and development,” Switzky said. “But it is substantially slowing to averages that are well below the 10-year average.”

Around 4,000 units are currently under construction as compared to around 7,000 in 2018 and under 1,000 have been entitled or filed this year, well behind pace to hit last year’s or the 10-year average. Meanwhile, the state is expecting the city to plan to produce 10,000 units per year starting in 2023 as part of its updated housing element. 

While fewer housing units are in line for approval, the city’s housing market is also “cooling” at higher rates than other places in the Bay Area and other U.S. cities, San Francisco’s Chief Economist Ted Egan said. That’s related to the city’s reduction in office demand due to the pandemic, he said. 

“If you don’t have to commute, you won’t pay as much for a house to save that commute,” Egan said. 

That’s despite recent work to make housing construction across the state easier.

Last year, a pair of Senate bills, SB 9 and SB 10, cut out some of the permitting and review time for new housing. But recent local project denials, like the Board of Supervisors rejecting 500 units planned for 469 Stevenson St., have cut into San Francisco’s building progress this year.

Two competing local ballot measures aimed at changing the housing approval process in the city are set to go head-to-head this fall. 

A chorus of developers tuned into the meeting to sound off on the issue. Some blamed the slow approval process on high market costs and city fees. Others cited delayed approvals and uncertainty as reasons builders are looking elsewhere. 

Reza Khoshnevisan, owner of San Francisco building consultant SIA Consulting, said during public comment that the combination of delays, fees and project denials is driving builders out. 

“The thing I would like to focus on is the amount of opposition a project goes through before it gets entitled.” Khoshenvisan said. “That uncertainty is so huge that a lot of developers are going away from this town.”

Still, Switzky said he expects a windfall of entitlements for a few-thousand units are coming in 2023 and 2024 from projects approved last year, but many have gotten delayed due simply to a lack of market incentives to build housing in the city. 

“Other than the market conditions, there is nothing that’s holding them back,” Switzky said. 

The commission, for its part, called for creative solutions to overhauling zoning and permitting to make building in San Francisco easier as it faces the housing element update and looming state penalties.

“If we don't do something like that,” Planning Director Rich Hillis cautioned, “the state will for us.”