San Francisco has agreed to a state-mandated requirement to approve 82,000 new homes by 2031—but judging by the number of new housing permits the city issued this year, it is far off track to meet that goal.
As of Dec. 13, only 1,823 new units of housing had been authorized in 2023, according to an estimate provided by the city’s Planning Department. Not only is that about 1,000 fewer than the year prior, but it’s also the lowest number the city has approved since 2010.
By way of explanation, Planning Department Spokesperson Anne Yalon said that overall housing production has slowed due to several factors, including high interest rates and construction costs.
While housing advocates and developers have called on the city to improve its complicated permitting process, some acknowledge that macroeconomic factors outside of the city’s control have contributed to this year’s slowdown.
“For bigger projects (over 25 units), I think it’s late 2024 when interest rates (hopefully) come down,” Corey Smith, executive director of the Housing Action Coalition, previously told The Standard. “Until then, the financial barriers are too big.”
Meanwhile, a local nonprofit housing developer who would normally be among those applying for approval of new units echoed a similar sentiment.
Sam Moss, executive director of Mission Housing Development Corp., said that because of uncertainties around construction costs, developers won’t start putting in applications again until 2024 or 2025.
Every eight years, state officials require local governments to write a plan, called a Housing Element, to build a set amount of new homes to accommodate expected population and job growth.
Failing to do so comes with a cost. If the plans are rejected by state authorities, it opens up the city to a loss of local zoning control and access to state affordable housing funds.
While the state certified San Francisco’s latest Housing Element at the beginning of the year, a subsequent review of the city’s progress in meeting that quota spurred the Board of Supervisors to adopt new laws to remove barriers to building. Chief among those changes will be the elimination of mandatory meetings and other appeals that usually slow down development.
Moreover, another state law, Senate Bill 423, singled out San Francisco as having the longest housing approval timelines in the state. As a result, the legislation requires the city to ministerially approve—which is to say, approve by default—projects with two or more units if the state finds that the city isn’t meeting its targets.
The state housing mandates are focused on approvals of a set number of units, but that doesn’t necessarily translate into shovels in the ground.
According to data from the U.S. Department of Housing and Urban Development, the city has issued building permits for 856 new housing units this year as of the end of October. That pace would represent the lowest number since 2010.
But city officials have said national data is misleading and doesn’t fully capture actual housing production, since projects that receive a permit don’t necessarily start construction immediately.
Additionally, city officials also point out that not all housing projects are built brand-new from the ground up, which is what the federal government counts as “new construction.”
Of the 82,000 new homes that the city is expected to approve over the next eight years, half need to be set aside as affordable. According to preliminary data shared by city officials, the Planning Department estimates that it has 74,163 homes currently in the development pipeline. Of those, only 16,377 are designated as affordable.
Anne Stanley, spokesperson for the Mayor’s Office of Housing and Community Development, said that 2023 was a “big year” for affordable housing production in San Francisco, despite the city needing to produce up to 47,000 affordable homes by 2031.
She said that in the last year, her department closed $21.1 million in predevelopment loans, representing approximately 784 affordable units. Of note, the city announced the second- and third-ever affordable projects for educators.
The city’s first such project, Shirley Chisholm Village, located at 1360 43rd Ave. in the Outer Sunset, is currently under construction and slated to open in the fall of 2024.