Why Housing in California is Unaffordable
It’s interesting how similar land policy is around the world. In the United States today, we don’t have collapsing buildings like they do in Mumbai (see video above) but the fanatical fear of density and the slow approval process are the same. Berkeley Mayor Jesse Arreguín, for example, says a bill that would allow higher density construction near transit hubs and bus lines is “a declaration of war against our neighborhoods.” And a new report finds that in San Francisco:
…in 2000, it cost approximately $265,000 per unit to
build a 100-unit affordable housing building for families in the city, accounting for inflation. In
2016, a similar sized family building cost closer to $425,000 per unit, not taking into account
other development costs (such as fees or the costs of capital) or changes in land values over this
Did you get that? Inflation adjusted construction costs have increased in San Francisco over the last 16 years by 60% not including changes in land values.
Interviews and focus groups identified four local drivers of
rising construction costs: city permitting processes, design and building code requirements,
workforce regulations and ordinances, procurement (small and local business) requirements,
and environmental regulations.
… the most significant and pointless factor driving up construction costs was the length of time it takes
for a project to get through the city permitting and development processes.