In San Francisco, the high price of proximity

San Francisco's housing market is pricing out the people that high-tech firms need. What can be done? The city reconsiders how small units can legally be.
Written by Andrew Nusca, Contributor

Supply and demand: that's how the market works, more or less, when regulation doesn't come into play.

But what happens when it does?

San Francisco is seeing an unprecedented level of interest from high-tech companies and their employees, and the small city (population: 813,000) finds its housing inventory bulging at the seams. With an average rent of $2,000, the city is pricing out many of the people -- students, entry-level job holders, service-class folks -- the tech firms need to survive.

Typically, there are three ways to deal with this kind of gentrification:

  1. Add more units, often vertically;
  2. Add more units by subdividing existing inventory;
  3. Let people live in surrounding areas (such as Oakland).

All of these things happen naturally, of course, as market pressures rise. But the city is looking at solution No. 2 above and considering an option previously left off the negotiation table: changing the building code.

San Francisco's existing code stipulates that there must be at minimum 290 square feet in a unit; proposals seek to reduce that figure to 150 square feet. Whether you call them "shoebox" units or "micro-apartments" or simply "tiny," it's clear that there is demand -- from tenants and landlords alike -- for cheaper inventory within city limits.

NPR has the story:

City Supervisor Scott Wiener authored the micro-apartment proposal for people in Huang's situation.

"We have a housing affordability crisis in San Francisco," Wiener says. "Rents are through the roof."

Wiener says he wants to help people who would prefer their own space but can't afford the city's sky-high rents.

"And if we can give them an option that's smaller for [$1,200, $1,400 or $1,500], that's a good thing," he says.

The Los Angeles Times and others have also covered the proceedings.

New Yorkers, Londoners and Tokyoites reading this article will surely scoff at San Franciscans' attitude toward personal space; all three have average unit prices that are even higher than the above.

But the initiative -- also under consideration in Boston and yes, New York -- threatens previous standards on how much personal space is acceptable. Those laws were put in place to reduce overcrowding and stress on surrounding infrastructure, something that Singapore was forced to address when shoebox units took off there.

Photo: Matthew Rutledge/Flickr

This post was originally published on Smartplanet.com

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