Priced Out of San Francisco

San Francisco Becomes Too Cool

San Francisco has long been considered a "cool" hotbed for bohemian culture. It is a very left leaning city that that thrived with the help of artists, hipsters and musicians. For decades these people have been the heart and soul of the city. But, as more and more people have been attracted to the city, those who make up it's cultural background are quickly being priced out.

San Francisco Rent Growth

As you can see from this graph, San Francisco was a relatively inexpensive city for most of the 20th century and it was easy to afford to live here. By since the early 1980's, rent prices have risen at an alarming rate for residents of the city. The current median rent in the city is $3,396 according to CNN, that equates to over $40,000 per year. This is more expensive than any other American city. It's no wonder many working class residents can no longer afford to live in San Francisco. Many of these people are hopping across the bay to Oakland where rents remain more reasonable.

Why Has This Happened?

Most large cities have seen rising prices across the country, but San Francisco is an outlier. Many residents blame an influx of high-wealth technology workers for rising costs, but this is really a symptom instead of the problem for the city. The real problem in San Francisco is that residents are resistant to new construction of higher density housing. San Francisco is not generally zoned to accept new high rise construction out of fear that it will ruin the character of the city.

Economically speaking, the problem is with supply and demand. There is a severe shortage of housing supply in the city at a time when demand for living within the city is skyrocketing. Because the shortage is not being addressed effectively, prices continue to drift upward. If the city could change some of it's zoning laws to allow more construction, housing supply could be increased and counteract some of the upward price movement. Many long-time residents want to see their city stay the same, but if they want to afford to keep living there, they eventually must be willing to accept change.