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.

San Francisco Inequality

San Francisco's Wealth Gap

Over the past decade or so San Francisco has become one of America's success stories. The city is known as a hotspot for technology companies such as Facebook, Yahoo and Google. These large companies have brought countless high-wealth jobs and opportunities to the Bay Area. It is easy to just focus on the success of the city, but the newfound wealth of the area has brought many challenges as well. The price increases that have come along with high-wage earners have begun to price out long time residents of the city, which is creating a strong divide between the rich and poor in the city.

In 2003 the average rent in San Francisco was around $1,700 but today is has risen all the way to $2,800. That is nearly double in ten years. That isn't a problem is you happen to have a high paying job in the technology industry, but it presents problems for San Francisco's long-time population of artists and small business owners. These groups may have seen their incomes rise slightly over the last ten years, but not fast enough to keep up with rising housing costs. Rather than feeling wealthier over time, many long time San Francisco residents have slipped down the lifestyle ladder.

Over the past several years, GDP has increased in San Francisco while median income levels have dropped. This is a sure sign of rising inequality. Despite the rising tide, food stamps are at a ten year high and homelessness is increasing at a dramatic rate. All the while, luxury coaches bus technology workers from the city to nearby Silicon Valley every day for work, ignoring the realities of the world outside. Right now the San Francisco area is home to record levels of both millionaires and impoverished households.