CNN Blames San Francisco's Booming Tech Sector for a Government-Created Housing Shortage
The news network largely ignores the role of government restrictions on housing construction
San Francisco is one of the most expensive places to live and work in the United States, with average monthly rent for a one-bedroom apartment approaching $2,500. This is largely the result of the Bay Area adding a tremendous amount of jobs and people over the past decade, but failing to build housing for these new residents.
From January 2010 to January 2018, the city added 100,000 jobs, according to the U.S. Bureau of Labor Statistics, with many of those in San Francisco's booming tech sector. In that same time period, the city has added a little over 20,000 housing units. The predictable result of quickly rising demand and slowly growing supply has been a massive spike in rents, pricing some residents out of the city, and others on to the streets.
The increasingly widespread conclusion is that this failure to build housing is a policy failure, born from highly restrictive land use regulations that've prevented the construction of new units. It's a story that everyone can agree on, from the Cato Institute to some of the city's progressive politicians.
"When it comes to housing, yes, supply and demand is a real thing," said San Francisco Mayor London Breed during her inaugural address. "We often ask 'should we build more housing for teachers, nonprofit workers, or the homeless?' Then we answer with an unending system of laws and procedures that seem designed to say no."
Enter CNN, which manages to ignore the supply side of this equation in favor of blaming the tech sector for the city's woes.
"The Bay Area's tech boom is hurting businesses," reads the headline of a Monday piece by Ahiza Garcia, which argues that the rise of the cities tech sector "created an influx of companies, workers and jobs, but in 2012, it ignited a housing crisis that's made it difficult for many people, especially those in minimum wage or entry-level jobs, to live nearby."
For someone trying to grapple with the high housing costs faced by San Francisco's low-wage earners, however, Garcia is remarkably incurious about what—apart from tech-fueled demand—might actually be driving up those housing costs.
There exists a single, solitary mention of the fact that "it take[s] years for projects to get approved and for construction on new developments to begin" in the last paragraph of the article. The rest of the piece is mostly finger-pointing at the peculiarities of tech-sector growth, which has given the city a lot of high-income earners demanding services from low-wage workers, while simultaneously pricing them out of the city.
That's an interesting dynamic. It's also one that can't be understood outside the context of how difficult San Francisco's land use policies make it for housing to be built for low-income workers.
While permitting obstacles get a mention, San Francisco's zoning policies (which forbid more than two units of housing to be built on over half the private land in the city) and its laborious environmental review process (which ensures most sufficiently controversial projects will be mired in administrative appeals and litigation) are totally written out of the narrative.
What's more, pointing the finger at San Francisco's tech sector for housing costs manages to ignore the counter-example of Seattle, a city where rents are actually falling despite a sustained tech boom.
Unlike San Francisco, Seattle has somewhat begrudgingly embraced the need for more housing, upzoning swaths of the city's downtown, and being far more liberal with the number of housing permits it issues each year. Between 2010 and 2017, Seattle added 48,000 units of housing, more than double what San Francisco has managed to produce in the same time, and despite Seattle having about 100,000 fewer people.
The end result is that Seattle is finally starting to see rents go down after years of sharp increases. A report from the company Apartment List found that rents in the Rainy City declined a whole 1.6 percent in 2017. In San Francisco, where average rent is already $1,000 more expensive a month than Seattle, monthly rents grew another 1 percent during the same period.
Just look to local media for a sense of how the two city's are dealing with the high cost of living. A Seattle Times article from early October describes in great detail the construction boom going on in Seattle's downtown, where new apartment buildings have shot up, and rents for high-end housing have cratered.
Contrast that picture with an August San Francisco Chronicle story which found numerous housing projects had stalled and others were unable to find financing thanks to a mix of rising construction costs and onerous demands from community activists that these projects rent out upwards of 25 percent of their planned units at below-market rates.
Ignoring the role that restrictions on housing supply play in increasing housing costs, as the CNN article largely does, not only paints an incomplete picture of the problem, it also gives cover to politicians and special interests pushing expensive government intervention as a solution.
In June 2018, the National Low-Income Housing Coalition—a non-profit advocacy group*—issued a major report on the unaffordable nature of housing in much of the country. It mentioned zoning or land use regulations a total of zero times, while advocating things like a national minimum wage increase and a huge infusion of federal funding to build below-market rate housing.
A month later, Sen. Kamala Harris (D–Calif.) introduced her "Rent Relief Act" which excluded any mention of reforming local or state-level land use regulations in favor of giving cost-burdened renters refundable tax credits.
Come November, California voters will vote on a measure that would, if passed, give cities broad authority to reimpose rent control.
All these solutions are terrible, counter-productive ideas, but they are the kind of ideas that can easily gain traction when government's failure to allow sufficient housing production is written out of the media narrative on housing affordability.
Free-market types interested in ensuring America's booming cities continue to grow and thrive should not let this omission slide, not even for a second.
CORRECTION: The original version of this post referred to National Low-Income Housing Coalition a lobbying group composed of largely affordable housing developers and public housing agencies.