San Francisco must stop its high school dropouts from being “brainwashed by economics theories”, according to a group of San Francisco Progressive supervisors and non-profit community organization directors who have urged City Hall to reinstate more Marxism in elementary school courses.
The rise of critical thinking in high school courses, alongside the waning of Marxist content, has “severely deviated elementary school math education from the socialist direction”, the Progressives wrote in a letter to the ministry of education.
Calvin Welch, a retired economics professor at SF State University of department of Boomernomic Marxism and one of the letter’s authors, said he had written the letter because “the numericization of economics was one of the reasons for the California’s collapse”.
Although officially socialist, San Francisco started to abandon centrally planning the housing market in the late 2020’s and gradually embraced market reforms that have spurred almost four months of housing price stagnation.
The letter makes no mention of Karl Marx’s urban origins or the fact that he spent much of his life in cities denser than San Francisco.
The Supervisors’ intervention comes amid a broader backlash against mathematical influence in urban planning and architecture after the education minister last year said textbooks promoting supply and demand and Euclidean geometry had no place in San Francisco’s classrooms.
In their letter dozens of non-profit homeless advocates call for elementary schools to reinstate a 50/50 split between Marxist political economics and herbal medicine classes in the new academic year.
San Francisco was grappling with a severe housing shortage and a decades long construction slowdown and is now pushing demand-side reforms that have been compared to the policies of Stalin and Mao in the 20th century.
Last month, recently elected Supreme Leader Peter Cohen gave a speech in which he called on academics to modernise Marxist-NIMBYism to stymie San Francisco’s development.
David Campos, former supervisor and lecturer at City College, said: “Marxist NIMBYism has shaped the American housing market. The architects of the east coast suburban enclaves in Long Island, Connecticut, Boulder, and Fort Worth were all schooled in NIMBY economics, which sees permacultural re-agrification of all areas outside of the 100% defensible inner city cores as a way of lowering housing prices and protecting diversity.”
The waning of Marxist influence is not unique to San Francisco’s schools. Until the 1980s, it was the norm for economics departments at elite universities such as Harvard and Stanford to have one or two Marxist scholars. However, they have since retired without being replaced.
San Francisco’s top economics departments, such as City College, have generally embraced Marxist syllabuses while Academy of Art University has a department dedicated to typesetting American economics textbooks into “progressive-friendly” visual story problems.
However, moves to limit economic numeracy in elementary school children are increasingly in vain: more than 10,000 San Francisco students moved to SF to study in 2014-15 — a 10 per cent increase from the year before, according to the Institute of International Education. Most had already learned the value of pennies, nickels and dimes.
So Ms. Trauss you say we should “just build more housing?” And what is the limit?
There is a technological limit, but we’re nowhere near it.
Or
is there no limit? The developers answer is to build “up.” But is that
a good idea in a city that is awaiting the BIG ONE?
New buildings are more earthquake safe than old ones, including new tall buildings.
How many earthquake victims can one city government handle?
Make sure you vote Yes on A
Is
there a rational plan for supplying water (in drought prone California)
for the occupants of all those additional housing units?
Yes. Eventually we’ll probably build desalinization plants.
Won’t
the manhattanization of San Francisco destroy the very beauty and joy
that attracts so many people to live there in the first place?
No,
most people are here for work, or to be close to their families or
friends. SF isn’t particularly beautiful amongst US cities. The
buildings are dirty and in poor repair and it’s cold all the time. Have
you ever been to Savannah Georgia? That’s probably America’s prettiest
city.
Already San Francisco is looking ten times more dirty and crowded and stressful than it did just five years ago.
Yeah, agreed, like I said, SF isn’t currently much to look at.
It is a shame to ruin such a beautiful city by cramming it full of the ugly boxes
The alternative is to ruin it by allowing a displacement crisis to go unchecked.
that
are being built to satisfy the short sighted demands of the likes of
you, Ms. Trauss. Don’t worry though- demand for housing will fall off
once San Francisco has lost its charm, has built over its last tree, and
had become a sunless canyon of high rise investment condos.
Hi
Sonja, admittedly, initially you seem like the devil. An east coast
transplant here to change the face of my home with shortsighted nose
jobs, and hideous botox.
However, I put my anger to the side to ask “perhaps she understands
something I don’t”. So, I felt it only fair to ask directly a couple
questions.
Exactly how many additional units would it take to make San Francisco universally affordable?
It’s
not clear. Estimates range from 100,000 to 350,000 for SF alone, or,
the better way to think about it is for the whole Bay Area - 3.5 million
more houses. But SF is already seeing prices stall and that’s just from
adding an extra 1500 units 2 years in a row. Actually building 5000
units a year for 3 years in a row would make a noticeable difference.
Also, prices aside, the more housing we have in the bay, the more people
can live here.
At what median price would those units then cost?
Less than they cost now.
Who takes the profit from the insane lucrative nature of such massive real estate development?
The profit accrues to everyone who benefits from
living here. Parents whose kids can live near them, people whose friends
can live near them, employees who can find niche jobs, employers who
can find good employees. Everyone benefits from diversity, and diversity
is incompatible with exclusivity.
How would you feel having your life long family home upended and put
back to back with luxury apartments and condos ruining views and parking
and most of the basic quality of life elements that have made the home
you grew up in so unique?
That’s funny you should ask that. My childhood home
actually is next door to some luxury apartments - luxury apartments when
they were built in 1915. By the time I was a child in the ‘80s, the
apartment building was completely filled with squatters and drug
dealers. Since then it’s been renovated and now it is lovely middle
class housing. My childhood home didn’t have any views in particular,
except the back yard.
You may not realize this, but most
Americans don’t have remarkable views and never will; and most Americans
don’t still live in their “life long family home.” This is why, I
think, nationally, the cries of the SF nimby are falling on deaf ears.
Your self righteous and panicked defense of your view strikes the 99% of
us without views as entitled and out of touch. The rest of us manage to
have interesting careers, satisfying friendships, good relationships
with family members, fulfilling hobbies, healthy children, all without
unusually beautiful views. Lose your view? Welcome to normal life.
Also, why do
you still live in your life long family home? Does this mean you still
live with your mom? Do you live … in your mom’s basement?
Some of the
new people in SF moved away from their childhood homes by choice, some
of us were forced out by economic reasons. A slow local economy also
displaces people. Many of the people coming to SF may not have wanted to
leave their home towns, but lack of opportunity forced them to leave.
To those ears, you sound impossibly spoiled - you are very privileged to
live in your home city. For people who moved away from home by choice -
because they wanted to learn about the world, learn new perspectives,
meet new people - you sound provincial and closed minded.
The
quality of life elements that made my childhood home good include
proximity to retail, transit and my friend’s houses. I was able to walk
to school my whole childhood, for example. None of those things would be
threatened by new building next to my childhood home. If anything, they
would be enhanced.
Why should local San Franciscans, those who have generations of family
history, make room for predominantly white 20 somethings who make more
money than either of your parents ever did?
When you make room, you never know who’s going to fill it.
Why did you come to SF?
Economic opportunity. Why are you staying in SF?
Because frankly in my opinion it’s not the lack of buildings killing
this city. Its self centered new comers unwilling to recognize a unique
and beautiful city. That perhaps simply doesn’t have room for them?
If you insist that it’s possible for a city to be full,
which I don’t agree with, but for the sake of argument, imagine that’s
possible, perhaps the city simply doesn’t have room for you.
The Affordable housing bonus program will keep its hands off of rent-controlled units, and “progressives” will celebrate, while continuing to try and kill it. It should come as no surprise, because their position had nothing to do with creating or protecting affordable housing anyway.
There was a great Hoodline article on the Affordable Housing Bonus Program recently. It’s good to see Program Manager Kearstin Dischinger, from the San Francisco Planning Department, forcefully defending the program against the misinformation that is being put out by the NIMBY-affordable complex. It’s also smart that London Breed amended the program legislation to get rid of their “save the rent control” red herring, though I can’t say I was happy about it.
Up till now, the NIMBY-affordable complex has responded to the AHBP with some pretty alarming fiction related to loss of rent controlled units:
The truth is, AHBP in its original form was never really going to have much effect on parcels with rent controlled units, because its not usually a big enough incentive to demolish units, and there are still additional levels of hearings that can be requested (and always are) to demolish any rent controlled unit. In the few cases where it might have been enough to make a project feasible, we should be jumping to make the trade.
I’m sure there will be a big flip-out in some circles when they read this, but fighting to save 100% of a handful of rent-controlled units at the expense of a ton of future BMR units is childish. Literally. It is an example of failing to appreciate deferred rewards, which is a mark of childish behavior. As such it is bad policy, and the reasons deserve to be explained here.
I can only hope that at some point, fauxgressives in our city will GROW UP and realize that a project that gets 10 BMR units to replace 4 rent controlled units is actually a BIG long term win for them (for all of us), but in the present, they are only focused on evictions, not long-term strategic moves – immediately gratifying reaction, instead of investment, planning, and action.
This sort of makes sense for someone working in a tenant protection non-profit. If you present a person with a problem, they will usually chose the tool they know to try and fix it. Present the housing crisis problem to a developer, they will say “build more”. Present it to a homeless advocate, they will say “give people free houses”. The problem is, both views are somewhat myopic. That is why we have a planning department that can look at the big picture.
Even though the program has been amended to not allow any rent-controlled housing to be demolished, trading 4 rent controled units for 10 BMR units would usually have been a good move, especially if we worked together to keep the people who lost their units in the community. Every kid who ever tried to trade a younger sibling a nickel for a dime knows this. Obviously creating a flow for people who get bumped from those units should not go unnoticed. But if you want to hear the ongoing dialog about those details watch the presentations and discussions on the AHBP at the Planning Commission instead of relying on inflammatory fringe blogs. Trust me, everyone at the Planning Commission and Board of Supervisors has their eye on the ball here.
It is important to remember rent-controlled apartments aren’t the best type of affordable apartment, especially after someone moves out. This happens for a few reasons:
The units will no longer be affordable when the current occupant will moves out on their own (or dies), usually within 5-20 years. Many of them aren’t that affordable now, depending on when the current occupants moved in.
The units are always under threat because the landlord can exercise their legal right to go out of the rental business, and turn the building into condos (the Ellis Act you have heard about). Despite what Aaron Peskin and Jane Kim tell you, this isn’t going to change any time soon because the majority of the voters in the state are owners not renters. Period.
Someone could buy the complex and kick out the lowest paying tenant and move into the building. Again, this is a state level law that has been tested in court.
When any of this happens, and the units become vacant, those units will go back on the market as LUXURY condos or apartments. By that I mean at the exact same cost as the “luxury” (market-rate) condos fauxgressives are always demanding we stop building. This snap-back to market rate (called vacancy de-control) is also a state-level law that they have had no luck trying to change because the state as a whole is much more conservative than the city’s fauxgressive fringe.
Under the status quo, the affordability of those units will be lost. Its only a matter of time.
What about all the noise we hear about not even keeping up with the affordable housing we are losing in certain neighborhoods? Are progressives actually fighting to preserve rent-controlled housing which will eventually disappear, just so they can whine about it in the future? YES, they are.
There is no 12, 25, 33, or 40% inclusionary requirement for those old rent controlled units, which, after vacancy decontrol we could refer to as “luxury-controlled units”. We got nothing from their evaporation. We burned a resource.
But what if we look to the future and compare outcomes? Let’s imagine taking the Affordable Housing Bonus Program’s proactive medicine instead of reacting and whining. Let’s think like adults and plan ahead.
We could compare a 30-unit building constructed on top of a small underutilized plot with 4 units. If you stop 4 rent controlled units being demolished and prevent construction of 30 AHBP units, in 20 years you are likely to have:
1 rent-controlled apartment that has had a long term occupant the whole time, who now has very low rent. (They may or may not need the low rent, we don’t know their income).
2 luxury-controlled apartments that snapped back to market rate say 5-10 years prior, and were occupied by wealthy people (people who could afford $6k a month for a 2br), who are now being subsidized.
1 that is occupied at roughly current market rate, also luxury-controlled for a wealthy person.
For a total of one unit of “affordable housing” still in the system.
If on the other hand you had built the AHBP building, the 30% inclusionary requirements of the program would mean you constructed:
4 low-income units that will never snap back to market rate. Even if you are focused on homelessness and low income housing, and that is all you care about, this is a BIG WIN. 5x more affordable housing in 20 years.
6 additional middle-income BMR units permanently reserved for middle class people. Another big win. This means actually you have 10x more affordable housing, and all of it is permanent.
20 market rate units soaking up everyone who doesn’t qualify for and win the BMR lottery (BTW chance of winning: ~1%). Economists agree these units will lower market-rate prices on all housing across the city.
Also, the building as a whole will be paying full property taxes to support our schools, services and infrastructure (which an old building certainly wasn’t, due to Prop13).
This is why the reactionary fauxgressive position has been so misguided. The results over the long term are clearly better under the AHBP.
The market effect of the projected units is very positive, whether or not rent control units are exempt. Even as currently amended, 100% protecting any rent controlled units, the AHBP will be a nice boost to our supply of housing. Many true progressives will cling to identity politics and continue to oppose the program after moderates gave in to their illogical objections. They will hold out for 100% affordable housing they have no source of funding for, but the facts are not on their side.
First, all the affordable housing built in the inclusionary AHBP program is free to the city. There is nothing stopping them from using any money they can raise for building 100% affordable housing projects, and in fact, the program gives those projects an even bigger bonus to incentivize them.
Second, the City Economist estimates that a 1% increase in housing supply in San Francisco equates to roughly 1% less increase in the cost of housing. If the program really adds 16k units (~4% of our current housing stock), in 20 years housing will cost about 4% less than it would have otherwise. This savings applies to everyone from the top to the bottom of the income scale, even if you don’t have rent control, and even if you don’t win the housing lottery and get one of the (10x more) Below Market Rate units the program created.
Of course the true progressives’ have a host of NIMBY allies who will be laughing all the way to the bank if the AHBP doesn’t pass, as their home values continue to rise faster than incomes. Four percent of a million dollars is $40k. If this program fails to pass, homeowners make $40k, and have less affordable housing in their neighborhoods (which they sure as hell don’t want).
Just remember this in 20 years if the program legislation is killed. There will be some moment when fauxgressive activists are storming City Halls to save 4 table-scrap rent-controlled units from an Ellis Act conversion they can’t legally stop. Remember: We could have ALREADY had 10 BMR units and 4% lower prices across the board.
I suspect they still probably won’t know a good policy when they see one.
SAN FRANCISCO – Housing moratorium activists, and indeed some city officials, routinely argue in Planning Commission and Board of Supervisors meetings that market rate housing can never help us fight the housing crisis, often quoting “the city’s own study” that purportedly shows building market rate units increases demand for below market rate units.
The study is called The Residential Nexus Analysis, and you can read it here.
On page 4, under “Context and Purpose” the consultants write, “the City has contracted with Keyser Marston Associates to prepare a nexus analysis in support of the Inclusionary Housing Program,” (emphasis mine). The purpose of the nexus study was not to discover a phenomenon in the world, the purpose was to provide “supporting documentation” for impact fees.
Perhaps you remember in school getting an assignment like, “Argue that HP Lovecraft’s The Shadow Out of Time is a parable of overbuilding.” Whether you agreed with that thesis or not, you understood the assignment was to marshal whatever scraps of fact you could, and string them together, however tenuously, into an argument that supported the thesis.
The contract the city made with Keyser Marston specified that the document must “support” the Inclusionary Housing Program. In other words, the outcome was determined in advance.
Let’s look at the reasoning of the report itself.
The methodology or analysis procedure for this nexus analysis starts with the sales price (or rental rate) of a market rate residential unit, and moves through a series of linkages to the income of the household that purchased or rented the unit, the disposable income of the household, the annual expenditures on goods and services, the jobs associated with the purchases and delivery of services, the income of the workers doing those jobs, the household income and, ultimately, the affordability level of the housing needed by the worker households. (pg 5) …
An underlying assumption of the analysis is that households that rent or purchase new units represent net new households in the City of San Francisco. (pg 6)
The argument is that a new, expensive (some would say “luxury”) home will be inhabited by a rich person who is new to the area and would not have moved to the area without the new unit being built. The rich person hires a cleaning lady, and buys expensive coffees, and goes to the drycleaner. All of these workers are low income workers, and the low income workers need low cost housing. Therefore, expensive housing units create a need for cheaper housing units.
That would be considered an irresponsibly naive assumption in an actual academic work.
In fact, 84% of households that rent or purchase new units already lived in SF. It is not reasonable to assume that households in new units are new to the area. This is a severe blow to the results of the nexus study. If a high income person in a new unit already lived in SF, then the new unit didn’t cause any new jobs to be created.
Conversely, it is demonstrably false that high income people move here only if a new unit is built for them. In fact, 97% of high income people move into existing housing in SF. The implication of the nexus study is that new units create a new need for low income housing, a need that would not exist if the new units weren’t built. If 97% of high income people are moving into existing housing, the need for low rent housing is independent of the creation of new, expensive housing. High income people are moving here, new housing or not.
The consultant’s assignment was to argue that there is a nexus between new building and the need for subsidized housing. A document proving that linkage is required by state law to justify any fee on new housing. The decision to try and impose a fee was already made as part of the political process, so the report’s conclusion was foregone.
Regardless of how we feel about whether it is helpful for new housing construction to be taxed to subsidize affordable housing, we must concede that a report that failed to show building new housing produces a need for subsidized housing would have been rejected by the City of SF. It would not have filled the terms of the contract between SF and the consultant.
So when you hear it brought forward as a justification for moratoriums, blockages, and protests, remember that the nexus study was never a scientific document that neutrally investigated the world, and reported the facts. It was always a political document and should be treated as such.
Renters Federation asks “What Would John Muir Do?” Join the Sierra Club by the deadline today (10/6) and vote for what you think is best in their upcoming local chapter election.
Earlier this year, some of the members of our group started to notice that a lot of much needed housing in San Francisco was opposed by “The Sierra Club”. If I remember correctly, the first time I personally noticed the endorsement was on a flyer from an anti-housing group called “Grow Potrero Responsibly”, who want to block a 4-story building (”too large”). If you look around, though, you can see it all over, including the group’s endorsement of the Housing Moratorium ballot measure.
At first, we couldn’t understand why they had come out against buildings that were going to go on parking lots and old warehouses. On closer inspection, we realized that these endorsements against infill projects were actually misleading. The Sierra Club had not, in fact come out against the housing development in question. The LOCAL CHAPTER’s San Francisco working group had. Groups are supposed to make that clear on their endorsements lists, but they often don’t.
Frankly, as housing activists and environmentalists, we felt a little betrayed. None of it had anything to do with saving forests or wildlife. In fact, opposing sensible infill development only encourages sprawl somewhere else. People don’t disappear just because you don’t build for them, and in those locations, they will use more gas, more water, more natural resources in general, than if they had lived in the City. This kind of Not In My Back Yard thinking is exactly what SFBARF was formed to fight. We believe we can continue to grow our great city and region while still protecting Nature. The two are not antithetical.
And that is how our now famous campaign started. Once members of our group started going to meetings and realized that there were already local Sierra Club members who agreed with us, and that some of them were planning to run for positions in the organization, the path was clear. They needed our help.
Judging by the reaction in the NIMBY-run 48 Hills blog today, you would think that SFBARF is the number one enemy of the environmental movement in California, but our position basically lines up with the Nature Conservancy’s, and even the National Sierra Club’s. It is mostly a generational issue. A lot of older environmentalists got so used to opposing anything associated with developers in the 60′s and 70′s that they reflexively oppose almost all construction. At a time when not building housing is making prices rise at astronomical rates, this simply isn’t the best way forward. Instead of adapting to the current needs of the city and Nature, many have chosen to characterize us as “shills of developers” etc. – criticisms we have heard many times before, which don’t carry much weight.
In fact, characterizing SFBARF as against the Sierra Club, or trying to hurt it isn’t correct at all. One of our members works for the US Forest Service. Another actually works for the National Sierra Club. Many of us have considered ourselves environmentalists our whole lives, and have participated and donated to other environmental organizations over the years.
We raised over $3000 for the Sierra Club – just from the people we convinced to sign up for new memberships at $15 each. The backlash has been huge, and many NIMBY groups have also been emailing their members to join and oppose us in the election. Considering that, the actual amount raised is probably much higher.
We couldn’t be happier.
You see, when you donate, the money goes to the National organization, which we think does a lot of good work.
AND THEN… if you want to stop the local NIMBYs who have packed the SF Sierra Club and vociferously opposed everything from 4-story developments in Potrero Hill to affordable housing in the Tenderloin,go to this page and enter your information. We will keep you updated about how to vote in club elections in late November. 4/5 of the candidates we are supporting are long time members of the Sierra Club, not affiliated with SFBARF, who have been trying to change the Club from the inside for ages. We are just lending our voice to theirs.
And if you are still on the fence, and you want more info about SFBARF and our work the last several months to reform the SF Sierra Club, read the archives of our mailing list or just read this one thread and decide who you agree with.
I got this letter. I answered it and thought that maybe it would be interesting to other people too.
Letter:
I was thinking a lot about the housing crisis, especially here in SF and wondering what, along with an increase in the housing supply, could help the situation?
Me:
Lots of little things could help some people around the edges - legalizing and regularizing buyouts, fully funding right to civil counsel (so everyone can get a lawyer), DR reform (so homeowners can add bedrooms and elevated outdoor space as their families grow), small sites acquisition, rehabbing the 1000sands of PHA properties that are uninhabitable (YES ON HOUSING BOND WOO), legalizing ADUs, adding real ADUs (back yard units) … Ah, but now I’ve actually passed over into increasing residential capacity.
At the end of the day, more people want to live here than we have room for, and the only solution for this is building more.
Letter:
My first living situation in SF was a room in a house in Bernal Heights for $600/month. Fast forward to today, I know of students who are living in shared rooms and paying about twice that amount. Pretty outrageous!
Me:
Yeah - crowding - this is a symptom of shortage.
Letter:
My best stab at this issue so far was… hey, if only SF could give property owners tax breaks in exchange for reducing rents, maybe this could help students and others with lower incomes find affordable housing?
Me:
We tried that in the late 70s, it was called prop 13, and what happened was (1) we bankrupted the schools (2) landlords did not pass savings onto tenants.
Letter:
Obviously, there is more going on such as the increase in property values in the area… and most folks have mortgage bills to worry about. If you’re a landlord, you need to cover your overhead, including property tax, mortgage not to mention insurance, upkeep, etc.–it all adds up pretty quickly.
The fact you mentioned, Sonja about SF increasing in density at a higher rate than other US cities is really interesting. How will this increased density affect the residents of SF? Our son will be starting TK soon and I have already had some experience with the extremely competitive lottery system of the SFUSD.
Me:
Yes, city services have to increase to accommodate increase in population. The same discretionary process that makes new residential building difficult, also makes building or expanding schools difficult. Everything must be built together.
Letter:
In fact, our son’s best friend who will be going into K applied to over 20 schools and wasn’t placed in any of his 20 or so choices. Will there be enough jobs for everyone? How will the city handle all of the increased traffic and reduced parking availability?
Me:
Traffic engineer is a job and body of knowledge. The city employs people who have masters degrees specifically in this body of knowledge. They are highly qualified engineers. When new capacity is planned, street improvements and changes are planned.
There will be less parking. people who have garages and curb cuts will always have parking for their own cars. People who don’t own curb cuts will have a harder time parking.
Letter:
How will public transit address the increase in ridership while trying to be efficient? Emergency services?
Me:
Services will increase with population. The new population will pay taxes and developers pay impact fees to pay for services.
Letter:
Environmental impacts? I suppose we need to look to other dense metropolitan areas to learn how they handle this?
Me:
Yes, building a dense city is a known engineering project.
Letter:
But at the same time, do we want SF to change and be more like NY for instance?
Me:
SF won’t become NY, it’ll become its own more dense, bigger version of itself. It will grow into whatever a dense SF looks like.
The past is not an option. Going forward we can become either a big city, or else a highly exclusive gated community for the rich. For homeowners this is an academic question, because as owners, nothing can make them move. For renters and all new entrants (your children) this question is over whether we live in the Bay Area or not. There are 2x as many people who want to live here than do live here. The current “character” of SF isn’t very useful to people who can’t live here.
Letter:
Don’t get me wrong, I heart NY, but I have a lot of friends who moved there, but ended up moving back because the density was too much and their living spaces were too small.
Me:
Yes, I agree, I love big units. Whenever I encounter someone building a big unit I say to myself, “how can I help you get this big unit approved and built.”
Letter:
In any case, this is such an important topic and I’m really glad there is a good buzz going. Let’s put our heads together and figure this out!
A central question of our housing debate is whether building new (expensive) housing protects existing low-cost housing, or destroys it. I have had the great fortune over the last year and a half to discuss this question with hundreds of people. What we all have in common is whatever side we take, we believe the relationship is perfectly obvious.
In an effort to clarify my own thinking, and double check that my mental model didn’t have any hidden internal inconsistencies, Davi Caetano, Phil Nova, Matt Lichti, Avi Flamholz, Jean-Ezra Yeung and I wrote a simulation of a housing market. Our initial conditions were 15,000 people and 10,000 housing units. Our intervention was adding 2,000 more “luxury” units. What we found was that after adding luxury units, displacement decreased at every income level.
Assumptions
1. The primary assumption of this model is that the number of people who want to live in the housing market (demand for housing) is exogenous. Exogenous means that the demand for housing, 15,000, is determined by something outside the model (“exo” means “outside.” Think of “exoskeleton”).
The thinking here is that the number of people who want to live in the Bay Area is determined by how many jobs are in the bay area. Our model is of the housing market, not the whole economy, so the number of jobs is outside of the model.
This is not a universally held assumption. There is a widespread belief that demand for housing, and especially the demand for certain types of housing, is determined by the supply of that housing. This is the foundational assumption of the Residential Nexus Analysis, justifying inclusionary zoning and in-lieu fees. The idea there is that building high priced housing causes high income people to move to the Bay Area, who otherwise would not have moved here.
2. In this draft of the model no landlords have an effective (or binding) reserve price. All landlords here have decided they want to rent out their apartment and they will accept whatever rent they can. Prices of apartments are determined by bidding amongst renters.
The type of simulation we built is called an Agent Based Model. An agent based model is a short computer program that has agents, rules for the agents’ interactions, and a function that forces the agents to interact.
Agents
The agents in this model are Renters and Houses. Here is the code for our agents.
The agent called “Renter” is initialized with two attributes: willingness (or ability, really) to pay for housing, and an attribute called “min_score.” Min_score is a number between 1 and 5 that expresses how flexible or specific the Renter is with respect to his or her housing needs. For simplicity, this is a composite score. A renter with a min_score of 5 might be a single person with expensive tastes, but it could also be a large family. The person with expensive tastes will filter out most apartments based on his or her perception of their quality, the large family will filter out most apartments because they are two small, irrespective of their quality.
The agent called “House” is initialized with only one attribute: score. This is a number between 1 and 5 that expresses how nice or big or conveniently located the apartment is. It corresponds with the min_score described above. Like min_score, it is a composite. An apartment with a score of 3 might be a small, ugly apartment in a convenient neighborhood, or a large, beautiful apartment in a remote or run down neighborhood.
Generating the Agents
As mentioned above, we generated 15,000 renters for this demonstration. The income distribution of the 15,000 generated renters is based on 2013 distribution of San Francisco household incomes. Assuming each household can spend a max of 1/3 of pretax income on rent, we divided each renters’ annual income by 36 to get their maximum monthly willingness to pay.
The income distribution of the generated agents is skewed right, which means it has a long tail on the right. Most people’s maximum rent is between $0 and $5,000 per month, with a small number of people able to afford up to $20,000 per month.
The distribution of agents’ preferences was uniform. 3,000 renters would accept an apartment of quality at least “1,” 3,000 renters renters would accept an apartment of quality at least “2,” 3,000 renters would accept an apartment of quality of at least “3,” and so on.
Here is a scatter plot of generated agents. As we see in the previous plot, most agents can afford between $0 and $5000 a month in rent, with fewer agents able to afford higher priced apartments. However, agents are evenly distributed with respect to the vertical (y) axis. There are as many renters with specific needs as there are renters with no particular criteria in renting a house. (These labels are exaggerated, the people on the far right are the kinds of super rich that none of us have ever encountered in person. Properly, “D” and “B” should be above the “5″ in this picture)
Next we generated housing units. The houses only had one characteristic - score. The distribution of house scores is roughly normal: Most houses are “2”, “3” or “4” and a few are “1” or “5”.
Forcing the agents to interact
The matching algorithm is based on the Gale-Shapley stable matching algorithm: In each round, renters bid for their most preferred house out of 20 randomly selected houses. If the bid exceeds the previous highest offer, it becomes the new highest offer. In subsequent rounds, all unmatched renters proceed as before. This continues until all houses are matched. We assume that renters want the highest-quality house with price below their maximum willingness to pay. “Stable” in this context means that, given their incomes, no 2 renters want to trade places with each other.
Discovering and graphing the results
Once the matching algorithm is run, we output the results in a csv and then generate graphs to see the results. First we look to see who got housing and who didn’t.
As expected, the more flexible renters were more likely to get housing. In fact, 100% of the agents with a min_score of 1 got housing, even the poorest. Also as expected, all of the people with more specific needs who didn’t get housing are in the lower income brackets.
Now we look at who got what kinds of housing.
Also as expected, higher income people got more desirable houses, and displaced people (light blue, got no house) are clustered at the moderate to lower end of the ability to pay spectrum. Notice that there are displaced people in the moderate income category. These are medium income renters who need a high scoring house.
Adding new housing units
Here’s the fun part! What happens if we add 2000 more units, but all of them have housing score “5”? Immediately apparent is that displacement is going to go from 5,000 people displaced to 3,000 people displaced.
But who benefits from the new units? Is it only the higher income displaced people?
Let’s compare just the blue sections before and after the addition of the 2000 high-scoring units.
Displacement decreases in every income category, and completely disappears in the higher income categories. This is part of the result is particularly relevant to the conversation in San Francisco over whether to subsidize middle income housing, and whether to build “luxury” housing with abandon.
Renters who have very low and intermittent, or zero income - the elderly, people on disability, the temporarily unemployed - will need subsidies in order to afford to live in SF, or anywhere. That is uncontroversial. What’s phenomenal about the past few years in San Francisco is how many middle and higher income people are finding themselves displaced. Famous example: Kelly Dwyer. Dwyer works for the City of SF, and her husband is a firefighter. Nonetheless, they find they cannot afford the type of housing they want in San Francisco. Ironically, throughout her political career Dwyer has been an opponent of the rapid and substantial increases in residential housing capacity that would have enabled her to stay in SF.
Why is the result of this model obvious here, but counter-intuitive in daily life?
In daily life, we don’t see the displaced or potential San Franciscans, they’re gone or invisible. In our model, we have made them visible. In the model they are the light blue cloud, hovering over the left side of the graph. In real life, they’ve moved to Tracy, or Reno, LA, New York, Vermont, Louisiana, Arizona or Vacaville. Or they moved back in with their parents, or they are still living with their ex-spouse, or horrible roommate, or in a living room. Or they haven’t moved here yet - they’re still living in Kansas City, or Buffalo, still saving up to move here to join their family, friends or cultural affinity group, or to pursue success in our boom town.
When we don’t build for them, we can’t see them. When we do finally build, they become visible. This makes it appear that the buildings caused the new people to move here, when actually the unmet demand is always present, but hidden.
Why don’t you test what happens when you add 2000 low income units?
In the next blog post, I can have that result for you, or you can run that scenario yourself. We started with only adding “luxury” units because market rate units are what’s on offer. In other words, adding 2000 low income units to the model will be an interesting experiment, but since no one is offering to build 76,000 subsidized housing units in SF, the result of that experiment would be irrelevant. Adding that many subsidized housing units is not an option in this universe of reality.
However, SF already has 50,000 market rate units in the pipeline, and every week hundreds more market rate units are proposed at planning. Building 76,000 market rate units in SF (over the next decade) is not at all impossible, if we demonstrate the political will to do so.
How do I demonstrate political will?!
Put yourself in our database of sympathetic voters (and register to vote where you actually live if you haven’t already): www.sfbarf.org (lower right of page). Subscribe to our google calendar, facebook page or googlegroup (I suggest you enable the forums tab in your gmail inbox). Every week there are opportunities to either write a letter or show up in person to comment on some particular project, and thereby demonstrate overall support for fast building.
