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If You Let Them, They Will Build

eye on the news

If You Let Them, They Will Build

Oakland shows how to expand housing supply: tell developers they can put up new homes. November 29, 2019
California
Economy, finance, and budgets

California’s housing crisis, particularly in the Bay Area, is notorious and well covered, with news stories chronicling homeless encampments, “pod” housing, and people forced to live in cars. But a surprising and encouraging piece of news emerged from Oakland recently. According to the San Francisco Chronicle, Oakland will produce almost 50 percent more housing units this year than San Francisco—6,800 versus 4,700—though Oakland has half the population and only 40 percent as many jobs as San Francisco. Just as surprising is the jump in Oakland’s housing production: the number of units brought to market in 2019 will be almost 15 times the number completed in 2018 and more than three times the number of units produced between 2013 and 2018 combined.

What caused this burst of production? Simple: Oakland told developers that they could build homes. In 2014 and 2015, the city passed a series of neighborhood plans in and around downtown that relaxed zoning and removed parking requirements, making it easier and cheaper to build. Now, after the four to five years required for design, permitting, and construction, Oakland is reaping the benefits of private development. By contrast, San Francisco continues to make it hard to build housing, with byzantine planning regulations, expensive development fees, restrictive zoning, and long delays.

It’s tempting to compare the 24,000 units San Francisco has added in the past seven years with Oakland’s 9,000 and think that San Francisco is ahead. But, adjusting for population and jobs, San Francisco is clearly falling behind. Just one more year at current rates of production will see Oakland surpass San Francisco in per-capita housing production since 2013—and Oakland has almost 15,000 more units under construction, approved, or in review.

The Bay Area housing crisis is ultimately a production crisis. For decades, supply has failed to keep up with demand. Oakland shows that it’s possible for the private market to produce enough housing if laws allow it. San Francisco is taking the opposite path; instead of reforming regulations, it recently passed two measures to fund publicly built housing and to change zoning measures—but only for teacher housing and subsidized affordable units. These measures will produce only a trickle of units. Even in Oakland, the neighborhood plans cover less than 5 percent of the city. If the Bay Area wants to get serious about housing, it will need to apply the lesson of Oakland’s rezoning far more widely.

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