New Report Says Mission Moratorium Will Only Make the Housing Crisis Worse
September 18, 2015

A new report looks at the economic impact of stopping all construction of new housing in San Francisco's Mission District. Photo courtesy flickr user Torbakhopper.

 

In September, San Francisco Chief Economist Ted Egan released a report analyzing the impacts of a moratorium on new housing construction in the Mission District. The report looked at both the possibility of an 18-month moratorium — a proposal SF voters will consider at the November ballot — and an indefinite moratorium, which could result if the city were to institute land use controls that effectively prevent future market-rate development in the district. While the rapid changes happening in the Mission neighborhood are real and of grave concern, the report showed that a moratorium on new housing would have many costs and few benefits. 

The report finds that an 18-month moratorium would stop or delay approximately 800 new housing units, and an indefinite moratorium could stop the building of the 14,500 units planned for the Mission under the Eastern Neighborhoods Plan. According to the report, limiting the housing supply this severely would lead to higher housing prices across the city. The financial impact would be minimal in the short run (approximately $100 per year per household, or a 0.3 percent increase) but notable over the longer run (nearly $1,800 per year per household, or a 5.5 percent increase). Because all new housing developments in San Francisco must either build some affordable units or contribute funds to build affordable housing elsewhere, a moratorium would also decrease the resources available to build new affordable housing: Between 97 and 131 affordable inclusionary units would not be developed. The report also found that the increased housing prices caused by a moratorium would not have a significant effect on evictions. 

In addition, the report found that the benefits envisioned by proponents of Prop. I, the 18-month moratorium measure, would probably not come to pass. First, declaring an 18-month moratorium would not lead to a reduction in direct displacement. None of the development projects in the pipeline in the coming 18 months are expected to demolish any existing housing units and directly displace any residents. (However, in the long run, sites that are likely to be developed in the future do house existing units that would be demolished, so an indefinite moratorium would potentially prevent some direct displacement.) Second, a moratorium would not stem indirect displacement caused by gentrification. The report found that most wealthy new residents to San Francisco live in existing housing, not new development, and that proximity to new development lowered rather than increased housing prices. Based on these considerations, the report concluded that the moratorium was unlikely to reduce the number of upper-income residents in the Mission or prevent gentrification. Lastly, while it is intuitive to expect that a market-rate moratorium would make sites more available for affordable housing, affordable projects are not only competing with market-rate development but also with existing uses, and the report concluded that the moratorium is unlikely to induce property owners to sell to an affordable housing developer. 

The report’s data analysis affirms SPUR’s position that a moratorium is only going to increase pressure on our existing situation, making the housing crisis worse for all — especially those with the fewest resources. We believe the solution to the crisis is not to stop new housing but rather to grow the supply of housing for all income levels: to find more funding for affordable housing and to allow market-rate housing to be built. Keep an eye out for the SPUR Voter Guide (coming October 1) and our analysis on why we recommend a “no” vote on Prop. I (the Mission moratorium) and a “yes” vote on Prop. A (the $310 million affordable housing bond).   


Read the chief economist’s full report >>

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