The Spectre Haunting San Francisco Analysis

In the article, “In Many Cities, Rent is Rising Out of Reach of the Middle Class,” housing that takes up no more than 30 percent of a household’s income is considered affordable. However, the price of housing in some cities has exceeded that 30 percent of middle income, and this is especially the case in San Francisco. In the article “The Spectre Haunting San Francisco” on The Economist, it discusses the housing market crisis in San Francisco. This city is a nice city to live in not only for the scenery, but also for the available jobs in the local labor market. There is a change in the local market of good housing because of the high rent prices. This affects not only the low-income households, but also the middle-income households. The

The San Francisco Business Time posted an article stating that San Francisco is only building 2000 housing units annually, which is estimated to be less than half of the units needed going forward. While there are new homes being built in the city, most are luxury homes that only the wealthy can afford. Since demand has come to a point where high-end housing is not satisfied by new construction, demand flows onto existing supply, putting pressure on buildings to spike prices. Strict building regulations are also an issue faced by San Francisco, and it prevents the supply of housing from reaching the demand for housing.

The articles I chose discusses how the imbalance of housing markets may result in negative long term affects on innovation hubs like San Francisco. One economic concept that helps explain the event is the supply and demand. Zoning causes the disproportion by preventing supply from

In figure 2, S3 shows this proposed shift. The price levels will stay at the equilibrium, and quantity will greatly increase. Zoning is a means by which owners who own capital extract a large surplus gained from job creation. According to the The Economist, by creating new building projects, the city as a whole derives benefit. More people and lower rent results in a larger labor market size, knowledge spillovers, and an increased chance for professional networking. San Francisco has a broad population growth, and so everyone in San Francisco derives small benefit. Before making a decision, I would like to know the effects of the housing market on the long run. People finding immediate housing is a short-term problem, and I want to be able to see if the results of the housing market in the long run. Homeowners end up hurt because they would get a lower value. The individuals in the city end up being the ones who are helped. There ends up being a larger consumer surplus if we increase housing and lower prices. The reason is because a larger population would have more consumption and cheaper access to housing in the city. Although there is an efficiency issue between building more houses and increasing congestion, there is not a trade off between efficiency and equality. The reason is that policies that benefit people