Early last year, the California Department of Housing and Community Development (HCD) approved San Francisco's eight-year housing plan, which requires the city to add 82,000 housing units between 2023 and 2031, or about 10,500 new homes each year.
According to preliminary data from the U.S. Department of Housing and Urban Development, the city is off to a bad start: San Francisco issued 1,136 residential building permits in 2023, the lowest total since the Great Recession that followed the global financial crisis, when only 779 permits were issued.
The number of permits issued last year is less than half of the annual average since 2001 of 2,476 units, based on HUD data reported by the San Francisco Business Times.
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In 2018, when borrowing costs were low, demand was high and construction costs weren't skyrocketing, residential building permits peaked at 5,200 units. During a construction boom that lasted until 2022, an average of 4,500 homes were delivered annually in San Francisco, the report said.
Multifamily projects of more than five units represented 1,076 of the permits issued in the city last year; 29 were for single-family homes, 16 were for duplexes and 17 were for projects with three or four units.
HCD approved San Francisco's eight-year housing element plan in February 2023. In November, the state agency sent a letter threatening to revoke its approval of the plan, giving the city 30 days to adopt a series of "corrective" measures to lift constraints on new housing projects and streamline the approval process.
Failure to comply would have resulted in the imposition of builder's remedy, which allows fast-track approval for affordable housing projects without approval from local zoning officials.
The measures, known as Housing Constraints Legislation and including the elimination of a requirement for Planning Commission hearings, were adopted by the San Francisco Board of Supervisors on December 12.
Mayor London Breed said at a Feb. 1 economic forecast hosted by the Business Times that there are residential projects encompassing 50,000 units that have been approved but not yet built. However, the costs that were penciled in for many of these projects have changed since they were approved.
In addition to streamlining the approval process, San Francisco also lowered the number of below-market-rate units that market-rate residential projects must include and reduced development fees.
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