San Francisco is falling further behind on its state-mandated target for new housing, with the city poised to deliver fewer units in 2024 than it has in any of the past 12 years.
Only 1,205 units have been delivered in the area thus far this year, less than 50% of the 2,593 units that arrived in 2023. Roughly half of the new supply (624 units) is deed-restricted affordable.
This makes the past two years the most anemic for home production in San Francisco since 2011 and 2012 combined to deliver about 1,300 units in an economy that will still recovering from the 2008 financial collapse, the San Francisco Chronicle reported.
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The state-mandated goal for the current eight-year cycle of San Francisco’s housing element plan requires the city to generate 82,000 new housing units between 2023 and 2031.
A quarter of the way through this eight-year cycle, less than 5% of the goal has been met. The city will need to produce about 13K new units for each of the next six years to come within range of the state’s Regional Housing Needs Allocation (RHNA) target.
The good news is that the dearth of housing deliveries in San Francisco in 2024 is a lagging indicator of a bottom for multifamily construction that is now heading in the other direction as several multi-phase developments are putting shovels in the ground.
According to city planners, there currently are 4,792 units under construction in the metro, with 2,210 designated as affordable. Most of these units will be completed in 2025 and 2026 in a pipeline that will continue to grow if, as anticipated, interest rates drop and a downtown recovery emerges next year.
The city has created several enhanced infrastructure financing districts (EIFD) to allow builders to borrow money against future tax revenue to build out streets and utilities for housing projects. The EIFDs are paving the way for several major housing developments, including the 2,600-unit project at the Potrero Power Station and India Basin, where 1,525 units are planned.
Also, the city made significant progress this year in speeding up its approval process for housing projects. In October, the state's Department of Housing and Community Development (HCD) designated San Francisco a pro-housing city, which gives it an advantage in California's housing and planning grant programs.
Meanwhile, the label came a year after HCD issued a scathing report rebuking San Francisco for having the state’s slowest project approval process.
The October 2023 report said it took an average of 523 days for a housing project in San Francisco to get its initial entitlement, compared to 385 days in the next slowest jurisdiction. Building permits took an average of 605 days to be issued because the city applied a “blanket discretionary review process” to all permits, the HCD report said.
In the past 12 months, San Francisco has enacted a priority permitting process for 100% affordable projects and local density bonus ones. It also has eliminated parking requirements; streamlined entitlements; eliminated hearings for certain residential projects; and established a “one-stop” permitting center where permits are coordinated across different departments.
Additionally, city planners are in the process of finalizing rezoning to increase height limits along transit corridors in parts of the city that have not traditionally produced new housing, an effort focused on western neighborhoods like the Sunset and Richmond districts and northern areas including the Marina.
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