You think of San Francisco and it embodies the conception of the California Housing crisis. Indeed, San Francisco is at a crossroads when it comes to housing.
Two recent developments—one an innovative, cost-effective senior housing project and the other a controversial market-rate project—highlight the tensions and challenges in addressing the city’s ongoing housing crisis.
At one end, the project at Valencia Street demonstrates how affordable housing can be built faster and cheaper, while the battle over the Mission Street project underscores the political and social barriers that continue to slow the pace of development.
The Valencia project is a rare success story in San Francisco’s notoriously expensive and slow-moving housing landscape. By adopting a streamlined design-build approach and utilizing prefabricated components, Mercy Housing and its partners have managed to shave months off the construction timeline while keeping costs lower than comparable projects.
Their model, tested previously at Bryant Street (across from the Courthouse), proves that affordability does not have to come at the expense of quality.
Although earlier efforts faced criticism from construction unions due to the use of modular components, Valencia has found a compromise by incorporating off-site fabrication without entirely shifting to modular construction. This hybrid approach provides a promising blueprint for future developments aiming to balance efficiency, cost-effectiveness, and labor concerns.
By utilizing an innovative design that standardizes layouts, Mercy Housing has eliminated many of the inefficiencies that typically plague affordable housing projects in the city.
Additionally, bringing in all major stakeholders—including architects, contractors, and developers—at the earliest stage has allowed for greater coordination and a more seamless building process. This approach has not only reduced costs but has also sped up approval and permitting processes, which are often bottlenecks in San Francisco’s housing development pipeline.
However, while innovative solutions like those at Valencia offer hope, the political battle over Mission Street serves as a reminder of how difficult it is to get housing built in San Francisco—especially market-rate developments.
The vacant lot, which has sat empty since a deadly fire in 2015, has become a focal point for anti-gentrification activists who argue that any development on the site should be 100% affordable.
Yet, state housing laws, including the Housing Accountability Act and the density bonus law, limit the ability of local officials to reject housing projects that conform to city regulations. In this case, despite activist opposition, it appears that Mission Street will move forward as a 10-story, 181-unit development, including 30 affordable units.
Opponents of the project argue that allowing market-rate development in historically low-income neighborhoods accelerates gentrification and displaces longtime residents.
The Mission District, once a hub of Latino culture and working-class communities, has seen significant demographic shifts over the past two decades. The percentage of Latinos in the neighborhood has declined from 60% in 2000 to just 37% in 2020, fueling concerns that new luxury developments will further erode the area’s cultural identity.
Activists like Larisa Pedroncelli contend that allowing market-rate developers to build in these areas prioritizes profit over community stability and affordable housing access.
On the other side of the debate, pro-housing advocates argue that San Francisco’s reluctance to allow new development—both affordable and market-rate—has contributed to the city’s housing shortage and sky-high rents.
They contend that restricting development in high-demand areas only exacerbates the affordability crisis by limiting supply. According to housing policy experts, increasing the number of available units, even if some are market-rate, ultimately helps alleviate pressure on the rental market.
Moreover, with the city’s mandate to permit over 80,000 new housing units in the next six years, blocking projects like Mission Street could hinder efforts to meet state housing requirements and expose the city to legal challenges.
The tension between these two perspectives has defined San Francisco’s housing policy for years, but state intervention is shifting the landscape. The state’s Housing Accountability Act now prevents cities from rejecting projects that comply with zoning laws, removing a key tool that activists and local officials previously used to stall market-rate developments.
While some view this as an erosion of local control, others see it as a necessary step to break the cycle of housing stagnation that has plagued the Bay Area for decades.
Ultimately, the lesson from these two projects is clear: If San Francisco wants to solve its housing crisis, it needs to embrace both affordable and market-rate development while ensuring that regulatory and political hurdles do not stall progress.
The success of Valencia proves that innovation can make housing more accessible, but for these methods to have a significant impact, the city must also overcome resistance to new developments—even when they comply with existing laws.
Without a balanced approach that prioritizes both affordability and increased housing stock, the city risks perpetuating its housing shortage and exacerbating displacement for the very communities it aims to protect.
Lessons for Davis
Davis, like San Francisco, faces significant challenges in meeting housing demand while balancing community concerns.
The streamlined approach used at Valencia offers a model for how Davis can build more affordable housing efficiently. By standardizing designs, incorporating prefabricated elements, and engaging stakeholders early in the development process, the city can reduce both costs and construction timelines.
Additionally, ensuring that approval and permitting processes are streamlined could prevent unnecessary delays that have historically hindered new housing developments in Davis.
The political battle over Mission Street also offers a cautionary tale. Like San Francisco, Davis has seen resistance to market-rate developments due to concerns about density, and changes to neighborhood character.
However, as state laws increasingly limit the ability of local governments to block housing projects, Davis must develop proactive housing policies that balance affordability with the need to increase overall supply.
The key takeaway is that rejecting market-rate projects does not necessarily prevent displacement—it can worsen the housing crisis by restricting available units and driving up costs citywide.
Implications for the California Housing Crisis
The struggles and successes of these two projects reflect broader trends in California’s housing crisis.
The state’s severe housing shortage has driven up rents and home prices, making it one of the most unaffordable places to live in the nation.
Innovative projects like Valencia demonstrate that costs and construction times can be reduced, but they also highlight the need for continued reform in the way affordable housing is funded and built.
Meanwhile, the controversy surrounding Mission Street underscores the growing role of state intervention in local housing decisions. With laws like the Housing Accountability Act taking precedence over local opposition, California is signaling that cities must do their part in permitting new developments.
Resistance to market-rate housing, often rooted in fears of gentrification, must be weighed against the dire need for more housing at all income levels. If cities continue to obstruct housing projects, they risk state-imposed penalties and further exacerbation of the housing crisis.
In the end, solving California’s housing crisis requires both innovation and pragmatism. Cities must embrace new construction methods that lower costs and speed up development while also recognizing that a balanced housing policy—one that includes both affordable and market-rate units—is essential to addressing the state’s dire housing needs.
San Francisco’s experiences provide a blueprint, but it will take political will, policy reform, and community cooperation to ensure that California can meet its housing goals in the years ahead.
“Fast and Furious” – what could go wrong with that?
Housing prices have been dropping in San Francisco (by about 15%), for reasons other than housing construction.
So? In January the median home in SF was $1.4 million as opposed to $1.57 million a year ago, a decrease of nearly 10 percent. Does that really reflect an argument they don’t need housing?
How much do you think the state’s mandates will lower the cost of housing in San Francisco? And why downplay the 15% drop in housing that occurred that’s unrelated to housing construction?
This is my complaint regarding YIMBYism. They’re only interested in forcing construction, and not in any of the other ways that housing costs are reduced. Nor are they interested in the fact that everyone has a CHOICE regarding whether or not to live in (or move to) a given city.
In general, increasing housing supply reduces prices if demand remains constant. Studies suggest that for every 1% increase in housing stock, home prices and rents decline by 0.5% to 1.5%, depending on market conditions.
For San Francisco:
• The city must permit 82,000 new units by 2031.
• As of 2023, San Francisco had roughly 400,000 housing units.
• If the full 82,000 units were built, that would represent a 20.5% increase in supply.
• Using the estimated price elasticity range (0.5% to 1.5% price drop per 1% supply increase), this could lead to a 10% to 30% reduction in housing costs over time.
Source? And does it matter regarding the “type” of housing (e.g., high-end apartments displacing existing, lower-cost housing)?
Does your source address that?
Also, what if the city pursues more economic development – partly as a result of more housing?
Does your source address that?
Also, I believe that it’s not “permitting” that’s required. It’s “planning” that’s required.
Is the city on track to meet its goals?
Or, is the study you’re referring to referring to a place like Phoenix, where there’s pretty much nothing but continuing sprawl (no infill)? And therefore has no relationship to a place like San Francisco?
It is odd, though – as I understand that developers NEVER build in order to lower the cost of housing.
Just think what the city would look like if pre-fabricated monstrosities were the only thing going forward.
For sure, it wouldn’t look like the photo accompanying this article.
Then again, making the city less-desirable should lower housing prices, right?
This is a very weird article. One project ‘worked’ (for YIMBYs anyway). Then: Lesson for Davis. Then: Lesson for State.
Talk about a stretch, or a Whopper.
This is an interesting conversation.
I wonder what the whopper thinks?
Back in 1978, a secret society of highly trained squirrels was enlisted by the U.S. government to infiltrate Soviet military bases. These elite rodents, known as “Operation Nutcracker,” were equipped with tiny cameras, radio transmitters, and the ability to crack encrypted codes using acorn-based algorithms. The mission was ultimately abandoned when the squirrels began defecting in exchange for unlimited sunflower seeds.
Total disaster. Huge cover-up. You didn’t hear it from me. 🐿️
Without commenting on the S.F. situation — I don’t know enough about it to have an opinion — a colleague in SoCal pointed out a situation that many, including me, would consider good intentions run amok. Using San Diego affordable housing bonus allowances, a developer is putting 17 ADUs on a half-acre formerly-single-family lot at the end of a cul-de-sac. It’s almost comical, though not to the neighbors.
https://www.cbs8.com/article/news/local/working-for-you/new-construction-adding-adus-in-clairemont/509-b8199b18-1f85-4b5e-a866-6d3db3bd35a0
Google Street View at the address (4601 Almayo Ave, San Diego, CA) shows the ADUs under construction.
Thanks for posting this Jim.
Unbelievable, the neighbors should sue the homeowner and the city.
Sue the city for what, failing to foresee edge cases? The city had good intentions in establishing the affordable bonuses, and in less extreme circumstances the bonuses probably work out okay. Unless the neighbors can get Pacific Legal to take their case, I think they’d be throwing away money (and lots of it) trying to get the city to compensate them for damages that haven’t even materialized yet, and will be difficult to substantiate if/when they do.
No homeowner anywhere wants anything like that going up in their neighborhood much less right next door in a cul-de-sac. I pulled up a picture on Redfin and it looks l whole apartment complex was built in that backyard. I have to believe every house nearby is going to see their home values suffer because of this infill. Where are they all going to park, and no they aren’t all going to take public transportation or Uber everywhere. The neighbors are going get royally screwed.
“Sue the city for what, failing to foresee edge cases?”
Yes, maybe that’s a good place to start. They set the rules and should have foreseen that something like this could happen. Obviously they didn’t set limits.
Who want’s something like this going in nextdoor to their house?
https://www.redfin.com/CA/San-Diego/4601-Almayo-Ave-92117/home/4964524
Jeeeeeesus . . . Holy F . . . What the ***** . . . thanks for posting that pic
Those neighbors need to camp at City Hall, get the local news out and/or protest daily at this site. No way that should be allowed in a single family neighborhood.
Again, David – that’s the direct result of your YIMBY allies, not a result of “blocking housing”.
You seem to have a strange definition of “blocking housing”, given that’s the opposite of what your YIMBY allies have been pushing. Again, they’ve infiltrated the Democratic party.
In any case, housing prices have been drastically dropping in some parts of the country, and it may be spreading. I’ve certainly noticed asking prices dropping in the region. (I like to monitor such things.)
It’s hard to tell exactly what’s going on, since the number of transactions has been low (few buyers).
I disagree.
“I disagree”
With what exactly?
Vacancy rates are up in Davis, median rents have dropped, median housing prices have dropped. Some houses stayed on the rental market straight through fall (student return) while they dropped rent 2-3 times. Literally dozens of houses on Zillow have had their asking prices dropped because the houses were on the market too long, some reduced more than twice. *** This is a complete reversal from two years ago *** .
And yet you would dare to say we are still in a “crisis”. I’m beginning to think the only thing that would get you to stop using the “c” word would be if the government gave everyone a free house with a water view and paid for all their food.
I’m beginning to think you keep yelling “Wolf” even after we have reached an almost-healthy vacancy balance is because if there is no Crisis there is no Vanguard. Actually I’ve thought that for a long time.
Here’s another view of ADU buildout, the Redfin photo only showed the first row.
Totally unbelievable, and according to this article San Diego citizens are starting to take notice.
https://www.sandiegouniontribune.com/2025/02/25/opposition-to-adus-growing-in-pacific-beach/
But there is an object lessons here – blocking housings leads to extreme solutions. When cities resist adding housing through incremental, well-planned growth, they often end up with extreme or unintended solutions later. San Diego has been one of the worst with regards to this.
David, that’s a result of electing corrupted officials, not a result of (as you put it) “blocking housing”.
The problem is that the political system itself doesn’t provide an actual choice. YIMBYs have taken-over the Democratic party.
There is no reasoning with corrupt politicians. The only solution here is a Proposition 13-style revolt, in which power is removed from the state.
So far, the state’s policies haven’t resulted in the “enough” forced housing to create a revolt.
No you are so focused on your little argument that we don’t need housing that you are missing the fact that the housing situation is such that developers believe that they can make money off these projects and exploit loopholes. What we need is well-planned housing, but what you’re missing is that the policies you advocate for are hindering that from occurring, so you end up with stuff no one really wants.
My “little argument”?
The “loopholes” that you’re referring to were put in place by the state (politicians like Wiener).
There is no housing shortage. The state is not growing, birthrates are well-below replacement levels (nationwide), and Trump is reversing immigration.
“The researchers found only four of the nation’s 381 metropolitan areas experienced a housing shortage in the study time frame, as did only 19 of the country’s 526 “micropolitan” areas — those with 10,000-50,000 residents.”
“The findings suggest that addressing housing prices and low incomes are more urgently needed to address housing affordability issues than simply building more homes, the authors wrote.”
https://news.ku.edu/news/article/study-finds-us-does-not-have-housing-shortage-but-shortage-of-affordable-housing
Yes your argument which you so kindly restated: “There is no housing shortage”
“blocking housings leads to extreme solutions”
That’s not extreme solutions, that’s someone taking advantage of a loophole for profit to the detriment of the community. I just read another article about residents in Encanto complaining about the developers buying up houses with the same intent to overcrowd single lots. Building high and dense. The residents said they had no problem with someone putting an ADU or two on their lot, but not 30 or 40 of them.
https://www.nbcsandiego.com/news/local/encanto-neighbors-push-back-against-adu-program/3739732/
I’m curious David, how do you come down on this? Are you okay with super dense infill like this in a single family residential neighborhood?
I come down in favor of well planned housing. But if such housing solutions are blocked, we are going to get worse outcome, that’s what’s happening here.
“Well-planned housing” has no definition.
“Blocking housing”? Your YIMBY allies have infiltrated the Democratic party. They are the ones who are FORCING housing in a state that isn’t growing.
You’re blaming the victims of the YIMBYs.
The housing market is declining. Few buyers/transactions, increasing inventory (especially in some parts of the country), asking prices significantly-declining.
I believe that people who have tried to stop housing for decades have create a situation where there are financial incentives for developers to find loopholes in the law and that if we want to stop such efforts, we need to get back to well planned housing. Once you’ve succeeded in blocking Village Farms in Davis for instance, do you believe that the housing that ultimately does get built – which is inevitable, will be better or worse? This is the calculus you have failed to work out because you believe this stuff is artificial instead of a result of a housing crisis t hat is statewide but felt acutely in the local market. There’s really no point to continuing this discussion – we simply disagree on a basic level.
BTW, the people you are calling victims are hardly victims. They have profited immensely from the policies they have helped impose and seen their net wealth increased tremendously and now ironically some of them will have to pay for that wealth by having less than desirable housing next door to them (btw, the very definition of NIMBY).
David says: “I believe that people who have tried to stop housing for decades have create a situation where there are financial incentives for developers to find loopholes in the law and that if we want to stop such efforts, we need to get back to well planned housing.”
(These are the same type of people who have always tried to force development – they’ve simply changed their argument. And they will never, ever give up, when there’s potential money to be made.)
(But let me ask you this: Why do these SAME PEOPLE advocate for developments like DISC? Which, if the commercial was actually viable, would INCREASE the demand for housing locally?)
David asks: “Once you’ve succeeded in blocking Village Farms in Davis for instance, do you believe that the housing that ultimately does get built – which is inevitable, will be better or worse?”
(I believe that if Village Farms (for example) is approved, that’s what could actually lead to the dismantling of Measure J. The state is not going to be satisfied with what the developer is putting forward (e.g., regarding affordable housing). In other words, the state’s goals will conflict with the development that’s approved via Measure J. At which point, the state might force the “builder’s remedy” on the entire property – despite what voters approved. That conflict could lead to the dismantling of Measure J.)
David says: “This is the calculus you have failed to work out because you believe this stuff is artificial instead of a result of a housing crisis t hat is statewide but felt acutely in the local market. There’s really no point to continuing this discussion – we simply disagree on a basic level.
(We do disagree. You state that all of the proposed developments, including Shriner’s, DISC, etc., will be needed to satisfy your YIMBY allies. I believe that it’s extremely unlikely that all of the developments would be approved in the first place. And that none of them actually address the state’s targets, regarding affordable housing.)
(But again, you (and those like you) continue to advocate for developments like DISC that (if viable) would actually INCREASE the demand for housing.)
(So maybe it’s folks like YOU who are creating the housing shortage that exists in your imagination in the first place. The same reason that housing is expensive in Silicon Valley, for example.)
“ But let me ask you this: Why do these SAME PEOPLE advocate for developments like DISC? Which, if the commercial was actually viable, would INCREASE the demand for housing locally?”
I’ve answered this question many many times. It grows tiresome. It’s like if you keep asking it, the question is going to change.
I just don’t see a point to continuing these discussions with you. I don’t learn anything from you and you believe there isn’t a housing crisis, so at the end of the day, what is there to discuss. I have other things to do.
David says: “BTW, the people you are calling victims are hardly victims. They have profited immensely from the policies they have helped impose and seen their net wealth increased tremendously and now ironically some of them will have to pay for that wealth by having less than desirable housing next door to them (btw, the very definition of NIMBY).”
———
You seem to be conflating (and putting forth incorrect descriptions) of “profit” vs. “destruction of neighborhoods”.
First of all, NONE of these people actually “realize” their “profit” unless they sell and vacate the very neighborhoods that they’re trying to protect (and live in). It’s an irrelevant (“fake”) number until a property is sold.
In any case, that fake “profit” is likely to INCREASE, as a result of upzoning.
So ironically, rather than “taking down” the people some seem to be envious of, you’re actually going to make them richer (on paper).
But you will have your “revenge” by making some of them live in a worse neighborhood, so there’s that.
Congratulations, I guess. 🙂
Unlike you, I don’t look at a place like Tiburon or Atherton with an intent to destroy them.
Ok
David says: “I’ve answered this question many many times. It grows tiresome. It’s like if you keep asking it, the question is going to change.”
The reason I keep asking that question is because you never respond to it. Again, that question (regarding something like DISC) is “key” to the motive of the YIMBYs – including some who comment on the Vanguard.
It also speaks to “who” (exactly) is creating the fake housing shortage.
Ok
Well, I’m glad we settled that (and that we’ll hear no more about fake housing shortages).
🙂
Next, we’ll tackle all of your other subjects.
DG say, “BTW, the people you are calling victims are hardly victims. They have profited immensely from the policies they have helped impose and seen their net wealth increased tremendously and now ironically some of them will have to pay for that wealth by having less than desirable housing next door to them (btw, the very definition of NIMBY).”
That argument is literally delusional. You are acting like harm done to one person who happens to be wealthy and happens to live next door to a densified lot that is a result of a completely different wealthy person is somehow the group suffering of some ‘wealthy class of people’, when in fact they are completely separate events. I’ve seen this sort of thinking before in progressive arguments, and it leaves my jaw agape.
Jim says: “Without commenting on the S.F. situation — I don’t know enough about it to have an opinion — a colleague in SoCal pointed out a situation that many, including me, would consider good intentions run amok.”
I actually have a different opinion regarding the last part of your comment. That is, I don’t think there’s “good intentions” involved in the first place.
What we’re seeing is ultimately the result of business interests infiltrating the political system. Which was always a problem, but they’ve now found a new angle to exploit.
As far as the example in San Diego is concerned, we actually need more of this type of blatant disregard for constituents before they are ready to remove power from officials (as they did with Proposition 13, for example). It hasn’t yet occurred often-enough for them to truly organize/solidify, though there are sporadic efforts (such as that made by “Livable California”).
https://www.livablecalifornia.org/
It’s going to take a joining-together of constituents from multiple cities to undo what the state has thrust upon its own constituents.
“What we’re seeing is ultimately the result of business interests infiltrating the political system.”
Progressives make an exception for those doing the work of the Lord.
Read: Build Baby Build