It's a known fact that people have to make compromises when house–hunting, but especially so in San Francisco and other metros with low supply elasticity.
In areas with low supply elasticity, a spike in demand will drive prices up without much increase in the number of housing units. Higher demand and low supply make it especially difficult for people with lower incomes to purchase homes in these areas — so they move to the outskirts or leave all together.
Our April Insight listed nine metros with low supply elasticities, which includes some of the most attractive cities in the country. Taking cues from San Francisco, which the Insight focused on specifically, we can see some of the forces that drive people to relocate outside of these low supply elasticity cities:
- High housing costs relative to income
- Difficult trade–offs between housing cost
- Proximity to work
- Quality of neighborhood
So why does any of this matter? Because the nature of low supply elasticity urban cities will be shaped in large part by how they react to the likely net loss of lower– and middle–income families over the next few decades. City and county government programs to subsidize or otherwise sustain housing affordability for lower– and middle–income families will play an important role in shaping their future.
San Francisco understands how important it is to the life of a city to retain residents who span the full socioeconomic spectrum. And while affordability is a challenge, our Single–Family and Multifamily businesses have been working with city and county governments, lenders, and developers to address the challenges of affordability in the San Francisco metro area.
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