It’s the 3-day Labor Day Weekend! If you’re sticking around town, and why wouldn’t you, there’s lots to do. The San Francisco Shakespeare Festival is presenting its 2018 Free Shakespeare in the Park production of A Midsummer Night’s Dream tomorrow, Sunday, and Monday (Labor Day) on the Main Post Parade Ground Lawn in the Presidio. All these performances begin at 2 PM. For more information, click here. For more ideas, check out SF.FunCheap.com. The website has posted a 2018 Labor Day Weekend Guide — spotlighting “a bucket load of awesome things to do” over the long weekend.
On the “Homes for Sale in San Francisco” front, here’s our report for this week, 8/26/18 – 9/1/18
Why Residential Projects Are Being Put On Hold
Even though there is a huge demand for condominiums in San Francisco, the cost of building brand new condo developments has become prohibitively high, according to a report just published by the San Francisco Chronicle and shared on SF.Gate.com.
The combined increases in construction costs and in affordable housing requirements have made building any project extremely difficult in San Francisco.
There are 6,750 units under construction in the City, about 1,000 units more than a year ago. While that is well above the historic average, there are another 15,000 units that have been approved by planning officials but have not started construction. Projects containing 6,690 of those units have secured all the permits needed to start construction but have not broken ground.
A big reason for the delay is construction costs have increased 10 to 15 percent annually over the past five years. Developers say they can’t make a profit. In the current real estate environment a condominium developer needs to sell units for at least $1,400 a square foot for a wood-frame building, and $1,800 a square foot for a taller, steel-frame mid-rise or high-rise. That’s asking a lot of buyers. According to one developer, above $1,400 a square foot is a tough sell unless it’s an unusually good location.
In addition to the cost of construction, City policies have hampered development. As the housing crisis has gotten more serious, lawmakers have required private developers to include more “community benefits” — below-market units or inexpensive space for artists, nonprofits, and manufacturing, all sectors that are being squeezed out in the City’s roaring job market. Well intended for sure, but there are unfortunate consequences.
Todd David of the San Francisco Housing Action Coalition, an industry group representing residential developers, said that weighing projects down with so many extra fees and obligations means that they simply don’t get built. A growing number of developers are seeking to cash out rather than risk losing money building something that they believe from the start won’t be profitable.
There are no easy answers here, but it’s important to know that this growing problem exists and clearly needs to be addressed.