This post is not by Andrew. It is by Phil.

There’s at least one thing people in San Francisco seem to agree on: the rent is too damn high. The median rent is between about $3000 and $3500 per month…for a one-bedroom apartment. High-tech workers and upper-echelon businesspeople can afford a place, but baristas and hair salon workers and teachers and shop clerks etc. etc. have real trouble.

Of course there is plenty of development pressure, and new high-rise apartments are going in that have hundreds of apartments each, typically with a rent of $4000 – $8000 per month. If you let a developer build “market rate” apartments, that’s what they’ll build.

Suppose San Francisco adds 10,000 market-rate units. Some will be one-bedrooms, some two- or three-bedrooms, and some will be occupied by singles, others by couples, etc. But for simplicity let’s just assume that on average each of these new 10,000 units is occupied by a household that earns $100K per year after taxes. Total, the occupants of these apartments have $1,000,000,000 in disposable income. That’s a lot! They’re going to spend some of that money — indeed, a lot of that money — in San Francisco: they will go to coffee shops, get their hair cut, buy things in shops, etc. Serving those extra 10,000 high-income households will require tens of thousands more waiters and shop clerks and car mechanics and plumbers etc etc etc….that is, there will be more jobs for the kinds of people who already have trouble affording a place in San Francisco. Those additional people will need to live somewhere, so there will be increased competition at the lower end of the market, which means higher rents. Most of these people will end up commuting from other cities.

The thing is, it’s not just lower-income people who feel priced out of San Francisco. Tens of thousands of high-income people who would like to live in San Francisco are living in Oakland and Fremont and Berkeley and Orinda because of lower rents in those places. As market rate housing is built in San Francisco, those people move into it. That’s why the ‘market rate’ is so high.

Of course, by the so-called “law of supply and demand”, building more housing does make housing cheaper. It’s easy to see why: those people with their billion dollars of disposable income are adding a lot economic activity in San Francisco, but they’re decreasing the economic activity in the cities they’re leaving, which no longer need so many waiters and barbers and shopkeepers. There is a cascade: some people move from Berkeley and Oakland to San Francisco, which allows replacements to move from Richmond and El Cerrito into Berkeley and Oakland, and so on. Ultimately, rents in San Francisco go up, and rents in some outlying communities go down. Yes, the increased supply of housing lead to decreased housing prices on average but they’ve gone up, not down, in San Francisco itself.

Admittedly it is possible in principle to build so many apartments in San Francisco that they become more affordable. One way for that to happen is if the city becomes a less pleasant place for rich people to live: crowds, traffic, lack of sunlight as big buildings fill the sky, and improved amentities in neighboring areas, could get to the point that people would rather live in a $3000 apartment in Oakland than a $3500 apartment in San Francisco. But it might take a great deal of building, and a complete change in the character of the city, for that to happen. Manhattan is 400% denser than San Francisco but it’s still not a cheap place to live [Note: I originally said ‘50% denser’ but a commenter named Ira pointed out I was looking at the density of New York City, not Manhattan]. Some people say Manhattan would be cheaper if it were easy to build more housing there, but for crying out loud, they already have 1.6 million people living on the island. What’s the theory, that housing for the first hundred thousand people didn’t make rents go down, nor did housing for the second or third or fourth or… or fourteenth or fifteenth or sixteenth tranche of a hundred thousand people, but we have finally reached the peak and the NEXT hundred thousand housing units will make housing cheaper? Sorry, no. If the ‘market rate’ for newly developed apartments is substantially higher than the median rent of existing apartments, then building more market-rate apartments will make median rents go up, not down.

(It’s worth remembering that there are other things that could make rents go down too, such as a local or national economic collapse. Maybe the next major earthquake will put a damper on things.)

Given all of the above, until recently I found it really perplexing that San Francisco has a movement of people who loudly claim to be pro-renter and to want policies changed so that rents will go down, but who are strongly in favor of building more market-rate housing. (The broader movement is sometimes characterized as YIMBY = Yes In My Back Yard, which is also the name of an organization; there is also the Bay Area Renters Federation, BARF, which is even more explicit that they don’t care what housing gets built, as long as it gets built). Why, I wondered, are these people promoting policies that are so bad for them?

But suddenly it dawned on me, just last week, that the question “why are people in favor of policies that are so bad for them” might have the same answer in this case that it appears to have for a lot of people in national politics: they aren’t trying to do something good for themselves, they are trying to hurt their perceived enemies. (In fact, there’s a New York Times Op-Ed on the day that I’m writing this, May 14, that points out that some people on the Right are currently cheerleaders for behavior that they once would have found objectionable, not because they think it’s good for them or for the country as a whole, but because it appalls the Left).

When someone proposes to build a 400-unit market-rate housing tower in San Francisco, who objects? Well, in a minor way, the affordable housing community will usually make some noise, but they usually quiet down if the developer guarantees that 10% or so of the units will be ‘affordable’. I presume the negative impact of higher rental costs everywhere in the city is just too diffuse to energize people from distant neighborhoods. As for the major objections, they come from people immediately surrounding the proposed project. These people complain (usually correctly) that the proposed project will cause more traffic and more noise, that two years of construction will cause major inconveniences, etc., etc., and they show up in numbers at public hearings to try to kill the project or at least get it reduced in size.

And who are these people? They’re people who already have what the YIMBY and BARF members want: a place to live that they like and can afford. These are often people who bought their condos or rented their rent-controlled apartments years ago. They’re older and often wealthier and probably smugger than the college-debt-laden millenials who desperately want rents to come down.

So this is my new theory: the YIMBY and BARF people know that building more market-rate housing in San Francisco will make median rents go up, and that this will be bad for them, but they want to do it anyway because it’s a thumb in the eye of the “already-haves”, those smug people who already have a place they like and are trying to slam the door behind them.

I hope this is the answer, because if it isn’t, I’m still at a loss.

Comments welcome.

By the way, I, Phil, do not live in San Francisco, I live in a quiet neighborhood of single-family homes across the Bay in Berkeley. I don’t have a dog in this fight. (Remember, this post is not by Andrew, it’s by Phil.)