Rising Housing Costs changing San Francisco for worse

RisingHousing Costs changing San Francisco for worse

Livingin decent, reasonably priced and reasonably located housing is one ofthe most important determinants of well-being of every person. Apartfrom being a basic need, housing impacts our lives in othersignificant ways such as: access to workstations, education,recreation centers and shopping places. The availability and cost ofhousing are also important to a state’s economy, affecting theability of businesses to recruit and retain qualified employees.Unfortunately, housing in California, especially in San Francisco isextremely expensive. San Francisco is one of the places in Californiawhich is highly sought after in terms of residential areas. Manyhouseholds wish to live in San Francisco but either cannot get ahouse to live in or cannot afford one. A report by Taylor indicatesthat the lack of adequate housing has resulted in high housing costsand hence the household wishing to live in San Francisco are leftcompeting for the few housing units (3). It is this competition thathas resulted in high housing costs. Researchers point out that manyhouseholds spend a large portion of their incomes on meeting therising housing costs. This essay brings out the argument that therising cost of housing is changing San Francisco for worse.

Analysis

Therising housing costs are changing San Francisco for worse sincehouseholds are spending more on housing and left with little if anyto meet their other essential needs. According to Kuchar, manyhouseholds in San Francisco struggle to find housing that isaffordable and at the same time meet their other basic needs (7).However, many households are finding it difficult to meet all theirneeds since they are spending more of their income on housing. InFrancisco, housing costs are the largest component of mosthousehold’s spending each month. For the people who own homes, thecosts include monthly principal and interest payments property taxesand homeowner’s insurance and water utilities like water, gas andelectricity. For people living in rental units, housing costsinclude: monthly rent and any other utilities that the tenant pays.On average, household spend about one-quarter of the gross monthlyincome on housing. This means that with most of the household’sincome being channeled to meeting housing costs, many family inFrancisco are compromising many other things such as the quality ofeducation for their children, quality health care, to name but a few.This means that as the housing costs go high, families experiencefinancial challenges and many find themselves struggling to meetother essential needs. However, the people with the view that risinghousing cost is changing San Francisco for good argue that withfamilies spending more on housing, the real estate industry investorswill get more finances to invest more in the industry in order toprovide adequate housing units for people living in San Francisco.They also argue that as the real estate investors getting more, theywill be paying higher taxes to the federal government hencestrengthening the state’s economy. However, it can be concludedthat as long as many families are struggling to meet the rising costsof housing and hence plugging themselves into extreme difficulties ofmeeting other essential needs such as education and health care,then, this trend is impacting San Francisco in a very negative way.

Risinghousing costs is changing San Francisco for worse since few peoplewill have the capability to own their own homes hence save andaccumulate wealth to improve their economic status and that of thestate at large. According to Taylor, with the rising housing costs,fewer households will have the ability to own their own homes (7). Itis a fact that by owning homes, households are able to build wealth.Taylor’s report points out that the federal government has activelypromoted homeownership since it restructured the housing financesystem during the great depression. As a result, the US homeownershiprate rose steadily and considerably. Homeownership helps householdsbuild wealth obliging them to accumulate assets over time. Amonghomeowners, saving is obvious. This is because, every month, part ofthe mortgage payment lessens the total amount owed and thus becomesthe homeowner’s equity. For people who rent apartments, savingrequires voluntarily sacrificing near-term spending. Kuchar asserts,“Due to this and other economic factors, renter median net worthtotaled $5,400 in 2013, a small fraction of the $ 195, 400 medianhomeowner’s net worth. For many households in high housing costareas, though, homeownership’s benefits remain out of reach, ashigher home prices mean very few if any households can afford to ownhomes.” (8) This implies that as the housing cost continues to gohigh, people in San Francisco will continue spending more on housingand saving less if any hence their economic status will continuedeteriorating. However, there is a counter argument that when peopleown their own homes, they will contribute little to the state’seconomy since they will spend less and save more. The conclusion ofthis argument is that since high housing cost makes it difficult forSan Francisco people to own their own homes and hence be able toaccumulate wealth, their economic wellbeing will continuedeteriorating affecting the economic status of the state as a whole.

Highhousing costs is changing San Francisco for worse since it isheightening labor costs for employers and investors. According toMetcalfand Warburg, manyinvestors and employers are spending a fortune on labor cost. Inareas with higher cost of living, businesses generally must payemployees higher wages since they need additional income to offsetthe cost of living (519). Life in San Francisco is very expensive dueto very high housing costs. Taylor contends, “In a 2014 survey ofmore than 200 business executives conducted by the Silicon ValleyLeadership Group, 72% of them cited housing cost for employees as themost important challenge facing Silicon Valley businesses.” (3).Other significantsegmentsof the state’s economy may also findstaffing challenging and labor cost expensive. For instance, somehigher learning institutions in high housing cost areas providehousing grants in order to recruit experienced and highly qualifiedadministrators and academic specialists. Due to this, fewer investorsare coming to San Francisco for development due to high labor costs.However, employees with high wages equally pay high taxes to thestate’s government hence improving the economic status of thestate. It can be concluded that high housing cost is changing SanFrancisco for worse since employers and investors are havingchallenges in recruiting and retaining employees hence fewerinvestments resulting in slower development.

Conclusion

Fromthe essay, it is quite clear that high housing costs in Francisco isaffecting people negatively in various ways. People in Francisco arescrambling for the limited housing units resulting in extremely highprices for rental units. Many households are spending most of theirincomes in meeting the high housing cost making them experiencechallenges in meeting other essential needs. Other families areliving in overcrowded houses, a trend that is impacting on theirhealth social and behavioral wellbeing negatively. Investors andemployers are spending are being forced to pay very high wages toqualified employees in order to attract and retain them. All thesefactors emphasize the argument that the rising housing cost ischanging San Francisco for worse.

Workscited

Kuchar,Sally. “The Bad News: As Suspected, Rental Rates have IncreasedDramatically Over the Past Year. “Curbed SF. 14 May 2012.Print.

Metcalf,Gabriel and Jennifer Warburg. “In San Francisco, the Boom is back.”The Urbanist. 519. (2012). Print.

TaylorMac. Legislative Analyst’s Office Report. 2015. Print.