A recent study published by the Terner Center for Housing Innovation at UC Berkeley discusses how rising construction costs in San Francisco are contributing to the city’s housing affordability crisis.
The report — which was gathered through interviews with developers, general contractors, architects and nonprofits working on affordable housing issues — found that there are four main causes of rising construction, which are all linked to governmental regulations. While the report uses San Francisco as a case study, Terner Center faculty research advisor and co-author of the study Carolina Reid said the results of the study can be applied to Berkeley by using the same rubric for housing cost.
The four main bureaucratic causes of the rising construction costs in San Francisco are city permitting processes, design and building code requirements, workforce and procurement rules, and environmental regulations.
Construction costs are especially important for affordable housing, because more housing regulations mean that more must be spent to make affordable housing up to code, according to the study.
“Reducing housing construction costs would be of particular benefit for affordable housing, where every dollar saved translates into subsidy for additional units” the study said.
This study was meant to serve as a first exploration into the issue, according to Reid. A full study is being done by the Terner Center into the multiple different costs associated with building housing.
Igor Tregub, the chair of the city’s Housing Advisory Commission, said Berkeley must have policies in place to ensure houses are built safely and in an environmentally friendly manner. He added that successful projects can ensure the developer will make a profit and that he has heard comments similar to the report’s findings on this topic from local developers.
“I think the findings (of the study) are consistent with the tenor of comments the city has been hearing from developers,” Tregub said. “I think some of the recommendations in the report made sense to study further.”
He also said, however, that the findings of the report might not be completely applicable to Berkeley, since Berkeley has much less new housing compared to San Francisco, construction costs are a “less important” factor when accounting for rent increases.
While the report was exclusively focused on construction costs in the city of San Francisco, Reid said many of the causes of high construction costs are “resonant for Berkeley as well.” According to Reid, Berkeley faces the same state environmental regulations as San Francisco and land costs in Berkeley are much higher.
“This research was focused on San Francisco, but I think that streamlining permitting processes and reviewing requirements and regulations are some takeaways from our paper that Berkeley could consider” said Hayley Raetz, graduate student researcher at the Terner Center and co-author of the study.
A previous version of this article may have implied that Igor Tregub said construction costs in Berkeley were “less important” compared to San Francisco because Berkeley has a higher stock of older housing. In fact, Tregub said that because there is a lower stock of newer housing, construction costs are a “less important” factor for accounting for rent increase.