How We Got Here: The Origins of the Housing Crisis in the San Francisco Bay Area (Part One)

This is part one of our limited series on the housing crisis. Here, we explore the history of housing in the San Francisco Bay Area and the origins and rise of residential zoning. In upcoming editions, we'll continue exploring the consequences of zoning, modern homelessness and the shelter system, and what we need to create a better future for our communities.

For years, Couper Orona was a firefighter in San Francisco. Then she got hurt on the job and had to retire. “It was almost life-ending,” she said. Eventually, she ended up on the streets. She became a street medic, “because our city turns its back on people. If you’re unhoused,” she said, people “look at you like you’re nothing.”

Roughly 20,000 people become homeless in San Francisco every year. Since the mid-2010s, the number of Americans experiencing homelessness has risen steadily. In 2023, it passed 653,000, the highest since detailed records began in 2007, and a record 12% increase from 2022.

About 180,000 of these Americans were in California, a little under 8,000 in San Francisco. (These figures are likely underestimates — or even minimums — in part because more than two-thirds of California’s unhoused are unsheltered, which makes them difficult to count.)

The Bay Area is, in one sense, the unfortunate epicenter of what some call an epidemic of homelessness. Like certain other epidemics, homelessness is considered an obviously existential threat that must be mitigated — in ways that won’t require significant sacrifices, of course — but that cannot realistically be eliminated. It’s sad, but inevitable.

Not true. It might be hard to believe today, but the very term “homelessness” only took its current meaning in the late 1970s. Before then, there was no homelessness or housing crisis as we understand it. 

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What changed? How did we get here? And how the hell do we get out?

These are the questions this series of articles will investigate. Through interviews with experts, advocates, and people experiencing homelessness, we’ll examine just how bad things are, what people are doing to tackle the problem, and what needs to change — in San Francisco, California, and the US as a whole. 

But first, we need to go back to the beginning. Along the way, we’ll discover why suburbs all look like that, how everything is rooted in racism, and why the rents are too damn high. A lot of that is linked to one seemingly innocuous word, one that’ll appear often across this series: Zoning.

The start of San Francisco (and the problem)

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Modern San Francisco was born in the mid-nineteenth century. Thousands poured into the tiny town seeking their fortune in the gold rush, or at least a steady paycheck working on the railroads. 

Many of them were tramps and hobos, itinerants who wandered the country in search of (or avoiding) work. Their transience, which made them homeless, was often romanticized rather than condemned. “Everyone is a hobo,” one 1929 editorial proclaimed, “to the extent that he hands a hobo a slice of bread at the back door.… to the extent that he lives with a self-made philosophy.”

Some contemporaries did fret about a homelessness crisis. But when the author of one 1916 sermon, for example, declared that “San Francisco is a city of wicked homelessness, destroying the essence of civilization,” he was being quite literal. People lived in tenements, in boarding houses; San Francisco was known as “Hotel City” due to the “vast numbers” of people living in hotels instead of houses. City life itself was the problem, with its lack of “home atmosphere.”

Indeed, cities like San Francisco were considered to have a serious housing crisis in the late nineteenth century — unsurprising, considering the population had increased by several thousand percent in a few decades. The problem wasn’t prices, though, but slums.

To this day, concern about living conditions is often really discomfort with the people living in those conditions. Thus, in 1870, San Francisco enacted a minimum amount of space for a single tenant. Critics noted that crowded jails often breached this rule. Only Chinese boarding houses were targeted, though. Strange!

In 1885, the city went a step further, becoming the first in the US to try and physically divide itself by race. It banned public laundries from many areas, which was such an obvious attempt to segregate Chinese residents that the Supreme Court invalidated it the next year on the grounds that it violated the 14th Amendment. 

The concept of segregating a city, though, stuck around. In 1916, the Bay Area would once again be a pioneer. That year, Berkeley became the first city in the US to enact single-family zoning.

The officials involved promoted the ordinance by explaining that it would keep “negroes” and “heathen Chinese” out of desirable areas.

The rise of zoning

Berkeley’s innovation spread like wildfire. In 1921, San Francisco enacted a zoning ordinance of its own. Initially, the constitutionality of these laws were in doubt, but a few years later the Supreme Court gave the concept the green light. (The majority opinion called apartment buildings in low-density areas “mere parasites,” despite the fact that denser buildings produce more tax revenue for communities to use.)

By 1933, roughly 70% of Americans lived under some kind of zoning ordinance. Federal authorities heavily pushed zoning and single-family housing specifically. After the Second World War, there was a significant rise in demand for housing, and prices rose for the first time. Massive federal spending helped meet this demand, but funds were conditioned on the adoption of strict zoning codes.

Maps were produced to guide the disbursing of the private loans which also contributed to this housing boom. Take a 1937 map of San Francisco, in which swathes of the city are in red, denoting the highest class of risk. Why? Older building stock — and the “threat of infiltration of foreign-born, negro, or lower grade population.”

As multiple researchers have shown, zoning was not really about planning better or healthier cities. Zoning was often adopted before any general plans were created, and building codes focus on health and safety. Instead, as Stephen Menendian, Director of Research at the Othering & Belonging Institute, explains, restrictive zoning is fundamentally a “mechanism of exclusion.”

San Francisco passed a new zoning ordinance in 1960 to “protect the character” of the city and “prevent over-crowding.” Zoning was “an essential element of a city’s program for the preservation of existing neighborhood values,” one contemporary academic concluded.

On the one hand, these values were undoubtedly social. As Menendian explains, the 1968 Civil Rights Act prohibited housing discrimination based on race — but not class, which  usually achieved the same result.

The discriminatory legacies of zoning, then, continue to the present. Not just because new development was forced into places without the infrastructure to properly support new residents — Mission Bay, for example — but because these midcentury zoning codes are still in effect in major cities like New York and San Francisco. Consider this when you read about the outrage surrounding and opposition to the latter’s long-overdue attempt to overhaul the zoning map later.

On the other hand, the values of a neighborhood were somewhat literal. Homeowners wanted assurances that their homes would remain livable. You wouldn’t want to settle into your dream home only to have a tanning factory open up next door. 

Of course, there was the economic value, too. That tanning factory sure would make it hard to sell and leave. 

Housing as an investment and the anti-growth crusade

If the introduction of zoning was the first major turning point leading toward the current crisis, we’ve arrived at the second. In the 1970s, the US experienced massive inflation. One of the only assets that outperformed inflation was housing. Houses became vehicles for investment. This was solidified by the 1978 passage of Proposition 13, which capped property taxes and limited their growth, effectively incentivizing homeowners to stay put and watch their investment appreciate. 

Around the same time, zoning became hyper-focused on limiting growth. Buildings and districts were designated as historic, blocking development. California passed the now-infamous Environmental Quality Act, which afforded people even more power to slow down and stop development — and which San Francisco soon adopted into its code. With these (and other) laws, pretty much anyone could challenge any development, and anyone with enough time and money could sue and delay even the most conscientious of new developments into submission.

Homeowners became homevoters, a “suburban cartel” concerned only with maximizing the return on their investment: their house. And if there’s one thing that’ll boost the value of an asset, it’s limiting the supply. (Research has repeatedly shown that people simply don’t understand — or believe — that supply and demand applies to housing. Developers, however, understand this perfectly.)

It’s not even that people necessarily want to live in single-family neighborhoods. Instead, Menendian explains, they are operating based on a set of concerns. Property values are one. Public services are another; wealthy single-family neighborhoods can zone out poorer folks, benefiting from their cheap labor but avoiding the costs of having to support them. These ultimately selfish concerns lead to single-family zoning remaining dominant.

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Zoning increases the cost of housing in two ways. First, less housing is built. Second, the housing that is built is more expensive, in part because it has to go through frankly ridiculous regulatory and review processes that can drag on for years. As recent research demonstrates, areas with stricter land-use regulations have higher house prices. In the markets where there is a housing crisis, like New York and Seattle, zoning adds hundreds of thousands of dollars to the price of a single home. In San Francisco, this zoning tax is the worst in the US, adding more than $400,000 to the price of a standardized quarter-acre plot of land within 15 miles of the city center. That’s over three times the median household income — over six times the median individual income.

The single-occupancy rooms of the early twentieth century may well have sometimes been crowded, dreadful places to live. However, demolishing them — as major cities like San Francisco did — and replacing them with single family homes leads to fewer units of housing. If housing is a ladder, removing the bottom rungs doesn’t magically lift those hanging on to a higher spot. They have to fight for the remaining units of housing — units that are now even more expensive, thanks to increased competition. Losing that fight means homelessness.

It really is a fight. Studies show that people often fall through increasingly unstable and unlivable “layers” of housing before ending up unhoused. On the East Coast, most of them end up in shelters. In the West Coast, most become unsheltered, literally living on the streets. This is the modern definition of homelessness, the crisis, the epidemic. It has various causes, different factors exacerbating and inflaming it. But at the end of the day, people are homeless because they can’t afford a home. 

Let’s return one final time to the late 1970s, when a citywide residential rezoning reduced San Francisco’s growth potential by a third. “What we’re doing here is pricing people out of San Francisco,” one editorial warned. “We cannot afford to be known as the generation that saved the whales … but forgot its people.”

“It sucks to not have your city, that you love, want to take care of you,” Couper told Invisible People earlier this year. “I love San Francisco.… My footsteps are embedded in the streets of San Francisco. I am San Francisco. My footsteps tell the story, and I don’t want them to be forgotten just because I’m homeless.”