A Feasibility Analysis of the More Homes Act

MapCraft Labs, a GIS modeling firm, and the Urban Displacement Project conducted a “feasibility analysis” of California Senate Bill 50, the More HOMES Act, to determine how it would impact the San Francisco Bay Area housing market for both market-rate and below-market-rate housing.

Key Findings

The feasibility analysis found that the Bay Area would see significantly more below-market rate and market rate home building than is currently feasible in the 9-county Bay Area.

Specifically, there would be:

  • Capacity for more than 100,000 additional market-feasible units of below-market-rate “inclusionary” housing, an increase above current base zoning for inclusionary housing of 500%
  • Capacity for more than 3 million additional market-feasible units of market-rate housing, an increase above current base zoning of 400%
  • Capacity for tens of thousands (~ 30,000 units or more) of new market-feasible units of deed-restricted affordable housing affordable to extremely low-income (ELI) households — including people with no income — up to 30% of Area Median Income (AMI). Current inclusionary housing rules in the Bay Area typically do not require units for ELI households.

A majority (greater than 50%) of the new housing units would likely be built in “jobs-rich*” areas, or areas that have experienced historic imbalances between job and housing creation – a problem endemic to many Bay Area cities.

(*Note that SB 50 does not currently specify how to determine which areas qualify for the “jobs-rich” housing bonus. This study used a scenario of high-opportunity/“commute-reducing” places created by the UC-Berkeley research centers: the Haas Institute for a Fair and Inclusive Society, Terner Center for Housing Innovation, and the Urban DisplacementProject, as well as California Housing Partnership.)

Feasibility Analysis: Not the Same as Zoning

A feasibility analysis is not an analysis of zoning; a city’s zoning determines the maximum potential amount of housing units in a given zoned area of land. A feasibility analysis takes that zoning and applies a “pro-forma” approach: Based on the zoning, how many units of both market-rate and below-market rate housing would developers be likely to build, given a set of assumptions about costs of construction, real estate prices, and other factors?

Because feasibility analyses assume cities are never built to their full “zoned capacity” (a rare occurrence in most cities), these types of analysis show results for home construction that are typically lower than a city’s full, zoned capacity.

Market-feasible capacity is a useful metric when considering the physical capacity of local regulations, like zoning, because even if a zoning code allowed skyscrapers, market-rate developers may only build townhomes if the smaller-scale development is the more financially feasible option.

Meeting California’s Housing Needs

Given estimates that California faces a shortage of 3.5 million homes between now and 2025, this feasibility analysis suggests that SB 50 is a major step toward providing the policy landscape necessary to meet the goal of creating 3.5 million new homes during that time frame.