As a recent college graduate, I moved to San Francisco this summer in search of an affordable and safe apartment near local shops and restaurants, where I planned to explore freely and enjoy city life to the fullest. San Francisco is notoriously known for large tourist areas and a growing tech space, making it the perfect attraction for young adults, families, and businesses. I was eager to start working and join the daily commuters down the magnificent Market Street. From the art and historical landmarks to the scenic hiking trails and exceptional food, the city provides an experience that truly keeps you wanting to learn and explore more. The growing city of San Francisco has a population of 864,263 people, much larger and diversity-driven than previous places I’ve lived at before (U.S. Census Bureau). The diversity focuses on a multitude of dimensions that would allow me to learn and grow from my experiences. However, little did I know in between all of the glorious skyscrapers and tourism, life was radically different for individuals who lived in one of the most prominent cities in the world.
As housing prices skyrocketed throughout the Bay Area and the city, I found myself a small place to live further down south of Market Street, in a neighborhood known as Tenderloin. Past the large shopping malls and expensive restaurants in Union Square for about 3-4 blocks, you enter a new world that is full of extreme poverty. Placed directly on the outskirts of downtown, the Tenderloin is a poorly maintained neighborhood one with continuous activity and people crowding the area at all times. From homelessness to buying and selling drugs on the street, this neighborhood is notoriously known for high crime rates and a lower standard of living in San Francisco. Throughout my short time in San Francisco I have noticed, that while downtown and many areas of San Francisco become heavily gentrified with shopping areas and wealthy neighborhoods, the Tenderloin neighborhood continues to remain a rundown housing area with a significant amount of homelessness. I constantly wondered what was going wrong within this neighborhood of San Francisco that makes it more difficult for people to overcome poverty. Throughout this paper I will propose a market analysis of the Tenderloin neighborhood in its entirety by focusing on income, overcrowding, rent burden, and unemployment within this area, to draw a correlation between the current demographics and statistics that prevail in the conditions today. For this market analysis, I will be using the area of San Francisco that falls into the zip code of 94102 as the Tenderloin compared with surrounding areas such as Chinatown, SoMa, Nob Hill, and Filmore/Haight/Western Addition.
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The history of the Tenderloin neighborhood was lively in the 1900s, as it was the entertainment district of San Francisco. People would be attracted to legal and illegal activities in the area such as the bars and nightlife, restaurants, gambling, and music/theaters. The neighborhood became a haven for immigrants, refugees, and LGBTQ-oriented individuals to enjoy their late nights and weekends in San Francisco. Referring to images 1 & 2 above, today the Tenderloin neighborhood is one of the poorest areas in San Francisco, at first glance you can see the crowding of streets as individuals and families have set up tents to live in for warmth and provide a tentative roof. Homeless people are begging on the streets day and night in these neighborhoods for food and money. The sidewalks are filled with cigarette buds and empty liquor bottles, clothes, shoes, mattresses, and people sleeping. This neighborhood is plagued with poverty to its core. From income, unemployment, philanthropy, and the environment, many aspects play a role in affecting poverty and inequality in the Tenderloin. Poverty is viewed as a problem of place resulting from toxic conditions within geographic space. We can see people who live in the inner cities are averse to the effects of neighborhoods with mass poverty and high concentration effects such as racial segregation, joblessness, low education quality, and crime that ultimately contribute to stagnant conditions. In the next section of this paper, I will focus on housing affordability, with emphasis on the demand and supply of units throughout the Tenderloin.
Several significant determinants of housing demand affect us every day as renters and homeowners. Income is a large factor of demand in the housing market as people who live in the city have increased in income over the years leading to a large increase in rent, as we can see in San Francisco. Affordability, rent burden, and quality improvements in housing are also large determinants in demand for housing, as housing quality increases such as a full kitchen included or an additional balcony, with larger improvements increasing the desirability and price. Within Table 1 we can see the median household income in the Tenderloin is $33,552 per year, however, the median in San Francisco overall throughout the city is $96,265. This is significantly lower than the rest of the city including nearby neighborhoods. From Table 1 we can see the percentage of households that have an income below the national poverty level is at 11%, ultimately showing us a correlation this population faces the adverse effects of poverty. Amongst these five neighborhoods surrounding the Tenderloin, we can see this neighborhood has the highest unemployment rate at 5.96%. This is crucial to consider, as the national unemployment rate is 3.5%, which is nearly doubled in the Tenderloin. “Although good housing in a good neighborhood is certainly no guarantee against tragedy or misfortune, inadequate housing increases one’s vulnerability to a wide range of troubles” (Swartz pg 2). The lack of resources reflects poverty with the absence of money and other key resources that are essential to increase currency. This is resulted from low wages and lack of skills that makes it more difficult to escape poverty itself.
The determinants of supply in the housing sector revolve around quantity, quality, and affordability. In San Francisco the demand for housing is increasing rapidly, causing the cost of housing to increase as well. Due to the lack of supply, companies and organizations are encouraged to develop housing and enter the market. The shortage in the supply of housing is causing a market failure throughout the bay area. In San Francisco, many factors make construction difficult and prohibit developers from not being able to meet the full quantity of the supply side. From city regulation to the cost of production, housing supply shortage hurts neighborhoods as they are driving up the homeless rates and people moving out to the suburbs. While new construction is mainly focused on high-income consumers, the correlation is that there is a direct impact on low-cost housing, as there is rarely an excess supply for low-income housing with less competition. In the Tenderloin, the median year of structures were built in 1939. Throughout the neighborhood, single-room occupancy residences are common as permanent or temporary living for low-income workers. ”To overcome opposition from the real estate industry, advocates for public housing agree to have the program designed so that it would not compete with the private housing market. This meant families eligible for public housing would have incomes far below the level necessary to secure decent housing in the private market” (Swartz pg 167). These rooms are generally bare with a kitchen placed directly in the room and a shared bathroom for the entire floor. In the San Francisco Housing Balance report of 2019, we saw there are a total of 3,323 affordable units in the Tenderloin and 15,335 units in total. This shows us that only 21.7% of the units in this area are classified as affordable living units (SF Planning Department, Housing Balance Report).
Housing affordability is a crucial issue in the Bay Area, especially in San Francisco. As Newman's article suggests, the threshold of your income you should be spending on housing every month is about 30% of your income. However, in the Bay Area, this is not the case. In Table 2 we can we can see the percentage of people paying more than 50% of their monthly income in rent is 25.15% in the Tenderloin. This is shocking as we see the people that are spending the largest amount of their income on rent, happen to be those with the lowest salary amount per household. Residents of the Tenderloin face a significant rent burden than its near by neighborhoods. Making it difficult for the people to live there to have substantial lives. As we can see in Table 2, 91% of the population in the Tenderloin is renting apartments or alternative housing that they are living in to provide a roof over their head for the time being.
Housing ownership is a major source of generational wealth accumulation as well as a form of security that allows individuals to invest in property. To own a house in the United States, there is a requirement to provide a down payment of 20-30% of the total home net worth in addition to regular monthly payments to pay off the mortgage. This amount of money can take years to save up for many individuals and families who are struggling to make ends daily. As we can see in Table 2, 91% of the population in the Tenderloin is renting apartments or alternative housing that they are living in to provide a roof over their head for the time being. For those who live in poverty, functioning markets are absent, or the failure to use the potential of markets to improve individual lives in the housing sector. We can see in Table 2 only 8.19% of housing units are owner-occupied in the Tenderloin, thus it is unaffordable and nearly impossible for individuals who live in this neighborhood to purchase a home here. Alex Shwartz discusses in Chapter 1 of “Housing Policy in the United States”, we learn that homeowners received tax benefits like mortgage interest deductions of $220 billion in 2012, while only $47.9 billion was spent on direct housing assistance. Through this analysis, we can see the benefits of owning a home and making the payments not only provide security but also show that the U.S. as a nation is allotting significantly less amount of money toward low-income housing.
With housing and renting prices being elevated, the percentage of your income used toward housing is significantly increased, thus there is less disposable income for day-to-day necessities. Renters are burdened with their standard of living as housing costs increased; expenses such as food, clothing, healthcare, and other necessities are cut back. As affordability becomes steeper for the renter, we see a decline in overall life leading to numerous issues such as overcrowding and decreased quality of housing. From the reading Newman’s “Does Housing Matter for Poor Families?” I was able to understand that overcrowding is considered when more than one person is living in a single room, essentially more people living in small spaces. In many areas of San Francisco and communities surrounding, there is a large issue with several people occupying small apartments and rooms. The living environment becomes hazardous and unhealthy as people live in such close quarters; there are higher chances of getting ill, mental health, and distress among the residents. In the Bay Area, the major cause of crowding is due to the significant increase in the cost of living, forcing families to live together in very small spaces. In Map 1 we can see that the Tenderloin faces 66-75% of overcrowding within housing.
Today the Tenderloin is flooded with philanthropy and non-profits that focus on providing housing services from beds and healthy food to community programs for education and development for children within the neighborhood. The Tenderloin Neighborhood Development Corporation is an example of over 5,000 low-income people who have faced various disparities coming together to live in this neighborhood and receive equality and opportunity in housing. This is crucial as they have 43 buildings around the city that provide housing and services. Another prevalent neighborhood organization is The Tenderloin Community Benefit District, as it has been focusing on maintaining the upkeep of the neighborhood, cleaning needles, trash, and waste off the streets. They have also included a program called “Safe Passage” to promote safety within the community hiring people to walk children throughout this neighborhood safely to schools. This focus on safety and education is a step in the right direction for the Tenderloin to overcome its poverty and care for the neighborhood providing for safe housing.
Conclusion
Throughout this housing market analysis, I was able to view the discrepancies in the Tenderloin based on housing supply and demand. The need to focus on affordability, home ownership, and overcrowding is crucial for policymakers and philanthropy to direct their efforts toward the housing sector. I believe the ability to focus resources and structural change will improve the quality, equity, and burden of low-income housing throughout San Francisco. When following the general threshold of housing affordability, I believe we as a society can increase the standard of living in the Tenderloin through accessibility and governmental programs. I believe this is possible as more people can afford the rent as well as enjoy their income on necessities they require to have a fully nourished life. This would not only boost the economy in these impoverished areas but also provide a disposable income for individuals to make investments for the future. As San Francisco continues to become further gentrified, let's not forget to improve the neighborhoods that require more assistance. By lifting the citizens and the Tenderloin as a whole we will see a positive change in housing equality in San Francisco.
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