Whoops. It’s July 1st, not April 1st. I am just wishfully rewriting the Daily Journal’s Monday headline that read “New housing sees decline throughout the Peninsula“. In the online edition, the angst gets turned up a notch with the headline “New housing on the Peninsula has plummeted“. Readers are treated to some data about completed unit numbers declining in San Mateo, Redwood City and South San Francisco. Same in Foster City and EPA. No mention of B’game probably because we keep building, building, building. Some pithy quotes follow:
“No one wants to do ground-up multifamily right now,” said Stephen Couig, founder of Center Street Lending, which provides financing to projects throughout the country, including the Bay Area. “It’s pure economics. The cost to build has completely outrun what it will bear in rent and what it will bear in sales,” Mounir Kardosh, owner and founder of San Mateo-based Nazareth Enterprises, said.
Between May 2025 to May 2026, countywide rents increased by 6% to $3,368 across all unit types, according to data from Zumper and Apartment List. That’s still not enough growth for lenders to underwrite loans for multiunit housing due to stubbornly high inflation, keeping interest rates and 10-year treasury yields elevated.
A recent report from the San Francisco Controllers Office analyzed costs for different development scenarios. The findings showed that none of them would be financially feasible if they adhered to the city’s inclusionary zoning policies — rules requiring market-rate projects to have a certain amount of affordable units — which are also in place throughout the Peninsula. Each model was “significantly worse than the same models in the 2023 study,” the April 2026 report said.
Well, “worse” is a value judgement, but more immediately perhaps this respite will lead to the realization that the premise is wrong and getting “wronger” each year. Trying to jam “stack and pack” housing as in-fill on super desirable, pricy land with the “inclusionary” handcuffs and insufficient parking on developers won’t fly. Oddly enough, the same DJ front page has a Calmatters piece about California Forever–the billionaire-funded shiny new city targeted for Suisun City. Going back to the Nazareth guy:
“From the bank’s perspective, why would they lend to me?” Kardosh said. “They could lend to someone in Waco, Texas, instead. They’re not chasing for projects.”
Or at least Suisun City. How about the Sacramento crowd green lights California Forever and retires the fake RHNA numbers that are at the root of the disconnect between economic reality, neighborhood security and planners trying to maintain some sense of a city or town’s character? That would be a fair deal.
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