San Francisco’s Housing Landscape is About to Change FOREVER

San Francisco's on the precipice of its largest rezoning effort in decades. With the looming threat of losing hundreds of millions of dollars in state funding and total control over enforcement of its zoning limitations, San Francisco has to come up with a plan to build tens of thousands of new housing units in a city that has largely resisted new development over the past 50-plus years, except in a small subsector of the city. This is far and away one of the most important and consequential housing policies the city has worked on in decades, and it's not just political maneuvering or theoretical policy. It's a real attempt to address our housing crisis and could impact neighborhoods for thousands of residents for years to come. How our neighborhoods look and home values going forward. This is Austin Klar, your Lurcher real estate agent in San Francisco and Marin County. And in this video, I'm breaking down what San Francisco's so-called family zoning plan actually is, why the city is all of a sudden pushing for such sweeping changes to its zoning regulations, what happens if the plan fails, and what it means for local residents. So whether you're a current resident or prospective buyer, seller, or investor, you've got the information you need to understand why this is one of the most consequential new housing policies we've seen in decades. Let's dive right in and start about 50 years back. The last time San Francisco made such large-scale rezoning changes to its zoning regulations that have in large part led to the crisis we face today. It's not only important backstory, but it illustrates exactly how policies like this can impact the trajectory of our city. In 1978, San Francisco supervisors voted to downzone a substantial portion of the city. What does downzoning mean? Downzoning is effectively lowering the amount of allowable density for building in a particular area. So let's say a particular area once allowed 100-foot-tall buildings and the rules changed to only allow 40-foot-tall buildings. That would be an example of downzoning, of decreasing density, or another alternative, reducing the number of units that are allowed within the same building envelope. It's basically a rule that curtails growth. It lowers the potential growth from a housing density or a unit density perspective. In 1978, that's exactly what San Francisco did for a bulk of the city. A 40-foot building height limit was established for the vast majority of San Francisco. New Setback rules regulating how far a building could be from a public right-of-way were passed. Limitations on the number of units that could be put into new buildings were passed, and guidelines were implemented to foster preservation of historic character of existing neighborhoods. This is exactly why most of the western part and northern parts of San Francisco only see single-family homes or low-rise mixed-use or low-rise multifamily buildings. These rules did not apply to the former industrial side of the city. So that's why the formal industrial side, that eastern part of San Francisco has seen the bulk of our new construction and high-density construction over the past several decades. And zoning changes weren't the only thing that changed at around that time that had a huge impact on our housing stock. Proposition 13 was also passed just a few months after the zoning changes. At a very high level, Prop 13 limited annual property tax growth and limited reassessment to only very limited circumstances. There are arguments on both sides for Prop 13, but by and large, it effectively incentivizes homeowners to hold on to their homes for as long as possible because it keeps the their annual ownership costs down. These stricter zoning rules and the overhauled tax regime, in particular in San Francisco, over time led to a significant shortage of available housing units. As population grew in the city, as buildings took ever longer to develop because of increasingly complicated planning processes and rising construction costs, housing supply became more and more sparse in relation to demand, in relation to the number of buyers and renters looking, and the cost of housing, both for purchase and for rent, therefore rose substantially. As of November of 2025, when I'm filming this video, San Francisco is experiencing the fastest rent growth of any major city in the entire country. In 2024, over 80,000 people applied for just 512 available affordable units. And properties in San Francisco across all property types are experiencing renewed price appreciation as city conditions improve, as the AI boom really regains steam and people come back to the city in droves, putting added pressure on our limited housing inventory. There's no real debate that we have an affordability crisis, not just in California, in San Francisco especially, and it's caused by a lack of adequate supply. So why does that matter in relation to the rezoning effort that San Francisco is working on right now? Every several years, the state of California conducts what are called Regional Housing Needs Allocation Studies. It's basically a process to determine, based on projected growth rates, projected demand rates, projected home price appreciation rates, how much housing do we need in a particular region? The most recent one conducted in 2023 concluded that San Francisco needs about 82,069 new units by 2030. 2031 based on projected needs for the city, assuming population growth metrics, job growth metrics, etc. There's also a buffer of 15% required. So the real number is about 94,300 units the city has to create the capacity for. Under San Francisco's existing zoning rules, it has the capacity to build about 58,000 new units. So well short of that 90-plus thousand, 94-plus thousand new units that it's supposed to create the capacity for. That means based on the most recent regional housing need allocation, the state's housing element, San Francisco has to adopt zoning changes that would enable the creation of an additional 30,000+ new units to plug that gap. And their deadline to come up with that plan is January of 2026. And that's why, especially over the past year with the new mayor, the city has been pushing very aggressively a brand new zoning regimen. And that's what they're calling the Family Zoning Plan. And the consequences for failing to pass that new zoning plan are actually very catastrophic for the city. Before I get into why and what the new zoning rules mean, if you do me a huge favor, if you like videos about San San Francisco real estate, lifestyle, history, current events, new developments, subscribe to my channel because I make videos about that stuff every single week. And if you're thinking about buying a place in the city and are wondering what all the changes we're seeing mean for our local real estate market, reach out to me. I was a lawyer at one of the biggest law firms in the world before getting into real estate, and I've helped numerous people relocate here from all over the country. I'd be happy to be a resource for you. I'll put my contact info in the description below. Reach out anytime. Now back to what happens if San Francisco does not pass adequate new zoning laws and what the current proposals are that are on the table. Okay, so the According to the Regional Housing Needs Allocation, California's housing element, the RHNA study says you, San Francisco, need to plan or create the capacity for, through your zoning changes, at least another 30-plus thousand new units. What happens if they don't do it? There's a lot that actually could happen. First, the city could potentially lose hundreds of millions of dollars in state funding that would go to funding affordable housing programs, public transit, infrastructure upgrades, water, sewer, roads. A ton of different projects could be put in jeopardy by losing that state funding. Second, it would lead to something called the builder's remedy. A builder's remedy is kind of the colloquial term for when the city loses the power to enforce their existing zoning rules, and they would effectively be forced to approve any project that meets certain basic standards and minimum affordability requirements, no matter the project height. So even if existing zoning rules say, hey, in this particular area, you're not allowed to build higher than 50 feet, as long as a proposal meets certain basic standards, a developer could potentially build a 500-foot project. So it can really change the kind of character or what you would expect to be built in a particular area. So that mega skyscraper out by Ocean Beach that everybody kind of wrote off as a joke, that could actually happen. That would be great for getting new housing built, but it would be bad for any attempt by San Francisco to preserve what makes San Francisco so great— its history and charm. So the consequences to San Francisco of failing to pass a compliant zoning plan could be very impactful. And that's why you've seen such a huge push, especially over the past year with the new mayor, for a new zoning plan. The Family Zoning Plan is what they're calling it. So what does the Family Zoning Plan actually do. There are 4 overarching elements to the proposal. First, it increases density in a lot of parts of the city that were previously limited to single-family zoning. For decades, like I talked about earlier, massive parts of the West and North Side of San Francisco, like the Sunset, the Richmond, West Portal, Marina, etc., those were all zoned RH-1, meaning one home per lot. Under the proposed rezoning, many of these streets would become RH-2 or RH-3, allowing more units on the same parcel. Second thing it does, it increases height limits on key key transit corridors. Heights on main transit corridors could go from 40 feet to 65 feet, or even up to 80 feet, or even higher, depending on the location. Think places like Mission Street, Geary Street, California Street, Judah Street— all these major transit thoroughfares and commercial corridors. The third thing it does is it loosens density restrictions for lot splits, building ADUs, and like cottages in your backyard. This is a big one that actually could matter to homeowners. The rezoning effectively makes it easier, and in some cases automatic, for homeowners to add units to their property through internal conversions and garage buildouts and accessory structures. So whether it actually makes fiscal sense for a particular owner to do that is really a circumstance-specific question. And in many circumstances, it won't make sense to do that. But the point of the plan is to at least allow for the possibility. And the fourth thing that the plan does is increase the capacity for mixed-use housing, especially on underutilized commercial land. Think places like parking lots, old, you know, car dealerships, or single-level retail spaces, those could be expanded meaningfully to larger mixed-use spaces. Now, when people hear this, they panic a little bit and they start to think that they're going to see construction cranes and trucks and tractors all along their block, and maybe their neighbors tearing down their homes and building these much larger, you know, 6-story, 7-story, or even bigger buildings right next door. That's not really what this rezoning does. And as a practical matter, even if it did do that, which it doesn't, it's very unlikely to result in that sort of change. Very quickly. First reason for that is the vast majority of parcels in the city either would remain at a 40-foot height limit or would be increased just to 65 feet. So it's not as if every single part of the city is going to have the capacity for these massive new buildings. You can see that in the gray zones and the yellow zones on the map here, which depict the current proposal that's on the table. And heights above 140 feet are only allowed on certain streets that currently allow for high-rise development or have large parcel at key intersections near major transit routes and stations, and you can see that with the pink and blue areas on the map. They're also increasing the number of units that could be built within those allowable envelopes. So a building that might currently only be allowed to house 3 units could be converted into a 6-unit building, but the building itself is not getting any larger. So as you can see on the map here, you're obviously not going to get mega development springing up on every single block in every single neighborhood of the city as a result of these changes that are on the table right now. Okay, so I'm not getting like mega high rises on every single block, but I might get more units next to me. Does that impact home values? There could be a potential impact on home values, especially the closer you get to more dense housing. If a great number of new units come to the market and supply increases sharply in a manner that outstrips existing demand, you could see home prices fall. But I think more realistically what's gonna happen is just a slowdown in home price appreciation. Remember, the purpose of these changes is to account for the increase in demand that we expect, or at least the RHNA study says that we should expect in the area. So it's to keep up with expected demand, not to exceed demand. And realistically, builders aren't going to build substantially outside of their expected demand curves. They're not going to intentionally build so much that it ends up hurting their bottom line in the future when the units come for sale or become available for rent. They're only going to build up to the level that they believe demand will support. They're not charity organizations, they're not nonprofit organizations, they are for-profit entities. So they're going to act in their best interest and only build what they can, what their demand is expected to support. Also, as a practical matter, for, you know, just regular folks who just own their homes, it's not necessarily financially feasible to convert a single-family home into a 2-unit or a 3-unit building. So areas like the Marina and Sunset and Richmond, all these areas that I keep talking about where RH-1 zoning is potentially being changed to RH-2 or even RH-3, doesn't necessarily mean you're all of a sudden gonna get multifamily spaces on every single parcel that was previously occupied by buy single-family homes. And even if it were financially feasible to convert a single-family home into a 2-unit or 3-unit or a larger building, most owners of these small, you know, single-family homes or multifamily properties don't want to create bigger properties. A lot of people that live in single-family homes like living in single-family homes. They don't want to convert to multifamily. They don't want to live next to their tenants. They don't want to be landlords in San Francisco. There are a number of reasons why somebody who lives in a smaller, you know, 1 or 2-unit building doesn't want to build a larger building. So I don't think it's realistic that you're going to see all of this developments, you know, spring up on every single block all across the city as a result of these zoning changes. So for those reasons, I don't think we're really going to see a rapid increase in supply that's going to outpace any growth in demand such that we're going to see home prices fall. I think more realistically, we're going to get gradual new supply on the market that will, you know, to some extent alleviate home price growth such that hopefully wage growth can keep up with home price appreciation. So if you own in an area that is traditionally residential, low density, and you're worried about new housing supply inundating the neighborhood and crashing home values, I really don't think that's going to happen, especially because the most substantial new capacity for housing will be along just those main transit lines, not deeper into the neighborhoods. The second reason I think that a lot of the fear surrounding potentially changing character of neighborhoods, changing what makes San Francisco so great, its history and its charm— Why I think that's not realistic is because there are a lot of safeguards in place within the family zoning plan to balance that new housing supply need with preservation. Listed historic resources are still subject to enhanced review processes. Design and preservation standards will still be recognized and protected, and there are actually incentives in place for adaptive reuse of historic resources. So you definitely shouldn't expect complete destruction of our landmark spaces or historic areas like Seacliff and St. Francis Wood if this passes. Third reason we're not going to get some massive influx of new housing as a result of these zoning changes is because of the realities of the economic market that we're in right now. Construction costs are high and continuing to rise. Interest rates are, while lower than they were about a year ago, are still very high. The cost of financing is still incredibly high. The timeline for building is long because we have very intense review processes, environmental review processes, and studies that need to be done, preservation hearings, commission hearings, et cetera. It takes a long time to get new units even to a shovel-ready phase before we even start building. The family zoning plan also includes numerous tenant protections, and small business protections that'll make it difficult to just evict everybody and build up. All of those things impact the financial feasibility of the project. It's costs over time. So realistically, I think any changes we're going to see as a result of any new zoning plan are going to be very gradual and not immediate. I really don't think our neighborhoods are going to see massive changes overnight, and I don't think it's realistic that what makes San Francisco so great— its vintage charm, its architectural pedigree— are going to fall by the wayside. Last reason I think that is because there's actually disagreement about how much new housing capacity the family zoning plan creates. The San Francisco Controller's Office released an analysis of the plan in October of 2025 that indicated rezoning would produce capacity actually for just about 14,646 units over the next 20 years instead of the required 36,000 units that are required to be built by 2031. And there are lawsuits being threatened about this, saying that if this is the plan that San Francisco passes, it's not actually complying with its mandate under that RHNA study, and it could lead to those consequences that we talked about, that loss in funding and the builders' revenue. So there's still a lot of back and forth happening about what the plan is, what changes need to be made. So the iteration that's currently proposed might be different than the one that ultimately passes. Anyone's guess what ultimately gets passed, but bottom line, we need new housing, and the city believes that the plan that's on the table is the best bet to get that and provide affordable housing across all income levels. At the end of the day, the city can only do so much to incentivize building. They can make the processes easier. They can put financial incentives in place from a tax perspective. But if it's not financially feasible for a builder to build, nothing's getting built. So creating higher density capacity and streamlining processes, those are all great steps to take. They are necessary, but not necessarily sufficient. We need market conditions to change as well. If you want to learn more about what's going on in San Francisco's real estate market, about new developments, or about San Francisco's history, lifestyle, different neighborhoods, or current events, subscribe to my channel because I make videos about that stuff every single week. And if you're thinking of relocating, thinking about buying a place in the city or investing in the city and want to better understand how the changes we're seeing are impacting our local real estate market, reach out to me. I've lived in the city for over 13 years and I've helped numerous people relocate here from all over the country. Be happy to be a resource for you. My contact info is in the description below. Reach out anytime. And before you go, if you want to learn more about some of the large-scale developments that we're seeing in the city on Treasure Island, Yerba Buena Island, Stonestown, and some other exciting developments across the city, I've got a bunch of videos on that stuff. I'll link several of them in the description below. Go check 'em out. I hope you enjoyed the video and I'll see you in the next one.