Housing affordability is a growing crisis for urban areas with constrained housing markets. In this paper, I examine the effects of income inequality and other demographic characteristics on housing prices in San Francisco. I find that income is not a determinant of housing prices, but that other housing and demographic characteristics do impact housing prices. That these findings differ from the existing literature is likely due to limitations of my study, but the implications of my study are nonetheless useful in the context of housing supply and pricing. As income inequality in San Francisco continues to grow, its impact on rising housing prices is relevant for policymakers seeking to address the city’s housing affordability crisis.

Housing supply and affordability plays a large role in creating differences in housing markets and labor markets across urban areas. Housing affordability within an urban area has implications for local labor markets and the local economy. A firm in each region, for instance, cannot expand without affordably priced homes to house new workers. A robust literature in economics examines the relationship between housing affordability and income inequality, which has become a pressing issue for many of the country’s most popular metropolitan areas. This issue is especially relevant in the case of housing in San Francisco, which has been making national headlines in recent years for its rising rent and housing prices. San Francisco’s growing population and demand for housing have not been met by rising supply, and, at the same time, the city has become increasingly unequal in terms of income, further exacerbating housing prices.