The Real Estate Crisis

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San Francisco has the highest housing prices of any city in the United States. The median price for a two bedroom apartment is approximately $4500 per month. This is causing major problems for the city, because many people are being forced out of homes they cannot afford anymore, although some apartments are rent controlled.  As a result, there is a shortage of low/middle income workers in the city, which could lead to inflation, as companies pay workers more and more to stay. Many workers are forced to make long commutes every day to work since they cannot afford to live in the city, which in itself is expensive and causes transportation problems for the city. This is not only a problem in San Francisco, but also in other cities worldwide.

Your team was hired by the city of San Francisco to create a model that estimates future housing prices and their effects on the overall economy in the city, and to compare several proposed solutions to the crisis. 

  1. Predicting future prices: Create a model that accurately predicts the housing prices in San Francisco, based on factors such as, but not limited to: population, quantity of housing, transportation, etc.
    1. Estimate the effects of the housing prices in your model on price level, the labor market, traffic, and the financial health of citizens.
  2. Evaluation Options: Use your models to evaluate the benefits and costs of the following options, and determine which is the best option for the city:
    1. Incentivize the building of more housing in and around the city
    2. Create a better transportation system so that people can live farther away and commute to work
    3. Control housing prices in the city, so that rent cannot be raised on tenants who already live in their apartments
  3. Develop a Solution: Use your model to develop a solution to the housing problem, and show why it will work.  You can use one of the options above, a combination of the options, or create a new solution.

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Problem author: Forrest Flesher, Ann Arbor Skyline High School​