It is possible to build houses cheaply in the Bay Area

THE BUILDING at 833 Bryant street in San Francisco’s trendy SoMa neighbourhood will be unusual. To start with, all the inhabitants of its 146 units will previously have been homeless. Its constituent parts will have been prefabricated, constructed miles away and fitted together on-site like puzzle pieces. Most unusually, the project will have been cheap to build, at least by Bay Area standards. A report by the Terner Centre at University of California, Berkeley found that, once completed in July, the project will cost 25% less per unit than comparable ones.

That is an achievement in California, where per-unit construction costs for supposedly affordable housing have ballooned since 2000; they are now the highest in the country. Subsidies for below-market-rate housing come with strings attached. Affordable developments that take public funds may be forced to install solar panels, contract with small businesses, or enlarge balcony spaces: well-intentioned demands that nonetheless drive up costs. Builders need to work with a patchwork of local and state agencies that sometimes impose unclear or inconsistent requirements.

Mercy Housing, the builder of 833 Bryant, was able to avoid these headaches. The project’s funders, Tipping Point Community and the San Francisco Housing Accelerator Fund, prioritised low costs and a short...