Why California is so expensive: It’s not just the weather, it’s the regulation

That's the rub, after you've constrained supply and inflated prices, there's a vested interest of those who've seen their values increase and those who bought at high values to not let them drop.

This is especially important for those that bought at a high value, as if the worth of their house drops, then they can find themselves in a position where they owe much more than the house is worth. We've seen this situation before, not too long ago. It's not pretty.

AFAICT, the trick is to manage growth effectively in an area through restrictions and incentives so that you try to stabilize house prices as much as possible (like the economy), such as tracking inflation and/or some other indicators. If you enact regulations that suppress new housing when demographics call for more of it, you need to offset that with incentives.

The worst thing that can happen is that a group will wrest disproportionate control over housing policy for an extended period, and then the policies they enact through self interest spiral out of control and make the situation worse for everyone.

The thing about California is that people who live in the nicer parts of California are not trying to get anywhere. They are not trying to get richer, they are not trying to work hard to get somewhere else, they've made it. They don't need opportunity that comes with growth. They like their lifestyle, their open spaces and their prop 13 and they're going to keep it that way. Right now, there are huge amounts of very valuable land that are owned by open space trusts that will never be developed even though they are collectively worth billions. The point I'm trying to make is that, especially for people who live well in Northern and Southern California, there are some things that are more important than making another hundred million dollars and limiting development is one of them.

SF housing crisis is entirely self-created. If it wasn't for zoning limitations they'd be one of the top 5 fastest growing city in North America no doubt.

[1] http://www.cbc.ca/news/business/130-highrise-building-projec...

Towers might be helpful in some cases, but are absolutely not needed. Indeed, research into the Bay Area suggests that the entire area functions as a unit. Because of the distribution of the population this means that the long hindered expansion of suburban downtowns is more relevant and critical to regional housing demand than what is going on in urban cores. Suburban cores do not need big towers, just the usual expansion. Large developments brought about by economic forces tend to be boxy and incrementally larger than existing buildings. Tall towers get built to house egos, not families or business operations.

What they DO need is to replace a lot of the single resident housing units with multiple-dwelling-units. Nice condos probably wouldn't be too bad. Better would be high-density mixed commercial / residential areas ringed by parks and with good transit connections.

Or lots and lots of 3-6 story apartment buildings. IIRC, New York has achieved its very high population density that way.

People don't understand basic economics and like blaming everyone from transplants to foreigners to "greedy" developers to the rich to the poor to outsider corporations. The power of denial and ignorance is real. It leads people like me to write pieces like this: http://jakeseliger.com/2015/09/24/do-millennials-have-a-futu..., but education is slow and always a step behind instinct.

People who already own property are also incentivized to prevent more units from being developed.

IMO, the nuance here is to allow large apartment buildings in the cities, while enforcing stricter building requirements in the family oriented suburbs.

Develop all that open space on the peninsula, the east bay hills and the Marin headlands. Not only will it increase housing supply, but by removing all that space used for recreation, the bay area will become a less desirable place to live, and demand will also go down. According to basic economics, it's a win-win!

I live in SF now. I consider this a 'large metro area'.

Last year I spent a week in Vancouver and my mind was blown. There were condo towers _everywhere_ downtown. Meanwhile, the city population of Vancouver is SMALLER than Winnipeg, and the metro area hosts half the population of SF over a 5x larger land area (according to wikipedia). Yet there's condo towers all over the place there, and relatively few here. WTF.

That's a kind of result that you only get with 40+ years of anti-growth politics

Sometimes the cure proposed is as bad as or worse than the disease. We need to be sure we pay attention to the effects of our decisions, and reverse, augment or change them as needed.

Switzerland could make everything less expensive if they imported cheap labor and cut the minimum wage. But they elect not to.

I guarantee that if you made California cheaper you'd attract more people and then it'd just become more expensive again. There's not enough space there to accommodate all the people in the country that would live there if they could afford it.

Are you just reflexively defending the concept of regulation generally, or do you have a specific defense for the regulations maligned?

To my ears, the only "intellectual twaddle" is the shallow implication that the author hasn't considered that sometimes regulations are there for a reason. The author surveys relevant research, highlights some key effects, and recommends specific reforms. You quote "the commons" as if the author didn't also have Hardin as required reading in undergraduate economics.

You're half-right, insofar as you say that regulation doesn't come out of thin air, but you're neglecting the role of philosophical ideas in history.

Regulation comes as a result of certain philosophical perspectives gaining sway. Namely, there was an era before German philosophy swept into America and gave rise to the Progressive movement (which, by all accounts, fought tirelessly for regulation.)

I don't have enough time to go into how Kant, Hegel, Marx and others influenced American intellectuals, and influenced/led to the utilitarians and pragmatists, and how this led to the Progressive movement, but it did, and this is not even a controversial point.

This is why I think that statewide factors are the dominant force here.

Check out the Vienna system:

http://www.governing.com/topics/economic-dev/gov-affordable-...

We'd need a radical cultural change to allow that kind of thing here, but considering how things are going with prices, this is a good time for a real change.

Edit: If you disagree it's quite simple to simple mentioning the relevant market were this has happened instead of downvoting. This emotionalism of HN is really getting annoying these days.

Prices almost never go down organically because it actually gets harder to build as things gets more developed, stake holders would have to take real losses to the detriment of the local economy, housing in these areas are almost essentially always a sellers market etc.

The "just build more" meme on HN is BS. In essentially no popular cities where this have been done have prices gone down or necessarily stabilized including the common examples of NY, HK or Paris.

With regard to railroads, there was no minimum wage to consider, no worker safety to consider, no environmental impact to consider and no zoning to consider. The only challenges were logistics, money and buying enough land in a straight line. Sure, there are costs to that approach, but the railroad builders don't have to bear them

We aren't living in the 1880s anymore. For one, we value life, health, and safety much more than they did back then, with things like OSHA, much more stringent labor laws (overtime, child labor), more types of insurance required for employers including unemployment and various disability coverage, environmental laws like CEQA/Clean Air Act, and tons of other stuff.

But I think the biggest change is ultimately cultural. We just don't value growth today like we did back then. We want safe workplaces, and a clean environment.

I also think there's a much greater tolerance for government bureaucracy today then there was in the 1880s, including all kinds of permits that take weeks to issue, multiple agencies overseeing everything at the state, local, and federal level, and just in general a huge expansion in the size of government. If you told someone from the 1880s that US government spending would rise to some 40% of GDP over 120 years, they'd think you were totally insane.

I go back and forth on whether it's good or bad. It's a complicated question. It takes forever to get anything done, and yet, young Chinese nationals are coming to the US because their parents have utterly ruined their environment, they don't trust the safety of their food supply, and factories with hundreds of people in them burn down, killing everyone inside. I used to think the US and Europe were radically different places, but I'm coming to see they're more alike vs. different. It's really the US and China that are worlds apart.

Anecdotally, a lot of people I know are leaving SF. I imagine the next 20-30 years will look like any other industry, where a clear center emerged, but then it diffused outward into the broader economy as more and more industries assimilated the new tech.

Now, you could make the argument that SF's core competence isn't so much a technology as the process of innovation itself, but I'm not sure that's the argument you're making. And I don't see any reason why a cheaper place with a lot of smart people and money (to reference pg) couldn't be the next SV, like say, Pittsburgh, or Seattle. Though I guess the social network, which is really what holds this entire place together, does have some staying power...maybe finance is the best example to prove your point?

Because for some of us, social responsibilities matter too, not just money?

*edit I'm being a bit hyperbolic by suggesting that Google would move anytime soon outside of extraordinary circumstances. My point is that is prices rise too high as a result of supply that is constricted by regulation, then demand will no longer exist at some price point. And due to the nature of real estate as a vehicle for retirement savings, when the price adjusts down, people are likely to try to sell off fast to mitigate risk. This in turn can cause rapidly plummeting prices, which would be bad for almost everyone.

With reduced regulation, there would be much more housing supply in SF. E.g. the city's footprint is slightly larger than Paris proper, which has 2.5x the population thanks to a consistent building height of ~6 floors. Paris is hardly a free-market bastion, or a place known for low quality of life, but SF out-regulates Paris with its tyranny of the vocal minority and regulation by bodies driven by perverse incentives.

Apart from directly adding supply, building up increases tax revenues and local population which enables / justifies transit expansion, which then increases the practically accessible pool of housing for anyone desiring to live in the city.

So, in trying to understand your point: do you not believe that housing costs would be lower if there was 3x the supply of housing, ala Paris, and a faster, more comprehensive farther-reaching transit system?