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Comment by random023987 | Hacker News Reader

> It's truly Orwellian that regulations that make housing less affordable get called "affordable housing".

To be fair, developers sell units at what the market will bear, rather than on a "cost-plus" basis. Raising developer costs doesn't impact the final sale price.

Now one could argue that reducing developer profits means that fewer developers will try to build... but it's properly zoned land, not developers that is in short supply.

Or maybe you mean that the requirement that some of the housing be "affordable", means only projects that the remainder of the units are "unaffordable" will be built... but that's the case anyway; given the scarcity of land it doesn't make sense to build affordable housing unless forced.

Not that I'm in favor of housing subsidies. It turns a few well-connected or lucky people into lottery winners, and doesn't reduce the overall cost of housing.

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>To be fair, developers sell units at what the market will bear, rather than on a "cost-plus" basis. Raising developer costs doesn't impact the final sale price.

Raising developer costs kill off unprofitable developments until the marginal unit created has a cost equal to what the market will bear. It depends on the relative elasticity of supply and demand - we'll hit an equilibrium of fewer units at a higher price, with both less developer profits and less consumer surplus. Whether the loss is mostly borne by purchasers or sellers depends on details of the market.

>but it's properly zoned land, not developers that is in short supply.

Developers in the Bay Area spend lots of money to figure out whether or not land is properly zoned, due to the community review system and other things that'd be fixed with a by-right zoning policy. Things aren't built to the maximum of the zones - they're built to what's affordable by developers attempting to get permission to build.

>given the scarcity of land it doesn't make sense to build affordable housing unless forced

It doesn't matter whether housing is affordable at market rates because we build things that are affordable, or through building so much luxury houses that there's so little demand for existing buildings that they now become affordable.

If the lot next door added a three-bedroom luxury apartment that cost less than your studio, you'd move out of your current place and into that in a heartbeat. Then your studio now goes on the market and gets whatever it can - likely, a much more affordable price.

Adding dense housing makes housing more affordable. It's only obvious if it's cheap and dense - if it's expensive, the affordable units are those that the new residents move out of.

> we'll hit an equilibrium of fewer units at a higher price, with both less developer profits and less consumer surplus.

No we won't, because the limit of zoning and land doesn't allow us to get anywhere near that equilibrium. Your statement would only be correct in a world with infinite land in the Bay Area. But the equilibrium for "fewer" units in San Francisco might be (for example) 50,000 new housing units per year, but you're lucky to get permits and land for couple thousand.

> Things aren't built to the maximum of the zones - they're built to what's affordable by developers attempting to get permission to build.

This is missing the point. 100% of the land that can pass the community review process is profitable to build on. Even with "affordable housing" requirements. Even with reduced developer profits. If you can build on it, you're gonna make money. Therefore, the limiting factor is land; the effect of affordable housing requirements is to lower the windfall profits of any developer lucky enough to get by community review.

> It doesn't matter whether housing is affordable at market rates because we build things that are affordable, or through building so much luxury houses that there's so little demand for existing buildings that they now become affordable.

Right, everyone who understands math understands this. The issue is that if you don't have land you can build on, you can't build. And if you do have land you can build on, you're gonna make money. Affordable housing requirements do not decrease the amount of net construction, they just move windfall profits from the developer to a few lucky random people.

Zoning is a self-inflicted problem. Land? Hong Kong hosts a population of 7.3 million in an area 427 square miles. The Bay Area spreads a population of 7.7 million over 6,966 square miles. The Bay Area has room for a fifteen-fold increase in population. All it has to do is remove the zoning straitjacket.

> fifteen-fold increase in population

That's a fifteen fold increase in garbage. Fifteen fold increase in the number of toilets that flush shit. Probably close to fifteen fold increase in cars; people can't live without those even if the density goes up.

I basically support density if the population remains constant. If we take a sprawled city of two million and make those people cluster together in a region that is 10% of the original area, that is fantastic! We can use the 90% of the area for parks and farmland. Everyone living closer together creates various efficiencies. Cheaper commuting, distribution of goods, HVAC.

So what? Beef up infrastructure by fifteen times as well. What's the problem? Are we running out of concrete? Have we lost the technology needed to build sewage treatment plants? Has actually building stuff become offensive?

I also want increased density. In the Bay Area, zoning regulations keep density artificially low and prices obscenely high. Stop the self-inflicted pain.

>100% of the land that can pass the community review process is profitable to build on.

The thing to look at isn't the after-the-fact windfall profits of successfully getting through community review, but the forward-looking expected profits of trying to get through community review. You don't know ahead of time what will work - the profits from the ones that do have to fund the losses from trying and failing to get through community review, else the whole thing will consistently lose you money.

Here's an advance prediction: the average profit from a successful project that gets through community review times the probability of success is roughly equivalent to the average loss from failing times the probability of failure.

> The thing to look at isn't the after-the-fact windfall profits of successfully getting through community review, but the forward-looking expected profits of trying to get through community review.

I'll concede that lower profits from developer-subsidized housing my drive fewer attempted community reviews, and I'll also concede that it's possible that more attempted community reviews could result in more housing being built.

However, I still believe that the loss of profit from subsidized housing is not the significant factor holding back new construction; at least not when 3 bedrooms goes for 7 figures. Land costs and political friction currently dominate the equation; if you could easily buy a half acre and toss up 100 condos on it, the sale prices of those new condos would drop, and construction profits would become a pressing concern. (of course at that point housing would be affordable, so it's a moot point)

Yeah, there's many factors. It's not like removing subsidized housing would magically fix everything. It would make things better at the margin overall, more than the wealth transfer from developers to subsidized housing lottery winners.

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