California's housing bill SB 50 has died in the state Senate | Hacker News Reader

California's housing bill SB 50 has died in the state Senate

usatoday.com

289 pointsbaron816439 comments

California has a more principled approach to housing capacity planning called RHNA, in which the state sets a zoning budget (like that proposed by David Schleicher https://digitalcommons.law.yale.edu/fss_papers/4955/) and then delegates to local governments the responsibility to zone to allow enough houses to meet that budget. Unfortunately, the RHNA has numerous flaws including vastly underestimating the “need,” lax enforcement, and having very long cycles. Scott Wiener has previously addressed the flaws somewhat (SB 35 (2017) and SB 828 (2018)), but there is still a lot that must be done to fix the RHNA; see this good overview for more information and potential administrative improvements (https://law.ucdavis.edu/centers/environmental/files/Elmendor...)

The appeal of Wiener’s SB 50 was that it would have quickly increased the capacity of housing using fairly good heuristics to improve access to opportunity (already residential, near transit stops or jobs, not high fire risk). It’s unfortunate that the state senate doesn’t seem to want to treat the housing shortage with the urgency that it deserves.

Principled is a way of making it sound less terrible than 'restrained'. California is a perfect example of what happens when you let environmentalists handle housing policy, the poor suffer because environmentalism is classism in disguise in these social contexts.

By “principled,” I mean that the RHNA sends the signal from the state government to the local governments of the state interest (regional quantity of housing to promote housing affordability and availability), while preserving local control over legitimate local concerns, which is what the opposition to SB 50 wanted. It makes sense theoretically; it just doesn’t work in practice due to the lowballed numbers and long time frames.

>California is a perfect example of what happens when you let environmentalists handle housing policy, the poor suffer because environmentalism is classism in disguise in these social contexts.

Most of the environmentalists that I know are very much in favor of increasing housing density and reducing commute time in ICE vehicles. Current housing policy does neither of these things.

Most of the environmentalists that I know are very much in favor of increasing housing density as long as it isn't in their neighborhood.

I don't think that's unique to environmentalists, turns out a big subset of everyone is selfish like that.

Selfish is the wrong word I think, people are myopic about density and assume its inevitably a negative. A number of cities have shown that's not the case.

It's me. Turn my neighborhood into Shibuya. That'd be amazing.

The fact that cultured Americans love Paris without taking any of the lessons of Paris (insanely dense city) never ceases to amuse me in the Bay Area.

Paris is shaped like a snail and concentric circles of density and affluence with the inner most circle being most affluent.

Paris also has a stellar and reliable public transport system and is very walkable. Bay Area wants the density (and property taxes inflow) but don’t want to invest in infrastructure and public transport.

> Bay Area wants the density (and property taxes inflow)

They already have sufficient density and property prices to actually invest in infrastructure. The problem has always been Prop 13 and the artificial limits placed on taxes that would otherwise fund infrastructure locally.

It’s not artificial limits. Including special taxes, it averages out to 1.25. It’s on par with other places. What happened was that housing and economy skyrocketed within a very short period of time. Foreigners are allowed to invest in the housing market for speculative purposes. The extra tax income is used to fund public schools. More immigration and younger people having kids. And overall death rate slowing down. And that means publicl employees pension funds. Looking up unfunded pension liabilities is a good idea.

Also..why should everyone feel like owning a home is a right? You can always rent. In fact, it’s a better economic decision because renters take advantage of best school districts within dealing with the hassle of home ownership. People buy property as an investment that is like an speculative asset these days. Homes should be a dwelling. There will always be those who have appreciating assets and those who will inherit. Punitively punishing them with taxes is just irresponsible and will create more instability.

At the end of the day, most of this is noise. CA is better than most places in the USA..America is better than most places in the world. The govt needs to stop manufacturing dissent and focus on what they need to do and aren’t doing..public transportation would alleviate housing issues. Universal healthcare will help people live their lives and remove the pressure of working for insurance.

How many people in their 50s and 60s would rather not work and just retire but continue because they need to pay for insurance. If they are going to work in the Bay Area, why not live in a home they had bought decades ago?

But it doesn’t matter..with automation and AI, jobs are going to dwindle anyways. It’s best not to create Uber dense cities as they will not be needed when people experience unemployment. We should look towards some kind of universal basic necessities/services and health care rather than building more and imagining that jobs will last forever. That’s just not going to happen. Period.

America is better than most places in the world.

That’s very subjective. For example America ranks 143 out of 230 countries by murder rate. Economically, it’s better than average, but as a place to live it’s got serious issues.

> Also..why should everyone feel like owning a home is a right? You can always rent.

Or, if you want to buy, buy a condo!

That's largely true, but many parts of Paris itself are relatively working class (the 13th district, the 19th district) and still very dense.

Similarly while the outskirts of Paris don't have a subway system (they have the RER, akin to BART) they are still very dense.

Walkability comes from density almost inevitably because it's financially doable to have more stores/activities/restaurants in a smaller space while still getting customers. This makes walking around the city interesting.

I think the issues in the Bay Area cities I know relatively well (SF and SJ) comes down to political will to zone neighborhoods properly.

There is also some politically correct diversity quotas. In the bay areas, they think the local school teacher as well as Starbucks barista should be able to live in the same neighborhood as a FAANG millionaire. Naturally, this creates NIMBYs. It’s human nature.

Yes, it may be selfish, but for environmentalists it is selfish and hypocritical. I'm specifically looking at the wealthy, anti-growth, green community on the SF Peninsula.

You should get to know the other group of environmentalists who aren't wealthy, are pro-density, and are less likely to live in the peninsula (although I'm sure they exist there too). There are a lot more of them, so it shouldn't be hard!

Why? That has nothing to do with criticizing the home owning hypocrites on the peninsula.

Because by definition, they hardly represent the majority of pro-density advocates. If the GP has common cause with YIMBY urbanist environmentalists, then by numbers they are in good company.

The anti local density environmental crowd might represent more dollars, though. That's perhaps the issue.

I suspect, however that the divide is more generational. For the older generation, environmentalism was far more about preserving local wildlands and the wildlife in your backyard. The environmental problems that face the younger generation are far larger in scope and far more deeply intertwined with questions about how we power society.

There are plenty of hypocrites on both sides of the isle. Lots of people who claim to be against regulation... unless it's on their block. People who are environmentalists... unless it means there will be an apartment complex put up next door blocking their view. People who are pro-growth and pro-business... unless it's in their neighborhood. People who are for making housing more affordable, etc etc etc.

So-called environmentalists don't have a monopoly on hypocrisy, it's pretty much universal.

Yet some people vote for representatives who approve measures like SB50, and others vote for representatives who reject them. That is the dividing line that matters. How they vote, and invest time and money to influence other people’s vote, is what determines who is a hypocrite.

Preserving nice low density areas is not selfish. Why does everyone need to be entitled to live anywhere they want?

Is everybody conversely entitled to live in low density areas?

I don't see anyone from the suburbs demanding to demolish Manhattan and turn it into farm land. Likewise I wouldn't demand to have housing built for me in a specific town instead of living elsewhere.

Maybe because that's where the best jobs are. Maybe because that's where they're from and it's not their fault they're getting priced out (gentrification). Maybe because they just really like the place. In any case, you don't get to be a gatekeeper. Cities are public.

If the OP doesn’t get to be a gatekeeper, why do you get to be a change agent?

Population growth is the change agent.

But doesn't rezoning land to higher density increase it's value?

Which is why the system need to be reformed on a statewide level, not by making a special case of every project and every neighborhood.

I think he may be getting at urban sprawl being fought against in the bay area. Something along these lines perhaps, but I'm not sure.

https://www.mercurynews.com/2019/11/06/in-fight-against-urba...

CEQA requirements are exempt from affordable housing developments. And developing Coyote Valley has never been about affordable housing. Essentially all of the proposals to develop Coyote Valley have catered to high-income home owners and renters. Even the mayor said in that article that preserving Coyote Valley contributes to the city's affordable housing goals.

It all helps. Relieve the shortage in high-income housing, and maybe they'll stop bidding up the prices for (formerly) lower-income housing because they had to live somewhere.

While I don't doubt that is the case, I do think it's offset by the high-income housing people then buying a second or third property as investment (gotta be a landlord, or you just haven't made it, I guess). I wonder if there is real data on this?

This is exactly the problem! People aren't happy unless the housing being built is low income housing. Building materials aren't made out of class concious magic, a premium apartment might be higher quality but the same kinds of contractors can often be used. We can't spite the rich here, we need a solution that leverages the market. Build so much housing for the wealthy that the demand will be insufficient to sustain the supply and then let the builders move on to the middle before finally the lower class housing types. People want to see homeless and poor people being provided for, I get it. But people also want efficient spending and that means supplying the top first to incentivize the builders to move down chain.

Just keep building. The rich will very quickly stop buying housing as an investment when it stops outpacing the stock market on ROI.

Sprawl does not help with lowering the cost of living, so no. It doesn't all help.

Environmentalist support for density increases is only about 20 years old. When these policies were created, it was done by the previous generation of lawmakers.

Progressives now desire to live in the urban cores of large cities. It make sense for them to have their various political views reinforce each other.

Look at the track record of the SF Group of the Sierra Club. They consistent try to block dense urban development in the name is environmentalism. I went to their executive committee meetings for months, and even ran a failed campaign to unseat half the committee. They are very much part of the “preserve neighborhood character” and anti-density collation in SF politics.

Are Napa, Atherton, and Malibu filled with environmentalists?

I'm so confused by your reaction, are there specific housing policies that are focused on the environment that have had bigger effects than things like prop 13? or cities with 30k jobs in a year but 300 units of housing (looking at you, mountain view)?

Atherton looks so funny from a satellite: https://imgur.com/a/kKpymj9

You can see the NIMBY lines so clearly.

I think speaks more to the average lot size. The surrounding towns are also mostly single family homes as well. They're just subdivided into smaller plots. But lot size restrictions are a factor of zoning laws.

My understanding (via my wife's family, who have been in Menlo Park for ~50 years) is that Atherton doesn't allow lots smaller than 1 acre.

I live at the yellow star at the top of the map. Needless to say, my lot is vastly smaller than an acre :)

Friend sent me an old ad for lots in the east bay. The developer was saying they were only selling 50 foot lots. No 25 foot lots! If you look on the map now all the lots have 50 feet of street frontage. If you look at San Francisco they are mostly 25 feet.

The ads date is 1913.

That makes me rethink how much zoning is about muni's forcing developers to do things. And how much of zoning is actually regulatory capture. Developers have always been pushing as much lux as the market and technology can bear. And home owners that are all in try to protect their investment in class distinction.

The endangered species act probably had 10x the effect on stifling building as Prop 13. Can you imagine a project like Foster City happening in the current environment?

https://www.fostercity.org/community/page/creation-foster-ci...

It takes Palo Alto 30 years to do flood mitigation because of a couple frogs in the creek.

If Mountain View needs housing, make more land. It will never happen because there are always myriad obstacles to building.

https://ww2.kqed.org/quest/2010/09/30/landfill-and-liquefact...

Look how much of the city of SF was built on landfill. When was the last time a major bay area development was done on reclaimed land?

After WWII the Army Core of Engineers had a plan to fill most of the bay.

I think their point is that environmental concerns are a convenient criticism when you don't want to come out and say "building adequate housing in my neighborhood threatens to slightly slow the growth in value of the investment I have decided to dump my entire net worth into"

While Environmentalism is definitely classist, and CEQA has played a part in preventing affordable development in cities, there are so many other factors that boiling it down to environmentalism is absurd.

If anything, CEQA and other environmental regulations have contributed more to improving the quality of life for working class people and the poor than it has contributed to their detriment. California is the median for poverty in the US and also happens to be in the top 15 for quality of life while also being in the top 10 most environmentally friendly states. Because of that, I don't see a correlation between environmentalism and poverty.

California is at the bottom for poverty on the only measure that matters (the Supplemental Poverty Measure, which accounts for cost of living): https://www.sandiegouniontribune.com/opinion/the-conversatio...

Fair enough, but even considering that, the other states at the top of the list are a grab bag consisting of some of the worst states in terms of environmental regulations. My point is that there is no absolute correlation with environmentalism and poverty.

Most environmentalists are in favor of increased density. The opposition is more NIMBYs who either don't want their neighborhood to ever change, don't want poor people anywhere near them, or want their house value to go up.

> environmentalism is classism in disguise.

Nice how you slipped your pet bugaboo into your argument. Enviros are not responsible for the height caps and the sprawl.

This is literally the exact opposite of what an environmentalist would want in terms of urban growth and planning. Environmentally friendly planning means you have housing near where people work to avoid highly polluting long commutes.

The problem is NIMBY bullshit in the purest sense. People will use every excuse in the book to prevent new housing in their neighborhood. While a fair amount of the time environmental policies are abused to block development, zoning laws are also abused, parking/ land use legislation, hell I've seen houses blocked because they increase the shade in a park by 2% for half an hour during the evening.

None of this is "environmentalism", its rich people standing on a high hill screwing over everyone else beneath them.

Ah, so exactly what happened with Hong Kong and their public housing. Blocked by homeowners who don't want their real estate to go down in value. Now it's one of the most expensive place in the world with New Territory largely empty.

Property owner cabals blocking development like this is cartel capitalism at the local level. What you have here is a cartel restricting supply to profit from scarcity.

>Environmentally friendly planning means you have housing near where people work to avoid highly polluting long commutes.

Vehicle miles driven doesn't make as big of a difference as one might expect. A paper[0] I saw linked on reddit had an interesting graph: https://imgur.com/a/n7u8fGH

In this paper, what carbon emissions you lose by not driving you gain from building emissions. Maybe because the study area was New York, with more fuel oil-heated buildings? Presumably, decarbonized heating and electricity generation would make a difference, but New York state already is pretty good by that metric: https://www.eia.gov/electricity/state/newyork/ (Though nowhere near carbon neutral, or carbon negative, as would be required for keeping global warming to 2C)

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0: Andrews, C. J. (2008). Greenhouse gas emissions along the rural-urban gradient. http://dx.doi.org/10.1080/09640560802423780 If you don't want to buy the PDF, then visit the crow site.

I think part of the problem of this graph is that it attributes commercial building emissions to the municipalities in which they are placed, even though these buildings might be used by residents and commuters alike.

So if you move into the city instead of commuting, you might be using the same commercial buildings a before, but their emissions are suddenly attributed to you.

I think you missed the central point of this paper. It's true that there is an offsetting factor of building energy use vs. VMT, but the reality remains that denser environments, with jobs near residents, emit less per capita -- as that graph you linked to shows.

What's surprising is that at the other end of the spectrum, in rural (not sub-urban) areas, other factors (forests, etc.) combine to cause lower per-capita emissions than suburbs (and in some cases, negative per-capita emissions because of sequestration).

Basically, from a carbon-emissions perspective, post-war suburbs are unsurprisingly worst, rural areas get some help from sequestration in forests (this fact being the contribution of the paper), and dense urban environments are the least-emitting.

It's not rational environmentalism, but I'm sure a lot of NIMBYs are honestly convinced they're fighting for Mother Earth, and the simultaneous explosive value increase of their home is purely coincidental.

Motivated Reasoning is a hell of a thing!

https://en.wikipedia.org/wiki/Motivated_reasoning

GP: Curse those environmentalists Parent: This obviously isn't environmentally friendly or motivated and the opposite of what an environmentalist would want. You: Well, they believe they're being environmental, even if it's self serving BS (here, let define self-serving BS).

One realization that's helped me a lot:

Yes, people talking self serving nonsense are lying. But they're primarily lying to themselves!!!

Essential book: https://www.amazon.com/Elephant-Brain-Hidden-Motives-Everyda...

TED talk version: https://www.youtube.com/watch?v=V84_F1QWdeU

Yes, people talking self serving nonsense are lying. But they're primarily lying to themselves!

When we're talking this kind of phenomena, we certainly using language at a very high level of abstraction. But the "color" of how one expresses one's self matters even more. What "primary" means here is key, for example.

People talking self-serving nonsense often believe what they're saying, maybe more than someone taking a rational position ('cause rationality involves some self doubt).

The main question, in a sense is "are these people 'out to get us'?". On the one hand, one can give the defense, "they aren't consciously trying to put their interests ahead of yours and aren't trying to deceive you" but there's the other factor that this sort of strategy can be the very best strategy for people putting their interests ahead of you and /or deceiving you, which makes them your most effective enemies.

I mean, if you dig deep down, the terrible people "are victims too". Does that mean you shouldn't blame them? Well, the terrible people need to be defeated and punished appropriately, in a judgmental way, to prevent them from doing the stuff we don't like and to fill those who might consider it with fear (still non-judgmentally).

> On the one hand, one can give the defense, "they aren't consciously trying to put their interests ahead of yours and aren't trying to deceive you"

Almost. There needs to be a "consciously" before each "trying".

Because they are trying to deceive you, but the conscious part of their (or, just as much, our) mind doesn't know it.

It helps to think of the brain as dozens of more or less independent units, most of which are unconscious.

The common metaphor is:

If you think of the brain as something like the White House, the conscious part ("me") assumes it is the President. In reality it is the Press Secretary, tasked with coming up with arguments for why what the real decision makers decided is a great idea.

Prop 13 and rent control both highly encourage NIMBYism and I would say are more important factors than property values. If a large apartment is built next to your house and you don't like the extra noise, the big shadow, and lots of people looking into your back yard, you could decide to move. Without prop 13 selling your house and moving a few blocks over to a location you like better is a pain in the ass and you have to pay off the realtors, but once you move, you just get on with your life. With prop 13 your property tax could double or triple, say going from $1000 a month to $3000 a month. This $2000 a month, every month, is going to make you mad and hurt you financially constantly for the rest of your life. No wonder people fight so hard to keep things like it was when they moved in.

People with rent control are under the same incentives. Have a $2000 rent controlled apartment that would rent for $4000? If something changes in your neighborhood the makes you want to move, you don't really have that option. So you fight really hard against changes.

The longer Prop 13 is around the worse it gets and California has just passed statewide rent control. Things will continue to get worse on this front and I don't see a way for California society to change the situation.

> California has just passed statewide rent control. Things will continue to get worse on this front and I don't see a way for California society to change the situation.

They did just change the situation. They made it worse!

The beatings will continue until moral improves.

Yeah, the lock-in effect of both Prop 13 and rent control deserve a lot more awareness!

Reminds me of what I've heard about working in the academic world: Since people often have a job for life, workplace conflict can't be resolved as everywhere else, where someone switches job or gets fired. Instead people make each other's life hell forever.

Just a story I've heard, I have no personal experience. But I've heard it several times.

This is the problem. Prop 13 creates perverse incentives that are not obvious to owners in other states.

One doesn't need to live in California long before they see a community leaflet opposing a local housing development. These developments, on the surface, all look like great ideas. The stated reasons to oppose the permit all seem thin: Accusing the developer of greed, or claiming that traffic will get worse. Homes closer to work and a local discount store do increase traffic on surrounding streets but decrease cross-town traffic in the wider area. They might even encourage people to walk!

This logic makes no sense and people like myself can afford to keep our houses mainly because of prop 13. Since buying my house almost 8 years ago the market has double at no fault of my own. This would double my taxes making a good portion unable to be written off thanks to new IRS rules. Yet, you want to call that locked-in? I love my house and where I live but it would be painful with that extra $2k a month tax bill you mentioned.

When someone proposes a four plus one housing development around the corner from your house to help address the state's housing shortage, would you oppose it? You can't move if you don't like it, after all, since you'd lose your property tax break.

If you oppose such developments, then the higher value of your home _is your fault_.

Im in favor of any housing that makes sense but dont espouse the logic that just because someone wants to move to a town everyone has to agree to let giant apartment blocks get put up. I did indeed buy where Im at because I enjoyed the small town culture but I understand the need for managed growth. My town is already overwhelmed with infrastructure and water issues that poorly planned growth will exacerbate. There is a lot of land in Cali we dont all need to live on the coast. Being here is a privilege not a right and Im not being selfish wanting to keep that for which Ive worked hard. Growth is inevitable ... Poorly planned cities are not. Just look at Daly city if you want to see the ugly side of unhindered housing expansion and poor infrastructure. Further, your argument still doesnt engender the need to get rid of prop 13...

All of your arguments have the side effect of increasing the value of your home, thereby making you more dependent on Prop 13.

So youre for poorly planned cities or gentrification? The value of my property is simply that it is the house in which my family and I live. I gain no benefit from the market increase until I actually sell my house (I suppose there is financial wrangling that could be done but I dont have the money or time for that). Anyone that buys my house or any house in a high value area is going to be paying a higher tax rate simply based on the cost. Prop 13 insulates me from that and encourages/allows me to stay put while still setting the tax rate for all new purchases. I will indeed resist poorly planned additions to my town and will insist on proper infrastructure in place before conceding to any mass buildings. Im not interested in living in an Oakland'esque place with ghost ships everywhere. Ill let you do that elsewhere. Further, you still havent reasonably outlined how getting rid of prop 13 is going to fix things. There are plenty of wealthy people around to pay the taxes assessed on a home purchase ... plus, they can probably afford CPA's to dodge taxes otherwise. Youd be better off trying to fix the socioeconomic disparities so prevalent in our society ... and if you think eliminating prop 13 is going to help toward that end then I got a bridge in Arizona for ya ...

Each time you interact with anyone employed in your area, you should ask about their commute. There's a good chance that the staff who care for your children, the staff who stocks your groceries, the staff that cleans your workplace, all have soul-crushing commutes. Your "managed growth" policy forces _them_ to pay for your "small town culture" with their time. That's gentrification, by definition.

What makes you think I don't commute to afford being here? You still haven't addressed how making my property taxes double is going to encourage me to accept poorly planned building ... I'd argue I would be doubly against it. Again, anyone that purchases a house now pays taxes on the market rate. People buy in my town not for jobs but for the culture and location ... If houses get cheaper here the wealthy will just buy two. Now if you said something thoughtful like eliminate prop 13 for anything but primary household you might be onto something but otherwise you're failing to convince me. You might also stress increasing minimum wages such as my town recently enacted. I'm curious if the obvious will happen: business that rely on ultra cheap labor will fold (which I'm ok with) and/or more workers will be attracted from further away (which I'm not ok with). I know Costco and Starbucks already pay a bit above state minimum and a large portion of the service industry folk I patronize are my town neighbors. Why do you have a problem with improving to middle class taste? I definitely prefer my neighbors not living in squalor.

Another point tho ... where I live doubling the taxes and pricing out those holding on with fingernails will only speed the gentrification. I would have no problem selling my house right now at market value and the buyers from the valley wouldnt bat an eye at the taxes ... not even including the foreign buyers coming in to hide the peoples squandered moneys. Prop 13 aids those like myself by keeping us out of the market loop ... I feel no pressure to sell and have no interest in buying again.

Prop 13 does keep you in that home, true, but a more stable home value would also keep taxes low. One way to keep home values low is to build high-density housing in the area. Such projects are opposed by local home owners in California.

This is an unfortunate result of how California deals with property tax. In many places the property taxes go mostly/all to the school district and the city/county. When property values go up a lot there is no reason that they have to keep the property tax at the same rate. They could lower it to keep the expenditures the same. In some places they even just figure out a budget for the year and then set the property tax accordingly.

California property tax mostly goes to the state and it funds schools by giving money back to the local districts (except about 60 really rich ones that opted out!) based on the number of student days/school. I'm not really sure, but I think that prop 13 passed after the state started taking property tax money. That would make sense as people like to have control of how there taxes are spent.

It's what happens when you let homeowners form a cartel and vote on how much new housing to create (and thus how much to dilute their own home's worth by). Environmentalism has nothing to do with it.

The article says that SB 50 was supported by environmentalist groups.

>The bill also garnered support from environmental organizations, including Natural Resources Defense Council and California PIRG, because of its potential to reduce the carbon pollution that comes from long driving commutes.

when you restrain housing, everyone suffers.

>It’s unfortunate that the state senate doesn’t seem to want to treat the housing shortage with the urgency that it deserves.

The state senators are probably making quite a bit of money off this housing shortage that they wouldn't make with an adequate housing supply on the market.

It's much likelier that they are responding to the voters that have the time and money to make their reelection difficult.

Who are also making large sums of money off the housing crisis. I really don't think the State Senators are likely to consist overwhelmingly of renters, anyway: if their property value is appreciating, they're benefiting.

I think all 40 senators in CA own a home in CA and something like 65% own at least one unit they rent out.

This decision is extremely frustrating coming from a legislature filled with landlords.

> This decision is extremely frustrating coming from a legislature filled with landlords.

Not only do the people have the power to vote out legislators, in California they also have the power to bypass them and legislate directly. But, while there is broad consensus that housing is a problem, there isn't broad consensus on solutions among the public any more than there is among legislators.

Homeowners are disproportionately likely to vote, so their constituents no doubt agree with them on this issue.

The real problem is that when you incentivize and subsidize putting your net worth into a single large investment vehicle, and then let holders of that investment decide how much competition to it will be allowed nearby, it creates a vicious cycle of ever-increasing supply shortage.

Eventually, of course, this will reverse. When the boomers die, renters will be the ones voting. But not before an entire generation has their net worth leeched by a geriatric vampire class of rent-seeking housing supply hoarders.

> When the boomers die, renters will be the ones voting.

When the Boomers die, their GenX and Millenial offspring will inherit their homes, oftentimes, in California, without a full-value tax assessment. And, as the relationships between wealth and voting propensity and wealth and homeownersip are both unlikely to switch directions, homeowners will still be overrepresented in the electorate, and there'll be a new generation of the geriatric vampire class of rent-seeking housing-supply hoarders, and a new generation complaining about them.

> geriatric vampire class of rent-seeking housing supply hoarders.

why so salty?

If I understand it correctly, when people die the state and IRS collect taxes from the estate based on the value. Since most people these days die in debt, it's most likely the property will have to be sold to cover the taxes owed by the estate.

This would mean the inheritance in many cases will be the cash left over from the property sale.

One solution I almost never hear talked about is on the employment side. How about if employers are encouraged to not crowd into dense cities? I've seen some employers offer "remote working" as an option. Quite literally, there is a remote office opened up so the employee doesn't have to either commute into work or they can relocate to a place with affordable housing. I've seen it where a bay area company opened up a remote office in Modesto, CA and over a dozen employees completely relocated out of the bay area entirely. It was mostly older employees that were fed up with all the issues in the bay area. Some even went on to say that the remote office was the best decision the company ever made.

> How about if employers are encouraged to not crowd into dense cities?

You mean, what if big cities had higher commercial/industrial rents, higher taxes, higher minimum wages,and more regulation, while less crowded places give massive abatements of their already lower taxes in desperate bids to attract employers?

I think that's been tried.

I read that 66% of California voters approve of SB50. It is pretty easy to understand that allowing sensible, 4 story apartment buildings to be built next to transit/BART stations will help increase the housing supply, which should make housing slightly more affordable.

https://sf.curbed.com/2019/5/17/18629809/sb-50-housing-trans...

Still, California has a 2.5 million housing unit deficit to repay by 2025 or it risks a further escalation of the homelessness epidemic.

Probably a combination of both.

Okay, change "state senators are probably making quite a bit of money off this housing shortage" to "state senators are probably being awarded with a lot of power by supporting this housing shortage." Decision-making on the basis of wanting to be powerful is certainly not better than decision-making on the basis of wanting to be wealthy.

It's very different though, because in the former case the assumption is that direct financial benefit is blocking all chance of change. In the second you realize that organizing by different interest groups (renters for example) can easily change the calculus. Senators who are landlords will gladly vote against their financial interests to stay in office, by and large (or be replaced by senators who are will to do so).

That’s why it amuses me whenever people point to this area as some bastion of leftist politics. This place has a decidedly libertarian tilt: socially permissive and very much laissez fair in many if not most ways.

Libertarians who want to control what you build.

They want the government to keep out of housing as much as possible so they and their developer patrons can control what is built, yes.

Local government is still governemnt.

California is one big vetocracy.

There's a reason that "Fuck you, got mine"/"socially liberal, fiscally conservative" was named "the California Ideology", https://en.wikipedia.org/wiki/The_Californian_Ideology.

That's outdated. California hasn't been fiscally conservative for over a decade.

Call me when they repeal Prop 13.

California is most definitely fiscally conservative. Taxes, and regulatory enforcement of leftish causes with real teeth are an uphill battle even with huge Democratic majorities, mainly because Democrats are basically a right-of-center party.

America doesn’t have a left wing in its political landscape, at least not one with any representation or power. Sanders might change that, but I doubt it.

California has the highest taxes of any state, and they keep getting higher. Citizens are taxed for everything while illegal immigrants get free driver licenses and health insurance. If you call that fiscally conservative then your political spectrum is completely off.

I don't care if it's principled or not. It's obviously not working.

Principle over efficacy, donchyaknow.

No policy, not one, out of Sacramento is going to solve affordable housing in a stagnant property market in which people are incentivized not to sell, rent or lease their properties. Sacramento could centralize zoning and effectively upzone the entire State tomorrow and it would be one State constitutional amendment away from being overturned, which is not nearly as high a bar as it should be.

The SF board of supervisors has voted on resolutions opposing this bill several times now. If you care about housing and live in SF, take a second look at your supervisor. Their votes may not make a difference with respect to SB50 but they can certainly block housing in the city and too often they do.

They all need to go. Not one is a housing advocate. All spend their energy to limit housing. They say they are for affordable housing, but their mandates are designed to exclude both groups of people and housing.

Not quite all of the BoS. Of the 4 misleading resolutions that the SF BoS passed to oppose SB 827 and SB 50 (https://sfbos.org/sites/default/files/r0084-18.pdf https://sfbos.org/sites/default/files/r0172-19.pdf https://sfbos.org/sites/default/files/r0541-19.pdf https://www.sfcta.org/sites/default/files/2019-12/R20-25%20S...), only Sup. Ahsha Safaí and Mayor London Breed (and Jeff Sheehy and Vallie Brown, who are no longer in city hall) voted against the resolutions and in support of SB 50. It’s important to pay attention to which supervisors do what so that they can be held accountable on election day.

They all say they are for affordable housing - but as I mentioned above the mandates are designed to exclude and prohibit housing. The results are clear very little actually gets built.

Is there any reason to think they're not reflecting the will of their voters?

It makes me sad that my supervisor got replaced with Dean Preston, whose entire persona is crafted around housing policy; yet, he is so staunchly against actually building housing.

He's the epitome of everything wrong with SF Supervisors: they pit communities against each other to create political gridlock and build voting blocs for reelection, but do fuck-all to actually solve San Francisco's problems.

No matter how many times they say "gentrification" in the same tone as "boogeyman," it won't refute basic supply-and-demand. Inaction just makes all the problems worse.

> they pit communities against each other to create political gridlock and build voting blocs for reelection, but do fuck-all to actually solve San Francisco's problems.

Sounds remarkably like national politics.

Dean is a nice guy but I believe the way he looks at the problem is naive. He believes land lords are to blame for high costs - but I see this as a function of what the market is willing to support. He could guide the invisible hand of the market if he would allow more housing. But he favors character of the neighborhood over housing.

Landlords are to blame for squeezing people like lemons (which extracts a lot money from software engineers and the like while leaving lower classes without decent housing), but the underlying problem is indeed insufficient supply. But what's really being done about either of these things?

No they are not. You could become a landlord and find out for yourself. Or you could simply do the math. Mortgage plus Insurance plus Earthquake insurance plus upkeep plus taxes. Costs are incredible.

The only way to bring down rents is to increase supply.

Everyone else is lying to you.

I suspect you are being down-voted because a lot of landlords are renting out their first home while they have moved out and into a newer, nicer home and are now just exploiting the underclass.

Presumably the mortgage on the first home is quite far below current market prices, but this is not enough to drive the landlord to offer a price that is necessarily in line with rents at the time the home was purchased.

The mortgage interest is no longer tax deductible, so effective cost of ownership is higher than when compared to someone paying a mortgage on a home they live in.

The profit from renting is compared against profit from selling. If the rental price is driven too low, the owner will prefer to sell and collect the profits (and the home will likely be taken off of the available rental inventory, which will further drive up rents).

> and are now just exploiting the underclass.

The only people exploiting the underclass are politicians that make building housing impossible. This dynamic is only possible through their help. A price is set by what the market - not by landlords.

Election turnout in SF is abysmally low. Those who do turn out are mostly homeowners who really want to keep the prices growing.

Nobody has ever lost a re-election race for SF district supervisor. It’s effectively a lifetime appointment.

This November a supervisor will lose re-election, since both the current incumbent Ahsha Safaí (who supported SB 50 as well as housing developments in his district) and the previously termed-out John Avalos (who opposed SB 50) are running for re-election in District 11 (Excelsior and Ingleside).

I think "re-election" generally refers specifically to an incumbent winning an election, rather than just any time someone wins more than one election.

Avalos is running for the same office that he held 12 to 4 years ago. In San Francisco, BoS members are termed out after 8 consecutive years but can come back after waiting a term.

Heh, like the president of Russia

> lifetime appointment

There is a 2-term (8-year) term limit (each member can run for re-election 1 single time before being termed out), so this summary is false on its face.

In recent elections several incumbents have won re-election by only 2 or 3 percent. It is entirely plausible for an unpopular member to be unseated by a well organized challenge.

Before 20 years ago, the elections were at-large, so what you’re going on with this complaint is a pretty short time frame (maybe a couple dozen individual elections involving an incumbent).

The SF board of supervisors (and its elections) doesn’t seem materially different than other American political offices.

It's so frustrating to me. I happened to have the radio on last night and the local NPR reporter stated seven times in six minutes that the bill failed because a bunch of groups who are nominally highly in favor of more housing just didn't think it went far enough (e.g., too much market rate housing not enough affordable, too focused on urban areas not enough suburban ex-urban, on and on and on). Classic shoot-yourself-in-the-foot move. At least it was a start. You can always try and improve it later. Now, we have nothing.

Hijacking this comment to point everyone to https://yimbyaction.org/.

>If you care about housing and live in SF [...]

What people don't seem to understand is if you live in SF you probably have housing that's working for you.

Lots of people can't live in that city. Guess what? If they don't live there they can't vote there. I'm not sure why but even as people decry NIMBYism they seem to think there's some groundswell of support that's somehow suppressed.

At this point we should just make Fresno really desirable too or something.

> At this point we should just make Fresno really desirable too or something

That's my rather unpopular opinion. Could just force the Tech Billionaires, VC's and lords of finance to point the fire hose of money somewhere else for a change.

To combat many problems, the government would certainly be helpful, but isn't necessary.

Take climate change. If every corporation took a carbon negative stance like Stripe and Microsoft, that would make a big dent in carbon emissions.

Unfortunately, a lack of housing is a problem that the government created. And it's a problem that only the government, in my view, can really fix.

As long as housing supply is artificially restricted, I don't see how this gets better.

Please let me know if I am wrong.

> If every corporation took a carbon negative stance like Stripe and Microsoft, that would make a big dent in carbon emissions.

Sure, but it's a lot easier for a software company to go carbon neutral than a power company. Which is not to take away from what they're doing, it is still hard to do!

The way I see it, we have two basic technologies for coordinating as a society: free markets, and governments. Neither is perfect all of the time. But when it comes to problems rife with externalities (like pollution, or intellectual property), free markets on their own tend to be bad at aligning incentives, and governments are the least-worst solution.

Edit to clarify: this was about the climate change part, but I agree that the government is causing the problem here wrt. zoning.

> The way I see it, we have two basic technologies for coordinating as a society: free markets, and governments

This is smart. I'm stealing this :)

On the counterfactual, it's actually not very smart, and a toxic and myopic view of society. There's an entire spectrum of coordinating collective human behavior that ranges from systems like feudalism to anarcho-syndicalism to mixed economies like those that exist in Scandinavia and much of Western Europe. Government's role is infinitely flexible as a result; it can choose to be as expansive or as minimal as possible. In the case of housing, which is an issue where there needs to be mass action to ensure additional housing supply, relying on either the free market or government exclusively is not going to fix the problem. One of the things that a lot of pseudo-intellectual YIMBYs in the Bay and elsewhere don't realize about the housing crisis is that it will require massive mobilization action by both public and private actors to solve. For instance, I rarely hear the YIMBY crowd sing the praises of public housing, a model that has been successful[1] in Singapore, Vienna, and many other cities across the globe.

I find the anti-government sentiments and libertarian beats on this website frequently tiring at best, gravely ill-conceived at worst.

[1]https://www.shareable.net/public-housing-works-lessons-from-...

to mixed economies like those that exist in Scandinavia and much of Western Europe.

Right. A system that includes both government and free markets, just like the OP said.

Yet public housing is a terrible failure in essentially every city with housing cost issues in the US.

> governments are the least-worst solution

No, they're not, because while externalities and other forms of misaligned incentives are departures from the norm in free markets, they are the norm in governments.

> No, they're not, because while externalities and other forms of misaligned incentives are departures from the norm in free markets, they are the norm in governments.

How do you figure? A totally free market results in monopolies, which are rife with externalities that exist for the purpose of maintaining the monopoly. Government is the body responsible for balancing and managing those negative factors against the desirable results being produced.

> A totally free market results in monopolies, which are rife with externalities that exist for the purpose of maintaining the monopoly.

I'd have to disagree. Not many markets have monopolies - where you only have one firm in the market. Tech is an exception.

In fact, I'd say that many government policies, while necessary, are a major contributor to monopolies, by imposing high costs to enter markets.

https://en.wikipedia.org/wiki/Standard_Oil

Yes, Standard Oil, whose major "crime" was selling oil more cheaply than all of its competitors.

Don’t forget constantly increasing quality as well as falling prices.

Standard raised prices to its monopolistic customers but lowered them to hurt competitors, often disguising its illegal actions by using bogus supposedly independent companies it controlled [1].

The evidence is, in fact, absolutely conclusive that the Standard Oil Co. charges altogether excessive prices where it meets no competition, and particularly where there is little likelihood of competitors entering the field, and that, on the other hand, where competition is active, it frequently cuts prices to a point which leaves even the Standard little or no profit, and which more often leaves no profit to the competitor, whose costs are ordinarily somewhat higher [2].

[1]. Grayson, Leslie E. (1987). Who and How in Planning for Large Companies: Generalizations from the Experiences of Oil Companies.

[2]. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911).

As if price discrimination isn’t a practice used commonly today.

I'm unsure what point you are trying to make here?

That the practices conducted by Standard Oil were considered acceptable?

Or are you stating that because it is done today (wrongfully so, imo), it was okay back then?

Please elaborate.

Price discrimination isn’t really a problem. Companies do it all the time with coupons, origin of purchaser, etc. What your comment doesn’t show is why it was bad when standard oil did it.

Your comment, seems to be missing a lot more: a coherent series of reasons, statements, or facts intended to support or establish a point of view

Wow, super childish. Anyway, the point I was making is that all you managed to show was that standard oil practiced price discrimination as if it was some big revelation. Then I pointed out how it happens to a vast extent every day and it’s part of modern markets and you have nothing in response to defend your stance on price discrimination.

My guess is you just found out that coupons are price discrimination and are still pretty upset about that? If so, I’m sorry to break that news to you.

> Then I pointed out how it happens to a vast extent every day and it’s part of modern markets and you have nothing in response to defend your stance on price discrimination.

Back this up. None of your statements have any backing.

Edit: From your comment style and prior history, you have a history of utilizing red herring and slippery slope style comments to get your way without backing a single thing you say. Please, cut the bullshit.

Back what up? Grocery stores send out thousands of coupons every day in the regular mail. Coupons are price discrimination plain and simple. I’m honestly not sure what you need me to provide to show you how coupons work.

Grocery stores getting more sophisticated: https://www.forbes.com/sites/moneybuilder/2012/08/21/individ...

Here’s airlines: http://theconversation.com/a-travellers-guide-to-airline-pri...

There’s a bunch of examples right in the fucking wiki page on price discrimination: https://en.wikipedia.org/wiki/Price_discrimination

Please spend a little effort at least googling before you make demands for proof of something so common.

> From your comment style and prior history

That’s just pathetic. Nobody is ever impressed you read someone else’s comment history to make a childlike ad hominem attack, especially just to misuse the term “red herring”. Stalking has ever advanced a conversation. Stick to the topic.

Didn't they collude with railroads?

That discounts history far too much. We have more competitive markets today because of antitrust regulation passed over 100 years ago and vigorously enforced up through the 90s. Tech would be more competitive today if the DOJ had completed the Microsoft prosecution instead of settling.

Our markets are becoming less competitive today because of government action due to regulatory capture - the intentional weakening of the regulatory state from within. We need more powerful, dedicated regulators in order to maintain competitive, free markets.

> A totally free market results in monopolies

In cases where there is a natural monopoly (because economies of scale outweigh the deadweight costs of a larger firm), yes. Historically such cases are rare. Most historical cases of monopoly are due to government interference, not free markets. Indeed, the word "monopoly" originally meant a government-granted exclusive right to sell some particular good or service.

I'm not completely sure about the etymology of the word, but I do know that in the US, most monopolies were not government granted. They were achieved through aggressive M&A, market manipulation, and other abusive practices (much of which should be seen as a negative externality on the affected human communities). That is exactly why the government was granted significant power to restrain concentrated entities from committing these abuses.

This isn’t true. The only industry I’m aware of that might actually be a natural monopoly, as in the efficient number of companies is one, is aircraft manufacturing. Local utilities aren’t natural monopolies, cable isn’t a natural monopoly, water, gas, electricity, these definitely aren’t natural monopolies.

If manufacturing semiconductors, with fabs that cost tens of billions of dollars isn’t a natural monopoly, why do we think anything is?

> The Myth ofNatural Monopoly Thomas J. DiLorenzo

> It is a myth that natural monopoly theory was developed first by economists, and then used by legislators to "justify" franchise monopolies. The truth is that the monopolies were created decades before the theory was formalized by intervention-minded economists, who then used the theory as an ex post rationale for government intervention. At the time when the first government franchise monopolies were being granted, the large majority of economists understood that large-scale, capital intensive production did not lead to monopoly, but was an absolutely desirable aspect of the competitive process.

https://cdn.mises.org/rae9_2_3_3.pdf

Local utilities aren’t natural monopolies, cable isn’t a natural monopoly, water, gas, electricity, these definitely aren’t natural monopolies.

How are utilities not a natural monopoly? The cost and disruption of building infrastructure to serve everyone is definitely a monopoly. Do you really want four or five companies digging up streets and building pipes, wires, etc?

Also, if you had multiple companies competing, they would only serve the most profitable customers who live in the most dense areas. You see that now with internet providers - especially fiber.

> How are utilities not a natural monopoly?

Water, sewer, and storm drain, yes, that's a plausible natural monopoly. Electrical power, telephone, and internet, no. At most the conduits that the cables have to go through could be a natural monopoly, but not the services themselves.

> if you had multiple companies competing, they would only serve the most profitable customers who live in the most dense areas. You see that now with internet providers - especially fiber

This could be an argument for individual municipalities building their own infrastructure, owning it, and leasing it to service providers like ISPs.

It is not an argument for what we actually have in the US, which is higher-level governments giving monopolies to private companies, and those private companies successfully suing individual municipalities that try to build their own infrastructure, own it, and lease it to service providers.

So instead of having a private monopoly on infrastructure where politicians tell the private monopoly what to do. Now we have a public monopoly where we have the politicians controlling it directly.

There is historical precedent for internet providers competing for internet over a common infrastructure. That use to be required for DSL. None of the companies were profitable. Locally there was MindSpring and Telestream among others that both tried.

Please consider reading the linked article.

Utilities are not a natural monopoly because we have multiple examples of competition lasting decades in municipalities. This is not compatible with the economic concept of natural monopoly. It’s a disproof by existence.

If you want to discourage too much digging up the street charge people to do it. If they’re doing too much charge more. Problem solved; the various companies that want to dig up will come to a mutually agreeable arrangement on cost sharing if they want to dig up the street.

Multiple competing companies going after the most profitable customers is very much not proof of the existence of natural monopoly. It’s also perfectly fine. If you want uneconomic customers served for reasons of equity pay for it. You can either pay for it directly and make the costs visible or you can mandate universal service and spread the costs across all customers. Either way the cost is paid; you don’t get anything for free.

We have multiple examples in the 1920’s in large dense cities...

And as far as what happens when you let multiple companies dig up the streets that are willing to pay for it, we also have an example of what happens when a company decides to abandon an area when it’s not profitable and leaves the infrastructure and the streets in a mess. Google Fiber and shallow trenching....

https://www.cnet.com/news/google-fibers-secret-weapon-in-its...

What do you think is going to happen when these companies go out of business? Are we now also going to have multiple companies serving the last mile? What happens at the last mile when your water company goes out of business? How long will it take a competitor to get to your home?

> in the US, most monopolies were not government granted

Railroads: government granted.

Public utilities: government granted.

Telephone: government granted.

Air travel: government granted.

Cable TV: goverment granted.

ISP: government granted.

Seems like a lot.

It seems like the common factor enforcing the monopoly is high capital cost as a barrier to entry. That moat allows monopolizing companies to focus their resources on capturing the state to maintain their monopoly status.

The remedy would seem to be for more decisive government action - to regulate or nationalize the infrastructure, break up the incumbents as necessary, and create a robust market for services that utilize the infrastructure and pay rents and taxes to the government.

Or strip the government of its power to enable monopolies in the first place.

Exactly.

We've already seen that show. SPOILER: The government didn't create these monopolies.

https://en.wikipedia.org/wiki/Northern_Securities_Company

https://en.wikipedia.org/wiki/Standard_Oil

My condolences for your narrative.

I recommend you read the section from the Standard Oil article on the criticism of the breakup.

Also, your rebuke is pretty weak if you have one example compared to the thousands of government granted monopolies all over the US.

It took governments less time to fix the Ozone hole (remember the Montreal Protocol?) than it took for the free market to converge on one type of phone charger that works on multiple devices.

Unfettered faith in free markets and unfettered faith in governments are equally bad things.

Wasn’t the phone charger convergence driven by an EU mandate though?

CFC emissions took some time to subside after the Montreal Protocol. We also know there's a current Chinese source[0] which is still emitting CFCs in 2019. So I dunno if 'governments' have the advantage on that one.

[0] https://www.bbc.com/news/science-environment-48353341

And by the time the government mandated a standard charger, the tech world was moving on to a better standard -- USB C.

Zoning isn't always the cause of this problem either. Zoning may very well be logical in that it properly restricts housing development when the town/city resources can't accommodate more residents -- sometimes there is a finite amount of freshwater, power and other resources available to an area... especially in California where mountainous terrain separates significant concentrations of people within and near some major cities.

That's not to say those resources can't be scaled up, but those changes require time and money where forcing new zoning may create new problems quickly while trying to solve an old one.

Zoning laws might be the right method in some cases, but I'd also like to see laws, tax incentives, etc for solutions that solve multiple problems.

For example, some of my coworkers work remotely 100% of the time. Many more would do the same if they were allowed. One of my coworkers moved to a farm far from his city apartment when he was able to work remotely. Not only does that help with the housing situation, it reduces emissions, reduces traffic, etc. An incentive for moving employees to remote work could dramatically reduce, maybe even reverse urban inflow.

It could also be very helpful to the economy as it would distribute more high earning individuals over a larger area, instead of most living in and around major cities. For example, I know a couple people who moved back to the midwest when they were allowed to work remotely. It's not a one-size-fits-all solution either, but it is one of many options that should be considered.

> Take climate change. If every corporation took a carbon negative stance like Stripe and Microsoft, that would make a big dent in carbon emissions.

But then some corporation would move away from that, get extra money and eat competition who is more green/moral/etc.

Competitive economy maximizes profits in the space allowed by regulations. That's a feature, not a bug. But it also means that expecting some sectors/inputs to become unfashionable and die out is very close to wishful thinking.

In theory, yes.

But I don't see Microsoft or Stripe going anywhere soon. They've built many great products and delivered a lot of value to users and displacing them will not be easy.

Spending money on lowering climate emissions may help improve their public image, which is a good tradeoff.

There’s one thing that constantly confuses me with the housing crisis, which is why more people aren’t moving to other cities (or at least a lot faster than they currently are). Perhaps my mentality is different than most, but if I can improve my economic situation by moving elsewhere I will. I know for some people it is difficult to move because of family ties or costs associated with moving, but I would have thought this would be a small minority of people, not the majority of them. Or are most people so rooted to where they grew up that they don’t want to leave?

The other thing that confuses me is why companies aren’t moving either. It’s been a long time since a "new" city was created, but we have plenty of land available, and a lot of it is in pretty (but not natural park) locations. Is there that much of a network effect with talent being in one region that companies would rather pay a 4x compensation premium than relocate to new or lower cost locations? Are there any examples of big companies that have relocated their HQ to lower COL locations and then failed because they couldn't attract talent to move there, or is it just conjecture that this would occur?

> Is there that much of a network effect with talent being in one region that companies would rather pay a 4x compensation premium that relocate to new or lower cost locations?

Yes, it's pretty strong.

Employers want to be where the employees are, and employees want to be somewhere where there are other jobs.

They like living CA better than elsewhere, but don't want the economic profit to go to landlords who didn't create that value.

Network effects I suppose. When this economy was based on land and natural resources it made sense to move (and subdue the native population) to open land and gain an advantage, with a service based economy it makes greater sense to cluster at population centers and leverage that. The rise of remote work will probably alleviate this a bit but education, health care, entertainment, hospitality (aka. the fastest growing sub sectors of our service economy) are more valuable when delivered in person. Not to mention fighting climate change (not to say that we're doing a particularly good job) encourages density.

I think it's more precisely referred to as "agglomeration effects" [1]

[1] https://en.wikipedia.org/wiki/Economies_of_agglomeration

What makes you think that people aren’t moving? Population isn’t decreasing if that’s what you mean, but the Bay Area is a revolving door. I own a condo in San Francisco, and I’ve had five different tenants in eight years.

Yup. Of the 12 people from my graduating class who moved to SF, me and one other person is left after 8 years.

Of course plenty more from later years offset that.

From what college? And moving into then out of SF doesn't make the bay area a revolving door.

My (bay area) college class was half from CA, half from the northwest. About 50% of those from the northwest moved 'home' after school. Is that a revolving door? Did they get sick of the area? Or did they never intend to stay?

People don't move to a place because that place has cheap housing, otherwise people would be piling into the countryside. People move places with better economic opportunities for them and their families, generally that means jobs but it also means low crime, good schools, entertainment options and more.

As for companies moving, there is good and bad about your hq being located close to other hqs and good and bad locating away, but there is generally far more good in locating together. Shared talent, shared training...

Many employees cannot or are unwilling to up and move so it is quite difficult for a company to relocate a headquarters. Companies can open a regional office elsewhere but that has its own problems with communication and distributed teams. Problems which are manageable but can require new processes and training.

Exactly this.

It’s also worth noting that this is true for people who are well past the “foot in the door” segment of their careers — even if one is able to move to a low CoL area thanks to remote-friendly policy at their current company, by doing so they’ll likely be locking themselves to said company for an indefinite period and greatly diminishing their chances at getting raises. Of course that doesn’t matter to everybody, but generally speaking it’s against one’s best interest to move away from the city despite savings on housing, commute, etc.

California, at least Bay Area in particular, has a slightly different problem that is keeping people stuck here.

People can’t live here without both husband and wife working full time. Now to move to a different city or state, both husband and wife needs a job there or the new salary + cost of living must equal the other person quitting their job. That is just a difficult mental model to get over. It will happen, but only at the breaking point

Totally agree. Add in the fact that, if you do move to a lower cost area it is typically a mostly an irreversible step. You'll never save up enough to move back. By the time you change your mind, CA house prices and rent will have risen another 7% yoy, and inventory will be in the gutter because prop 13 discourages people from selling and rent control discourages people from moving. For some, that is not an issue. For me, well, I have lived here almost my whole life. I'd like the option to change my mind.

Also, throwing your kid in a new school, giving up your friendships, etc. is not withoud downsides.

Relocating HQ means laying off all your employees. This is not a figure of speech or analogy, it’s literally true. You are laying off all of your employees in the current location when you move the jobs away. The question is whether those employees are going to choose to uproot themselves to go work for you at the new HQ, or stay behind and find another job. Most will stay put instead of moving away. People generally don’t take kindly to forced moves. Many ethnic groups have legendary historical calamities that consist of being forced to move en masse.

If a software company did this, my guess is all development would cease for a long time and you may exceed the “bus factor” and permanently kill a large portion of projects. In fact I’m aware of management at one company winding down projects by moving the skeleton crew who agrees to leave to a lower COL city.

This is not much different from outsourcing to a lower COL country.

Because of my father's job, my family moved 9 times before I was 12. It wasn't as big a deal as you're describing.

Mine too. I hated it. It sucked. I promised myself never to do that to my kids.

That's nice, but would I move to follow my company? Probably not. I'm pretty sure most of my coworkers wouldn't either. Would you?

A surprisingly large number of adults live very close to their parents [1].

[1] https://source.wustl.edu/2015/12/most-americans-live-surpris...

Ironically Prop 13 makes it more difficult for kids to afford homes near their parents.

You have it backwards. Prop 13 overall increases house prices, yes. But kids, whose parents own a home, benefit the most from Prop 13.

Until 2018 you could inherit homes from parents or grandparents and keep the original assessed value, but that's no longer the case. So unless the kid is earning enough to pay taxes on a massively appreciated house, they're going to have to sell and/or move away.

EDIT: I was wrong about this.

But I still don't get the point though.. unless of course you are arguing that a non-Prop-13 world would have reduced tax for everyone under 1%. That isn't going to happen. we have never reduced taxes in Californa :)

Now let us look at it from the other side

1. The family, probably unfairly, benefited from not having to pay the full tax for so long.

2. In scenario that you mentioned the kid just inherited a $1m+ house. What part of it makes him poor that he can't pay the new property taxes? Sure, they might choose to cash out and go live somewhere else because it makes financial sense for him, but that is not `an unfortunate` situation at any stretch.

3. I know there are significant cost-basis advantage here, in additional to all the wealth just inherited, but I don't know enough about it yet.

CA property taxes are cheap enough that your taxes on that new big value you just inherited are still gonna be way lower than you'd pay rent for something else nearby... and often be pretty good even compared to some other big cities not in CA.

Or you have multiple kids and you sell the place and split the cash... nice windfall, taxes or no.

Meanwhile, the people whose parents DIDN'T leave them one of those houses are still way worse off...

Source for that no longer being the case? My SF housing activist friend says that this has not changed.

You're right. I confused it with something else.

No problem.

To an outsider like me, this seems like one of the worst features of Prop 13. Over time it separates people into two classes: those whose family has owned property for a long time, and everyone else who can't afford to buy a house because the taxes are prohibitive. (Even if you're very rich, it will make more sense to rent than to trigger tax reevaluation.) Call it neo-feudalism.

Taxes in CA are far from prohibitive, even with today's prices. The gap between affording something in the first place and being able to cover the tax is not that large. But the base prices are the killer.

But that's also largely a factor of mostly high-income people moving in, while mostly lower-income people are moving out. Keep up the business climate that fuels the inward funnel of money, and you'll keep prices high. Even if you reduce restrictions to building supply, you'll have a game theory bit of not lowering prices in any hurry since people can so clearly afford them and are so clearly willing to pay them.

My thought on that is prices reflect the ability of people to pay principal, interest, taxes, and maintence. Lower the property tax rate and prices just go up. Difference is taxes go to pay for public goods and services. Principal and interest do not.

Prop 13 benefits corporations, long term property owners, and people that inherit property. At the expense of renters, new home buyers, and beneficiaries of public goods and services.

Precisely true. Give a mortgage interest deduction, or lower interest rates? Good news! You can afford more house! _and so can everybody else_

This is not a feature of prop 13. Generational transfers were added in two later propositions, first for parents to children, later for generation-skipping transfers.

...but even this Prop 13 Landed Gentry has a big problem:

They have to live in their fabulously high priced and undertaxed home to enjoy the benefits. They can't move to another town or maybe not even take a job in the other side of town.

They actually could, until December 2018.

https://en.wikipedia.org/wiki/1978_California_Proposition_13...

Well, sure you might get a home from your parents when you are in your late 50s or 60s. Doesn't do much good when you needed that larger home to raise your own family.

Free babysitter? :)

Free meal maker and shirt ironer.

I'm surprised that's surprising. I always figured most people rely on grandparents for at least occasional childcare.

> It’s been a long time since a "new" city was created

huh?

the I-25 corridor north of Denver is sprinkled with towns and such that were nothing but an intersection and a gas station 20 (15?) years ago. right now they're bedroom community type things, but they've got some big box stores. they'll keep growing.

are they big cities right now? no. (was your claim very specific? nope.)

>Or are most people so rooted to where they grew up that they don’t want to leave?

I mean, historically speaking, yeah.

Well, economic situation is your income less expenses.

For a lot of people the Bay Area is maximizing this. But we're taking a huge social loss (as a nation) by making it so expensive to live in the area that offers the greatest opportunity.

An easy example, you can make movies in other regions of the country, YouTube makes it possible, but if you want to easily hire the best people you have to go where they are concentrated. This is why being in the movie industry pulls everyone to LA.

The Bay Area is a hub because it's where the industry was born. People who have deep knowledge in the industry are here. If you want to grow your startup somewhere else, you can. I think the problem is that you might eventually hit a wall as you grow. You'll need to pull in UX research, or a PM, or grow a legal team. In most places in the country, these roles just won't exist, or there won't be any domain knowledge to build them out from scratch.

Also, just like the film/tv industry, tech workers want to move around a lot. Unless you're in a hub like Seattle, NYC or the Bay Area, your options to move around are limited.

Remote cities can work if all the stars align or someone finds a company that lets them remote work. However, once you leave the job after 4 or 5 years, you will have to find another remote working position.

If companies could hire remote employees in low cost of living areas and remain competitive they would have done it years ago. But the effects of agglomeration are simply to great. That's why we have business clusters all over the nation - here is a map of them:

https://www.clustermapping.us/content/clusters-101

Charles Schwab is currently relocating their HQ from bay area to texas

Economists have studied this pretty extensively. What they've found is that every time a city doubles in size, its economic productivity goes up by around 5-7%[1].

This relationship seems to hold across a remarkable range environments. In the ancient times, in modern times, in the Renaissance, in American, in Europe, in Asia, in the first world, in the third world, and so on.

This is what makes bootstrapping a new city so difficult. Let's say your economic metro has 10 million people. even if you manage to coordinate 100 thousand leaving together, the new city will still have nearly 50% lower productivity than the old mega metro.

Density seems to boost productivity by making it easier to quickly spread innovations. Think about Silicon Valley. There are hundreds of tech companies in a single job market. New technologies and approaches. Employees switch companies every six months and bring the best practices to their new firms.

Take those same companies and disperse them across the continental US. Workers don't move firms because relocating is expensive, unpleasant and risky. Instead of bouncing between jobs every six months, people stay "loyal" to their local employer for decades at a time. Every time a new innovation is discovered at one firm, it takes orders of magnitude longer to diffuse across the industry.

Think of the major improvements in software engineering during our lifetime. Things like devOps, test driven development, microservices, rigorous source control, code review, open source, containerization, and the like. Silicon Valley adopted all of these practices years, if not decades, before the average IT department in Tulsa or Jacksonville.

[1]https://www.jstor.org/stable/1885259?seq=1

> decades

Great comment, but... that's a bit of an exaggeration! The rest of us read HN and mailing lists and web sites and whatnot, and technology does tend to spread faster thanks to it, these days.

Good point. Somewhat higher in another study:

> … in contemporary US cities productivity increases by about 11% with each doubling of their population.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3609801/

Just because your economic situation is unsustainable where you are doesn't mean you'd be better off someplace else. If you arrive in a new city without a job and without connections, you're in trouble from the moment you get there.

We don’t know exactly why yet, but the majority of people just don’t want to move. Even in times of war or famine, only 10-20% of the population leave

> There’s one thing that constantly confuses me with the housing crisis, which is why more people aren’t moving to other cities

The people at risk of homelessness lack the resources to move; the people with the resources to move have, on average, far less incentive to want to.

A lot of tech companies might there be that is where the talent is. Talent moves there because that is where the companies are. A company did want to move to Timbuktu because there is very little talent. And if they did, talent didn't want to follow for dear of being locked in to one company. Remote work helps but isn't the answer

>The other thing that confuses me is why companies aren’t moving either

Company isn't a person. It can't think for itself.

Here are the reasons company choose to not move:

1. The powerful executives are often the people who existed since beginning. They've had invested their compensation in the city where the company's headquarter is and now they are permanently part of the city's influencial people with ties in government, law and more.

So you want them to leave and become no one in some new city?

Their old connections and knowledge of the city will become worthless - they made all those connections and acquired that knowledge when they were young and now those executives might be in 40s or 50s and might not have same drive to earn all of that back

They profit from rents, they profit from sale of property in the their city. They profit in lots of ways.

When you acquire new talent, you recognize majority of the compensation goes towards "rent" and that rent end ups in the pocket of successful city dwellers (aka executives at the said company)

When decision makers in the company benefit from this. You can't build a rival company with lower costs unless you can somehow make it run without these executives.

2. Employees will not move that easily because in big cities employment market is efficient, switching to another company is easy and most new players will he dying to snatch those freshly laid off employees.

Companies don't move because those location decisions are made by wealthy senior executives who like it here. California is a great place to live if you have enough money to insulate yourself from the bad parts.

I looked it up and people are. California is #3 of states people are moving out of. https://www.thespruce.com/map-shows-where-people-are-moving-...

It seems like people from Silicon Valley are moving to Portland and Seattle specifically: https://www.forbes.com/special-report/2011/migration.html

Not necessarily the best or most up-to-date sources, but I'm only going to bother spending so much time on this.

Jerry Hill is the Senator for most of the SF Peninsula. He voted against the bill. https://sd13.senate.ca.gov/

He is termed out. The author of SB50 has endorsed Shelly Masur for the open seat. She is, I believe, the only candidate for the seat in support of SB50.

Endorsement: https://padailypost.com/2019/08/30/sb50-author-wiener-endors...

Her campaign page: https://www.shellymasur.com/

What a mess. Sad to see "tenant" organizations yell and scream about gentrification and displacement, ignoring the fact that both of those things are happening right now.

SB50 would make the problem worse the way it’s structured.

How is increasing the supply of housing going to increase gentrification? The housing shortage has resulted in high housing prices, which is the main driver of gentrification.

Because it will displace communities while the housing is built and there's no guarantee the tenants can move back.

they are anti-displacement provisions in the bill.

gentrification/displacement can't happen if upzoning happens at scale of the entire regions/state. e.g. techies won't move to Oakland if there's a bunch of new housing in San Francisco, Palo Alto, Cupertino etc.

You are spreading misinformation.

This doesn't apply to any parcel that has a building been rented out for the past seven years. A length of time calculated to ensure that it is not profitable to tear down existing housing

That among a whole host of other protections to make sure that nobody is displaced.

There was a serious chance seriously upgrade protections for tenants while also increasing supply to prevent other pressures and welcome more people in to our cities. Instead a bunch of wealthy NIMBYs in suburbs do what they do and maintained exclusionary zoning to keep our apartments.

A fraction of self described tenants groups carried water for landlords and wealthy homeonwer's profits by opposing this and giving conservatives the language to sound like they were woke. But be it tenants groups, non-profit affordable housing builders, unions, social justice groups, you will find them among the supporters.

> Because it will displace communities while the housing is built and there's no guarantee the tenants can move back.

Increasing the supply of housing displaces no one. What do you mean "no guarantee that tenants can move back"? A new apartment building creates units that new residents can move into instead of out-bidding residents on the existing supply of housing. An apartment that doesn't get built is an existing resident that now has to compete with more prospective renters, or further subdivisions of the existing housing.

People cannot live in a building under construction, they have to find somewhere else to live while it is being built. To build a new apartment, you need to tear down some existing housing.

And they probably lose their rent control in the process. So, some percentage of current residents will be forced to leave permanently.

This is fixable with some regulation, but it's a really common oversight in these discussions. It's not just beginning and end state we have to think about, we have to consider the way the housing is built and what happens to the people during that time.

> People cannot live in a building under construction, they have to find somewhere else to live while it is being b

Incorrect. Apartments can be built on empty lots or on land currently used for things other than apartments. Yet this kind of construction still meets fierce opposition from people claiming to be preventing gentrification:

https://missionlocal.org/2019/02/how-the-developer-of-sfs-hi...

https://reason.com/video/san-francisco-mission-housing-crisi...

I would read a book about the development of midtown and the fillmore before stating these opinions again. I can’t follow any of what you’re saying.

Will the people it displaces be able to afford one of the units? If not, it’s just gentrification.

Why would adding more units to the housing supply displace anyone? Who is displaced when 60 new apartment units open open up on a new building? Your question is a vacuously true: everyone who is displaced will be able to afford a new unit, because increasing the supply of housing displaces no one.

In fact, it reduces displacement. Without new housing, more and more people are going to outbidding each other for a constrained supply of housing, thus displacing lower income residents. Increasing the housing supply is the best way to prevent displacement.

Well, most people can’t afford market rate units in a high demand metropolis. Increasing supply will just allow paying off people to move via a buyout. The market rate will only go down when capital views vacant units as cutting into their investments, which won’t happen in a world where real estate is considered an asset.

New housing does not cause gentrification. No studies support your claim.

If new housing is not built then rich people will push out existing residents. Think about it.

Demonstrably false.

>Sad to see "tenant" organizations yell and scream about gentrification and displacement, ignoring the fact that both of those things are happening right now.

Spicy take: they're fundamentally not mad about those things happening right now, they're mad about those things happening to them right now. California housing advocacy is Winston Smith screaming, "Do it to Julia!" over and over again.

They oppose bills like SB50 because they prefer a zero- or negative-sum solution over a positive-sum solution, which would still allow those people to live near them and "destroy their community".

It's getting very difficult to see how California works its way out of this mess. SB 50 like measures can be passed at the local level in theory but if I've learned anything from these fights it's that older, wealthy homeowners will cripple any attempt to do so.

They can’t be passed at a local level without CEQA review and a torrent of unending lawsuits. That’s why it needs to happen at a state level.

That’s not true. Any city in California has total authority to adjust their zoning code. Cities change zoning as a matter of routine business. The reason cities have not done anything constructive is each individual small government is held hostage by its own incumbent land owners.

They can do it, it takes 8-10 years. Look at the eastern neighborhoods plan in SF, it literally took 20 years. Part of that is shitty nimby neighbors, part of that is area plans are able to be litigated under CEQA, which Is basically guaranteed, and it adds 4-8 years to an area plan project. My point is that it’s literally illegal to do, but it’s functionally impossible, or at least extremely difficult and it takes a very very long time. Ballot box rezoning is not subject to CEQA and therefore can pass quicker (it’s how JJJ skipped CEQA review in LA) but that’s a whole other can of worms.

Cities don’t need area plans to achieve this. They need only amend their codes to change the parameters of their existing designation, like R-1 or whatever. No public outreach is needed to write down that a duplex is permitted in the zone called R-1. No EIR need be written before raising maximum heights from 25 to 45 feet. Any city government can put the item in their agenda and do this in a single sitting.

You’re right that people will sue over anything, and that’s why I support state preemptions in this case, but there’s no excuse for what cities have failed to do.

There are so so many more renters than land owners. It should be possible if not easy.

YIMBYs need to focus more on winning local elections instead of hoping for sweeping changes at the state level.

California's housing policy failures have repercussions up and down the west coast.

It's sad they didn't follow Oregon's lead and legalize some more diverse housing options.

“Legalize” housing options. The way we talk about housing reflects part of the problem: the government wants you to ask for permission (and take their cut) before you can do anything, via permitting and zoning laws. They could care less if they’re a big part of the problem.

The real answer is to legalize and tax it. Prop 13 is a huge distortion on the California real estate market.

Prop 13 is a huge distortion to tax and revenue generally, but it doesn't promote anti-development NIMBYism. If anything, Prop 13 should make denser development more tolerable to existing residents as otherwise denser development in their neighborhood would lead to accelerated increases in assessed land values. That's the very reason Prop 13 was enacted in the first place--to improve ownership security in the face of rapid changes in the neighborhood.

The one and only fix for NIMBYism is to remove local control. Cities have every incentive to continue restrictive zoning because the immediate costs are externalized to the larger region, while the benefits--satisfaction of home owning voters who don't want multi-family dwellings in their neighborhood--inure directly to the city leaders. It's a collective action problem. Mandates don't work well because leaders who comply are voted out of office, while those who find loopholes or simply ignore mandates are favored at the polls.

So when politicians complain that SB50 and similar bills remove local control, that's exactly the point. But nobody wants to say that aloud because to most people "local control" is in the abstract a good thing, and losing local control a bad thing.

Prop 13 is a huge distortion to tax and revenue generally, but it doesn't promote anti-development NIMBYism.

When the carrying costs of a piece of property are artificially low there isn't nearly as much incentive to put that piece of property to its best and highest use, so you end up with people being just fine with single family houses instead of multi story apartment buildings.

Two things. The low tax rate drives up the price of existing real estate. Which makes it more expensive to buy and redevelop.

And then redeveloping resets the tax basis.

Both of these appear to favor holding onto older substandard property.

Yes, those things too.

> legalize and tax it

Thank you for this.

The gentrification boogeyman comes off to me as privilege masquerading as the voice of the oppressed. It's regularly used to bludgeon the poor into homelessness, while the areas that are rife with actual gentrification seem to have far more diverse and affordable neighborhoods.

It's a little of both. There are plenty of people who genuinely believe they can help keep gentrification at bay if they preserve the housing approval systems that exist now. In practice that can mean anything from blocking everything to using approvals to extract design and donations to charities.

There are also, as you say, those who are quite privileged and wish to preserve that. To them, gentrification is a great way to scare other people into averting change.

> There are plenty of people who genuinely believe they can help keep gentrification at bay if they preserve the housing approval systems that exist now

It's a complete reversal of cause and effect. New buildings don't cause demand; new buildings are a response to demand. You can't make the sun shine by passing a law against rain.

Question from an outsider: Is it really necessary to have a state-level bill for this as opposed to county-level? Is the diversity of the localities in the state small enough where such a measure can be decided so centrally? (I admit I haven't read it or saw if it had conditions on population).

Well, one of the main "reasons" this bill was killed was about what you're asking. From the LA Times[0]:

"Senate Bill 50, which would have allowed construction of mid-rise apartment complexes near transit and job centers and fourplexes in most single-family neighborhoods throughout California, was opposed by state senators who said the measure took too much power away from local governments and failed to sufficiently address low-income housing needs."

So it seems there are people in the CA state senate who would rather see this done at county or city levels. However, sometimes these projects hinge on state support in the form of taxes/allocation or if there is existing state-level legislation that requires amendment or repeal... I think. I'm not a gov buff.

Overall, though, I think the prevailing thought is that the cities/counties that some say "need" affordable/denser housing would never on their own vote for new legislation. Palo Alto is named in this article[0] where a resident claims building higher density dwellings is less important than curbing corporate expansion. Quote:

"Greg Schmid, a 78-year-old retired economist, said the region should slow the expansion of large companies. Young, highly paid tech employees are overwhelming Palo Alto, he said, and adding to traffic congestion. The situation, he said, only works for the companies’ benefit and drives out families who earn less and could otherwise live in Palo Alto.

“The aggressive expansion of big business does not have any sensitivity to the need for a sustainable community,” Schmid said."

I think it's a fair point.

0. https://www.latimes.com/california/story/2020-01-29/high-pro...

1. https://www.latimes.com/politics/la-pol-ca-california-apartm...

They have been failing to do anything at the local level for years, because it's easier for a small group of angry wealthy homeowners to get their way in local processes.

So they were looking to do something statewide, to put everyone on a level playing field.

You’d be surprised at the diverse makeup of “do nothing” advocacy groups. Some don’t want the makeup of the neighborhood to change. Some don’t want a building style to be different. Some want their particular disenfranchised group to be represented before any permits are granted. There are many people up and down the spectrum who make up different shades of the NIMBY groups.

For example, look at the reaction to Uber building a new HQ in Oakland, which they ultimately abandoned[1]

> Residents were not as thrilled. After watching the rapid gentrification and rising real estate costs in neighboring San Francisco, many feared Uber would accelerate similar trends in Oakland. The area was already struggling to hold onto its own history as a diverse, working-class area known for activism while absorbing a wave of wealthy new residents.

[1] https://money.cnn.com/2017/08/25/technology/business/uber-oa...

https://www.stitcher.com/podcast/voxs-the-weeds/e/66321406

Boston University's Katherine Levine Einstein explains the dysfunctional politics behind America's housing crisis.

https://www.amazon.com/Neighborhood-Defenders-Participatory-...

"Since the collapse of the housing market in 2008, demand for housing has consistently outpaced supply in many US communities. The failure to construct sufficient housing - especially affordable housing - in desirable communities and neighborhoods comes with significant social, economic, and environmental costs. This book examines how local participatory land use institutions amplify the power of entrenched interests and privileged homeowners. The book draws on sweeping data to examine the dominance of land use politics by 'neighborhood defenders' - individuals who oppose new housing projects far more strongly than their broader communities and who are likely to be privileged on a variety of dimensions. "

> Question from an outsider: Is it really necessary to have a state-level bill for this as opposed to county-level?

County-level decisions on zoning has essentially outlawed most new housing except for single family housing which led to this crisis.

In the US the State has legal authority over land use and can supersede local jurisdictions at any time.

Every smaller entity in the state has abjectly failed to create conditions under which housing can be built. That's why the state needs to set some minimal rules.

I personally think mandatory over-the-counter zoning approval for fourplexes statewide is clearly desirable. People who want to sell their rat-infested shacks[1] for $4 million dollars, in the same year that the shack had an assessed value of $65k, obviously prefer if local zoning regimes continue to protect them from competition.

1: https://socketsite.com/archives/2020/01/dilapidated-postcard...

This is not entirely true. There are a handful of decent actors (Emeryville and Redwood City come to mind in the Bay Area) but they're absolutely swamped by bad actors like San Francisco, Palo Alto, Cupertino, etc which have massive undersupply of housing relative to the number of jobs they have.

I don't know that we should let cities like Redwood City off the hook. Between 2000 and 2013 their housing stock expanded by only 2%, whereas the historical pace is 1% per year, or 15% over 14 years. Their history of inaction should not be ignored.

From 1990 to 2007 housing units increased by 9%, outpacing the San Mateo county which grew at 7% over the same period. The growth in the decade after 2000 did slow, that was the period immediately after a major contraction in 2001 of the tech industry

All governments want to point fingers. The municipalities get away with murder because of state laws that define "urban growth boundary" regions which essentially state that there cannot be any new urban growth where there are not currently urban areas.

Predictably, the municipalities behave as an oligopoly because they know that people can no longer move just outside city limits, which is what people used to do when cities were behaving badly.

Jurisdiction matters far more than most people realize. If we had state level environmental protection laws, Missouri might be more than happy to let St Louis save money by dumping their trash into the Mississippi River where it becomes Louisiana's problem instead. Thankfully the EPA has their jurisdiction set appropriately.

Housing and Land Use definitely need wider jurisdictions. State level would be nice, but at the very least they need metro regional jurisdiction. When a city like San Jose or San Francisco doesn't build enough housing, the affordability and traffic effects ripple far throughout the region. Right now, land use planners don't have to care about the effects they have on neighboring cities, but with wider jurisdictions they absolutely would have to take those concerns into account.

This reminds me of the overly pedantic Wikipedia synopsis of “Louisiana Woman, Mississippi Man”

https://en.m.wikipedia.org/wiki/Louisiana_Woman,_Mississippi...

>The song details the travails of a couple geographically separated by the Mississippi river. They emphatically pledge that their love is too great to let the wide distance of the river keep them separated. Overcoming alligators and bouts of distraction (the man is often sidetracked by spending time fishing) the man pledges to somehow cross the river while the woman claims she'll go so far as to swim the distance (1 mile the song claims). This is an especially bold proclamation on her part as in 1973, arsenic, E. coli and fecal coliform bacteria levels in the Mississippi river far exceeded modern WHO recommendations by over 2000% (similar to current levels in the Ganges river).

Massachussets has a law that enables developers to bypass zoning restrictions if they are helping bring low income housing to an area: https://en.wikipedia.org/wiki/Massachusetts_Comprehensive_Pe...

I think it's sometimes used to threaten local zoning boards to capitulate to other developer demands, but it does contribute somewhat to the supply of affordable housing.

California's SB 35 is similar.

Here's the voting breakdown: https://legiscan.com/CA/rollcall/SB50/id/910526

Yea: 18, Nay: 15: Not Voting: 6

The measure fails despite more Yea than Nay votes. The California State Senate has 40 seats and always require 21 votes to pass. Vacancies (currently 1), absences and abstentions don't appear to affect the denominator of the 51% threshold. As a result, Not Voting is essentially a disguised no vote.

Not Voting is essentially a disguised no vote.

This is such a lame rule. People wanting to vote no should have to say so and vacancies shouldn't make it harder for bills to pass.

It’s a shame.

One only has to look at San Francisco‘s current zoning map to understand why this bill was important to solving the housing crisis in the state.

https://sfplanning.org/sites/default/files/resources/2019-02...

In San Francisco, most of the city is zoned RH-1 or RH-1(D). Areas not zoned RH-1 (Essentially residential areas that allow the construction of multifamily apartments and other larger condominium projects) are seeing an explosion of growth and change; mostly in lower income minority neighborhoods where developers can affordably purchase property.

It’s incredibly unbalanced; and senate bill 50 would have balance the scales to favor more housing options in some of these areas with stringent zoning for only residential single-family homes.

Even though Senator Wiener is from San Francisco, the city council itself came out against this bill. San Francisco is the densest large city in California, with a larger ratio of the population living in apartments then most other cities in the state. Sen. Weiner is pretty safe from backlash as a majority of San Franciscans understand that other cities around the state need to do their part in building housing just like San Francisco has over the last century.

For other politicians around the state, senate Bill 50 is Kryptonite. Like everywhere else in America, Politicians are elected by residents. The largest constituencies of voters tend to be those in single-family homes because mostly California lives in single-family homes. Very expensive single-family homes.

People do not want to change the neighborhood to drastically in a way that would alter the equity they have accumulated in their home.

The best way to not be reelected is to support this bill. Why support multi family apartment construction for people who do not live in their district? Very much the “I got mine“ attitude.

There is no panacea here. It’s going to take a ballot referendum, which is not likely to pass for the same reasons. Or change to the fair housing act. In the 50s and 60s, California zoning was indeed complicated with racial bias and exclusion. Above all else, it is the epitome of Systemic racism for the time period; and the biggest flaw in the fair housing act. As it turns out, the system is still working as originally intended. Fixing the fair housing act to cover residential zoning might be more achievable then anything California can do on it’s own.

This is a great read for anyone who wants to learn more about how we got here: https://www.amazon.com/Neighborhood-Defenders-Participatory-...

Katherine Levine Einstein was on The Weeds podcast a few weeks ago and gave a really good summary of her findings. She doesn't have an answer, but it at least frames the situation in a way that seems solvable.

https://open.spotify.com/episode/6VfqIzzoOlYtkuKvwGDq1K

Would never accept job offer from the Valley exactly for that reason, unless it's a CEO position. Living in Asia, I can rent a perfect house for about $1000, including utilities and cleaning services. Remote job gives equal opportunities

That's pretty good. May I ask what part of Asia?

I rent a ~1600 sq. ft. house in the southwestern US for about $1400/month including utilities. It blows my mind what people pay for a quarter of that on the coasts.

I dunno man, I ran the numbers and came out WAY ahead in the Bay Area

As a senior engineer, I was able to negotiate 150k for remote work (and I'd rent a house house in a nice Midwestern city or a nice apartment in Tokyo for $1200/month) vs 300k+ per year in Mountain View

Even with $3000/month rent, $6 gallons of milk, etc, I'm saving up way more money per year for a similar quality of life. Not to mention that I'm making way more connections and learning more in my time here, so I'll be in a way better spot after 5 years career-wise

I think you can get about 33% more both in Tokyo and in the Bay Area.

I took the Tokyo side of this trade. I don't think my learning and connections are significantly impeded by being in Tokyo, and my quality of life is leaps and bounds greater.

Examples: Strangers regularly assault or shout slurs at me in San Francisco while I am distracted by trying not to step in the human feces on my way to work. In Tokyo, while I was waiting at a crosswalk in the rain without an umbrella, a stranger placed his umbrella above me. In Tokyo, everyone uses a form of bike lock that's essentially an extra back brake with a combination lock. In San Francisco, I lost my $500 bicycle from inside the trunk of my locked car in a private garage. In Tokyo, I do not really have any reason to own a car.

I will save a little bit less money per year, and I will not get to deduct as much money per year from my income due to theft. I think it comes out alright.

Well the only solution is a ballot initiative to repeal prop 13. That will change things.

> Well the only solution is a ballot initiative to repeal prop 13. That will change things.

This seems to always be stated as if stating it makes it true. Prop 13 has little to do with high housing prices and a lot to do with getting more revenue for governments.

Prices are influenced by supply and demand. The artificial limiting of supply by all of the governments in California is the biggest factor in why the prices are outrageously high.

Exactly right. And every time a property is turned over, the base tax rate gets reset, plus prop 13 allows for a 2% increase every year. California has the highest sales and income tax (for incomes over $500,000) in the Nation. They don't need the highest property tax, too.

The reason California has the highest sales and income taxes is that it has the lowest property tax. People who have held property for a very long time are taxed very little relative to how they would be taxed in other states, and people who are new are taxed a lot.

California does NOT have the lowest property tax. It is very distasteful for you to try to win an argument by lying.

http://www.tax-rates.org/taxtables/property-tax-by-state

And if you rank the states by percentage revenue from property tax, you'll see they are right in the middle

https://www.urban.org/policy-centers/cross-center-initiative...

> California does NOT have the lowest property tax. It is very distasteful for you to try to win an argument by lying. (moderators @dang)

> http://www.tax-rates.org/taxtables/property-tax-by-state

> And if you rank the states by percentage revenue from property tax, you'll see they are right in the middle

> https://www.urban.org/policy-centers/cross-center-initiative....

Since the California median home price is more than double the national average for median home prices, your two claims seem clearly to not tell the whole story.

What prop 13 does is keep tax rates from increasing beyond a very small percentage of the original purchase price. Thus, property values increase by a lot while taxes collected do not.

So the first sentence is sort of true. Anecdotal, but a guy on my street purchased his property with no house on it in the 70s and pays like $100 per year even though it is easily worth over a million, which will heavily skew the stats. The second sentence is completely true:

> People who have held property for a very long time are taxed very little relative to how they would be taxed in other states, and people who are new are taxed a lot.

It is also very distasteful to accuse others of lying. It's about the least charitable assumption you could make, and therefore against the site guidelines.

Not everyone who disagrees with you is lying. Not everyone who disagrees with you and is factually wrong is lying. Some repeat what they've heard. Some just lazily assume without doing the research. Some mis-remember.

State that they're mistaken. Cite the evidence. But don't claim that they're lying unless you can prove that they are deliberately stating what is false.

It is very misleading of you to post aggregate statistics when people who have owned property a long time pay very different property taxes from people who have not, as I stated in my earlier post.

> It is very distasteful for you to try to win an argument by lying

Whoa. Please edit personal swipes out of your comments here. Your comment would be fine without that bit.

https://news.ycombinator.com/newsguidelines.html

The property tax in Palo Alto is 0.42%, which is less than 48 states in US. So, not dead last, but I think you can agree that it's pretty close.

>> They don't need the highest property tax, too.

Prop 13 doesn't change the property tax rate, it changes WHO pays the full "nub" rate and who enjoys a "nobility" rebate.

It disincentives home owners from moving, even when their new jobs are far away, increasing commuting time.

It also creates a resource allocation imbalance. Folks that are retired and don't benefit so much by living in highly concentrated job areas tend to remain there. Even when younger people who would benefit more from living in these areas would be willing to pay more, providing an incentive for retired owners to move to a less concentrated area and making a profit.

But with Prop 13, we have instead a system that artificially distorts the housing market(and not in a "just" or "deserving" way).

So a retired person should be forced to move from his little 3 bedroom house because some Googler decided the house next door was worth $3.5MM and his property tax goes up to $75,000/year? That's pure evil.

I fully supported SB50. Build. More. Housing.

>> So a retired person should be forced to move from his little 3 bedroom house because some Googler decided the house next door was worth $3.5MM and his property tax goes up to $75,000/year? That's pure evil.

Nope. A retired person should have the CHOICE to pocket the $3.5MM the Googler is ready to pay for his house in Palo Alto and buy an even fancier house in Livermore knowing that his property taxes is not going to substantially change much.

But with the present system instead, another Googler, let say the food service employee, will never be able to pay the mortgage for a one room apartment PLUS exorbitant "nub" real state taxes. At least the retired guy has a large amount of equity in the house and choices.

Yeah, I feel really sorry for the retired person sitting on millions of dollars of equity. Real sob story.

Why not just give the option to defer increases in property taxes?

It makes zero sense to give tax breaks to people who won the housing lottery.

Well, I don't have the feelings of "envy" that you do. The fact is, there's little he can do with his "millions of dollars of equity" unless he moves far away from family, friends, and social network. It's cruel to force people to move. I'm not envious or cruel, so I support Prop 13.

He doesn't have to move far and away, he can go live to the other side of the San Mateo bridge and pocket at least a million dollars on the house price difference.

And as others have mentioned, there are other mechanisms to defer the tax payment based on the house equity.

The real cruel thing is to lower the bar for the "have" (as in have a house in SV) and higher it for the "have not".

I guess at the end of the day those who own property will do what feels good for them.

It’s funny to see non owners seem up of ways property owners could do with their ‘wealth’.

Guess what, they own property in the hot Bay Area market by virtue of..wait for it..being here and working before most of us were born!

So we can sit here on hacker news and think of all that they need to do to make us feel better, but it means nothing, you know. It’s like the French peasants wondering how Louis XIV should redistribute his kingdom to them. There are no victims. They aren’t the villains...they are just old folks who want to continue to live and die in the towns they funded and built and not be bothered by kids who were likely educated in free public schools they helped build.

> There are no victims.

What a ridiculous take. Besides, the problem of people wanting to remain in their existing homes is trivially solvable by deferring property taxes as liens against the property to be paid on the death of the owner. Average property tax in California is ~1%, so a person could live an entire lifetime without having to pay anything. But of course that was never the real reason anyone supported these absurd initiatives. It was always about rent-seeking.

Sorry. It doesn’t work that way. You can’t tax people for living in the properties they own. Property taxes are just another way to ensure that one never owns their homes 100%. Leins? Who in their right minds would agree to this?

When you want someone to part with their money or wealth, you have to give them a reason to do so. ‘We want what you have’ is not a good reason. It becomes a punitive tax and is based on coercion.

I see no valid arguments or offers that would make people agree to higher taxation.

The have-nots want to take more from the haves. This has happened many many times in the past. It comes from lack. Not logic.

> You can’t tax people for living in the properties they own.

We have to do this if we want to allocate land properly. Land is an exclusionary good, so one person owning a piece of land means that someone else can't own it.

Imagine a society with no property tax. What prevents one (or a few people) from buying up all the land, holding it indefinitely, and then charging arbitrarily high rent to everyone else? Property tax forces people to sell if they using it inefficiently, and makes sure that few aren't able to take land and exclude everyone else.

When you want to take what’s someone’s property and make sure you want to ‘allocate’ it to someone else who wants it..it’s called redistribution.

They used to send people to re-education camps to ensure it happened smoothly. We may not have re education camps here in CA but asking senior citizens to accept punitive taxes so they would feel incentivized to move to the country so land can be reallocated is the same thing.

And yes, ‘one or few’ people will buy up everything and hold it. It is the nature of property rights. To have rights over ones own property. If you want to rewrite that, we have to change what America is about..

Being able to live in your property is not ‘using it inefficiently’. Wanting someone’s property ..otoh..is theft.

> When you want to take what’s someone’s property and make sure you want to ‘allocate’ it to someone else who wants it..it’s called redistribution.

No one's property is taken, they'll just sell it on the market to whoever can pay the most. That's not redistribution, it's called markets (what America is build on).

I think we fundamentally disagree on economics, so I doubt we'll come any useful agreement here unfortunately.

However, one thing I wanted to note is that Milton Friedman, one of the most libertarian modern economists thinks property tax is the best tax [1][2]. If a libertarian economist thinks a policy is good, yet you're comparing the policy to authoritarian socialist countries and re-education camps, you may want to consider that your mental model of economics/definitions of common words is extremely off base from how everyone else uses it. The Conservative Party in UK did the same thing, where they called land value tax (essentially what I'm arguing for here) a "Marxist tax grab", even when Marx opposed it!

In general, using words to mean the exact opposite of what everyone else considers them is not a great strategy.

Even ignoring that, I think claiming that property taxes are the "same thing" as re-education camps is a fairly tone-deaf statement to make (and one most readers would consider wrong), and it only serves to weaken the rest of your argument.

[1]: in his words, the "least bad tax", but that's equivalent, since he considers taxes to be required

[2]: see https://www.youtube.com/watch?v=yS7Jb58hcsc

Right. I don’t think we will agree on economics because I have a degree in economics and my thesis paper was on Milton Friedman.

Secondly it is not market forces when the govt has to interfere and impose more taxes to make sure homes become affordable to the working class by snatching away the economic net of the non working retired class. In fact, it is the exact opposite of ‘Markets’. It’s a freebie by the govt to the govt educated public school kids who became adults. The kids who grew up in public schools are doing what they were taught to do. Redistribution of common resources and wealth. Socialism sits uneasily with free market forces. An imposition of an INCREASE in taxes is not the same as imposing a tax.

Friedman speaks about land value tax on unimproved land. And that the property tax thus collected should be used for public services like law and order, infrastructure and essential services.

Almost 85% of the property taxes collected is used for public system. 45% of California state budget goes to provide free public school education for everyone regardless of whether they pay taxes or not to the tune of 10-12k/child per annum. It is also used to cover unfunded pension liabilities of these public school system teachers.

I am pretty sure you haven’t understood what Friedman suggested and this was read from some Bay Area real estate sponsored article from a click bait’y rag that has nothing to do with economics or Friedman or libertarian economics.

There is zero economic logic is in trying to alleviate housing shortage by taxing retired property owners on fixed incomes except to displace them..aka drive them away to make space for public school educated young people who despite having earning power are not mobile enough to educate their kids in quality schools because California’s educational system is a Ponzi scheme. And no one is paying attention to it because the schools did not do the job of actually educating these kids in..I don’t know..subjects like economics.

Current workinh populace can not afford to buy properties from older folks. Because they lack the purchasing power. So the mob wants to increase taxes so old people who don’t gain anything from public school funding will leave.

This is exactly what is known as ‘cutting the nose to spite the face’ because what’s good for the goose is good for the gander. The only winner is the govt that gains more taxes from property, income(because only the wealthy can now afford to buy and most of their income is going to income taxes, property taxes, sales tax, gas tax, road tax on top all the other special taxes, parcel taxes, business tax etc). It’s like in the casino..the house always wins. Why anyone with a modicum of understanding of economics cannot see this beggars belief.

The problem is relating property taxes to public education budgets. The problem is the speculative nature of real estate and allowing foreign investors to speculate on California real estate. The problem is the lack of TRUE purchasing power of the Silicon Valley grunt workers allegedly making hundreds of thousands of dollars in income but have little to show for it. The govt is taking them for a ride and they can’t see it because the critical knowledge of evaluating a bloated govt’s economics is conveniently left out in the public school system. And I suspect..by design.

Density benefits taxes. Taxes are ‘good’. The purpose of a tax increase is to make it unaffordable for retirees to continue living in their homes and to displace them. It doesn’t pay for any services. The govt acts like a henchmen so housing stock is cleared and made available for the highest tax paying demographic. So they can collect more taxes. Let this sink in. I repeat. Let.This.Sink.In. Milton Friedman ..trust me on this...wouldn’t approve.

Anyone in this situation can easily take out a home equity loan to pay the taxes and come out way ahead. Your assertion that the higher taxes would force them to move is wrong.

Say you have equity in a non public company, would you be okay if the government taxed your equity forcing you to take out a loan against it?

These 2 scenarios aren't equivalent. Land is an exclusionary good; you using it means I can't. Equity is non-exclusionary. Additionally, the city has to provide services to owners of land, which requires money. The government has no such obligation to owners of equity.

Yes, land is exclusionary but there is plenty of it in the US. People in California just don’t want to live there.

The government also has to fund services to everyone who works there whether or not they own land. Do devices cost more to home owners based on the value of their land?

I thought the purpose of tax was to fund the government. Not to take stuff that other people wanted.....

I thought the purpose of tax was to fund the government. Not to take stuff that other people wanted.....

Property taxes are among the most economically efficient taxes that exist. They are an excellent way to fund the government.

How are they "economically efficient"? It doesn't cost anymore to serve someone in a million dollar home than a $200K home. Besides that you get into situations where richer neigborhood have better services, better funded school systems, etc.

Because they don't discourage otherwise positive economic activity.

Do you feel the same way about the government taking private property via eminent domain to build a Walmart?

No.

What's the difference? Either way you're taking property for "positive economic activity". A Walmart can bring more jobs than a group of houses....

One obvious difference is that property taxes are applied uniformly and predictably --- a whole industry exists to plan around them --- and eminent domain is not, so widespread application of ED would create uncertainty that would discourage positive activity.

What’s “predictable” about having to pay taxes on a property that you don’t know how much will appreciate? Someone who bought a house 30 years ago while they were working, paid it off and had enough in savings to pay their bills but not pay taxes on a house that went up 10x the rate of inflation couldn’t predict their tax bill.

What happens when they can’t pay their taxes? The government takes it.

This is an unserious argument. ED and property taxes aren't comparably unpredictable. An obvious illustration of this would be the fact that most places in the US don't have California's cap, and people manage tax planning just fine. If your real argument is, essentially, "taxation is theft", that's a coherent position, but since most people don't agree with the premise, you're not left with much to contribute to this particular discussion.

No, I’m not saying that “taxation” is theft, but the undercurrent of raising property taxes on people who have been living in their houses for years is that the land could be better use by “more productive” tech bro’s than old people and if you raise the taxes enough, they would be forced to move.

Those same tech bro’s would hate it if they were taxed on unrealized, illiquid wealth.

But, yes there are plenty of jurisdictions that give property tax breaks to senior citizens.

This is how property taxes work pretty much everywhere else, dense and sparse, tight housing market and loose. It doesn't seem to be causing a crisis anywhere, unlike California's policy, which is implicated in an actual housing shortage.

And since we do have 49 other states, if prices get to high - companies and people will move.

Problem solved.

In addition to what tptacek said, taxes are paid with money which is an infinitely fungible commodity. Eminent domain confiscates a specific piece of property that cannot be precisely replaced.

Money is a fungible commodity but a house isn’t. You can’t sell part of a house. If that’s where all of your wealth is.

You

You can’t sell part of a house.

Sure you can: https://point.com/how_it_works

Fair enough so we should also tax equity in private companies. That money could also be used for positive economic activity.....

I'm glad you've come around to my p.o.v. on property taxes!

The pros and cons of a mark to market capital gains tax are pretty far outside of the scope of this thread, so I will save my thoughts on them for another day.

It’s the same concept. You want to tax illiquid unrealized wealth that may force people to sell the underlying illiquid asset to pay taxes.

I already covered this way upthread. Property taxes aren't wealth taxes, they're consumption taxes.

I don't understand why that is a relevant question.

Because people are always willing to tax other people's wealth.

Property taxes aren't wealth taxes, they're consumption taxes.

This is obvious when you consider the fact that a person who owns a piece of property outright pays the same property tax as someone who owns a similar piece of property but carries a mortgage.

Does a person who owns a $1 million dollar home "consume" more resources than a person who owns a $200K home? What if the homes are the same but in different parts of the city?

Yes.

How so?

Some land is more valuable than other land. Living on top of more valuable land consumes a more valuable resource.

You could make that argument about any property (e.g. art). I guess your definition of "consumption" is "having something someone else doesn't"? But that isn't what most people mean, I think.

Edit: I think a tax on imputed rent could maybe be considered a consumption tax, and it would indeed make sense for it to be higher or lower depending on the location of the property. But a tax on the value of the whole property is not, because it also captures the value of the property as an asset. So that's why I think your argument is too broad.

Imputed rent is (roughly) proportional the the value of the property, So a tax on one is the same as a tax on the other.

Yes, there's a consumption component and a non-consumption component. Of course when either component goes up the total goes up. But the tax is on the total value and therefore it's not a consumption tax.

Let's say that imputed rent is, on average, 10% of the total value of the property.

That makes a 10% tax on imputed rent the exact same thing as a 1% tax on the value of the property.

So your point is really just an argument about the rate, not an argument about the fundamentals of what is being taxed.

Note that property taxes tend to be a fraction of sales taxes for exactly this reason.

Yes, I understand this point but the ratio between rents and property values varies wildly. So yes you can compute an average ratio and say it is "equivalent" to a tax on imputed rent if you adjust by that ratio, just as you could average out the number of bathrooms in each house and say it is "equivalent" to a bathroom tax. But it's not a very compelling argument!

ratio between rents and property values varies wildly

Does it vary all that much within a specific property tax jurisdiction?

Sure! Here are some things that could cause the rent/value ratio to be significantly different for a single property:

- There is no usable building on your property.

- There are plans to build a highway through your neighborhood in five years.

- Amazon has announced plans to build an office in your neighborhood two years from now.

- There are harvestable (with further development) natural resources on your property.

Many of these have impacts on hypothetical future consumption, but hopefully you agree that a tax on anticipated future consumption indefinitely into the future is not a consumption tax.

I don't have data as to precisely how strong the correlation is, but I think it's pretty clear that it is not 1, and furthermore if we really wanted to tax imputed rent directly we could presumably do so (we'd have to guess what it is but the same challenge applies to valuations of properties that haven't sold recently). So I just don't think "consumption tax" is a good way to look at a tax that clearly captures, and is designed to capture, other things.

I don't have data as to precisely how strong the correlation is

I'm actually pretty curious now, and might be go looking for data. It's surely not precisely 1, but I bet it's not all that far off. Especially if you limit the sample to residences.

Your list of outliers is a good one (I particularly like the natural resources one), but I think they're probably mostly exceptions to the rule.

In the end though sure, property taxes aren't precisely consumption taxes. But they clearly aren't wealth taxes either. They're something in between and, I think, much closer to consumption that wealth.

I've really enjoyed thinking about the points you brought up. Thank you for doing that.

Thanks, I enjoyed the exchange as well. I am also curious about the correlation coefficient but could not find any details in the amount of time I had to put into it. I did get the feeling that there is substantial research in the area of what drives housing prices, though.

The land isn’t more valuable because of some inherent virtue of the land.

It’s only more valuable because tech bro’s want it.

You could say the same thing for almost all goods and services which are subject to consumption taxes.

The cost of police, fire fighters, schools, roads, etc. don’t go up with the value of the home. There is no reason that you couldn’t charge a flat rate to every property owner - including businesses.

We could do that, but then it would be more like a poll tax or a head tax instead of a consumption tax.

How so, taxes are meant to fund the government and services they provide. Everyone who lives in a jurisdiction either consumes those government resources or we as a society have decided that it was in the common good to provide those services (ie education).

The cost of all of these things do increase with the value of the home, because the labor required to do it gets more expensive. The individual house price doesn't contribute to this but overall housing costs do.

SF has had an explosion in property values and thus struggles to find teachers, firefighters and police officers at the salaries it's willing to pay.

Again why should those taxes be based solely on housing instead of or in addition to other types of wealth?

This is not a good argument. It would be the equivalent of me asking: Does the trash pickup service, repairing potholes or patrolling the street cost more if the home owner just moved in than if has own the house for 30 years?

Well, that does argue for my previous stated idea of charging every property owner the same fee for the same service.

Trash pickup is actually a great example. Where I live it’s not part of your property taxes. It’s a separate bill and everyone pays the same amount.

The city council can set budgets for the different departments and set taxes based on the budget. Neighborhoods already do something similar via homeowner’s association fees and condo fees.

It’s not envy. Happy that he made a ton of money.

But, yes, there is plenty he can do. Stay in the house and keep paying low property taxes.

Once he dies or sells, then all those accrued property tax increases get paid, with interest.

You know, the same way a lot of governments in Canada and the US do it.

You could allow for partial tax deferral until home ownership is transferred(sale, death, etc). So, retired person keeps paying $100/month while their neighbors are paying $10000/month for the same exact services, but if they accrued $150k in taxes by the time they died, that chunk is taken out of the sale price of the home.

It's also pure evil that a retired person can't sell his 3 bedroom house to a quad- or 5-plex developer, not move (except temporarily while it's being rebuilt), and get a nice chunk of cash, because his other neighbors don't want the "neighborhood character" to change.

I agree with you 100%. That's why I support SB50!

Do you feel that it is fair to evict an old couple because they purchased their house in the 70s when it was in the woods, but now that people have built up a town around them, they have to go because they didn't plan on paying $7,400 per year in property taxes in their retirement planning, and then also can't afford to take on a new mortgage in the region, so move really far away from where they saved for and planned for retiring?

Right. And $7,400? Try $30,000! That's what the starting property tax is on a $2.5MM house in Sunnyvale is today.

That's what people moving into Sunnyvale California in 2020 are paying.

https://homeguides.sfgate.com/calculate-california-property-...

Or they could sell to a condo developer, get a brand new unit, with lesser maintenance needed, in the same location. It doesn't have to be a binary choice between "sell and move away" and "stay and keep prop 13".

With Prop 13 and zoning restrictions, "sell to an upzoner" is essentially off the table.

Also an old couple who have been renting since the 70s could be evicted until state-wide rent control was passed this year. No one cared about them this whole time.

It's also not clear what things like commercial properties or family farms have to do with "keeping old people in their homes". All these are covered under Prop 13.

I'm all for SB50. Get rid of zoning restrictions. Don't conflate Prop 13 and SB50.

Just curious, are you in favor of statewide rent control too?

> Don't conflate Prop 13 and SB50.

The existence of Prop 13 has created a large class of voters opposed to rationalizing zoning laws - such as by SB50. It benefits these people to restrict housing supply, and Prop 13 ensures they don't pay the cost. Prop 13 is one of the root causes of all of California's housing supply issues.

I think we should build a lot more housing and make housing affordable by increasing supply.

How do you convince the opponents of SB50 to come around?

Pay them more money than the other guys are paying them.

Who are the "other guys" here? What does "pay them money" mean?

I assumed you were referring to the politicians voting against the bill.

Politicians vote in a way that they think will get them re-elected. They aren't the true opponents of this bill.

Campaigns cost millions of dollars. Where do you think that money comes from? Principles and integrity?

A well-funded campaign is useless against pissed off voters.

> A well-funded campaign is useless against pissed off voters.

The re-election rate of incumbents in California state senate districts approaches 100%. Getting into office in a district of a million people is about money, nothing else.

> nothing else.

So the politician is getting re-elected even if they vote entirely contrary to their constituents' wishes? That's a bold claim.

Nothing bold about it. Nothing correlates as strongly as campaign contribution, especially in enormous districts.

The voters matter less than you think, largely because in these huge districts there will be an incredibly diverse range of opinions. Short of ordering troops to come in and murder people in broad daylight, getting such a huge number of people to coalesce around any single anything almost never happens.

And don't forget non-primary residences. Not only prop13 "helps" you to stay in that old estate of yours that you may not be able to afford with increasing taxes, it also allows you to keep the cabin (or two) in Tahoe.

I never say it is fair to evict them. What is unfair is to have a two tier tax system: one for nubs and one for the established.

The noob faces a double whammy, he needs to put a lot of money for the house and he has to pay a higher tax rate (and he has to live there because his livelihood depends on it). The established has an incredible investment in his home with a big market value giving him many options.

Financial instruments can turn their equity into an annuity which will pay the taxes, or the taxes can be deferred until they die or sell.

The rest of the world manages without Prop 13.

"A total of 44 states and the District of Columbia have at least some limit on the amount local communities can raise property taxes."

> Prop 13 doesn't change the property tax rate

Part of it was capping rates.

How about repealing Prop 13, and replacing it with a land value tax?

https://www.econlib.org/land-taxes-the-return-of-henry-georg...

Prop 13 has a TON to do with high housing prices, because it eliminates the downside of high housing prices: higher property taxes.

Once higher property taxes are out of the picture, higher property values are purely beneficial for homeowners, which means there's every incentive to vote for anti-housing policies to enrich themselves at the expense of transplants and immigrants.

I wouldn't say it eliminates it. When you buy a property, you still pay taxes on whatever your purchase price is. Prop 13 just mediates the rate of increase, which is beneficial, but not immediately.

>When you buy a property, you still pay taxes on whatever your purchase price is.

And again every year after that, including whatever increase your taxing authority may legally apply, usually the maximum allowed by law unless you actively fight it.

Texas has no state income tax and property taxes are (so they tell me) quite high as a result. My property tax is $7k+ each year. Not onerous because I have a full time job, but many of the retirees and landlords in my area did find it onerous enough to sell. Bad for renters because a lot of reasonably priced rental properly was lost, good for the city because a house like mine was torn down and 5-7 condos or townhomes took their place. Now the city is looking at easily 8 or 9 times the tax revenue for a single lot like mine since these new homes also appraise higher than mine.

If anything prop 13 represents one extreme and Texas the other. It would be nice if we could meet somewhere in the middle.

It isn’t any coincidence that Texas is one of the few places in the US that has experienced large population growth without a corresponding affordability crisis.

Make it as hard to build a new residential unit in Texas as it is in California and that trend falls through the floor.

They won't because they don't want to keep their property taxes affordable.

> They won't because they don't want to keep their property taxes affordable.

The tax rate has nothing to do with building houses.

Sure it does. High uncapped taxes strongly incentivize property-owners to support new housing development. Low property taxes, capped to rise slower than inflation (e.g. prop 13), do the opposite.

(I meant to say they do want to keep their taxes affordable)

> Sure it does. High uncapped taxes strongly incentivize property-owners to support new housing development. Low property taxes, capped to rise slower than inflation (e.g. prop 13), do the opposite.

> (I meant to say they do want to keep their taxes affordable)

That has absolutely nothing to do with CEQA.

> a house like mine was torn down and 5-7 condos or townhomes took their place

I fail to see the downside here. Isn't that a good thing, and exactly what you want in California (SFH being replaced with more units)?

>I fail to see the downside here. Isn't that a good thing, and exactly what you want in California (SFH being replaced with more units)?

Depends on whether you're a preservationist or not. There are also other answers to high density than a few condos per each 5,000 sqft lot. Combine a few of those lots and you can build a 10-20 story tower which will hold many more people.

> Prop 13 has a TON to do with high housing prices, because it eliminates the downside of high housing prices: higher property taxes.

> Once higher property taxes are out of the picture, higher property values are purely beneficial for homeowners, which means there's every incentive to vote for anti-housing policies to enrich themselves at the expense of transplants and immigrants.

I will agree that it will impact the absolute price of the housing.

When we talk about "housing prices", what we are really talking about is "monthly payments". Increasing the tax rate will just result in an exchange of dollars previously going to mortgages to dollars going to taxes. The monthly payment will remain the same, largely unaffordable, rate.

So, I disagree that it makes housing more affordable, because it has done nothing to change the supply or demand.

If you have some sort of refutation for the claim that supply and demand affect price, you should publish and collect your Nobel Memorial Prize in Economic Sciences.

No it won't. It would displace even more people.

The only way to get lower-cost housing is to build more housing. It's that simple.

Yes, it will.

One of the problems with housing is that local governments get less revenue from housing than business. That gives them every incentive to approve commercial construction and deny residential.

Take away the financial perverse incentive., and there is a lot of money to be made by approving badly needed dense residential housing near existing commercial buildings.

Prop 13 also applies to commercial real estate. The difference is that commercial properties require fewer public services, so costs are less. But the real difference is that there's usually much less NIMBY opposition to changes in commercial zoning than residential. Talk is cheap. What matters is who shows up to zoning board meetings. People tend to only show up when it effects their neighborhood, not so much when it effects the business district a mile down the road. Likewise for voting preferences.

Rescinding Prop 13 is unlikely to change anything because assessed values will be even more if developers can build bigger, multifamily dwellings in the neighborhood. So, yes, taxes would go up, but the local pressure to restrict zoning won't change as the incentives still line up the same way relatively.

Zoning meetings happen in the middle of the day. The only people that can go are old people!

Also rich people and neighborhood associations, who send their lawyers. And some poor and ethnic neighborhoods, who send their community activists.

Figures that I saw estimate that local tax revenue from commercial property averages double that from residential. That's a pretty big incentive for a city to attract business and not attract residential.

To take the example that you just latched on to, if rezoning the land makes it worth more, and therefore increases local taxes, this becomes an incentive for the city to balance its budget by rezoning. And some of that rezoned land will get dense residential living. Which will reduce traffic congestion. And make everyone's lives better.

It’s not that simple because the housing that gets built in areas with the worse affordability crises is high-end stock that gets bought up as an investment or cash store. “The market” has decided that in an era of extreme inequality and stagnant wages that the only way to recoup investment is targeting this segment, leaving everyone else in dire straits.

(Unless you’re talking about the government building massive amounts of social housing to account for the market failure, in which case I agree).

Even most high end housing ends up getting occupied. This takes high income / wealthy people out of the market for existing housing stock, helping reduce market prices for existing housing.

Grandfather them (current owners) in till it’s sold and all new units are outside prop 13.

rather than a wholesale grandfathering, you can just defer the additional tax owed until a sale, when proceeds would be available to pay the tax.

Repealing prop 13 might help a little, but it's a weaker driver than recessions and interest rates.

https://fred.stlouisfed.org/series/CASTHPI

https://fred.stlouisfed.org/series/JHDUSRGDPBR

https://fred.stlouisfed.org/series/MORTGAGE30US

How do those graphs support this claim?

It supports them because the inflation adjusted difference in monthly payments correlates very well with the 30 year mortgage rate. As interest rates fall, home values appreciate based on how much of a monthly payment someone can afford, less the effect of recessions and including other things like prop 13.

Take Q1 of 1995 for instance. The inflation adjusted home value at that time was ~340, and the interest rate was 9%. In that case, a $340k home would have a $2.7k monthly payment. A $680k home today with interest rates at 3.75% today would have a $3.1k monthly payment, and I believe that most of it's appreciation is because of low interest rates.

If housing prices were driven by prop 13, then when interest rates go up, housing prices should stay the same. If housing prices depend on mortgage rates, then they should decrease over time as interest rates increase.

What will be the actual process by which things change? It's not obvious to me that say rents will drop if prop 13 is repealed.

Prop 13 was created because it was forcing people out of their houses because of inflation property values on paper. That is detrimental.

You shouldn't scrap it completely; you should limit it to primary residences (spend more than half the year there). That would get rid of some of the worse issues.

It shocks me every time I hear fellow left-of-center people talk about scrapping Prop 13, but then also rail against gentrification or some other issues. Absent Prop 13, people would literally be forced from their homes from high taxes.

Prop 13 was a response to the inflation of the 1970s that drove asset and investment prices higher.

Limit to primary residence and cap the increase at 10% instead of 2% (I think Michigan does this) might be okay.

Low income seniors have https://www.sco.ca.gov/ardtax_prop_tax_postponement.html so Prop 13 is wholly unnecessary for them.

Jesus Christ. I didn’t know CA already had that law. As you said Prop 13 is absolutely not required.

That law basically says if you can’t afford the increases, we’ll bank it. If you can, pay up.

That isn't nearly enough. It only applies to 65+ or with disability who make $35k or less.

This is part of the problem is that people are unwilling to compromise. On one side you have those who view even the risk of a single person being displaced by gentrification and rising housing prices as unacceptable.

On the other side you have those will accept nothing less than displacing everything. I make enough that I don't care, and I don't really want to live in CA long term (from NYC).

But I think a primary residence carve-out that applies to everybody would be a good compromise, but that seems to be a dirty word in CA politics.

Is $35k not good income for retirement? They already own a house which has gone up in value and have had years to accumulate savings.

I lived in Los Angeles for the better part of a decade making less than $35k and it was fine (and I didn't own a house).

Limit it to primary residence. Tally the tax deferred and take it out when the property is sold or transferred. Remove it from commercial properties.

Maybe they will be motivated to legalize housing if they are taxed proportionally to the value of their houses.

> He acknowledged, however, that more work is needed on SB 50, and asked his fellow lawmakers to approve it so the Assembly could continue that work.

So why not do that work before sending it for a vote?

Because there is a time limit on these things. I don't understand all of the procedural rules but since it didn't pass this vote now nothing can be done for a year.

If it had passed this vote now it could have been tinkered with between now and a possible eventual passage in the next several months.

Expensive housing is a feature and not a bug for the tech industry. They prefer to hire young, single workers because they will work longer hours in worse conditions, and if they can keep them rent- and commute-burdened they are less likely to switch jobs, start a family, take up a hobby, etc.

That's funny considering that Google was literally trying to build housing for its employees and the Gov blocked them because nimby. Blaming the tech industries for California's terrible idea of governance is pretty laughable. The state would be bankrupt if not for the valley.

So, I guess the question is, if tech companies keep feeding the monster, they are complicit in this.

California is not just SV for a start. What's the point of having all your workers in a high CoL area again?

Get a small office to appease VCs but have your workers somewhere else. Your money will go further as well

Only one word can describe these politicians: Despicable

Pathetic.

Well this is for sure a bummer

Thank the lord, these places already are terrible.

Housing has been a bitter historical and cross-cultural source of class conflict and oppression. In its current form in America, the bourgeois accumulate as much as they can like any unethical entity, and leverage it to maximize personal utility at the cost of the living conditions of the masses. It's always interesting to see how people use capitalism to indirectly (which is no excuse) cause this natural brutal nature of existence, to cause the common man (or woman) to "groan and sweat under a weary life".

To be fair, a continual rent treadmill that forces everyone to work full time is the explicit overt policy of the Federal Reserve. But any candidate that brings this up gets memory-holed by the mainstream propagandas.

Woah. What kind of language do they use to describe said policy?

https://www.federalreserve.gov/faqs/money_12848.htm

> The objectives as mandated by the Congress in the Federal Reserve Act are promoting (1) maximum employment, which means all Americans that want to work are gainfully employed, and (2) stable prices for the goods and services we all purchase

The qualifier "want" is a distraction, as everyone "wants" to work if that's what it takes to have a reliable bed to sleep in.

Furthermore, "stable" prices are untenable in the face of technological progress that makes everything less expensive. In order for the CPI average to keep going up, the price of housing has to shoot through the roof.

edit: Try drawing out the basic feedback loop. The Fed acts by creating new money. It doesn't simply give this money away to everyone (which would cause across the board price inflation), but it can only be accessed by taking on loans. Anything that can be financialized becomes awash in this new money - housing, cars, education. Consumers then have to settle for paying interest payments (rent) on sky-high asset valuations, rather than having smaller loans that can be paid off early to achieve economic bargaining power.

This conclusion you're coming to is quite the massive reach based on the logic you used to analyze that sentence.

I suspect American English, but I suppose we could look it up.

Well, I guess I’ll just copy/paste my comment from another unrelated HN story 10 minutes ago:

“And once again, any US organization allowed to use a .gov domain loses yet ANOTHER notch of credibility, and confidence in their competence.“

Our “Governments“ are becoming obsolete... meanwhile we’ll continue to delegate more and more of the responsibilities to provide the utilities we need to technology companies.

Alright, please see this as an olive branch to YIMBYs. The results are pretty clear. The YIMBYs do not have the votes on their own to get this done. Unless you are some suburban retiree you probably recognize that the solution is building more housing.

I think based on the voting records YIMBYs should join forces with PHIMBYs and make the next iteration of SB50 really take public and affordable housing seriously. The existing provisions added to SB50 already got the bill much closer. Why not add some provisions from AB1279? Maybe repeal article 34 in the constitution? Maybe repeal Costa-Hawkins? There are NIMBYs that are pretty clearly hiding behind affordable housing that we know are insincere. We know their cities and counties aren't doing enough to help poor folks. But the evidence suggests there are enough people that want to upzone and build housing to get this done.

Does this strike others here are a reasonable path forward?

The reasonable path forward is to write off SF as a good place to live or do business. Tech badly needs a new economic zone, one where it is actually welcome.

My way or the highway doesn't work in politics. I'm sorry if you were told otherwise.

Asia?

This has been obvious to me for years. Also because the most affordable dynamic places always have a combination of PHIMBY and YIMBY. YIMBY was started by libertarian market urbanists. I agree govt intervention limiting land use rights is the main problem, but you’ll never get support for deliberalizing land use without guaranteeing protections to the lower and working classes. There’s plenty of ways to make this stuff work (see abroad) without having it turn into another Cabrini Green

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