California’s housing crisis: how a bureaucrat pushed to build

In most places, new cars are more expensive than used ones, but if you stopped providing new cars, the price of the used ones would shoot up as everyone started competing for a dwindling supply of cars.

Same goes for housing.

Also, it's a longer term process with housing, but 'filtering' is a real thing: https://oregoneconomicanalysis.com/2016/05/25/housing-does-f...

vs. the article:

> ... how expensive new housing today would become affordable old housing tomorrow ...

People are outraged when you put apartments and condos in their multi-single-family cities because "lower class" people will move in. Don't those "lower class" people currently lack access to live these places?

Therefore, if you say it's bad to build new housing if it will end up being expensive, you're really saying there should be no new housing built during a housing shortage...

I find it's often better to think it terms of number of homes and housed people than in prices. If 100 new apartments are built, it's hard to say what will happen to prices exactly. But it's undeniable that there will be 100 more homes, and 200-300 more people can live indoors in that city, than without the project.

https://reason.com/2018/10/10/booming-construction-and-falli...

> Portland added 4,419 unit of completed housing in 2016, a slight increase from the roughly 4,365 it added in 2015, which combined is more than all the housing units added in the five years prior to 2014, according to the Portland Housing Bureau's 2017 annual report.

> Year-over-year average rents declined by a full 1.2 percent in the city of Portland, with average rents dropping to $1,140 per month for a median one-bedroom apartment, according to the yearly rent report from Apartment List. It's a similar story in Seattle, with Apartment List data showing rents declining 1.6 percent from where they were in 2017. The median monthly rent for a one-bedroom apartment in Seattle is $1,346.

When you don't build more, rents go up. When you start to build enough, rents go down. It's pretty fucking simple. In fact, it is econ 101.

Their zoning is where they have obvious huge differences. The zoning categories are set at a national level and limit how restrictive local cities can be (there's 12 categories based on nuisance level). The higher zoning usually allows lower density also, so cities just start with a little extra zoning headroom that allows them to grow over time. They also automatically permit things that follow zoning. [1]

In the US zoning is more local, often there are many more zone types that are much more restrictive about what they allow (it's more micromanaged and often prohibits things like mixed-use in addition to multi family). In many of the biggest markets even projects that follow zoning are usually not allowed, every project is an individual years long fight. Also in cities like Los Angeles the zoned-for capacity has actually dramatically decreased over time, even as the population grew. [2]

Some of these policies may be a legacy of people deliberately not wanting it to be too affordable, because neighborhoods didn't want low-income people to move in. Of course now in many places even middle-income people can't afford it.

I think, from a social justice perspective, the US policy has been an abject failure. It's increased pollution (from long commutes) and homelessness. It's deprived people of good paying jobs, since they can't afford to move to the locations where they're available. It's squeezed the middle class and enriched landlords, there's even debate that housing may be the most important contributor to wealth inequality. It's anti-environment since higher density has less environmental impact on a per-capita basis. I'm sure there's some upsides, but I can't see any that remotely justify the long-term costs that these policies have brought about.

[1] https://marketurbanism.com/2019/03/19/why-is-japanese-zoning...

[2] https://www.salon.com/test/2015/04/05/the_incredible_shrinki..., graph at: https://www.austincontrarian.com/.a/6a00d8341d04dc53ef01b8d2...

The role of new construction in affordability is more direct. The people who live in the shiny new places will just bid up the price of the next best thing if it isn't available, and this ripples down until the people at the bottom are priced out. So by building it, you're preventing other things from being bid up.

It's not so much induced demand as it is pent-up demand. Lots more people would already love to live here — indeed, many have moved away solely because of housing costs.

If housing prices were cut in half in SF you’d see WAY more people moving here.

Prices are a function of demand and that's it.

Every city has to ultimately decide what kind of community they want to have and then act accordingly.

As SF is an attractive city, every home ever built there will essentially be bought or occupied, there is nearly an unlimited number of people who would like to live there - so it's merely a matter of what kind of density and price they choose to have.

Do they want SF to be a city of skyscrapers, with tiny expensive flats like NYC?

Or a neighbourhood of fairly expensive homes as it is now.

Nobody anywhere will doubt that 'building significantly more homes' will reduce the average cost of homes but ultimately SF residents will decide what they want to do: if they don't want skyscrapers or high-density style buildings, it's their business.

There absolutely is. Here's a great paper studying the effect of removing rent control in Cambridge, MA (https://economics.mit.edu/files/9760) which found that rent in non-rent controlled units went up as a result of the removal. The effect is similar to what GP stated -- gentrification causes a feedback loop that can affect all housing.

All said, it is very possible (and I subscribe to the idea) that the Bay Area would not suffer from much induced demand because people are in the area for the economic opportunity, not for local amenities.

Such as?

This would imply that the value goes up (location, location, location). That would cause property taxes to increase and may drive people out that can't afford to stay.

Although, if other states do it, should be data to talk to those predictions...

I'm not saying you have to agree with that cause, but if lowering state income taxes is your goal, then there are plenty of groups in CA advocating for that whose cause you can join.

However, I'd guess that due to political realities, most of them also oppose repeal of proposition 13 also, so you might have some challenges building a movement around that.

Just because I bought the same house decades later my property tax is 20x what my neighbor’s is?

Am I really using 20x the resources my neighbor does?

Get rid of Prop 13 and you could probably be revenue neutral and still drop the property tax rate by 50%.

Thank you!

1. why are you so sure? What makes you an authority on the whole society's interests? 2. even if so, are you saying that collective interests trump individual rights? This is socialism 101. Government will decide who should live (and work) where, and who should own what.

https://twitter.com/eean/status/1228182747149025280

https://twitter.com/neversassylaura/status/96939949395841843...

https://reason.com/2019/01/16/san-francisco-property-owner-f...

I could go on for days.

If you look at the photo of the lot you can see why: Beautiful rolling green hills. They didn't own the lot so they didn't have any right to stop the development. Nevertheless that's human nature.

That's why I chose the school bus example. You're supposed to get the part of the seat that your butt sits on, not the whole seat. But from childhood to adulthood, people just never change.

Residences are mainly exempted from depreciation, but commercial real estate is allowed to be depreciated because buildings do have a useful life.

I don't think the US will even be able to start on a tear-down-and-rebuild attitude until there is already a sufficiency of housing. As it is now, it appears to be in a cycle of new development, then decline, then revitalization, where redevelopment only occurs when property values in a place have already collapsed, and ruined those who weren't able to move before the wave hit.

Even in SF, there's some places where public transportation is faster. But in very very limited situations because SF transportation is horrible. But an express Caltrain is often much faster than driving MTV-SF if there's any traffic. With all the (super delayed unfortunately) infrastructure projects going on (new SF subway being installed, Caltrain electrification), things will hopefully get better...

I'm not, let me explain.

> More commuters creates more ticket revenue, which gives BART more resources to expand capacity. They're not going to expand capacity until there's more demand.

BART needs money to expand, and this money is not going to come from commuters. Why?

First, "expand capacity" can mean two things:

1) Buy and/or run more trains on existing tracks, serving existing stations.

2) Build more tracks and/or stations.

For 1), BART already operates at or nearly at maximum physical capacity at commute hours in the peak commute direction: there is not headroom in the Transbay tube to add more trains at rush hour, at least for trips between SF and the East Bay. BART could earn more revenue from more commuters that are not on the peak lines -- but building more housing in the suburbs will not provide this.

For 2), this money comes from the capital budget, not the operating budget. BART fares provide about 70% of the operating costs of BART. There is no profit, no money left over to go to pay for more tracks or stations. That money comes from voters who approve bonds or other sources of funding for this constructions. More commuters will not provide this either.

We need to expand BART, and we need development -- these two go hand in hand!

What happens, in every city, is that more housing gets built, then the infrastructure system starts to get closer to capacity, and then the infrastructure gets upgaded.

Saying that they should upgrade all the infrastructure first, before there is any demand, is the same exact thing as saying that it should never be upgraded.

Because the infrastructure isn't going to be upgraded if there is no demand for it yet.

If you want a train/bus to be used by people who have a choice you must run not less than ever half hour for 16 hours a day. The more often you run the more people who will ride, up to about 5 minutes where everybody knows you can just show up and get on. (unfortunately the amount of extra riders you get from coming more often isn't linear so you sometimes cannot justify coming more often by the amount of extra riders you get)

Note, there is a 2 year lag between changes in routes/schedules and riders figuring out the new routes. I think Caltrain could get a lot more non-commute hour riders by coming more often but if you push them to make sure you make everybody aware that it will be 2 years before there is a change.

But a primary home is not an investment. Many many many people mistake it for one, or try to treat it like one, but it's not. Often it works out in the end as if it was one, but it's not. There's a reason why we call non-primary homes "investment properties"... because your primary home is not that.

It's a liability. It ages. It requires costly maintenance. It requires upgrades and renovations. In most jurisdictions you have to pay ongoing taxes simply to own it.

The main reason housing prices often rise faster than inflation is because of scarcity, much of which is often artificial and due to zoning and other legal tricks.

Opposing housing in high-demand areas is one of the most selfish things a person can do.

My parents bought a house on the Peninsula in the SF Bay Area for $500k in 2000 and it is now worth at least $2m.

Condos I saw for $400K in 2010 are going for about a million. Homes that were about $1.1M in 2010 are about $2.4M. The sibling comment describes homes bought for $500K in 2000 that are now $2M; this is not out of line with what I'm heard from some founder friends I have that are pushing 50. IIRC my wife's parents bought their home for $130K or so back in 1986 and it's now worth $3M.

1) there is a 100 single family homes somewhere.

2) there are 300 people looking who need to live in that somewhere

3) on top of 100 single family homes now we have 400 units built

..

Can it be that price of the units for sale may get reduced for competitiveness?

It's incredibly selfish to use PTSD or noise-sensitivity as a justification for contributing to a situation where tens (hundreds?) of thousands of people have 3-hour commutes when they could otherwise live closer to work.

Most things are accidents of time/place/whatever. Including whatever resources those newcomers are bringing to a city. Is migration and density growth a strict good? A strict bad? Somewhere in between? Lots of ink have been written on that, I'm fairly personally neutral, but I'm very skeptical of the "this is a simple problem with a simple solution" crowd. I'd love to see a decentralization of high-end high-paying jobs. Right now if I wanted to live back near my family, I'd have to work on problems that are less interesting to me for quite a bit less money.

There's nobody exactly being unselfish in this debate... People who want more density or to save their own money argue one way. People who want to live a (different) way argue another... it's basically all wants considering we have so many other cities in the country with plenty of space.

Realistically, it won't. The new supply will be apartments - not single family homes. It's not like people will all want to sell and move into apartments or that the desire for homes will go down. It just means competition for apartments will improve.

Primarily because the individual housing protection is what causes the incentive problem where people prevent housing from being built.

Companies would benefit from more plentiful inexpensive housing.

My dream bill would be a prop that requires local communities to build X amount of housing (where X is some large number possibly determined in part by the spread between property tax payment and property FMV) every year.

Failure to meet X means that all property owners see a 10% increase in their property tax.

This happens every year with an upper bound on the property tax being the current tax for the FMV of their property.

This is basically impossible to actually pass, but it's what I would do if I was king of Palo Alto, either build the housing or pay the actual cost of your policy.

Maybe one day SB50 will pass - at least that'd be something.

... why?

I've lived in apartments with my family for the last three years. It's honestly been great.

> Apartment living is no fun with families.

That is a gigantic assumption. I grew up in an apartment and it was great. My parents wouldn't trade living in an apartment in a major city for a house in the suburbs for anything. Plenty of families all around the world do just fine in apartments.

I disagree that existing cities can't be redesigned. Sure, we'd need to invest in public transportation. And sure, we'd have to build other infrastructure. But the case in the article is a pretty obvious case for expansion. You have a town that is 30 minutes by rail from SF, an epicenter of insanely expensive real estate, and yet nobody can expand because people are worried it'll destroy their precious suburbs.

Yes but the angle of those curves are important. There are elastic and inelastic demands for resources. There can be unfulfilled demand at the current equilibrium price. Its basic economics.

rural areas are depopulating and cities/metropolitan areas are rising in both population and inflation adjusted real estate prices, both in the US and around the world.

Say you have 2 options...

This is a false framing. For most, the choice is between lower density area with a long usually car based commute or a higher density area with a shorter non car based commute. Things become more complicated when you have a life partner and you both have jobs, then you need to minimize the commutes while maximizing the job opportunities for both of you, and that happens best within cities.

"shoved like sardines into a 20 story high density apartment building"

this is also false framing. Some of the highest density neighborhoods in the united states are filled with 3 story buildings, like triple decker homes (ex: somerville MA) that are essentially 5k sqft homes 3 story homes subdivided into 3 units, one on each floor.

"What's the point of high density living"

The point of high density living is that it takes you less time to get to the things you want to do, it allows you to live without using a car to get everywhere, it allows for higher specializations of places, ex higher densities can support a niche board game store and gathering place, it allows a higher group of people to live within your commute shed so that you have more opportunities to make friends.

The past 5000 years of human history has included a nearly universal and constant theme of people moving from the countryside to the city. Post WWII America was a slight abberation from that, but we're back on trend like the rest of the world.

I know my backyard. You don’t.

So if accumulated property tax will remain unpaid, how does any of it help keep people ‘off the streets and no in squalor’?

What is the Big Plan?

If people are going to be taxed after their death, is it like a death tax? Forced charity?

Theft by proxy? This is literally thuggery. The current youth population and the government are working hand in hand as fellow thugs. And engaging in elder financial abuse.

However, there is a solution. One can impose hefty inheritance taxes. One can impose higher tax bracket for foreign owned properties. I would like to see that rather than citizens turning against citizens of their own country.

Further..has any of the YIMBYs sat in city council meetings and looked at city and county budgets. Or the state budget? There is a LOT of money. There are a lot of infrastructure improvements to be made that will make life better for everyone. And yet Sacramento does nothing.

None of the young non home owning YIMBY professionals ever question that. Perhaps because they have been indoctrinated in public school and taught fake economics. They have literally been hand fed to believe that nanny state is the best and higher taxes will solve everything. Perhaps it is this lack of financial literacy and responsibility that is causing them to be the handmaidens of the govt bureaucracy to act as thugs against middle class senior citizens.

Over crowded schools, inefficient DMVs, pot holes on roads, congested freeways, tolls on every stretch of freeways leading to Silicon Valley..Bart is a joke. Homeless on streets after billions spent. And more density on top of this inefficiency?

In other words, it's not a very useful way to look at the issue in my opinion.

Even most “YIMBY” supporters are actually “Yes In Your Backyard”, because nearly everyone has some local environment they want to protect. Don’t want a pork rendering plant or a sewage treatment center or a strip club next door to your home? Congratulations: you’re a “NIMBY” too! It’s a sophomoric epithet that makes you feel good and superior to fling around, but does nothing to convince people who don’t already agree with you.

If you don’t understand this, you are doomed to fail to achieve your goals.

The caricature doesn't really help things.

It’s cynical to call it YIMBY, because a) it mirrors the name-calling, and b) anyone who is intellectually honest knows that YIMBY really means YIYBY for most people. So stop it. Own that you want something that will be at least a little bit painful for everyone. Then sell the positives.

Unfortunately the incentive problem here is real, and there isn't a super obvious solution to it. At least, not to me. Trying to shift the culture and convince people to vote against their own economic incentives is great and all, but I don't think it is destined for success at any significant scale.

I grew up in a single family detached home in Queens, NY in the 80s as the shift to bigger condos and rentals started. The newer buildings are almost always shoddy and ugly, and dealing with landlords for property issues suck as compared to the homeowner.

I suspect it will be hard to solving the housing problem without unwinding Prop 13 and some of the other issues that make it harder for people to sell homes.

The important thing being conveyed is lack of diversity, not whiteness. In the United States, saying something is "mostly white people" conveys that other ethnic groups are not present for some reason (whether it be them self-selecting to not participate or because of exclusion). The purpose is almost always to note diversity or lack-thereof, and assume that the person is making a value judgement about the people because their skin is white is to completely miss the point.

For example, if you bought a pack of starbust candies, and they were almost all orange, you might note or complain that they were almost all orange. I would do so, and orange is my favorite flavor of those. The issue is, I desire the diversity of colors and flavors, and too much orange is not as good as what the added variation brings.

So, "mostly old white people" as a negative doesn't mean old people are bad, or white people are bad, or old white people are bad, but that mostly old white people are not as good as a group that has more variation in it. "Mostly" is the word you should be focusing on, not the other ones.

* Literal backyard: in this case, then maybe one could argue that if we accept the premise[1] that YIMBYs aren't homeowners, then they are in fact arguing about other people's backyards.

* Figurative backyard: in this case, then whether someone is a homeowner is irrelevant, because the backyard refers to the general area, shared by all residents.

Of course, as we know from this thread, backyard in [N|Y]IMBY refers to the figurative backyard. Therefore, we must reject the argument that people are arguing over other's backyards.

[1]: As I argue elsewhere in this thread, I don't think we should accept this premise.