Governor Brown's housing proposal could mean sweeping Bay Area changes

Yes, the real estate developers and construction unions have screamed, for decades. It passed anyway.

In so far as real-estate is a product, differentiation between quality and price points is primarily a function of location...as Peter Thiel might put it [but probably doesn't], each lot is a monopoly. There is cheaper housing in Detroit and solely based on the opportunities afforded by location and not necessarily the nature of improvements one might deem it of lesser quality than a similar structure in San Francisco.

Anyway, I've been involved in a bit of housing development over the years. The few developers I know who do affordable housing specialize in it [as the many upmarket developers do in the upmarket]. Developers who don't specialize in affordable housing typically don't do it. The market analysis and proper institutional investors are not orbiting the market rate housing and general commercial development herd...and most developers stick to their track record.

The data shows, clear as daylight, that prices are only ever this high in cities which refuse to build any new housing:

http://www.spur.org/sites/default/files/wysiwyg/asking.price...

In Houston, which famously has no zoning, you can buy a condo in a downtown luxury high-rise for $200 per square foot (http://www.zillow.com/homes/for_sale/Houston-TX/condo_type/6...).

"few cities in the world where there's no more undeveloped land"

Downtown San Francisco is full of undeveloped surface parking lots. Here are some maps I made:

http://i.imgur.com/iSik6Zw.jpg

http://i.imgur.com/zNFjk6v.jpg

http://i.imgur.com/HygnC5e.jpg

http://i.imgur.com/SJs576L.jpg

"The majority of the costs of any new project are land, labor and materials."

That's highly misleading, because if development gets easier then rents go down, and if rents go down then land prices go down. The paper at http://faculty.washington.edu/te/papers/Housing051608.pdf estimates that excessive regulations are responsible for half of San Francisco's housing costs. That was in 2006, so it's almost certainly more now.

* Allow new higher density development, accept that your neighborhood will be under construction for years and then will look vastly different forever; and besides that, the city has to divert budget from other things to pay for building expanded infrastructure now (because California property taxes are mostly fixed by Prop 13);

* Fight development, the city spends that money on your pet project instead, the neighborhood looks the same as it always has, and then there's the bonus that your house will be worth a whole lot more in 5 or 10 years.

This is why you have unremarkable 1950s-era 3 bedroom ranch houses that would go for 75k in most US suburbs selling for $2m in Silicon Valley. It's why you can pay $5000 a month for an apartment in San Francisco that would be $700 a month in most US cities.

Population can grow even if the housing supply does not, if the existing population becomes concentrated into fewer dwellings.

Bay Area residents who used to have their own apartments or houses are now renting rooms and sharing apartments or houses with others.

The people moving here are generally wealthier or higher paid than the existing residents, and will not be deterred from moving here until the number of high-paying job openings decreases.

Regarding living in tents, there has been a noticeable increase in the homeless population in recent years. It's not clear if they were displaced from housing or came here from somewhere else, but there is no denying the increase.

The old Victorians you see on postcards were built as single-family houses. Most of them are now subdivided into multiple apartments. Many houses in the city have illegally built inlaw apartments in the basement. People live with multiple roommates into their 40s and 50s.

It is true that eventually housing prices become so high they outstrip the ability of the local economy to provide salaries. In the meantime, it massively increases the costs of doing business, the capital requirements necessary to operate any business in the city. So far, venture capitalists have been willing to provide that capital, but that can't last forever. Last time (1999), it ended in a big economic crash.

Further complicating the analysis is rent control: most existing residents aren't forced to leave, because they are legally shielded from rising property values and rents. They are given the reverse, an incentive to stay in place no matter what, because they enjoy an artificially low rent that they cannot possibly replicate in any comparable dwelling. This causes market rents to skyrocket as maintenance costs and profit are shifted by landlords to the few open units they have, subsidizing the long term residents. It's a wealth transfer from "people who have moved recently" to "people who have not moved recently."

Finally, there are tons of people living in tents in San Francisco, which has become a major political issue lately. This is arguably partly due to homeless people from outside the city moving in to take advantage of its extremely generous social welfare programs for the homeless, but it is at least in part due to high housing costs.

In the long run, infrastructure for dense housing developments is cheaper per resident than infrastructure for sprawly housing developments.

An apartment complex of 100 units requires far fewer miles of road, water pipes, electrical wiring, sewer pipes, etc. per $ of local tax revenue generated than a development composed of 100 detached SFHs.

But, you're right about the immediate impact vs tax revenue that comes in slowly.

This seems like another way of saying money is fungible. Suppose there is School A used by current residents and School B we propose to build for new residents. The annualized cost (labor+amortized capital) of a School is $X/year, which registers as a tax burden on current residents. Building School B doubles the total tax burden, but in response to a doubling in population, so per-person taxes are unchanged. (assuming that new residents pay taxes at or above the average rate, which is certainly true in the Bay Area).

It's meaningless in this case to distinguish who is paying for which schools - you could say "newcomers are paying the entire cost for School B" since the marginal revenue increase equals the marginal cost, or you could say that the costs of servicing both schools are "borne by the community overall". But in the latter case, in order to claim that current residents are contributing to new infrastructure, you have to acknowledge the reciprocal contribution of new residents to existing infrastructure: increased tax revenue helps to pay off the bonds that built the current schools, and that will eventually be sold to renovate and rebuild them. Either way it balances out.

Not desired by the people living there? Or not desired by other people in Dublin? These are two very different things.

> even the planned communities have a certain target ratio of public/garden/playground use space.

Maintaining a certain amount of public space in the form of parks/playgrounds/plazas makes sense, but that shouldn't translate into shooting down high-density housing developments.

> I think it's more a case of it's the 'burbs, and they'd like it to stay that way.

This kind of attitude -- the "let's keep it this way, forever" attitude -- is exactly why the bay area is now largely unaffordable. Sure, we'd all love it if we could maintain a certain neighborhood style AND have affordable housing. But we can't.

So, it comes down to what you value more: a style of neighborhood with more space between residents, or people being able to afford their rent without hour+ long commutes.