How Much Housing Will Be Built?
ternercenter2.berkeley.edu
ternercenter2.berkeley.edu
So, would this change increase or decrease displacement?
Well, another recent Berkeley study concluded that a new market-rate apartment has about half the displacement-fighting impact of a below-market-rate apartment: http://www.urbandisplacement.org/sites/default/files/images/...
Therefore, the benefit of the extra market-rate units fails to offset the damage from the loss of affordable units (6000/2 < 4000). It fails similarly, but to a lesser degree, if you drop it to 5%.
But if you crank it up to 15%, the gains from the extra affordable units are overwhelmed by the lost market-rate units (4000/2 > 784). So it looks like the default value of 10% is the sweet spot.
By the way, the math is even easier for the 25% threshold that Supervisors Jane Kim and Aaron Peskin are proposing (http://www.sfchronicle.com/opinion/openforum/article/Prop-C-...), because that would actually lead to less affordable housing being built. Less market-rate, too. A double displacement whammy.
If the government spent the money it spends subsidizing rents on subsidizing construction then the problem would be solved.
If so, what's the basis for this belief? Have you read the study I linked to, which concludes otherwise? If so, what part of its reasoning do you contest?
Source: http://experimental-geography.blogspot.com/2016/05/employmen...
(Author of blog post here.)
For the primary target audience (city planners), this makes sense.
Obviously the better solution is to do away with the restrictions, but politics is the devil's day job and all that.
Good thing there's no actual people involved.
In London this is through the Green Belt, torturous planning laws, height and density restrictions, low interest rates, government-backed mortgages and lending schemes, etc.
Supply in the markets for food, computers, software, etc. is not nearly so controlled by government action (or inaction).
But I guess it's because of different attitudes in these two parts of the world? American don't trust poor people with money?
For instance, imposing a very high land value tax would reduce the value of land, which would in turn reduce the cost of housing.
It would only potentially reduce the tax-exclusive cost of housing. It would not reduce the tax-inclusive cost. (In fact, the rational expectation would be that it would radically increase the tax-inclusive cost.)
You are right, that the tax-inclusive cost of housing won't change with a land tax on its own, at least not as a first order effect.
If however, you eg use the land tax proceeds to lower taxes on labour and capital, building higher (ie using more capital for housing) will become more economically feasible. (No economic revenue will be lost. Lower taxes in a jurisdiction directly lead to higher land prices---which the land tax will capture.)
There's also some other second order effects, like less NIMBYism. (https://www.dartmouth.edu/~wfischel/Papers/00-04.PDF) This will make development easier.
> subsidizing construction If you mean state owned properties. I agree on that. Having low rent housing competing in the market bring prices down. But the number should be significant enough. Otherwise it just becomes a lottery where a few win but has not broader impact in the market.
Not if you publicly announce your intentions ahead of time. Then people have no incentive to do that because the expectation will be for housing prices to decline and the investment to lose value.
> If you mean state owned properties.
I mean giving subsidies to builders who create new market rate housing. Although another major problem is zoning regulations that prevent new housing from being constructed regardless of financing.
I really like this idea, except that "market value" is vague, and would require a bit of work to determine accurately. Maybe the best you could do would be to have a by-block square footage to value chart to be used for these purposes (and you would want a definitive source anyways, to prevent gaming the market value side).
This could also help quite a bit with the property owned in New York as a way to launder money[1].
1: http://www.npr.org/sections/money/2016/05/27/479717380/episo...
Ie you probably would want to tax under-occupation as well. (Otherwise you just declare a bunch of apartments as a single unit, and have a single dude check in every once in awhile. They did that in Britain, because of different legal treatment of trespassing between empty and `occupied' buildings.) But how do you define under-occupation? Where do you draw the line?
Just use a land tax. It's simpler and harder to evade.
If it was levied on the value of the land alone, there's no such thing as unreasonably punitive: land values would just drop until the tax is priced in.
If you look purely at economic efficiency, and leave out any morals about _who_ should be taxed, the only thing keeping taxes from going up all the way to taking everything is economic inefficiency. Ie if you heavily tax a particular widget, people will produce fewer widgets.
Land is fixed. You can't produce it, thus no tax can interfere with its supply. (Unless it's a tax system that incentives you to keep your land off the market, like negative gearing in Australia (https://en.wikipedia.org/wiki/Negative_gearing).)
However, if the tax was levied on the value of land plus building on it, a high tax would discourage building houses---whose supply is emphatically not fixed.
Or just give poor people money?
Depending on your political leanings, you might be happier with just lower taxes.
(And yes, the welfare-trap is probably real. Make sure to watch out for effective marginal tax rates of poor people especially.)
The intent of low income housing is laudable, but the execution causes more problems than it solves.
The government forces everyone to write cheques to car owners. (Even the car owners themselves, of course. It's a tragedy of the commons; like eg communal charging for electricity in a whole city.)
Now, we mostly see the demand for parking at zero [#] marginal cost to the parker, not the demand for parking at its true cost---because the costs are shared by society.
The short term demand for parking is relatively inelastic---so right after introducing pervasive charging for curbside parking and dropping minimum parking requirements for new developments, we will see roughly the same number of cars parked. (That's where your dependency comes in.)
In the longer term, demand for parking is more elastic. (One can see a similar relationship between oil price and demand for gas guzzling cars: inelastic / path dependent in the short run. More elastic with enough time.)
This holds even without public transport at all. Public transport is just one of the things that can serve as an (imperfect) substitute for private car rides. There are other ones, like car sharing, choosing job/home combinations that are closer to each other, telecommuting, home delivery of groceries, buying groceries in bulk, etc.
(To take one example right now, people already prefer to work closer to home, and make trade-offs all the time when considering a home or a job. The point of indifference between eg home price/salary and commute length will shift. Full disclosure: I hate commuting myself and have decided to fork out the money to live very close to the office.)
All the people in the market are probably much cleverer than me in coming up with substitutes. The price mechanism can guide them.
Some of these substitutes can and are provided by the private market. Public transport is generally not. Though eg Britain has privatised train companies.
Add in as another complication that without careful regulation, lots of public transport options are natural monopolies. One attempt to blunt this effect is by careful separation: eg run the rail network as a heavily regulated, public utility and make private companies bid for the right to run trains on it and for slots at the stations etc. And be very careful to specify that apart from meeting some minimum standards, the height of the bid alone determines the winner of the auction---politicians like beauty contests, because it gives them power to meddle.
See https://en.wikipedia.org/wiki/Privatisation_of_British_Rail for some lessons. Germany faces similar problems in eg their electrical power market.
Since I'm already on a tangent: the American freight train market and its history are another interesting piece to learn from. (It's doing pretty well, mostly because they don't have many passenger trains clogging up the network like in Europe, and the new regulatory environment of the Staggers Rail Act (https://en.wikipedia.org/wiki/Staggers_Rail_Act) seems to have worked out reasonably well. (They called it `deregulation', but that almost never happens---it's just a different form of regulation.)
[#] Zero in terms of dollars plus the effort and hassle of congestion and cruising for parking.
I'm not sure you're going to like the market price of parking. If a parking space is 25% of the size of a $3000/month apartment then the market price of a parking space should be something like $1/hour, which isn't that high. And which puts it right in the hard spot where people subsidizing the price down to zero may actually make sense.
If all you care about is maximizing the revenue from parking spaces then you can set a price like that, but having a price at all discourages people from using parking spaces that you've already paid to construct whether you use them or not. And if you don't use them then the local shops lose customer traffic. So the local shop owner does the math and says hey, if there was free parking here I would get an extra $20,000 profit from more customer traffic, so I should go lobby the city to have free parking even if it means my taxes will be $10,000 higher.
Then their customers realize that if parking was paid for through taxes rather than at the meter the local businesses would be paying part of it instead of the customers paying all of it, so they would be paying less, and paying at the meter is more stressful than paying via taxes anyway.
Then the government realizes that to get the money from taxes they only have to put a slightly higher tax rate on the tax forms but to get it from parking they need meters and credit card processing computers and customer service and parking wardens and dispute resolution systems and the whole works.
So the vote comes up and 90% of everybody votes for free parking because the lack of free parking would collectively cost them more in money and grief than it costs to provide free parking.
The way out of this is to make the alternative to cars (or parking) more attractive, without making cars less attractive. Because people are going to fight you and win if you try to make cars less attractive without immediately replacing them with something which is at least as good.
That pricing will not discourage too many people directly---because you price it exactly at a point where not too many people are discouraged. (That point might have to be adjusted over time.)
Like a congestion charge, you shift from people bidding with their willingness to sit in traffic and endure queues, to people bidding with their chequebook. (Interestingly, your mix of parkers would shift towards more people who value their time more than their money. Affluent customers are good customers!)
Congestion charges worked out well for Singapore and London.
Politically, it's a good idea to hand out the fees from parking at the same level as the people who can decide about it. So if local opposition could derail the scheme, you have to hand out the proceeds very locally. Otherwise you get the political dynamics you describe.
Charging for parking is relatively easy and does not require high-tech. For example Singapore uses a scheme (amongst others) where you buy a bunch of perforated cards. When you want to park, you take a card and push out the appropriate chads to indicate the date and time of day and display the card in your car's window. Each card is valid for an half-hour slot. You can punch out multiple cards with consecutive slots. Each card can only be used once (obviously).
(If you want a crud variable pricing, you can require people to display multiple simultaneous cards for peak hours.)
I have also seen a system where you send a premium SMS with your licence plate number to pay.
Except that you're admitting to discouraging 15% of the customers. If there isn't enough parking for everyone then the shops much prefer people to be cruising around so that as soon as a space opens up there is someone to take it, rather than not showing up in the first place because they can't afford parking.
> (Interestingly, your mix of parkers would shift towards more people who value their time more than their money. Affluent customers are good customers!)
You can't actually make more money strictly by losing profitable customers, even if the customers you lose are below average customers.
> Like a congestion charge
It is like a congestion charge, which have exactly the same problems.
> Congestion charges worked out well for Singapore and London.
They keep poor people off the roads so rich people can use them, anyway.
> Charging for parking is relatively easy and does not require high-tech.
People don't use the high-tech stuff because it's harder. Either way you need something vs. the alternative where you don't need anything.
> Politically, it's a good idea to hand out the fees from parking at the same level as the people who can decide about it. So if local opposition could derail the scheme, you have to hand out the proceeds very locally. Otherwise you get the political dynamics you describe.
The problem is there are no "proceeds" -- the money is going to come from the local residents whether it's parking fees or taxes. The only way you can save anything is to have fewer parking spaces, which nobody is going to allow until after there is already a better alternative in place.
What makes you think they don't?
In fact, wasn't that the problem in 2008?
That environment did artificially inflate the growth of urban sprawl McMansions above any working class persons paygrade, but it was nowhere close to direct intentional housing subsidy beyond trying to achieve some pipe dream of families on 30k combined income affording a 5k square foot house.
I think hacker news isn't smart at all about fiat money because it's inextricably bound up with the venture capital world where you agree to hand over your labour for paper.
Fiat money is ex nihilo and therefore creatable in infinite amounts. Many of you won't be old enough to realise the productivity gains computers have brought. It's amazing. Yet here we are all scratching around for enough to cover our basic bills.
It will always be like this when you have land enclosure and tax labour. Create more and you can devote more to land costs. Hurry up, the rentiers are waiting.
The problem is there's no solidarity with the newcomers, and a strong desire by incumbents to keep the place the same and not turn it into skyscraper-filled Guangzhou. For a lot of people not building housing is an important priority in their life that they will fight for. Not to mention the question of money.
You might equally ask why the tech industry feels the need to be stuck so tightly to SF when it's far more amenable to remote work than most industries.
There's also the little matter of the earthquake zone.
So is Tokyo.
What an inane response.
Anyway, the point stands that the problem isn't solved because plenty of people either don't want it solved or refuse a solution that disadvantages them the slightest bit. A common problem the world over.
Since realistically we're probably not going to do even that, fears of Manhattanization are completely unfounded.
The best part is many of these people aren't even landlords. So many homeowners are obsessed with the values of their homes staying high, even though it benefits them in no way whatsoever. Well, unless you count "paying more property tax" and "making the neighborhood affordable to everyone but wealthy white families" as benefits. These people are working against their own self-interest because some banker convinced them that real estate was a good investment.
Which is totally reasonable.
You or I may not like it, or disagree with it, or work against that idea, but it's incorrect to claim that incumbent property owners (anywhere) protecting their perceived value in the status quo is somehow wrong or morally bankrupt or misinformed or illiberal.
Yes, I also wish I had a pony.
1. In one city, incumbents rule. Their property values rise to a level that keeps everyone else out. They make all the rules. They were there first and they win. It's theirs and outsiders should respect that.
2. The second city is open to anyone, always changing. Incumbents cannot expect gains by virtue of having been first. Everyone there has the same expectation of benefiting from the city as anyone else. Anyone in the country is free (and able) to make a life there, if they choose.
I know which city sounds better to me. I know which one sounds like it benefits the most people, for the longest amount of time.
Of course incumbents prefer #1. Of course.
But, so what?
Still, most people find these actions to be immoral, as they result in plenty of suffering and wasted potential. The mealymouthed excuses about preserving historical parking lots or not creating wind tunnels or whatever are easy to see through.
This pops up in every thread about housing.
The answer is that there's still a ton of value in being in the same place as other people. Stuff happens faster. Ideas are more easily shared. Spontaneous ideas are born.
Of course at a certain point, having to pay someone way more makes it just not worth it, but that seems to be a pretty high number for a lot of companies.
But no, in most western countries, there is no right to live in a city just because you currently happen to live there. If you want to live in an inclusive place with room for everyone, you have to ensure that the right policies are in place. If it's something you care about, you should get involved with these people: https://twitter.com/sfyimby
Come down back to earth.
Putting your post into the context of neuroscience, Einstein's brain consisted of much smarter (or "just better" and "harder working") neurons than can be found in all other brains!
Or maybe Einstein's brilliance was an emergent property of how they are working together in their network?
You should take some time and think about the nonsense in your statement. You raise a question without much understanding. It's not in the hand of individuals, and to change system outcomes is very, very hard. Politicians and businesses have power - but they have power because they function in a system. If they go against it they lose it. Like the king on that tiny planet in "The Little Prince" who commanded the sun to rise and to set.
You understand humanity as a bunch of individuals - that will always leave you baffled why we act (or don't) the way we do. It is a very inadequate model if you try to apply it to things like the missing housing in the BA.
Also, there are risks few are talking (or thinking) about when significantly increasing the Bay Area's population: Water and earth quakes, for example (the latter can severely impact the former). http://www.bayareacouncil.org/issues-initiatives/water-polic... What will happen in "Black Swan" events? Especially since we can be pretty certain that they will come. The water situation in particular needs to be addressed for the entire Bay Area.
Without having seen the concrete truck, I think I would still always prefer this tent: http://cocoweddingvenues.co.uk/wp-content/uploads/2013/12/ar...
[1] http://www.tomtom.com/en_gb/trafficindex/list [2] http://www.sfchronicle.com/bayarea/article/BART-gets-candid-... [3] http://www.caltrain.com/Page3882.aspx [4] http://www.nytimes.com/2015/08/02/us/bay-areas-disjointed-pu...
I just appreciate top comment bringing up this type of infrastructure as I think there is room for big improvement in Bay Area. We really need it to support any increase in housing which is also badly needed to ensure a diverse and prosperous economy going forward.
[1] http://www.tomtom.com/en_gb/trafficindex/list [2] http://sfcontroller.org/sites/default/files/FileCenter/Docum...
I personally take my helicopter to work to avoid all that, but it's pretty expensive.
You may think you are special, I assure you you are not.
Sort of like companies claiming to only hire "the top 3%".
The rest of your comment shows why the area as a whole is often kind of stupid.
This is the area where the Gold Rush happened. It was an entrepot for valuable commodities. It still has that dynamic to this day. People come from all over to extract as many resources as possible, sell them and run off to somewhere else not caring about the externalities their opportunistic behavior creates. The political landscape here is mostly about pandering to special interests and never really solving social problems. Whoever panders best uses their constituent base to get elected into state and federal government positions leaving behind the dumpster fire that is the Bay Area.
1) Zoning happens at the national level in Japan, not the local level so there are no, or at least very weak political mechanisms for neighbors to block projects.
2) There is no Proposition 13, which caps property tax levels for incumbent homeowners. What this means is that transit providers can pay for infrastructure needs through increases in land value created by better connections to transportation. California can't do this because if it improves infrastructure or experiences an economic boom, the incumbent property owners basically get to appropriate all the increases in land value.
Perhaps that's the reason why everything works? It was all rebuilt much more recently. Also, to my understanding the Japanese culture doesn't place the same value on historical structures[1][2]. It's much easier to secure right-of-way when there is less importance placed on the actual locations or buildings, or when it's expected it will be torn down at some point in the next 20-30 years anyway.
1: http://freakonomics.com/2014/02/26/why-are-japanese-homes-di...
2: http://www.smithsonianmag.com/smart-news/this-japanese-shrin...
1: https://en.wikipedia.org/wiki/Painted_ladies
2: https://www.sanjoseca.gov/Index.aspx?NID=126
3: http://www.cityofpaloalto.org/gov/boards/historic/bldgs.asp
Silicon Valley has the brightest minds in software engineering, which is great for building the world's most advanced ad-serving network or behavior tracking. Software is easy. The Bay Area's housing and infrastructure issues require political, social, economic, and engineering management fluency; these problems will not be solved by software engineering. These problems will not be solved by "disruption." These problems are hard.
> And we cant solve the simplest problems in the Maslow's hierarchy.
Maslow's hierarchy seems focused on individual psychology. Solving these problems for 7 million people with different values, cultures, and perspectives is not "simple."
> American Indians solved the housing problems with Teepees and Wigwams - so much for being "smart."
Yeah with a few orders of magnitude lower population and a drastically different standard of living. This is a ridiculous over-exaggeration.
> Tokyo, 1945, burned to the ground, population 3.5 million.
Throwing it away and completely starting over might be the easiest way to fix a metro area's infrastructure issues. But to your point there are also very significant cultural differences between CA and Japan; the present debacle can be blamed in a large part on CA's endemic cultural values.
I'm running for governor next whenever that happens. I really had to put myself in the shoes of a California voter to get the numbers to work out. I think for all new housing going forward, it's important that we enrich the state's coffers so that all y'all don't have to pay as much property tax -- as manded by the State Constitution. I'm therefore raising the fees per unit to the maximum this game allows (really not high enough but it's good as a working model). I also think the whole point of California is big open parking lots and lots of freeways; so I'm going to require that density be lowered by 40% and parking increased by 40%. I've noticed that there's no affordable housing in the entire state pretty much, so each new project will be required to set aside 40% of their units to qualified people-in-need-of-affordable-stuff. It's a real problem and these fat cat housing developers only care about themselves. Additionally, the banks going bust really fucked our economy a couple years ago, so I'm mandating that they charge no less than 10% per year of interest. Finally, as a show of good faith, the State of California is levying a tax on property development of 16% of the total project cost.
With this, there is a 0% chance of any new housing being built. You won the lottery when you happened to be alive 40 years ago to buy a house, and it's my job as the Governor of California to protect that asset for you and your children.
Vote for jrockway!
See http://www.nytimes.com/2010/08/15/business/economy/15view.ht... and http://www.uctc.net/research/papers/351.pdf
But on the aesthetic side it's possible to turn these buildings into something interesting if they're renovated by someone creative. Worked across the street from this place when an architecture firm bought and renovated it: http://www.rchstudios.com/639-larchmont-boulevard/
People are still free to build parking places (and even charge for them).
The hope is that by ending the parking subsidy for car owners, they choices will be informed by something closer to their full economic impact.
(The cost can even be borne by the same people---ie currently a car owner might as well be paying for his own parking on average with other taxes / higher rent / etc. The economics still work out to better incentives, if we allocate the whole cost to the decision that causes it.)
There's no need for weasel words. We want fewer cars and less driving, so we use policy to make it less pleasant to own and drive a car.
Okay, fine. But what are you replacing it with? Because making driving hurt more is a net loss to subjective well-being unless you're prepared to replace it with something better (i.e. a few billion dollars of rail).
People can still do the same amount of car driving and parking as before---and on average [#] the same amount of income will go to parking as before. Only now the cost will be directly visible, as opposed to hidden in other prices.
But of course, decisions on the margin will change. Someone might want to move closer to work, or decide to carshare, or take a job closer to home. (All these options cost money or are inconvenient. But they can save the person in question money otherwise spent for parking. Different trade-offs are viable than before.)
Yes, investing a few billion dollars in rail might make sense. But you don't have to invest in rail before you start de-socialising the price of parking.
This is somewhat covered in the pdf I linked.
[#] On average means: the total amount of resources society as a whole spends on parking won't change. The population won't change. Since the average is just total divided by the population, it will stay constant.
This is somewhat different to eg proposing an extra tax on parking or petrol. And definitely different to eg the price of oil rising on the world market.
Of course, even if the average stays constant, the burden on individuals will change. Eg people too poor to own a car will benefit from other goods and services becoming cheaper, but won't be hit by the de-socialising of parking.
And of course, we want people to `game the tax' by changing their behaviour. Ie encourage stuff like the Google bus for employees even more.
After 1979, long-term tenants moved in and the supply of rent controlled units dropped to nothing very quickly. Then what? You can't tell the entrenched 'fast movers' who got there first with the cheaper rent control units "move out and give someone else a chance."
Once a government shows a willingness to steal control of someone's personal assets, NO one who is smart enough to afford to build housing is also DUMB enough to build in rent control zones.
Only enticements get builders to build in those areas. And most builders see this:
- in Southern California there was a move to 'move the goalposts' and instead of pre-1979 rentals being rent controlled, now everything built pre-1995 would become rent controlled.
- here recently on the Peninsula the same topic came up -- re-classify candidate rental properties for rent control up to 1995.
Both of those were defeated. But it signaled to developers that the goalposts can be moved.
Until leadership stop stealing control of people's personal assets, it doesn't matter if all building code/zoning/etc. rules are removed -- very few builders will put a new project in a rent control area, where city leaders have already stolen control of personal assets.
"You like to steal control of assets that don't belong to you? I won't be building assets near you."
SIMPLE AS THAT.
Properties included in the model have total development
potential, measured by FAR and residential units, of 20%
or less of the maximum allowed under local zoning law.
All properties above this level are considered "built
out" and do not factor in to the maximum potential units
number.
(For example, zoning where I live sets a maximum FAR of 0.75, but most properties are over that limit and grandfathered in, averaging more like 0.90. Allowing people to build to 0.90 instead of 0.75 would not substantially change the feel of the area, and would make a lot more units available.)
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