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Comment by jseliger | Hacker News Reader

If L.A. is worried about housing affordability, the real solution is to build more housing: http://la.curbed.com/2015/3/18/9979526/housing-crisis-los-an...:

While Los Angeles County built the most out of any California county in the years between 1980 and 2010, it was waaaay less than it needed to keep housing prices from getting ridiculous. For comparison, in the same 30-year period, "the number of housing units in the typical U.S. metro grew by 54 percent, compared with 32 percent for the state's coastal metros. Home building was even slower in Los Angeles and San Francisco, where the housing stock grew by only around 20 percent."

We have the technologies to increase housing supply, but we've collectively made deploying them illegal.

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> If L.A. is worried about housing affordability, the real solution is to build more housing

And that's precisely what the city is doing. Housing permits are up around 40% YOY, about 70% of which are for multi-family units.

But that's not directly related to the purpose of rent control, which is not to keep housing throughout the city affordable, but to keep longtime residents--especially older individuals--from swiftly getting priced out of their particular community.

At any rate, I'm not sure how construction of new housing in Los Angeles has been "made illegal" as you suggest.

Thank you for making an accurate reply. It is worth noting that the situation in LA is very different than in SF -- people may be using the state of affairs in SF as a comparative, and it's just not the same: there is now and has been much more intensive housing development in LA.

Certainly there are many NIMBYs in LA, but the regulations in LA are not tilted as strongly against development as they are in SF. In the past years, there has been a lot of infill development in Hollywood (especially), mid-Wilshire, and around downtown. It has been encouraged by changes in zoning regulations that lift some parking and density rules, especially along transit corridors. These changes have been supported by two mayors now, and by most of the City Council. (One of the sued parties in the OP had units in mid-Wilshire, and another in Hollywood; the other two were in Venice.)

Here's a very selective overview of some new Hollywood projects: http://urbanize.la/post/hollywood-construction-binge-revisit... -- but the story is similar in many other neighborhoods.

The resulting density increases have caused considerable gnashing of teeth among older residents, who think of LA as a city of single family residences. There is going to be a proposition on the ballot soon, seeking restrictions on this development, and it's not clear where things will shake out (http://la.curbed.com/2016/1/21/10844688/los-angeles-anti-dev...). I don't see it passing, but it's too early to be sure.

It's also worth saying that it's often poor renters who are forced out by these changes -- their little three-story apartment building is torn down and replaced by a 6-story mixed-use building. That's the message the City Attorney is trying to get across to landlords.

> ... who think of LA as a city of single family residences

I don't know that the word "think" really applies to such a blatant contradiction.

In addition to the comment above, I'd view this as an update to zoning laws and renter's rights. As we become increasingly a nation of renters instead of owners, these sort of issues need to be addressed.

Great point. But not only are we becoming a nation of renters but we have also become a world of urban dwellers. Additionally as wealth becomes more concentrated more residential real estate purchases are not primary residences but income properties and in many cases a means of hiding money. The majority of new construction in many large cities appear to be "Luxury Condos", glass and steel structures designed to attract "hot money" inflows and not targeting the working or middle classes.

I encourage you to read the following:

http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign...

http://www.nytimes.com/2011/07/07/nyregion/more-apartments-a...

These are in now way restricted to New York either. This is happening in Shanghai, London, San Francisco etc.

    "from [ever] getting priced out of their particular    
    community."

FTFY. Rent control is a bogus solution. Rents rise when demand exceeds supply. It shouldn't be that hard to get a reasonable realtime measurement of demand and make sure that you're publishing the data showing that change in demand while simultaneously making sure that you're approving new housing projects at an equivalent rate. Doing so would have the same impact of rent control via market dynamics.

You say that like housing is fungible. It is not, neither for low-income residents who have formed a community around a location, nor for wealthy people looking to move into a trending neighborhood.

Rent control has some economic merit - it quickens price feedback to those with the least inertia. Market inefficiency is a thing, and if someone has been in an apartment for a decade it's going to take a much greater increase to make them consider moving compared to simply dissuading someone who is thinking about moving to an area.

It's just a hunch but I suspect that induced demand[1] works similarly in the housing market as it does with traffic, at least for otherwise desirable areas like Los Angeles/Southern California.

"Build more housing" will tend to make developers very wealthy while doing relatively little to reduce rents or property prices, just like "build more roads" doesn't help traffic.

1. https://en.wikipedia.org/wiki/Induced_demand

Induced demand in housing would require people to buy second or third homes because they were affordable. So long as people are only buying or renting one home, there is no induced demand from housing stock.

The induced demand does not come from those who already live in the area buying/renting multiple units but from new people migrating in (that's why I included the "...otherwise desirable areas like [LA/SoCal]" in my original comment).

For areas like LA, you can assume that there is a very large pool of people with at least some desire to migrate in (just like NYC, Chicago, etc). One of the primary throttling influences on this migration is the cost of housing, just like one of the primary throttling influences on "Will I drive to location X" is "how bad is traffic between here and there?" (what is the cost of driving).

Increase the housing stock (build more roads) and it will almost immediately be soaked up by those eager to migrate in (drive), before it has the chance to sit on the market for a while and exert downward pressure on prices.

Perhaps its because those who can afford to buy due to their socioeconomic status can vacuum up properties at cheap interest rates, and then profit by renting to those who can't afford to buy?

One part of the solution is to drastically curtail subsidies for landlords (depreciation/mortgage interest deduction)

I've heard that brought up a lot with road expansions. What I haven't heard (and would assume) is that even if the delays stayed consistent your throughput (therefore economy) grows after the expansion, right?

Just growing the economy (as "economy" is currently defined) may well leave people less happy, with less access to services and infrastructure because the government has failed to keep up.

Just being in a "larger economy" may mean each person is burdened with more air pollution (e.g. China and India) and more crowded conditions than when the economy was smaller, while reducing access to various natural attractions (e.g. beaches, forests, open spaces).

Where are the economic models that take these sorts of economic costs to people into account?

I'm often surprised so many people are persuaded to embrace various policy positions by general statements to the effect of "studies say this increases GDP."

As in the old saying "War is much too important to be left up to the generals", it seems the economy is too important to be left up to the economists.

If they chose to expand the road, the assumption is that they considered the obvious cons (displacement during construction, cost of land and labor for construction, added pollution and noise, change in demographics, etc) and were hoping for the obvious pros (reducing traffic). I always hear people quick to say it won't reduce traffic, but I never hear alternatives that are proven to work. By dismissing expanding a road over that one thing, they also seem to dismiss the other pros (I mentioned possible gains in economic throughput) and the cost of inaction.

Throughput does not directly equate economy. More roads leads to more scattered land use, and there is no 1:1 relation between land use patterns and economic productivity (additionally, there are many other aspects to this like qol and environmental concerns).

Well, yeah, what I said was a simplification and an assumption. Throughput doesn't directly equate to economy, but it's one of many tools that could be used of the goal is growing the economy and needs to be balanced against other factors.

Maybe I should have elaborated more in my reply. My point was that I've heard that argument /a lot/ but I never hear alternatives or what I feel like is an honest discussion (maybe I'm just out of the loop). The scenario usually starts with, "a road is busy and citizens what something done about it." The obvious choice is to expand the road. This obvious response is, "that won't fix traffic." What I'm saying is there are other reasons to expand and I also haven't heard alternatives to expanding the road that are any more proven to work--which I'm genuinely curious about.

The key is reframing 'mobility' as 'accessibility'. The fundamental 'solution' (although I dislike that word because it implies a global maximum) is different planning and incentivizing users of infrastructure to make choices that better align with the common good; put less nice, to force them to internalize their costs.

There are two goals that are in direct conflict in your scenario: one is 'keeping voters happy', the other is 'make efficient use of infrastructure, and minimize externalities of transport' (this goes for other issues as transport, for example water management, but let's keep it concrete for now). The 'solution' in your example is simple, from an engineering point of view: toll roads, congestion charges, smaller and more dispersed schools and healthcare facilities, denser residential development in fewer urban centers (=less sprawl), and a bunch of other, smaller measures.

Obviously this is impossible (no single administrative unit can do all or even several of those things), as well as too slow (we're talking 5-10 year implementation timelines, + another 5 or 10 for the effects to really set in). It's all about trade offs, and stopgap measures to keep things rolling in the mean time. I've been on all sides of this: informing the public about these things (haha good luck, even the 'average' citizen who has time to get involved in this is a raging lunatic, in my experience - let alone the real troublemakers), convincing policy makers to (also) look at the long term, infrastructure builders/maintainers who are essentially firefighting most of the time, ...

One of my former colleagues wrote his PhD thesis on the effect of remote working on transport demand; if you're really interested, email me and I'll see if I have a pdf somewhere.

(I've been working in this field for 15+ years, which is not to say that I know everything or even that that means that I'm right at all, but I've thought about this longer and harder and studied it more rigorously than 99.9999% of the population)

This is really the most tired argument ever.

How about the opposite argument: if you have a supply constraint with hotels, why not build more hotels rather than convert housing to quasi hotels that skirt taxes and impact housing supply?

My friend bought into a condo hotel a few years ago. Still a great model. Airbnb could easily move into that sort of model and outsource ownership, management, etc and follow the law. But I guess that doesn't apply to them.

> My friend bought into a condo hotel a few years ago. Still a great model. Airbnb could easily move into that sort of model and outsource ownership, management, etc and follow the law. But I guess that doesn't apply to them.

You're not going to be all disrupty with that attitude.

What happens when you build more supply, but increasing amounts of people just buy up the units not to live or rent out, but in order to run virtual hotel businesses on Airbnb?

The better supply side solution to increase available housing stock is to build more purpose built rental. This would eliminate the possibility of new rental supply turning into short term rental.

If you keep adding supply, the bottom will fall out of that market as they compete with one another, and the market will balance out as they sell, or seek long term tenants.

The question is, is it feasible to build enough supply for this to happen?

I mean, if SF ever hit "affordable" on a median family income, the population would probably be tens of millions.

Keep in mind that tearing down old housing and building new is not very cost efficient: you are paying for land, and the old structure (which you are tearing down), and the demo of the old structure. I live in LA, and my structure, which was built in the 70s, is still valued at more than the land it's built on.

> The question is, is it feasible to build enough supply for this to happen?

Given current market prices? Absolutely.

There's also not enough hotel rooms available for the tourism industry which is why renting as an Airbnb is quite attractive in many areas.

If enough people keep getting stabbed in San Francisco, maybe the tourists will stay away! Only slightly not serious. Web search for "stabbing" and "san francisco"

Wouldn't it just mean that they appropriately react to demand for these two categories of tenants, short and long-term?

>What happens when you build more supply, but increasing amounts of people just buy up the units not to live or rent out, but in order to run virtual hotel businesses on Airbnb?

Then airbnb prices decline or units go empty so listing on airbnb becomes unprofitable. Supply and demand is very real, it's not like some ideology that hasn't been demonstrated day in and day out. Please read up on an intro to econ!

And what happens to the people in the meantime? How long does this take before we have a satisfactory outcome, which would be people not being priced out of housing?

If you chose to rent and cannot afford the neighborhood you live in, I'm not sure why you are entitled to be there at the expense of others who want to be there as well.

I'm going to turn that around on you: Why are you entitled to be there at the expense of others who are already there?

If L.A. is worried about housing affordability, the real solution is to build more housing.

That's a nifty opinion to have, I guess.

Are you saying that violations of the Ellis Act aren't really a problem -- and so cities shouldn't pursue Ellis Act enforcement cases, then?

Bluntly, yes. As long as the market is poorly supplied, people will keep coming up with creative ways to get around regulations to extract the market price out of their assets. Fighting that is like trying to convince a lion not to eat you by yelling rather than giving it a steak.

If the market price is kept low enough through continuous supply, Ellis Act violations would be a non issue. There is a reason this isn't a big problem in unconstrained cities.

Feel free to start a ballot measure to not only have the Ellis Act repealed, but all current enforcement cases voided (as you are apparently advocating), then. In fact, if you did so, I'm sure that not just AirBnB, but Graham, Thiel, Andreessen, Khosla and hordes of VCs will be more than happy to bankroll it for you. In fact, they'll be bending over backwards to do so -- in order to, you know, secure their "legacy."

And I can just see the bus shelter ads they'll be putting up already -- and the side-splitting hilarity that will be sure to ensue, up and down the state. Remembering how swimmingly well AirBnB's efforts to "educate" local voters went down in a certain recent election.

Yes, LA should build more housing, but it doesn't help when people remove housing from the market. This is a huge problem with AirBnB, they're encouraging people to remove supply from the housing market, often in the areas where more housing is needed the most.

I'm for repealing rent control - if we repeal Prop 13 at the same time.

For some reason, landlords want their cake and eat it too.

Don't know why this is getting downvoted--it's spot on.

Can you briefly explain prop 13?

Thanks

Increases to property tax are tightly capped. If housing prices skyrocket (which they have for a long time) the taxes on the houses barely rise at all. It highly encourages never selling property, and largely decouples property tax from the actual market price.

All this results in a situation where the state with the biggest economy is constantly broke.

California's Prop 13 is basically eternal rent control for landlords.

If you want build, baby build, move to Texas. They've been doing that, and by some definitions been successful. If you want the quality of life that exists in the San Francisco, follow the polices that San Francisco has done for the last 50 years. Don't Fvk with success.

San Francisco isn't a success. The quality of life is garbage unless you are rich (>150k annum). The crime (car breakins) and hostile homeless people make it feel unsafe.

The only thing that people want to preserve there is their property values. Constantly voting against new housing is just a "fuck you, I got mine and don't want to share" stance that is extremely close minded. It's basically a giant country club.

Most families in SF either have been there for decades or do in fact make 150k/yr. It's not being rich - it's just the local standard. This is the mark of a successful city (even though in the process culturally a lot was lost unfortunately) There is a small section of the city that has crime. That pretty much goes for any large city - and it's tied very closely to the city's efforts to help disadvantaged people.

If SF really wanted to get rid of the homeless and crime they definitely could with some NIMBYism. They'd shut down all the low income housing and stop helping the disadvantaged and increase arrests.

Context: grew up in SF. don't live there anymore.. but i don't recent the changes to the city. Life moves on

Eliminating low income housing doesn't eliminate homelessness.

>Most families in SF either have been there for decades or do in fact make 150k/yr. It's not being rich - it's just the local standard

Nope, most families have just been pushed out because it's hard to find a job that pays that much. If your policies are generally "screw the middle class", of course high income is the standard for the people that have managed to remain.

Also, claiming the massive income required relative to the rest of the country doesn't mean rich is ridiculous. That's like saying people who stay at the Four Seasons aren't rich because they all have to pay a lot per night.

San Francisco has some of the highest property values in the world. By what definition is that a success? "Don't fuck with success" sounds here like "dont fuck with lowering obscene property values because then homeowners might be slightly less loaded than they already are".

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