The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing | Hacker News Reader

The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

stanfordpolitics.com

149 pointsjseliger199 comments

It seems that we made a pact with the devil by positioning housing as an investment asset. By doing so, we've encouraged people to commit a very large fraction of their net worth into a rather illiquid asset, tying their financial fates to the future assessment of that asset. As a result, protecting the price and appreciation of this asset has come to overshadow the other crucial roles that housing plays in our society.

If I bought shares in AAPL at $50 (now $100+) and someone comes along asking that AAPL let them buy some shares for say, $65, I'm obviously not going to be happy since the value of my investment is under threat. This is the kind of reaction we've unfortunately promoted for ourselves. It didn't have to be this way, as other countries have shown us. But now that we're here, it's hard to imagine a way to turn back time.

It's a double whammy when you also consider that property taxes are generally based on real estate value. City and local governments are dependent on that income and have little incentive to see real estate values (and thus tax) go down.

That would depend on the price elasticity of the existing housing stock in response to each additional unit of housing that is supplied to the market. It's conceivable that the marginal decrease in tax revenue from the existing stock would be more than offset by the additional tax revenue from the one additional unit.

Also governments get tax not on the value of a single property but the cumulative value of the properties (emphasis on the plurality) .

If my 1M house gets replaced with 10x 250k units the government has 2.5x its tax base. See how affordability and solid tax base can coincide?

Local government costs also go up as population increases.

The relationship is not usually linear, though. With density comes efficiency in services. Though some of that efficiency is eaten by the additional cost of doing the work.

Not really teachers are linear with population size. An overpass is vastly more expensive than a stoplight and still cheaper than a subway system.

So, yes for small changes to population size a city need not spend more an can simply degrade services slightly, but doubling population size quickly gets really expensive.

I would have thought that the linear system was still more expensive than the dense system (within some reasonable limits). Consider the single family home as the null case, everyone lives in single family homes as far as the eye can see, the distance that family must travel to get to the core of a city is greater than any other existing family (that is new homes are on the outer ring of the city and thus progressively further and further from the core). So that family consumes more road miles daily. Vs if you grow in density you do not create anymore miles of road because those people only have to travel a shorter distance. And when the inevitable overpass comes, instead of needing overpasses from 1/2radius of the city you may only need them for 1/4 etc because the people are already in the core and do not need to come from as far.

just some thoughts on efficiency of density vs dispersement

But tax rates generally adjust for increasing housing prices. In my old hometown, when housing prices went up 20% in one year, tax rates decreased by ~15%, so overall the increase was about inflation. Otherwise you'd see city budgets double in only a few years in really hot markets.

Of course this doesn't work in California with Prop 13, but I've seen it in other areas.

That's not the case, to a large extent, in California, thanks to Proposition 13.

The longer a property is held, the lower its assessed value relative-to-market. In cities with buy-an-hold populations (and Palo Alto tends to resemble this), that means a large part of the assessible property value is severely underassessed.

Mind: this means that surplus value of urbanisation goes to the property owner rather than to help provide city services.

The double-whammy is actually the opposite of what you suggest, and may well be a triple:

1. Prop 13 keeps property taxes down, meaning ...

2. There's an additional upside (and less downside) to inflating property values and ...

3. There's growing opposition to providing new and higher-density housing, as this would remove pressure from housing prices, and leave existing homeowners with a lower property value, itself useful for loan collateral, HELOC, etc.

Knowing long-time California natives who've been chased entirely out of the state, I'm starting to think the situation may become untenable. Or, perhaps, it's one more in line of economic population displacement, which began with Spanish missionaries displacing the aboriginal natives, American Anglos the Mexican successors to the Spanish, and now various new money, some domestic, some foreign, chasing out the 1950s - 1980s immigrant class, at least from the Bay Area.

I ran into a claim some years ago saying that homeownership is policy because homeowners do not riot.

Homeowners don't riot. Neither do married people.

But while there is good evidence that marriage transforms rioters into non-rioters, giving houses away doesn't seem to have much effect on the recipients.

Logically, if you want to tamp down rioting and your metric is homeownership, you should be trying to oppress non-homeowners, not trying to get houses to the people that don't have them.

Housing is a taxpayer subsidized, inflation proof savings plan for the average citizen. It is also levered.

Open this chart of historical mortgage rates and click 'max': https://fred.stlouisfed.org/graph/?g=NUh

Since 1981, rates have declined and tax treatment has become more advantageous to existing owners.

With the current ZIRP/NIRP/QE regimes around the world, the leverage available to the average citizen has never been greater. That leverage has gone directly into housing.

If the leverage trends continue (see 'helicopter money'), housing (along with all other asset classes), will get further out of reach.

>It seems that we made a pact with the devil by positioning housing as an investment asset.

That was certainly a mistake, but the much larger mistake was made (and continues to be made) by the FED (and other central banks at the FED's insistence). FED efforts to prop up the housing and equities markets through QEinfinity, Operation Twist, the FOMC, and countless other FED mechanisms designed to prop up markets (and owners) at the expense of everyone else have led us to the situation we are in now. If not for FED chicanery, housing prices would fall precipitously to meet real demand. People would be able to afford a place to live and speculators would realize that homes are places to live and not investments.

>If I bought shares in AAPL at $50 (now $100+) and someone comes along asking that AAPL let them buy some shares for say, $65, I'm obviously not going to be happy since the value of my investment is under threat.

If nobody was willing to to pay more then $65 for your Apple shares, then in a free market, like it or not, your shares are worth only $65. Just because they were $100 at one point and you "arent happy" that they arent still worth $100, doesn't mean the government should step in and offer $100 when the market only offers $65. That's the problem we have now. In the fantasy world that the FED is trying to propagate they can continue to offer $100 no matter how low the actual demand for your stock is. In reality, all their efforts to prop up your stock have eliminated free markets, dried up "real" liquidity, and massively disrupted equity, bond, fx, and all other markets. The longer they try to extend and pretend the worse the problem gets. For example, the bank of Japan owns over 60% of all ETF's in Japan. 60%!! Things are not going to end well.

Get outta here with your free markets. In free markets, those that lose big get up off the table. In our TBTF markets, the bigger your loss, the greater the odds that your national Treasury will backstop you.

Have you helped out your local banker today?

> If not for FED chicanery, housing prices would fall precipitously to meet real demand.

Maybe in some places, but I don't think that would happen in Silicon Valley. As the article says, the population of Palo Alto doubles during work days. A lot of those people would rather live there than commute from wherever.

Silicon Valley is not a creation of the Fed.

Where do you think VC money comes from? Massive profits from bond, equity, and real estate profits courtesy of the FED. Cheap money borrowed at 0% thanks to the FED.

Some of us older people were around to see a very similar situation in the 90's (although not nearly as bad). Greenspan debuted ~0% interest rates and the Clintons fully embraced the Reaganomic/trickle-down philosophy (now called "wealth effect"). They opened the borders via NAFTA and deregulated Wall Street via Rubinomics. It all fell apart when the tech bubble burst in 2000. Instead of fixing the problem, Bush doubled down on the same broken policies, which led to the collapse of the late 2000's. Again, Obama and the FED doubled down, trying to fix the broken, cheap money policies with even more cheap money. Here we are 8 years later and markets have basically ceased to exist. Central banks own far more bonds and equities in many counties then private parties do, and they are only increasing their buying. Growth is non-existent even by the manipulated, mostly-worthless metrics employed by the central banks. The insane wealth of Silicon Valley is not only a creation of the FED, its a good barometer for how out of whack our economic system is.

And ZeroHedge assured me society would collapse in 2009...guess enough people don't subscribe to InfoWars

Society is crumbling rather then collapsing. How long the process will take is anyone's guess, but you have your head buried deep in the sand if you don't see the deterioration.

>Silicon Valley is not a creation of the Fed.

Silicon Valley itself isn't but the exaggerated SV house prices, exaggerated levels of VC funding and exaggerated valuations are all a function of the fed's ZIRP policy.

Right. It's a creation of the DoD [1]. The Fed just supplies the extra money for VC's and home loans.

[1] https://steveblank.com/secret-history/

Re:AAPL

There's a market for $AAPL shares at $100+. Some people are happy paying this price. Some people think this is too high.

There's similarly a market for Palo alto houses at $2.5m. Some people are happy paying this price. Some people think this is too high.

When someone comes along asking AAPL to sell them shares of $AAPL for $65 when there's a market for them at $100+, you as the holder of other analogous $AAPL shares won't be happy since such an occurrence will diminish the value or your investment.

When someone comes along asking a city for as additional housing stock at $X << $2.5m, you as the owner of an analogous investment asset will respond to the threat of your investment coming under siege. Non-investment aspects of housing's role in society will be greatly diminished in the homeowner's mind, when the home represents 20-50% of their net worth (given that their minds have been conditioned to treat housing as an investment asset).

You're missing the point. When there isn't a market for $AAPL shares at $100, but the government steps in to offer $100 to prop up the price of $AAPL stock, there is a problem. That is the issue with housing prices, stocks, bonds, debt, and everything else on the world stage. This central bank interference destroys price discovery and disrupts prices everywhere, including Palo Alto, even if they aren't directing bidding on homes there.

That, and also no one needs AAPL stock in order to live, but everyone needs housing. So the price distortions in housing affect society more severely than price distortions in AAPL stock.

> That, and also no one needs AAPL stock in order to live, but everyone needs housing

If housing should be protected from 'distortions', please explain how foreclosures help? I'm not being snide - my economics knowledge is basic, kindly explain it like you would to a high-school graduate.

People generally don't have enough capital to pay cash for a house so they need to borrow some of the money. Such loans are typically secured by the value of the house. If the borrower doesn't repay the loan the lender needs to be able to liquidate the asset to make themselves whole, hence foreclosure. If this were not done, mortgages would be much more expensive because they would be much risker investments.

> If this were not done, mortgages would be much more expensive because they would be much risker investments.

So foreclosures protect mortgages, rather than housing directly, right? My take on ancestor was than housing was very important so "price distortions" need special intervention to protect housing as a societal need. I'm probably overthinking it.

> So foreclosures protect mortgages, rather than housing directly, right?

Yes. But making credit more easily available makes housing more accessible.

People don't need AAPL shares to survive.

They do need housing. And food, and clothing, and a reasonable assurance of stability in their lives.

Start taking that away, and social fabric starts unravelling quickly.

Well put. Most discussions around here take a simplistic position, "build more to drive prices down". And then wonder why it doesn't happen when the solution is so obvious. Because it is not only about new buyers but also about folks who have invested everything they have into a market that was already in place before they invested.

The "technically correct" way to fix this would be to remove the investment potential of housing by taxing away land value (the grand old panacea of the Land Value Tax[0]).

I think this is a good idea, but it's a disruptive one, and one unlikely to happen soon. But in the meantime, we might as well fix the policy that's in direct contradiction to this ideal:

1) Repeal prop 13. Full stop.

2) Intervene with exclusionary zoning on a state level. Zoning is, after all, a state power that is entrusted to cities. (Jerry Brown is already doing good work in this department[1])

3) Implement split-level property taxes a la Pennsylvania. There's work that demonstrates that this partial LVT had real benefits for Pittsburgh when it was under effect: [2]

[0] https://en.wikipedia.org/wiki/Land_value_tax [1] http://www.latimes.com/politics/la-pol-sac-jerry-brown-housi... [2] https://www.lincolninst.edu/subcenters/property-valuation-an...

The thing about getting rid of prop 13 is you'd price out a lot of residents that bought a long time ago for something they don't have a whole lot of control over. If you thought that gentrification is bad now, churn in residents would got through the roof. Not to mention that you wouldn't solve the issue of shorter-term investments in land, or investments that include new constructions.

Honestly, the real issue in the bay area is there isn't enough housing, period. To solve this, build more housing, or build more infrastructure to enable people to live further away, or both. However, residents in the bay area have always been opposed to things like that.

We shouldn't just repeal it. You abuse it's existence and the appeal to drive investment in property. Have the repeal not affect existing housing... and not affect housing built for some short period afterwards. In places where developers have sway with local government or have carte blanc from counties to build, there will be immense efforts, because the benefits to the property owner will be huge, meaning they can charge a premium. And after 5 years or whatever is appropriate, you will have removed the penalty in tax revenue cities take with residential and residential services. Maybe add a provision for city councils to more easily approve bond measures to fund housing development, and kick start building properties where value will go up.

You could simply revert people to market rate taxes over a decade, 10% a year.

s/residents/home owners have always been opposed to that. Renters would be thrilled about it, but home owners love seeing their home values skyrocket. Multiply this if they've been in the area for a while, and again if they're currently renting out their place(s).

A lower-end but not ghetto apartment in SJ is around $2200 for a 700sqft 1bedroom. This would not be in a place walking distance to a train station or to a downtown area. The mortgage on a 4 bedroom 1200sqft house valued at 800k (i.e. What most people would call a normal average single-family home) would be about $2800/month (assuming you had the 125k or so down payment). You can then rent 3 of the 4 bedrooms and end up making money on the house you live in vs flushing >$2k a month.

This is why normal people can't get ahead out here and end up moving away. The way things are is massively skewed toward home owners and property investors. Building more apartments won't necessarily help, since all the apartments built after the rent-control cut off are getting renovated or demolished to be replaced with brand new units which are "luxury" ($2800/month and up for a 1br).

Apartment places almost always have units available where I've looked. It's not like you can't find a place out here, just not a place for under about $2k a month. Apartment places would much rather rent out 85% of their units at exorbitant prices vs 100% at half that. I don't believe that adding more housing (which won't be under rent control and will undoubtedly be "luxury" housing) will lower average rents. I don't know what it would take to get the Bay Area back to rents in the $1000/month for a 1br range. I'm not even sure that it's realistic anymore.

Does anyone have a link to or know of a place built in the past 15 years in Santa Clara, Cupertino, Palo Alto, Mountain View, San Jose, Saratoga, Los Gatos, etc with units under $2k a month? My pessimistic side just thinks that adding more new apartments will just drop the price on the high end, so that $3k/month loft in the glass tower in downtown SJ might only be $2800 next 11-month lease term, or maybe only go up by 12% a year instead of 18%.

We need to do something drastic if this is to be again under control, but I suspect that due to the very large sums of money involved, the entrench interests are attempting to prevent that by whatever means necessary, and we're basically screwed until this bubble bursts, if that even happens this time.

> The thing about getting rid of prop 13 is you'd price out a lot of residents that bought a long time ago for something they don't have a whole lot of control over.

One thing to consider is that the removal of Prop 13 would drive prices down, so in the tax burden wouldn't be as high as it would be, when compared to today's market rate of housing.

> If you thought that gentrification is bad now...

It's important to note that gentrification only happens to poor/disenfranchised neighborhoods, whereas the burden of removing Prop 13 would fall upon all, including the affluent. This is an important measure for fairness.

> To solve this, build more housing, or build more infrastructure to enable people to live further away, or both. However, residents in the bay area have always been opposed to things like that.

Largely because policy like Prop 13 shields them from the consequences, which has led people to remain in the same property interminably (even when they may wish to move), and to push for restrictive zoning policy.

Repealing prop 13 would provide the cash needed to build more housing and infrastructure.

Landowners in SF are going to hate any effort to deal with the housing crisis because they profit so handsomely from it. They'll fight any attempt to fix it tooth and nail - with lobbying, bribery, public relations, etc. That's what the Howard Jarvis Taxpayer's Foundation and prop 13 was all about in the first place.

Really, the only solution to that is to single out the leeches and demonize them until they stop. There's no way they will ever be on our side and there's no way they will stop fighting while they still have the power to protect their entitlements.

One of my biggest issues with Prop 13 is that it suggests that you should have a claim a municipal government in perpetuity. Huge amounts of the value of land in towns and cities comes from the services provided by the city government, and I think Prop 13 pretends this couldn't possibly be true.

I also think it would be an absurd argument to make. If those people had no desire for services, they would have bought/built houses well North of the bay area, or South of San Francisco in some place like moss landing. And I don't think it's worth preserving that delusion at the cost of perverse incentives, waning tax revenue, and a massively illiquid housing market.

Granted, this is not all that's needed to fix the problem (even moreso in CA, which has some really bad barriers), but I don't think moving in the wrong direction will get us where we need to be.

Given that a full repeal may be difficult politically, I wonder if Prop 13 could be limited to owner-occupied houses.

Seems like that would hold true to its original purpose of not taxing someone out of their home, make investment in property somewhat less appealing, and provide a more predictable funding source for schools.

Prop 13's effects for primary-resident housing have been less problematic than its effects for commercial land and purely speculative real estate, but it isn't good-- if we allow this subsidy strictly for housing, we'll still run out of developable land (just not quite as quickly.)

Too, the policy that reassesses the site upon re-sale takes away mobility for Bay Area residents-- this lock-in is extremely destructive for the housing stock (not to mention transportation), and will continue as long as Prop 13 exists in any form.

The idea that "being taxed out of your home" is a bad thing is extremely overblown (remember that any person to suffer this malady is suffering from overly valuable land). Rather than the heavily distortionary effects of Prop 13, better approaches would be:

* Building more. That's what the folks who suffered high property taxes in the 1970s should have done. The property tax burden for each housing unit would be driven down.

* Community land trusts offer the possibility of stability for residents who want to be completely removed from the rises and falls in housing value.

* For the "poor widow" situation, a direct subsidy on an as-needed basis (food stamps for property taxes, as it were) is a better solution than what Prop 13 does.

Which countries do you think handle housing well? Any references would be appreciated.

I myself know little about the subject, but since I followed the discussions I noticed the Singapore has been mentioned several times.

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

    > The majority of the residential housing developments in Singapore are publicly
    > governed and developed. As of 2013, 80% of the resident population live in such
    > accommodation.

It's been an often used example because it is a market economy, no use pointing to a "socialist" country because nothing unexpected if they let government take care of housing.

I can only point to this example though, since it always seems to come up in these discussions, I cannot evaluate it.

EDIT: Aaaand it's come up in this thread too. Just search for "Singapore" to find the comments.

Japan.

Have you actually talked to many Bay Area homeowners? The primarily reason that many long-time residents oppose new denser housing developments has little or nothing to do with property values. The real reason is concerns over quality of life, such as traffic, noise, pollution, school overcrowding, etc. You're not going to convince them to support higher housing density without addressing those concerns.

Personally I think denser housing developments in some neighborhoods would be a good idea. But the infrastructure improvements need to be constructed first, not as a reactive afterthought.

I'm not sure that nimby behavior can be explained by a desire to maximize the cash value of a single family home. Keep in mind, owners typically own the land their house sits on as well. If I were allowed to purchase a SFH in palo alto, tear it down, and replace it with a four story apartment building, I would probably profit, even at these sky high prices.

This does come up in San Francisco as well. I live in one of the SFH zoned parts of SF, though we are all packed in there, houses are small, not free standing and backyards are small. A friend who lives nearby owns a SFH that is technically zoned R-2. This means that he could technically tear down his house and build two flats. This isn't just theoretical, it has been done on his street. I do believe that the value of the two flats would be considerably greater than the dollar value of his SFH (especially if nobody else did it, but even if it were widespread). He could still live in one of them, with the same square footage he currently has, and with the profits, he could pay off his mortgage and have an impressive chunk of change left over.

Hostility to greater density is a complex issue, but I really don't think that a drive to maximize the dollar value of real estate assets is the major factor here. If people were purely interested in maximizing this dollar value, I think they'd be agitating for the right to build, rather than the right to prevent their neighbors from building.

I think that a lot of bay area nimbys are long time residents who bought when it was less expensive and are well heeled enough that they don't really need the money, and anyway, where would they go? If they cashed in by tearing their house down and making a ton of dough, they'd try to move to... well, a medium density suburb with nice, old, historic houses, pleasant year round weather, a university nearby, a city with a good opera and ballet a moderate drive away, and... oh wait, yeah, palo alto - just. as. it. is.

To me, there's yer trouble.

You'd have to get the property rezoned for multiple family occupancy.. Good luck with that.

Relatedly: "More housing density keeps Seattle affordable for younger residents:" http://www.seattletimes.com/opinion/more-housing-density-kee.... Seattle is doing better than SF or NYC: http://www.vox.com/2015/12/23/10657690/seattle-housing-crisi... but still not good enough. Tokyo should be its example: http://www.ft.com/cms/s/0/023562e2-54a6-11e6-befd-2fc0c26b3c....

I moved from Palo Alto to Seattle in 2014. One factor was cost of living (including taxes), but another was that Seattle had a large number of very nice, relative new high rise apartments. I had my pick of great apartments, while in Palo Alto such apartments simply don't exist.

The housing problem in Palo Alto is not simply one of affordability. It's also a problem of desirability among those with the means to pay.

I get depressed every time I think about the Bay Area housing situation. As half of an early-30s professional couple looking at our baby clock and anxious to start a family, I don't see how I can possibly provide a middle-class lifestyle for children while staying here. The choices are to join the bleeding edge of gentrification by moving into a slum like East Palo Alto or commit to severely degraded quality of life that comes with a megacommute.

I don't mind leaving and I probably will, but I do resent it when people act like two highly-educated and gainfully employed young people wanting to live where they work is some kind of unreasonable millennial self-entitlement.

Wanting to live where you work is not "unreasonable millennial self-entitlement", but wanting to live in PA is. PA is one of the best places on earth. That makes it a scarce commodity. A lot more people want to live there than can possibly live there without fundamentally changing what makes it a nice place to live in the first place. If everyone who wanted to live in PA did it wouldn't be PA any more, it would be Westwood.

If some of the area were more like this:

https://goo.gl/maps/h6VUZB7hVZs

Wouldn't it still be a pretty desirable place to live because of access to so many things, high paying jobs, a great climate, etc....?

It would be pretty desirable, but it would not be as desirable. All else being equal most people would rather live in less crowded conditions.

"Human wants are unlimited, but resources aren't" - and markets are a pretty good way of allocating things. Sure, not everyone can afford Palo Alto, but a functioning market would likely provide for more people than the artificial scarcity they have now.

Providing for more people is not the same as creating more total value, and markets do the latter, not the former. PA is the result of market forces, together with democratically elected government, working together to serve a particular segment of the market: rich people who want to live in a low-density area close to both undeveloped land and urban amenities. Yes, this leaves a lot of people on the outside looking in, but that's not a market failure. Not everyone can live in the most desirable areas. If they did, they would cease to be the most desirable areas.

Realistically, "not everyone" is going to live in Palo Alto, but in any actual market, density would be significantly increased. Some people might actually like that. Others wouldn't. Those people can always sell their houses at hugely, hugely profitable valuations and move to, say, Lakeview, Oregon if they want a small town.

I'm not one of those internet libertarians that thinks 'free market' is the answer for any problem, but the market in most of the US is anything but free.

Have a look at this book:

https://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B...

> Those people can always sell their houses at hugely, hugely profitable valuations and move to, say, Lakeview, Oregon if they want a small town.

Sure, and the people who want higher density can move to Los Angeles or Seattle or even Oakland if they want to be in the Bay Area. There are plenty of places where development is not as restricted as PA. So I don't see your point. And I don't see how PA is not an "actual market."

In a 'free' market, people would be able to do as they see fit with their property. Clearly, there are some limits to this, but I don't think 'building more housing' should be one of them.

> there are some limits to this

OK, so you recognize that. But...

> but I don't think 'building more housing' should be one of them

Well, the good citizens of Palo Alto disagree with you. Why should your opinion override theirs?

Along with majority rule, you need to have minority rights, and I think that's being thrown out with regards to zoning in the US, and it is causing all kinds of problems.

> Along with majority rule, you need to have minority rights, and I think that's being thrown out with regards to zoning in the US

"Thrown out" implies that specific, identified, previously recognized minority rights have been abandoned. What I think is more likely in the case of zoning is that things that people would like to have recognized as "minority rights" but which have not been are, well, still not recognized as minority rights.

But I suppose this would be easier to discuss if you would talk about what specific minority rights you think are being ignored or thrown out, rather than vague generalities.

I'm talking about the right to do things like add another floor to a house, or not have to have a 2 car driveway, or things like that that are very often part of zoning codes.

Zoning turns 100 this year, so indeed, at one time those minority rights existed, and still do in other places:

http://marginalrevolution.com/marginalrevolution/2016/08/col...

I think its a mistake to equate the absence of a current rule prohibiting something with the existence of a specific right to that thing, rather than the general right to take actions which do not violate laws which themselves do not infringe recognized rights.

That doesn't make any sense at all. Which minority's rights are being thrown out? (Note, by the way, that you didn't actually answer my original question: why should your opinion about where the limits of zoning should be override the opinion of the residents of PA?)

Presumably, some of those people would be happy to sell in order to let denser housing be built. They're the minority.

I think there are things majorities should not be able to decide:

http://reason.com/archives/2014/04/02/zonings-racist-roots-s...

Not that I think most people there or here in this thread are motivated that way, but ... sometimes you should not be able to tell other people how they can use their property.

Personally, I care about it because you lot in California are exporting a ton of people up here in Oregon where they then proceed to displace people because our own NIMBYish zoning laws and lack of supply.

> Presumably, some of those people would be happy to sell in order to let denser housing be built.

Maybe, but they surely knew what they were getting into when they bought their houses. So what right do they have to complain? It's not like PA's zoning is a recent development.

I might be able to make even more money if I build a chemical plant or a toxic waste dump on my suburban property. Should I be able to do that?

> [Zoning's racist roots]

Unless you have some evidence that the current zoning laws in PA are racist, this is a non-sequitur.

> you lot in California are exporting a ton of people up here in Oregon

If you think that PA's zoning is what is driving people to Oregon you are completely out of touch with reality. There's a lot of cheap dirt left south of the Oregon border.

Also, it strikes me as just a wee bit hypocritical to complain about our zoning because you have failed to keep people out while we have succeeded.

I'm actually happy to have people move here. I wouldn't be able to live where I do without people having moved up from California. The problem is that a bunch of people from a state with nearly 40 million people moving to a place with less than 4 is that it makes for some difficult adjustments. I'm still ok with it, but California is very much exporting people because they cannot afford it.

The more the merrier for me, but I guess having lived in Europe, living with other people does not bother me to the degree that it seems to for many people in the US.

The racism thing just goes to show that everyone thinks there are some limits to what majority rule ought to be able to do, just as many of us that take a dim view of zoning think that there is probably a line somewhere (your nuclear waste example).

> there is probably a line somewhere

Fine, then we agree. But the question you still have not answered is why your opinion of where that line should be drawn in PA should override the opinion of the residents of PA as expressed through their democratically elected local government.

Not sure what part of the bay area you live/work in, but where have you been looking? I bought in Redwood City last year and the prices, while high relative to the rest of the country, are probably manageable for many professional Bay Area couples. You can get a decent 3 bedroom for $900k-$1.2m, which is probably ~$3k-$4k/mo for [mortgage + property taxes - tax breaks].

Wow, only a million dollars for a 3 bedroom house. That's so affordable /s

People should come to the midwest or texas and see how far a million can really go

I know it's very expensive relative to the rest of the US, but:

1) It's way cheaper than Palo Alto (where a 3br is probably $2m).

2) This would be affordable in the bay area for many couples, especially when at least one person is an engineer.

commit to severely degraded quality of life that comes with a megacommute

Do not under any circumstances concede to a megacommute, any other option is better than that. You might as well concede to chopping your right arm off.

EPA will gentrify. It already has in some respect. Right now elementary and middle school are bad but for high school you end up in Menlo Atherton. Charter schools exist and Zuckerberg is working on something.

Palo Alto has the problem that people don't leave.

It used to be a college town. University Avenue had four bookstores. But then people stopped moving away. About a decade ago, Palo Alto did a survey of residents to find out how long they intended to live where they were. Most said they intended to live there for the rest of their life. This implies Palo Alto becoming a retirement community.

University Avenue now has zero bookstores.

Bookstores are certainly disappearing in other cities as well due to economic pressure from online vendors and ebook readers.

Not just Palo Alto but California-wide....Prop 13 makes dying of old age in the home you raised your children in the cheapest option. Literally anywhere else people move to, even a downsize, will result in higher property taxes

Related to this is the shabby conditions of many homes...the aged can't afford to renovate, but they also can't afford to move. They die in a tear-down

Seems to be the same old story we've long known. Government interference in markets leads to distortions. Yet year after year we act surprised. And when it comes time to setting up a government, we vote for the person who promises to spend others' money on our pet project.

I'm tired of hearing the ideological position that government interference is absolutely bad. I live in a city-state where government housing and policies and strict zoning at once makes housing affordable for the middle and lower class insulated from fluctuating rents, and protects public spaces from overdevelopment in a land-scarce island.

I'm curious to here more about how this policy works.

I would be skeptical that the claim that a land-scarce island should be wary of overdevelopment-- I would think sprawl would be more dangerous (and density would be welcomed).

In practice, strict zoning tends to create sprawl-- when density is outlawed, the displaced people need to live somewhere... and thus the footprint of cities grows wider and wider.

Sorry for the late response. The city in question is Singapore. The homeless population is extremely tiny in Singapore, but the homeless choose to live in public spaces and parks near urban centers due to the proximity of services.

When I say zoning, very little space is zoned as low-density in Singapore. Where there are buildings, they are almost high-density. However, the government owns a large proportion of the land, and this preserves and protects common pool resources like parks from being developed on.

You're right in one sense -- all government (in)actions should be considered, not an "interference" per se, but a choice made with at least some understanding of the consequences on society.

As for the problem of interfering with the market... One issue is that a well-functioning market depends on the idea that price captures all information. This is central to the idea of the "invisible hand" guiding individuals to arrive at the correct level of supply to optimally satisfy demand. When government actions set prices, the market participants no longer receive the correct information. In turn, the market will arrive either at too much supply (and waste) or too little supply (and unsatisfied demand).

In the case of housing, the government usually takes action to set prices for some homes lower than what market forces would arrive at. Therefore, the market will under-supply and some folks who want housing will not have it. The answer is to either allow prices to move without intervention or for the government to subsidize the supply of housing.

I agree with you on all the theory, but I'd add that if you take the subsidy option, you'll forever have to clamp down harder and harder as the effects of the distortions amplify.

I'm actually open to the idea that the government option could work; I just find it entirely antithetical to the ethos of the US.

Right, and there are also other externalities the government "captures" and turns into inputs for homo economicus. For example, the "cost" of dumping toxins in a river, or assassinating a competitor's CEO.

Which city-state are you talking about, if I may ask?

Most likely Singapore:

http://www.adb.org/sites/default/files/publication/181599/ad...

Singapore's house prices have rocketed over the last few years and are getting less and less affordable as a consequence of ZIRP, immigration and dirty Chinese/Indonesian money looking for a safe haven.

The government the subsidies are graded depending upon whether you're newly weds, new immigrants who chose citizenship, age, if you have children, income, etc.

Question - not arguing, I don't know the subject well: Are house prices relevant for this discussion? According to Wikipedia [0] 80% of the resident population live in Public housing in managed by the Housing and Development Board (HDB). Wouldn't house prices only be of concern to the other 20%?

[0] https://en.wikipedia.org/wiki/Public_housing_in_Singapore

Of that 80% who live in HDB flats, the ownership rate is not zero percent - it's 95% [0].

https://en.wikipedia.org/wiki/Public_housing_in_Singapore#Ow...

Kim-Mai Cutler's excellent and thorough analysis from a couple of years ago [0] is still broadly relevant, though I think there have been some changes -- the whole Google bus thing blew over, I guess, and Mountain View's city council got largely replaced, the new council being more housing-friendly. But there's still a lot in here that's applicable.

ETA: Oh, and here's a great piece on Henry George [1].

[0] https://techcrunch.com/2014/04/14/sf-housing/

[1] https://techcrunch.com/2016/01/29/nothing-like-this-has-ever...

Relevant:

http://marginalrevolution.com/marginalrevolution/2016/08/col...

http://marginalrevolution.com/marginalrevolution/2016/08/lai...

https://www.washingtonpost.com/news/wonk/wp/2016/08/10/why-c...

http://www.nytimes.com/2016/07/04/business/how-anti-growth-s...

http://www.bloomberg.com/view/articles/2016-07-27/zoning-has...

Get involved:

http://sfyimby.com

http://www.strongtowns.org

As much as I appreciate all these articles expounding the plethora of issues stemming from housing in the Bay Area, I can't help but feel thoroughly discouraged.

It seems that despite an abundance of chatter, we'll never see any change. If things were going to be fundamentally different, any time soon, we'd see indications of that. Instead it's just articles. Articles, on articles, on articles.

The sfyimby people are quite active - they go to local meetings, get out the vote and otherwise engage with the political process.

Don't be discouraged! YIMBY groups are popping up all over the Bay Area working to make a difference in their cities. Join a group's mailing list and show up at your city council when they ask you to. Easy. Bring enough friends and we'll see real change.

Live in Palo Alto: paloaltoforward.com Live in Menlo Park? www.imaginemenlo.com Mountain View? http://balancedmv.org/ San Francisco? http://www.sfbarf.org/

Some headlines: http://gizmodo.com/yimby-groups-are-organizing-across-the-us... https://nextcity.org/daily/entry/who-are-yimby-first-meeting...

http://www.forbes.com/sites/scottbeyer/2016/06/30/what-is-a-...

I think that California will eventually be forced to change as more and more people migrate to states to like Washington. The data only goes through 2010, but the Tax Foundation has a nice table for net migrations from state to state. [1] Also, anecdotally, try call up a moving company and inquiring about a move from the Bay Area to Seattle. The typical response I received was, "Oh, no problem. We have a steady stream of trucks moving people up there."

[1] http://interactive.taxfoundation.org/migration/

While it is fine to call out the City Council, I am surprised there wasn't an acknowledgment that the City Council is a reflection of the will of the people in the City. If it were really an issue to the community they would elect new Council persons.

Since the majority of the stakeholders on this issue likely can't vote to change the Council because they don't live in the City, I would recommend a boycott. One thing the transit workers could do is organize to the extent they don't buy anything within the city limits. No gas, no food/lunch, no shopping, no entertainment, etc... Once you get local business behind a political issue the rest typically fall in line or they may find themselves ostracized within their own community.

The problem with the "will of the people" is outlined here pretty well: https://www.washingtonpost.com/news/wonk/wp/2016/08/10/why-c...

A small minority of NIMBY homeowners can capture and control a city council fairly easily. When you are well off (and are retired or independently wealthy and don't work...) and you're in a town of 65,000, that really means there are maybe at most 1000 people actually going to City Council and paying any attention to it. That means that if you've lived there for 30 years, you know all of them and your networks are very deep. So, a small minority who has time and resources can effect a lot. And meanwhile young people, working people, people with young kids, people working 2-3 jobs, etc they're not paying attention, they don't have those deep networks, and frankly they only show up to vote in presidential elections. Plus, people who like how things are going, don't really dig into this stuff and have no reason to think anything is wrong. If you think Palo Alto "is on fire" and "going to hell in a hand basket" because you have to drive by a new apartment building, then you show up to council and you show up to vote. But if you have no issue with new buildings, you've got no reason to show up and you're far less concerned with voting. So, problem #1 is that people who are most affected are not paying attention or do not know that they should be paying attention.

Problem #2 is as outlined in the article above. When every city council is captured by existing homeowners, no town decides to add housing. Every town prefers to add jobs that bring in tax revenues but thinks they have little to gain from allowing more housing, because of the attendant infrastructure costs (like new schools). And so collectively, they make choices that drive up the cost of housing, drive people away from jobs centers, create homelessness, and which contribute to income inequality as people spend more and more money on housing because of an artificial constraint on housing supply. Added together, this stuff hurts our economy and it's killing off the middle class.

I used to live in Silicon Valley for many years. Devil's advocate: Why should Palo Alto provide affordable housing? People who want affordable housing can find it in Menlo Park, East-PA, Mountain View, all of which are just minutes away from Palo Alto. The reason why people don't want to live there, is because they want to live in a neighborhood that's as exclusive/upscale as Palo Alto. And yet, if Palo Alto gave in to demands for Affordable Housing, it would lose that very upscale/exclusivity that people are seeking in the first place.

I've always argued that San Francisco needs more affordable housing, because it's not just a neighborhood, it's a city. Anyone who lives outside of SF has to expend considerable effort in getting to SF, hence why the city has a duty to provide affordable housing within the city. However, this argument doesn't apply to Palo Alto. It might be a city, logistically speaking, but given its small size and extremely close proximity to other "cities" around it, it's really more of a neighborhood than a city. And I don't see the evil in having some neighborhoods within a metro area that are more upscale/exclusive than others.

None of those places are affordable anymore, with the possible exception of parts of East Palo Alto (and even that pool is drying up fast).

The problem with your logic is that just about every city on the peninsula has decided it can be the "exclusive/upscale" neighborhood in the region. And the ones that aren't on board with that can't possibly make enough of a dent in the regional jobs/housing imbalance on their own to matter. Thus people commuting to Palo Alto from Gilroy and Tracey.

I'm surprised that none of the YCs startups have tried to solve this problem. People really want 'affordable housing' and YC's motto to its startups is to 'make something people want'- so what gives?

Housing is not just an app...

I'd like to see someone mass produce stackable prefabricated units out of pieces and assemble them into multi-floor apartment buildings, increasing the number of aparments on offer very fast and driving costs down. Unfortunately, I think the problem here comes down to regulations. It's hard to acquire land. Much of the bay area has laws preventing you from building new housing much higher than a few floors. The property taxes are very high, which also makes it difficult to offer low cost housing.

My general impresion is that the bay area does not want to grow... Or at least, much of the existing homeowners, the NIMBY crowd, don't want it to grow. They want tech people to get out and for things to go back to how they were in the 1980s, while maintaining the price of their own homes as high as possible.

Like this? http://www.abc10.com/news/local/sacramento/modular-apartment...

Yes, like that, except I think you could make the process even more efficient. Make the modular units more "plug-n-play". Maybe even make them replaceable, so if an apartment is old and damaged, a new unit can relatively easily be swapped into its place and the old one recycled.

Housing prices depend on availability, and housing density is controlled by regulation. No amount of innovation can fix a zoning problem.

That is why a startup is needed. Airbnb and Uber showed how to get past regulations.

Sorry you aren't going to build a multi-unit dwelling in Palo Alto in secret.

Does the problem scale beyond Palo Alto and San Francisco? Do residents of Topeka or Detroit have similar issues with housing affordability?

The problem in the Bay Area is that since 2010, we added about 500,000 jobs and only 50,000 housing units. Roughly speaking, jobs gives you a sense for demand and housing units give you a sense for supply. Our jobs-housing ratio is completely out of whack. That's what makes the Bay Area so expensive. I actually don't believe any of the nonsense about this being a "destination area" or that there is "insatiable demand" - the demand is directly driven by job growth and you can see that plainly. People are not moving here from Nebraska and taking on housing that is multiple times more expensive just because it's pretty here- they're doing it because they got a job offer here. So no, Topeka and Detroit don't have this problem because their jobs growth isn't so far out of whack from their housing growth.

Yes: California is exporting a steady stream of people to Oregon, which displaces locals and irritates some people. We're not building fast enough either and may simply not have the capacity, short term.

On a similar note, I find it profoundly ironic that the hub of "technology will save the world" ideology hasn't fixed other local issues like homelessness.

You have to admit that the bay area has a higher class of homeless though. Where else do you see homeless people with brand new $300 REI tents and iphones?

Startups solve problems where a small but clever resource commitment (some programmer-hours) can have an outsized impact.

There is no elite team of 10 or 1,000 that can press the right buttons on their Macbook Pros to bring more land into existence in desirable areas.

Being a landlord is pretty much the opposite of being a startup.

We see the same problem here in Europe, maybe to a less extreme extend. We have a few economy hotspots with rapidly raising real estate prices. One fundamental problem is, that those people, who could change things have litte interest in changes. Homeowners like to see their property value rising and for cities life is easier without a growing population.

If one says: let free markets take care of that, the problem is exactly that there are no free markets. A free market would mean, that anyone owning a piece of land could build there without limitations. But zoning laws and building size regulations prevent exactly that. As a consequence, building permits have exploded in value like taxi concessions once did. They are no longer tied to the economy of building/owning a cab, but of a limited market.

Munich is one of the most expensive cities in Germany, but it is closely surrounded by farmland. The housing problem could be solved easily, if more of it were allowed for building. But as this happens only at a very small speed, land value can multiplay up to 100x when a building permit is issued. This multiplier shows how skewed the market is.

"Downing and her husband, an attorney and programmer, respectively, say they simply could not afford to pay almost $150,000 per year for housing alone while starting a family in Palo Alto."

It's interesting the difference a couple of miles make. $150,000 per year is $12,500 a month. The most expensive house for rent in East Palo Alto (3 miles away) is $6,000 (half that) and there are many choices under $4,000 per month. They could live in Gilroy and ride the train for free[1] for around $3,000 a month. They could do even better if they decided to rent an apartment or a townhouse instead of a detached single family home.

Whining about not being able to afford to live in a neighborhood where multi-millionaires want to live is not very productive. Unlike San Francisco there are a lot of housing options up and down the peninsula, and since they work (or used to) in Palo Alto it is extremely close to the train station (so an easy "no drive") commute, which saves them even more because the City pays for their rail ticket and they don't have to buy gas.

[1] https://www.cityofpaloalto.org/civicax/filebank/documents/40...

The $150,000 number is the cost of the mortgage needed to buy a home the size of the one they rented in Palo Alto [1]. The breakdown was that they rented the home with another couple for $6200/mo. If they wanted to buy a similar home, it would cost ~ $2.7M, thus the $12.5k/mo mortgage. They were already renting a place in Palo Alto at ~ $3100/mo. Their problem was that they wanted to start a family and needed more space. Doing so in Palo Alto was prohibitively expensive.

I don't think that she was whining about not being able to live in a neighborhood where multi-millionaire lived. It was about being able to establish roots anywhere in the Palo Alto area. It's all but impossible and it will become harder and harder to run a city where all of the labor force needs to be imported (police, teachers, city gov't, etc).

I know this is already starting to become an issue with some departments at Stanford where it's very difficult to recruit/keep faculty and postdocs due to the cost of living in the immediate area.

[1] https://shift.newco.co/letter-of-resignation-from-the-palo-a...

So, the argument is based on her insisting that she had to buy a house in Palo Alto. But renting a place large enough would have been much cheaper than that $150,000: $5k/month gets you a nice 4 bedroom.

I don't think her math adds up. She's just insisting that she has to buy, and it has to be in Palo Alto. Neither of those are truly requirements for her, so the $150K quote is specious.

EDIT: I acknowledge $5k is not realistic in PA. 6k is, however.

Hey there. I'm Kate Downing. I don't insist on living in Palo Alto at all. See? I'm moving. But what I'm trying to say is that we have a serious problem because people who are integral to our community who SHOULDN'T move can't afford it. You can tell lawyers and engineers to go get lost and they don't HAVE to buy a house in Palo Alto. But are you also going to tell our police, firemen, teachers, city staff, nurses and EMTs to get lost, too? They all make less than we do. What happens when they follow your advice?

My complaint was based on the $150,000 quote, specifically, because it's a specious one. It is not based in fact.

I'm certainly not arguing that Palo Alto or areas around it don't have serious pricing problems caused by policy that restricts growth. I rent in San Mateo (can't afford to buy) and am very frustrated that houses typically cost $1M or more (outside of what I consider affordable, on a dual-professional income, very similar to yours).

Based on your response what I am hearing is that you're angry. That's fine, but you're lashing out. For example, you just attacked me, while I provided a data-driven argument that your $150K argument was simply false. It's based, apparently, on your insistence that you must buy, rather than rent. Renting is currently much more affordable than buying in the Bay Area.

As for whether the support staff for a city should be able to afford to live in the city they support, that's another argument. I personally do not see any requirement that a city provides affordable housing to its support staff, especially in the form of purchased housing. That would be a major policy change that would have enormous impact.

NO ONE is talking about the city providing anyone with housing. This is not about government subsidized housing. It's just about the city allowing people to build housing on the land that they own. Just permitting people to build.

What do you mean, "allow people to build housing on land that they own". What land? The cost of building housing in PA is marginal to the land costs.

Multi-tenant buildings are the key here. Cost of land is inversely proportional to the number of units. Building up, shared outdoor space, etc. all lower cost for owners but are often prohibited by local municipal regulations.

You can only build multifamily housing in 3% of the city. It's illegal everywhere else. You can't build more than 3 stories in most places - it's illegal. The supreme cost of housing here comes partially from the fact that you can only build a tiny number of units on land that could otherwise hold much more. So you split the cost of land among, say, 5 condos, and not 20. If you're paying 1/5 of the cost of the land and not 1/20 of the cost of the land when you buy your condo, it's obviously much more expensive.

I'm fine with increased density housing in the peninsula. But, this is mainly going to help developers (who are already rich). You'd have to build skyscrapers not multifamily units to address this problem (the area is intensely hot).

Again, my only beef is on the $150K quote from your interview (and your requirements for "walkable to downtown" and "kids can bike on the street"). I think your argument would be much stronger if you backed off on that, and cited a more reasonable compromise (living 30 minutes from PA).

Palo Alto traffic is already really, really dense. Building a lot more housing, even if it's close to downtown/transit, is going to increase traffic tremendously. In addition to building this housing, the city would need to improve its road throughput. This probably would have to include removing the various one-way barriers in the city that currently preclude optimal traffic flow.

Agreed but lets not oversimplify too much...in San Jose they increased density in many areas quickly and ignored parking and roads...we should be greenlighting projects but not gutting standards. What residents will usually throw back is SCHOOLS. They are afraid already crowded schools will become moreso, and there is nowhere to put new schools

I can't seem to reply to dekhn, so I'm writing here -- the issue is that the city won't allow people to increase density on their lots, for example by building more apartment buildings, or by adding "mother-in-law apartments" in backyards or over garages.

I support you Kate but firefighters etc don't deserve a pass on housing costs (I say this as a son of a lifelong firefighter). They all are commuting in to most high cost municipalities anyway and have been doing so for years already.

There is a stack of applications for the Palo Alto dept that is surely a foot high...supply and demand says most of the positions are plenty acceptable to a huge backlog of applicants

As a Palo Alto resident of a little more than a year I completely agree with you.

I understand rents being high because of the cost of housing in general - it costs a great deal of money to pay the property taxes alone.

Let's face it - Palo Alto is a wondrous city. So many great things come out of this area because it's chock full of talent in so many areas - from software developers to financial investors, medical researchers, inventors, lawyers, etc. There's a reason why the cost of housing is high: many people want to live here, and living here affords all kinds of opportunity and inspiration.

But it does need to be managed. Pricing out talented individuals is bad for the future. Families should be able to move into the area to work important jobs at local businesses.

I have several children, and it's a struggle to get by in the area, let alone save for the future. I see so many people that work non-stop in great jobs that are barely making it. The cost of housing is such that it's affordable for people with multiple high incomes and that's just about it.

Many local businesses don't look good, and it's no wonder. How can they possibly bring in workers at retail wages? My neighborhood is full of people sleeping in their cars every day who work at local restaurants. At first I was completely wierded out by the phenomenon, but at this point I understand. They are just trying to get by, and can't drive in during rush hour to prepare for the dinner shift, so they do what they have to do.

The cost of housing in this area is great for some, but it affects the quality of life of many residents and many people who come to the area to work. Palo Alto needs to expand the availability of affordable housing in order to sustain itself.

Other communities have found solutions. In Huntington Beach we had Median Income Housing developed with caps on pricing. There are large facilities in town that look to be unoccupied or sparsely occupied. Surely there is room for high density housing like apartments or condos. Even a hundred units would make a difference and help drive sustainability.

My 2 cents.

$5k / month definitely does not get you a nice 4 bedroom in Palo Alto. Maybe in East Palo Alto, but that is a very different place in terms of quality of life, safety, and schools.

Edit: I decided to check, and there is one place in Palo Alto right now with 4 bedrooms at that price https://sfbay.craigslist.org/search/pen/apa?nh=83&max_price=...

From personal experience, as someone who was priced out of Palo Alto this year, it is rare to see a place at that price point in Palo Alto proper, and they tend to be quite run down. The one place available right now is actually in a good location and doesn't look too bad inside, so that's not a bad deal for the location.

On the other hand, you can get a great place in Seattle with views for over $1000 cheaper: https://seattle.craigslist.org/see/apa/5723972635.html

I see plenty of units for rent in Palo Alto in this price range. Not East Palo Alto, Palo Alto. Also, don't just check Craigslist- that only includes a very limited number of rentals in that price range; other rental searches show a lot more examples.

[EDIT: I had incorrectly filtered my search. The price break is at $6K for a 4 bedroom (at least 4 units) not $5K. However, that is still well under half of the quoted value of $150K for a house purchase).

I have looked for a year and a half at 4 bedrooms in Palo Alto for under $5k / month - the caveat being that I have pets.

I have yet to see anything pop up other than where I currently live. It was available for all of three hours.

The upside is that if I were to leave the area, I would be able to provide my landlord with acceptable tenants quickly.

Yes, I can rent. I can rent until I die. But how bizarre is it that you are telling me and everyone else who isn't wealth enough to have bought a house yet that we "insist" on buying and we should be happy to rent forever when we spent decades telling the baby boomers the exact opposite? As a country, we recognize the wealth building aspect of home ownership. We recognize the stability it gives people who don't have to worry about rent increases and who don't have to worry about pulling their kids out of their school. We see the value of people leaving their kids with homes after they die, not dusty rent checks. We recognize the value of people putting down roots in their community and investing in it. We gave the baby boomers the mortgage interest rate deduction, Prop 13, and the GI bill and numerous other programs to make sure that everyone in the middle class could have a home to call their own.

Now you're saying that it was fine for the American dream for boomers to involve home ownership but if a Millennial wants the same benefits then they're "entitled" and "insisting"?

The absurd cost of housing in this country and the declining rates of homeownership are directly tied to the massive divergence we're seeing between rich and poor in this country and the shrinking middle class. https://www.washingtonpost.com/news/wonk/wp/2015/03/19/meet-...

Hey, I think you're being unfair here, attributing a wide range of beliefs to me that I never stated, nor do I believe. That's really unfair. I said in another post: I hear that you're angry, but it's not OK to lash out or claim that I'm arguing something I'm not.

Anyway, with regards to home ownership: I'm personally of the belief that home ownership has been massively oversold as a benefit. I've been in the Bay Area for 25 years, from undergrad to staff engineer at an internet firm. Over the various dot-booms and dot-busts, I saw people moving further from the Bay Area and taking on insane commutes due to the desire to own homes. For example, many Stanford employees purchased in Tracy(!), then experienced massive financial failures when that area depreciated.

I'd like to see Prop 13 die in a fire. Unlikely to ever happen.

So, as you say, you're moving out of Palo Alto because the costs to buy there are too high. However, Santa Cruz isn't particularly cheap nor is it significantly cheaper than my own area, San Mateo, which has a 20 minute commute to Palo Alto.

If you had just said, "$90K/year in an area 30 minute commute to PA", I wouldn't have complained at all. The problem here is insisting on living directly in PA weakens the argument (it's specious) because there is no specific reason for a person to have to live in PA. There are more affordable communities around within 30 minutes commute. I feel like you're insisting that people who support a community must live (and own) in that city. I don't think that's a rational requiment.

Again, none of my argument is based on the systemic issues in the Bay Area (or anywhere with a booming economy and a large number of well-capitalized buyers), which I freely admit is a problem.

I think you're missing the forest for the trees. Yes, I personally can go live 30 minutes away. So how far away should the teachers live, then? The police? Because if I can afford San Mateo, then that means they largely can't. So where are they going? Is it acceptable for them to be coming up to PA from Gilroy? Tracy? Stockton? At what point do we say that we've created a ridiculous system in which people are needlessly spending years of their lives in traffic and throwing rent money in the toilet all because we can't build some more apartment building next to our jobs centers? I'm not insisting that city work live or own in PA, I'm highlighting that they can't own anywhere near PA, since, as you state, even 30 minutes out of PA is where two-income professionals can afford, not them.

101 to Gilroy will often be faster and saner than 17 to Santa Cruz... sorry but you are in for some serious commute pain. Even people who only need to go as far as Summit Road eventually crack. 17 was never designed for commute traffic

Simply put, in your situation I would head to Texas. Sucks, but Santa Cruz is also gentrifying and you are already too late to catch a break there. You fought the good fight, there are other great places to live.

I would be on suicide watch if I had to take 17 every day. It is beyond awful and every day there is some lane-closing accident etc. The State will discourage more coastal development: 17 will never be improved...to do so would mean more development in precisely the areas the State wants to protect....coast and redwood forests

$2.7M house in PA -> $1.2M house in San Mateo. less than 30 minute commute (it takes me 20 to go from SM to PA on a moderate traffic day).

"They can move elsewhere" is not a reason to not build more housing - it is reasonable (and desirable) for people to live in the city that they work in. If your argument is that they can pay 3,000 a month for the privilege of living 50 (!) miles away from work in Gilroy then that still doesn't do anything for the "teachers, police officers, and other working and middle class people" - you know, the people who actually keep the city running.

Indeed. but it's also unreasonable to expect that homeowners in a city should not be able to decide how much building they want to allow in their city. I mean, it's a Bay wide problem, why can't all the building be done right outside Palo Alto? why does Palo Alto have to shoulder the solution to this problem? I don't have a dog in this fight, but I certainly can understand current homeowners. They want to keep their city a certain way. Why can't they ?

> Indeed. but it's also unreasonable to expect that homeowners in a city should not be able to decide how much building they want to allow in their city

How far away does said land need to be before you think current homeowners shouldn't have a say anymore? Should someone who lives on the border of Palo Alto and another city be able to prevent housing being built in that other city, or just in Palo Alto? It's pretty arbitrary.

The people who are trying to prevent housing being built today are the same people who benefited from lots of new housing being built during the 1960s-1980s. Why should they have the right to prevent other people from doing what they themselves did? Should the Palo Alto residents in the 1960s-1980s have been able to prevent the newcomers at that time? I suspect very few current residents would agree with that, which is hypocritical.

I think there is a much simpler way to deal with this -- if land is zoned for housing, allow housing to be built. If some rich guy in Palo Alto wanted to control what happened on that land, he should have bought it. Why should anyone be able to veto the development of housing on land they don't own, if it is zoned for housing?

so, should a town be allowed to decide what kind of zoning it wants to have, or should it be decided by a decree from Federal government? So, suppose people in a town decided they want their town to be a town of 2 story single family homes. Should they be allowed to make that decision or not? Suppose all of New York decides to move to Palo Alto within the next 5 years. Should current homeowners in Palo Alto have the ability to decide how much housing and what kind of housing should be built to accommodate that demand?

It is unreasonable for the government to limit housing. It directly causes economic segregation. Only the wealthiest get the homes allowed by law while everyone else gets pushed further out. The market does not do this. Our segregation laws do.

If it were legal to build fourplexes anywhere in Palo Alto, merely wealthy families would be able to outbid some of the insanely wealthy with their four rent payments combined. For the most part, single family homeowners can't actually afford single family homes in such desirable locations, but our laws make it illegal for middle class families to outbid the wealthy the way they always have: using less land.

This is an obvious injustice, and the people who insist on laws that exclude others will soon find themselves in our history books. Stop letting Dixiecrats call themselves progressives.

"It is unreasonable for the government to limit housing" for which government? federal, state, local? Is it really that unreasonable for homeowners in a town to exercise some measure of control over their own town?

> I mean, it's a Bay wide problem, why can't all the building be done right outside Palo Alto?

I mean, climate change is a worldwide problem, why can't all the cutting of greenhouse gas emissions be done outside the US?

so you think that a town should have no say whatsoever in deciding what should be built in its borders? By this analogy ?

Or move the jobs out of ridiculously high COL areas?

An area of land has a carrying capacity dictated by the will of the people who live there through their votes. Why fight it when you can simply move work elsewhere?

> Why fight it when you can simply move work elsewhere?

You can't really do that. You underestimate the powerful network effect Silicon Valley has on the tech industry. Almost all of the investors are here, and many of the world's best software engineers choose to live here and will not move elsewhere for work. There are only a few other cities that have a lot of software jobs and also a large pool of software talent, and they also have a high cost of living -- NYC, Boston, and Seattle come to mind.

Go remote. High quality engineers, project managers, designers, etc can be had all around the world, and if you're seeing a drop in team or employee performance from working remotely, you're not managing properly.

Your argument about investors and quality developers only being in SFBA is a strawman. There are successful startups all over the world. Unicorns? Probably not, but that's a perception issue, not a quality issue (current unrealistic valuations will continue to come back down to Earth)

The number of orgs supporting remote, even fully remote, grows all the time: https://github.com/lukasz-madon/awesome-remote-job#companies... ; if an employee chooses to expose themselves to outrageous housing expenses due to the employer's ability to externalize this cost to the employee (with no penalty to the employer, because "that's just the way it is"), this will never change.

> Your argument about investors and quality developers only being in SFBA is a strawman.

That was not my argument. I said most, or "almost all," not all. And that's true! Even the NYC startups have to come to the Bay Area to meet with VCs.

Having a founder fly out every week is still cheaper than building a startup in the Bay Area as soon as you leave the 3 people in one room stage.

The reason why it happens is the same reason why VC have historicly had negative returns; VC's as an industry make most of their money by convincing investors to part with there money not from actual returns. As such they like having a dog and pony show in the area while they try and fleece more people.

This sets up boom and bust cycles and many market distortions. As VC's still want positive returns it's just not their #1 goal.

This is the real answer.

The problem is that the large global companies like Facebook and Google are extracting an unnatural amount of money and that's flowing into the Bay Area, and translating into high-paying engineer jobs. The problem is all of the great jobs are landing in the Bay Area, and in the age of the Internet that just doesn't make any sense anymore.

These large global companies need to spread that around the US and move jobs around to other areas, so that young people can get exciting jobs in lower cost areas. This will take off the burden off the Bay Area, and ease the pressure of housing prices.

The weather man. You get to 'live' almost twice as many hours because of the weather. Add top companies, upcoming companies, jobs, schools, colleges, city stuff, nature stuff, Sports and you just can't beat it. After all you only live once.

Huh? When I lived in SF all daylight hours were spent in the office...

Industries are successful when they cluster. It's why you see entertainment in LA, insurance in Chicago, biotech in North Carolina, banks in NY, and think tanks and defense contractors in DC. As we move away from manufacturing and into a knowledge economy, being able to quickly exchange and improve on ideas with other people becomes more and more valuable. It's why the entire world is seeing a massive movement toward urbanization. We are not going to see high tech companies set up in places with few potential employees, no research universities, no investors, and no potential partners. It's simply not going to happen even if it looks like the easy way out. If you consider your own fortunes and you consider joining a young up and coming company that is risky because it has a high chance of failure, I think you'll find you are much more comfortable with that risk if your town has hundreds of other employers for you to go to afterwards, rather than just a small handful. The Internet does not and cannot replace the connections you form by accidentally meeting people at coffee shops or parties. Knowing and seeing people on the street in real life has more value and builds more trust than a text message. Do you think that calling your mom is the same thing as visiting her in person? Do you think you could be a good parent via Skype? Of course not. So why do you think that business relationships are any different?

> Do you think that calling your mom is the same thing as visiting her in person? Do you think you could be a good parent via Skype? Of course not. So why do you think that business relationships are any different?

Because familial relationships are not transactional in the same way that business relationships are?

Business relationships are also relationships. The first people a small company hires are the people they're friends with or friendly with. The people who invest in you are more likely to be your social acquaintances or friends. You won't even get a meeting with an investor in many cases unless you have a common connection. Partnerships are formed all the time between people who also are on the same soccer team, etc. People in business also have people they like and that they don't like and that they're friends with outside of work. I have coworkers, but I also go to their BBQs and their birthday parties - they're still human beings. When people are entrusting each other with the fates of their companies, their employees, and their own personal wealth, they need a high degree of trust.

You sound like someone who has never actually had to work in a multinational company before or with remote team members. Anyone who has can tell you that things are much easier when co-workers know each other personally and become friendly with each other than when they're just strangers to you on the other end of the email. It changes how you respond to them.How likely you are to misunderstand them. How likely you are to respond with kindness or terseness. And it changes how you feel about your job in general. When you go into work and you like the people you work with and you consider yourself their friend, you're far more likely to like your job overall and stay there. If you treat your entire work life as a "transaction" then you're far less likely to be happy with your work life.

The teachers, police and fire fighters all moved out a long time ago.

The problem is that they continue to be pushed out further and further from their jobs every year because cities like Palo Alto keep adding thousands of jobs and almost no housing. That means professionals like me get pushed out of PA, move somewhere cheaper, and end up pushing out people that make less. All of these things are tied together and at the end of the domino what you get is homelessness which we've seen spike in the last 5 years.

Isn't it a very unhealthy thing for a "community" to be protected and serviced by people who do no longer live there? Who get pushed out further and further from it?

A city, where you have separate classes of homeowners and all the service personal commuting in sounds pretty dystopian to me.

For those who aren't familiar with the Bay Area: East Palo Alto is a high-crime city. It is not the eastern part of the city of Palo Alto -- it is not even in the same county. It has such a high rate of crime that there were no grocery stores there for many years, because the shoplifting put them out of business. There are frequent gang-related shootings. And yet, it still costs more to live there than it does in most of the United States. That's pretty good evidence that we need more housing.

Fun fact: Antarctica got its first ATM before East Palo Alto did. (Both in 1998)

I've been told that the huge Ikea-Home Depot shopping center in East Palo Alto was built on top of the most dangerous neighborhood in the city. Apparently it was contested gang territory, and the city used eminent domain to solve the problem by demolishing it and converting it to retail.

East Palo Alto's crime rate has dropped significantly in recent years and is rapidly gentrifying.

http://www.paloaltoonline.com/news/2015/10/12/report-violent...

> Whining about not being able to afford to live in a neighborhood where multi-millionaires want to live is not very productive.

You make it seem like solely a demand-driven problem, but supply is being artificially restricted, which is a form of protectionism that is unbecoming of the otherwise highly capitalist homeowners of Palo Alto.

The point has been made well here: http://marginalrevolution.com/marginalrevolution/2016/08/col...

"The people who bought their homes a long time ago lucked into a windfall and they resentfully lash out at anyone trying to cut in on that windfall. But notice how un-American these claims are. The current residents want to protect their gains by telling other people how they can use their property. When a new restaurant starts to take patrons from an old restaurant we generally don’t think that the old restaurant–the long-term resident–has the right to prevent the new restaurant from opening. The same is true, by and large, for new technologies and ways of doing business. Yet when it comes to residential land we give the old residents a veto on the new."

Multi-millionaires? ProfessorVille has numerous Billionaires on a single block.

Agree on the sentiment though...arguing for affordability in PAMPA is a lost cause

No owner of an oil company wants to live next to a refinery. No owner of an auto plant wants to live next to the plant. In the Industrial era, owners wanted to live far away from where the work was done because it was ugly and polluted. This created the suburban pattern and cheap housing close to work for workers. This is basically Oakland.

Rich Tech entrepreneurs, executives, highly paid programmers, and VCs want to live close to the tech "factory" and they want it to be a nice place. They don't care where everyone else who works there lives, just as long as they don't screw up their nice neighborhood with excess traffic, pollution and density.

It's as simple as that. All this stuff about economic policy and zoning laws and the general decline of western civilization is a whole lot of overanalyzing, IMHO.

Is living in the Bay Area a privilege or a right?

That is the core of this discussion I believe. Bay Area is really hot as a place to live and many real estate investors are very much aware of that. I can assure you that most of the new housing put there just becomes a big target for the investors. I believe most of new housing won't be available to low income families but immediately go to the real estate hunters. Right now, there is a huge global market hungry to invest to Bay Area.

In that respect, I support the housing is limited, instead we should push more public transportation, we should push more on new hot zones for commercial zones, outside of the current ones. This is the best way to balance housing and traffic.

It's not a privilege or a right. But it's a smart policy that will make us all richer, healthier, and more environmentally friendly. You can read more here: https://medium.com/b-copy-com-longform-content/why-can-t-tho...

We'll kill the golden goose and eventually companies will leave. They can't afford to pay workers 3x the competitive rate just to support housing costs.

The person who cleans your office's bathrooms shouldn't be burdened with a long commute.

Neither Hilliary nor Trump will stop feeding this monster.

I found these whining hypocritical and snobbish. I can't afford a house in Palo Alto even if I work there. I don't complain about it just like I don't complain about not being able to purchase a luxury car. I don't expect the people who CAN afford these things to just lower the price and give them to me.

Many cities near Palo Alto have houses at a reasonable price, East Palo Alto, East Menlo Park, Mountain View, Redwood City, just to name a few. Why doesn't the author want to raise her kids there? BECAUSE SHE DOESN"T WANT HER KIDS TO GO TO SCHOOL WITH THE AVERAGE JOE! She wants her kids to go to a school where Joe Millionaires send their kids, while only paying the price of an average Joe. How could that be possible?

Her mentality is the same as that of the people she's accusing of not making a change. She just makes less money and she's loud.

Your theory doesn't explain why she's moving to Santa Cruz -- the schools are nothing special there.

We're moving to Santa Cruz because we wanted to live in a walkable area. If you travel up and down the peninsula, any house near the walkable downtown area is going to be $2M+. Yeah, sure, you can buy for less and have to travel by car absolutely everywhere. But why spend $1.5 to live in a dead cul de sac when you can spend the same money to live in a lively walkable area near the beach? If you're going to hang an albatross around your neck, you better think it's awesome. We're sick of driving everywhere and we want our kids to be able to go bike around the neighborhood safely.

You're preaching to the choir :-) I lived in Santa Cruz for 13 years, and I would love to go back -- except that commuting to Sunnyvale would be hell.

Redwood City has a lot of nice houses near the downtown for under $2M

It didn't when we were looking. We didn't see a single property come up on the downtown side of El Camino. We would have liked that, but we didn't see it. And also $2M would also not have been within the band we were looking for.

Speaking as a Los Gatan...get ready to HATE hwy 17

As I've pointed out elsewhere on this post, you've setting up a ton of requirements that can't be met. While I appreciate that you want to live in a "walkable area", that's pretty much the first requirement you should drop. That's a "want to have", not a "must have" in housing. Like I've pointed out elsewhere, you're setting up specious arguments when you insist of a bunch of details, like living directly in PA, living directly in a walkable area, being able to bike on the streets in your neighborhood.

Dude, where do you get off telling her what choices to make about where to live?

Well, she and I share a great deal of things in common in this situation. We're both dual professional marriages with families in the Bay Area who are in the situation where housing in the areas where we want to live is unaffordable. The difference is while I also want to see denser and more affordable housing and shorter commutes, I didn't rage-quit on the internet over not being able to buy a $2.7M home in exactly the place where I want to live. Instead, I was extremely rational, considered a wide range of issues, decided that the problem with housing in California is effectively systemic and unchangeable because existing homeowners are an extremely powerful voting block.

If I wanted to live in Palo Alto the first two things I'd drop are the requirement for "walkable to downtown" and "my kids can bike on my street". Those are great attributes, but that's about half a million of additional house cost, and I think any rational person buying a home would drop those requirements if they truly want to live there. Adding on to that, I'd also suggest buying a fixer-upper, fixing it up, and living there (not flipping it).

Ultimately, if you rage-quit on the internet, you can't complain if people call you on the irrational parts of your rage.

"Rage-quitting"? She couldn't find what she wanted, so she left. Her argument is not "everyone should get what they want" but that the majority of people's situations are worse than hers. You having different priorities regarding where/how you want to live is great, doesn't mean that they're right for her, or that the choices others have made to get by are right for her. It's great that you can zero in on what the actual problem is, but it seems much more valuable to do what she's doing and spread the information (including how the voting block would have to be overcome) than to give up and suggest everyone else give up, too. "systemic and unchangeable" sounds more like quitting to me than anything in the article.

The point is that if two professional salaries aren't enough to buy a home in Palo Alto, then it highlights how much everyone else must be struggling. It highlights just how far away all of our service workers must live. Highlights just how miserable housing prices and commutes have gotten for the vast majority of people in the Bay Area who aren't lucky enough to have two professional salaries. If two professionals are, according to you, expected to have a half an hour commute, then everyone else is melting into their car seats every day.

By the way, in San Mateo, my children go to school with a number of children whose parents are "service workers" for neighboring cities. They live in San Mateo- most of them have bought fixer-uppers in areas like East of 101 where prices are lower (unfortunately, also very close to the freeway, with lots of pollution and noise). Obviously, this is anecdotal, but it's clear that there are people who have recently purchased in this area and are commuting to nearby cities.

If you hate driving, you're really gonna hate being on the wrong side of Highway 17. Many of my coworkers commute over the hill (I used to go to UCSC, too) and it's a really bad commute: there's effectively a single path, with 2 lanes, and a high rate of accidents that block both lanes.

Formerly America's deadliest highway (prior to the dividing barrier)

As you say, lane-closing accidents daily...but also hillbillies in huge 4x4s from Redwood Estates who also hate tech people and are often high

1) Exclusionary zoning is a problem-- it's keeping those out except those who are fortunate (rich or lucky), and not paying for the privilege. It's a country club atmosphere, but with Prop 13, without the requisite fees (which should go back to the community at large)

2) "Many cities near Palo Alto have houses at a reasonable price, East Palo Alto, East Menlo Park, Mountain View, Redwood City"

Their houses sell for less than Palo Alto/Atherton, but they're far from reasonable. An artificial scarcity of land has driven prices up everywhere.

>Many cities near Palo Alto have houses at a reasonable price

LOL

The east coast of the USA was settled first, recall. What did they do back east to 'solve' this problem of "we're running out of space"? They increased the density of occupants per unit of land -- they built UPWARD.

That will have to happen here too. It's already happened in LA.

There will always be crybabies like this attorney during the growing pains of a popular 'destination city.'

For now, think of turning the Peninsula into tall buildings, concrete and asphalt. Think how the picturesque drive up highway 280 to San Francisco from the South Bay will be affected.

Everyone wants the nature. Not the tall buildings, concrete and asphalt.

Crybabies need to do precisely what this gal chose -- LEAVE. There's the door. That's how markets work -- when the price of a good or service is too high, demand drops. Well, she's a living example of a smidgen of demand disappearing.

People who don't like markets should move to Venezuela or North Korea or Cuba.

What you're missing here is that the market delivers rent to the holders of a natural resource (land) far in excess to its marginal product-- which is to say economic rent.

Landowners in the Bay Area are rentiers, and unless we enact policy to reverse this, we'll never have a competitive market in housing.

There is no free market in housing. Supply is very tightly constrained by the city via a system of very stringent zoning (3 stories max most of the city, only 3% of the city is even zone for multifamily housing) and taxes. What you see happening in the Bay Area isn't the result of the laws of supply and demand, it's the result of the laws passed by city councils. There's no developer in the world who wouldn't love to build more housing in one of the most booming places in the country. They're not not doing it because it doesn't make financial sense or because there's no demand there. They're not doing it because the housing market in the Bay Area has been regulated to death.

> For now, think of turning the Peninsula into tall buildings, concrete and asphalt.

No, the opposite. Urban density reduces sprawl. The more people you can accommodate in the city core, the less you need to spoil the surrounding countryside.

> crybabies

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