The case for making New York and San Francisco much, much bigger
vox.com
vox.com
New York definitely has its NIMBY crowd, and people will scream about development in certain places under certain situations, but on the whole it seems to be an entirely different culture towards growth. As a longtime NYC resident, my feeling at least is that everyone here basically agrees on the premise that they are going to live in a giant, incredibly dense, tall, interconnected city that looks like a city. People might lament loss of historic buildings, get annoyed by the aesthetics of cookie cutter towers, or get seriously concerned at lower income people being ignored by builders, but we do get that we live in a big city.
From the outside, it seems like the Bay Area is completely schizophrenic. San Francisco has obvious big city problems that seem largely unaddressed. The Valley is completely dominated by automobile-scale planning with a way of life based on four story office parks surrounded by parking lots, a fundamentally broken model. And the people with real money seem to want to continue some fantasy that everyone is living in a bucolic nature preserve rather than the choked up global megacity that clearly surrounds them.
I have little doubt that NYC will, in fact, just get much much bigger over the next 20 years, and will generally have the same fundamental structure and urban fabric. The Valley on the other hand seems like it's going to need to change course.
It was very forward-thinking of local governments to create these parks and open spaces back when the there was no demand for the land.
There is no possible way it can convert into a sprawling metropolis when the muni "lines" all share one basic tube and one path. It's a joke.
New York works because even when the president is in town you can get from downtown to uptown in 15 minutes on an express train. I can barely move 10 blocks in SF in that same time at 5pm.
I think the tech activity will move elsewhere in 30 years.
Most of this probably heavy romanticizing on my part but nonetheless, the general awareness of ones place in the world must be much stronger if you grow up in NYC, compared to other parts of the world.
Not that they're stupid, there's nothing north or east of SF, and NYC is very far away. Much dilution on what an actual global city is.
This is literally every place I've ever lived, both big and small. Everyone wants to be the last person to move to a place.
https://en.wikipedia.org/wiki/California_Proposition_13_(197...
Sure. But at what cost? And paid by who? And for how long?
When we're preserving someone's memories of SF from 1965 at a huge cost to everyone who has the temerity to be under 45, it may be time to maybe possibly consider a re-evaluation of the balance of costs and benefits.
If preserving things for your parents means a hundred working-class families get pushed out by rents rising because your parents' memories require no new housing built, the balance of policy exhibits significant opportunity for improvement.
The past is important, but it's not healthy for the future to be enslaved to the past. Your parents, too, are a trend that will change.
Do you think the people protected by prop 13 deserve to be protected and the people living in apartments in the Mission don't? What about anyone moving to the area now and getting hammered with $3k+ rent?
Prop 13, by itself and in isolation, is not a bad thing. In SF specifically and the Bay in general, it has had very nasty and pernicious knock-on effects that harm everyone. It's pushing out the people who made the area what it is - the very people prop 13 is supposed to protect!
In short, I agree with you. Pushing people out of their homes is not cool. We should pursue policies that don't cause people to be pushed out of their homes.
Second, prop 13 has contributed to the current insanity by created a privileged group that acts to protect their privilege. They protect their privilege by becoming ferocious NIMBYs and other means. This means that housing for people not currently covered by prop 13 is more expensive than it needs to be.
Changing prop 13 is not sufficient to fix an insane rental market, but we really should consider a potential re-examination of a policy that has helped push a great many people out of their homes. Pushing people out of their homes is not cool. We should consider maybe doing less of it.
Your analysis would be correct in a context where both supply and demand for housing are constant... and also assuming that maintenance costs never, ever change. However, prop 13 helps to discourage land sales and new construction, resulting in a supply that grows much more slowly than demand. This drives prices up, especially in areas like the Bay that have been under-building housing for decades. Higher prices results in landlords incentivized to find ways to throw out rent-controlled tenants and outright prices out many working-class families.
Also the costs of things like building upgrades and plumbers can sometimes go up year-to-year.
In short, keeping property taxes fixed to 1970s-era for grandma with multi-million dollar property results in people getting pushed out of their homes. This is perhaps just a bit less than ideal.
http://static6.businessinsider.com/image/5342ef126da811ef6ab...
On top of that, the power of the NIMBYs is significantly stronger in the outer boros than it is in Manhattan (especially Queens and Staten Island). Once you reach city limits they are all powerful (Nassau, Suffolk, Westchester).
Then there's Chris Christie's killing of the ARC project and the worrying lack of new transit capacity. It's most acute over the Hudson, but the pending doom for Williamsburg highlights the mass transit system's lack of resiliency outside of core Manhattan.
I don't want to get too political especially on local politics which is probably not of much interest to most HN readers, but Bloomberg left BdB use a very solid economic position and a couple of ambitious transit plans in the works or almost finished (7 extension, east side access and 2nd ave). Since BdB has become mayor he started a war with the governor and his only proposals for new transit projects are frankly dumb (the trolley down the east side of the East River and the new ferries).
The City Council just voted 45-0 against rezoning an Inwood project that would have allowed for 3 measly more stories of housing on a building that can as of right have 14 stories. God forbid if we actually have to build real amounts of housing, preferably non-subsidized. As a NYC resident and market-rate renter, I'm sick and tired of paying for everyone else's rent when they will not lift a finger to help alleviate my burden.
"More housing would mean lower rent and a bigger economy" : I'm all for increasing density (up to European equivalents), but more density adds complexity and more costs (waste disposal, parking space, public transport, local commerce, health issues). I'm not an urban planner, but most of the high-density areas I've seen in my city, even those outside the core, are pretty expensive places (i.e. buildings with 10+ floors).
The author also mentions the need for serious urban planning, while seeing a need for "liberalizing housing regulations". That's a bit contradictory.
Also, we need a culture shift in terms of how we see high density. The urban core is not just for 20-somethings looking for an opportunity. An old industrial area was converted to high-rise buildings in the past 10 years in my city, and they didn't plan a single school. Now young professionals moved in, they like the area, have kids, but want to stay in that area. (it's no different than living in Manhattan with kids, which is not a problem if you can afford it)
The high-density places in your city that are expensive are only expensive because the developer probably had to fight a multi-year battle to be allowed to build there, with millions of dollars at risk because permitting could be stopped by a cranky neighbor at any point in the process. Dealing with those kinds of legal impediments to construction, it only makes sense to build higher profit luxury housing, and since there is a lack of housing the market can bear it.
I think this causation is slightly backwards. The price will be high regardless because of the limited supply, so they build luxury apartments to best appeal to the people who can afford those prices.
I'm just saying the luxury apartments are a result of the high prices, not the other way around.
And customers therefore have more choice. In the suburbs a given area might support only one McDonalds, but in the city the same area can support a McDonalds and a Burger King and a KFC.
Why? Well large buildings have less surface area to volume and thus need less heating and cooling. Public transit is vastly more efficient than cars idling. Further, fewer cars per capita is far less stuff to manufacture and maintain. Restaurants are vastly more efficient than home cooking, and density reduces energy costs of takeout making even that better than heating up a stove to make a single meal. Yes, that iPad had to travel from china, but it did so in a huge efficient boat and could be unloaded right at their harbor.
I could keep going but for all their talk about environmental awareness SF adds a terrible burden. Now sure, it's a high cost of living area but that's mostly rent being paid both directly and indirectly. (Your chef also has high rent, and his doctor also has high rent...) Yes, taller buildings cost more to construct, but they also last a long time.
Keep digging and limiting new construction is a large part of why things get so expensive. Many really expensive buildings where built to hold poor immigrants.
Pretty much half the west coast and a good number of other cities in the country have worse air quality.
In fact, right now (which is a particularly hot muggy day in NYC) it's around 55. Parts of Arkansas, Colorado, and Ohio are over 100, and a majority of California is over 70.
Look at this bullshit in Oakland for example:
http://www.socketsite.com/archives/2016/08/local-coalition-c...
The developer plans to replace a dilapidated 2-story building with a much larger building in central Oakland, but the "local" "community" which consists of people who don't even live in that neighborhood want to extort a bunch of "community benefits" i.e. sacks full of money, or else they'll tie it up in courts forever.
Here's an example of another shakedown in Oakland where the electrical workers' union will take you to court over CEQA until you've hired enough electricians to satisfy them.
http://www.socketsite.com/archives/2016/05/appeal-challenges...
I don't really understand the electrical workers' union issue. Here there are provincial guidelines for safety and that's it. Construction is heavily regulated, union membership is mandatory, but it's often in the promoters' interests. The US tendency to deregulate/liberalize and let people sue each other is mind boggling sometimes.
Not per-person, which is the measure that matters. Density largely makes those things more efficient.
Real estate is a bigger and harder problem then people give credit for.
Us "hackers" can make the world prosperous and inexpensive through innovations like self-driving cars, 3D printers, and so on, but the cost of real estate is baked into EVERYTHING: the cost of food in the store or warehouse, the cost of your haircut, the cost of your dwelling, the cost of your office, and by extension, the opportunity cost of you compared to outsourced labor from somewhere cheaper.
A lot of this is our own fault: we want neighborhoods with "character." We introduce regulations that slaughter high-density living like requiring all bedrooms have windows (to protect us from actual, fire-style slaughter). We require nearly all living spaces to have full kitchens, even if the people living there almost entirely eat out (the ancient Romans didn't have a kitchen in every home, but they did have plenty of eateries).
Housing and real estate cannot be "innovated" away. It cannot be "disrupted." It can only be solved with a lot of hard work and sacrifice for a way of life we are lead to believe is the only way forward.
All of the upscale towns surrounding San Jose (Los Gatos, Saratoga, Cupertino) were approached to be absorbed numerous times over the past few decades...none regret their decision.
Trying to kill distance might be crazy. But is it crazier than trying to cram even more jobs, people, and housing into a tiny % of the available area?
Geographical income inequality exists. Maybe it always will, and maybe we can't make it much better. But why should we try to make it even worse?
Seems to me this equation has a couple "V" variables -- VR and VC -- to which small adjustments might make a large difference.
Palo Alto is successful because you can't make an exit from 49.5 states.
The fact that the biggest cities have enjoyed growth during the last few years doesn't necessarily imply that making them even bigger will produce even more growth in the future.
The whole SF housing debate -- both sides of it -- is completely irrational. One side believes that unrestricted building will solve everything, despite ample evidence to the contrary. The other believes that nothing should be built unless it's 100% affordable, despite clear evidence that this won't work, either.
Meanwhile, SF continues to encourage tech companies to relocate to the city by offering substantial tax incentives. If only we could do something to reduce the severity of the crisis...
What evidence?
http://cityobservatory.org/what-filtering-can-and-cant-do/
The economics are clear and intuitive: the "filtering" effect of new construction happens on a decades-long basis. Building today won't have a downward impact on prices on any timeframe relevant to the people involved in this discussion. So fine, build more...but don't expect it to solve your problems.
Considering that the current housing crunch began in ~2012, it's far more likely that we can impact prices on a timeframe that matters by discouraging the (acute) crisis in demand. We can start by reversing the ill-conceived tax incentives we give tech companies to move to San Francisco.
http://www.bloomberg.com/news/articles/2016-06-01/apartment-...
http://sf.curbed.com/2016/7/12/12163544/san-francisco-rent-p...
That's what's so irrational about this debate: the construction market may be inefficient on the margins, but it's basically functioning as you would expect. The "build up" crowd has a poor understanding of the practical impacts of their proposals, and the "affordable housing only" crowd has a poor understanding of local real estate economics.
Meanwhile, everyone ignores the elephant in the room.
Housing assistance would obviously help, but longer term, you need to start the filtering cycle that that article describes.
People create jobs, not places, not governments, not even money... people. Yes, all these things can help (sometimes dramatically) but ultimately all jobs are the product of the creativity and hard work of people.
New York is rather different in that NIMBYism never had the formal tools to block development as effectively.
In order to convince homeowners to allow expansion, you would need to pay them off somehow. Perhaps a large tax on new developments that is redistributed out to nearby property owners?
EDIT: I suspect people don't like the implication that property owners should get even more, but fundamentally property owners are the ones that vote and go to city hall meetings because they have the most skin in the game. Political and economic power are already concentrated in their hands, so there is no workable solution without their consent.
Surely if this would work, developers would already be bribing NIMBYs directly? If they can't profit after the bribe, then they can't profit after the tax either.
The point of codifying this sort of payout is so that approval would happen automatically -- i.e. the law says the developer gets green lighted as long as they pay. Basically the 'negotiation' between developers and the community happens only once, during the legislative debate.
I upvoted you because you do identify a real challenge with bribery; but this solution won't solve that problem.
Governor Brown has a proposal that would work to improve things:
http://www.sfexaminer.com/san-francisco-needs-governors-hous...
More housing will boom real estate market, and only for short term. I don't believe new housing will help average Joe to have better prices. To the contrary, it will make some real estate investors richer.
Perhaps OP thinks housing doesn't behave like a normal good or perhaps he think there are some other governing dynamics than the ones people typically learn?
Unfortunately, to some extent it doesn't. House prices go up, especially in a terminally low-interest rate environment, and lots of people with (unearned) equity from that increase pile in buying more as speculative investments. You'd hope that government would step in to break such an obvious vicious circle, but... no, it's no use, I can't keep a straight face.
(Not defending OP's specific claim. Also speaking from a London perspective; YMMV.)
If new construction was going up that was priced in a normal bracket, affordable for mere normal people who had 150k to put down for a mortgage, I would consider that a massive improvement.
The problem here isn't just that what's being built is unaffordable - although it definitely is that - but that it's not what inhabitants want. It's being built to appeal to mostly Asian investors who like shiny high-rise newbuild and will probably never even see their purchases, much less live in them, so you end up with minuscule unit sizes, poor build quality, overheating, insufficient elevators and boilers, all the obvious corners to cut.
Not sure what you mean by "mere normal people who had 150k to put down for a mortgage" - with median London incomes somewhere around £30k, needing a £150k deposit doesn't sound especially normal-friendly. If you meant total price, yes, now you're talking.
I was being facetious, $750,000 is a totally insane cost for a condo unit, but even that would be far more affordable than what's been going up in San Francisco over the last 10 years.
You are definitely affecting the price of housing by doing that
SF isn't taking full advantage of the business opportunity that greater housing density presents. It could be that more density, especially if handled well (better public transportation, proper infrastructure) would lead to even more economic activity, more high paying jobs, and so forth. Keep in mind, the cities that are more expensive than SF tend to be denser as well.
People actually do like dense neighborhoods under the right circumstances - dense parts of Brooklyn and Manhattan are more expensive than SF, and some of SF's dense neighborhoods are more expensive than the low density ones (russian or nob hill vs excelsior or outer sunset).
I figure that the desirability of higher density housing with good public transportation, combined by the increase in economic activity from greater density and a larger population... yeah, it could happen. Not saying it would, but I don't think it's all that outlandish a thesis.
Also, this is partly a trick of borders, since lower cost housing would probably be built outside SF's proper, so taken as a region, costs could drop even thought they went up in SF. Kind of like Manhattan vs New York generally.
Wages can't support that -- most people can barely afford housing today as it is. Even higher tech industry wages can't support that in many places. (Even in my small-town-Midwest city, tech wages don't cover "downtown" cost of living)
Until we get serious about planning density for people who work for a living, this problem will only get worse. If you just let cities get bigger on their own with "less regulations", developers will build cities full of penthouses (as they do today). Sure, millionaires will save some cash, but 99% of the population will still forever be priced out, and therefore be driving in from elsewhere
So yes. Land Is Different.
In car terms : If companies only built Lamborghinis and Ferarri's, cars would never be affordable for regular people. Even if you built 1 million of them, you'd never end up with the Yaris or Camry or other regular cars that the market actually needs. Increased supply can drive up prices, if your increasing the wrong kind of supply.
This is the same problem we see in cities today. Developers build exclusively super-ultra-high-end housing. If we loosen restrictions, Developers will just build more exclusively-ultra-high-end-housing. Sure, your wealthy folks will save 5% on housing costs as supply increases and the cost of "ultra-high-end" housing drops. But the 95% of regular folks will still forever be priced out of the market. It will take 60+ years before ultra-high-end housing becomes affordable enough for a regular person to afford it.
To solve the gentrification problem this article mentions ("to stop gentrification steadily erode opportunities for ordinary, middle-class people") we have to start by building urban housing for ordinary, middle-class people. Something no city in America is currently doing.
This is nonsense. If companies produced exclusively luxury products in excess of demand, they would become affordable because that's the only way they'd be able to sell them. Of course that wouldn't be profitable, so they don't do that.
Houses aren't expensive because they're "luxury", they're expensive because they're scarce. Building "urban housing for ordinary, middle-class people" doesn't help much if there are still lots of rich people who want to live there.
The question is then /why/ would companies only build Lamborghinis and Ferraris when there is such a huge market for Hondas and Fords. To extend your analogy, if all manufacturers were collectively allowed to build only 10,000 cars a year, and each one of those were subject to neighborhood review and potential lawsuits, /of course/ they will build only luxury cars!
Because the market for high end is much more profitable. The question isn't "how do we ensure builders are profitable as possible". We know how to do that, everywhere does that every single day.
The question (from the article) is "how do we prevent cities from eroding opportunities for ordinary, middle-class people". My answer is "we need to just start building housing for ordinary middle-class people".
Everyone wants to frame this in economic terms that make it rational for a for-profit company to do this. That seems silly to me, we all already agree it's not the most profitable action. But that's ok -- a city government's goals are supposed to be in the interest for it's citizens and region, not in the interest of profitability.
> if all manufacturers were collectively allowed to build only 10,000 cars a year, and each one of those were subject to neighborhood review and potential lawsuits, /of course/ they will build only luxury cars!
This assumes everywhere is San Francisco.
Even where there is no building limits, there is no shortage of land, and there's comparatively no review process -- density is still 2x-4x the cost. Even out here, developers make so much more money selling 1 high-end unit, than 5 mid-range units, that the vast majority never bother with low-end.
Most "free markets fix everything" arguments hinge on this future hope that builders eventually exhaust the high-end market and look to the working-class market. I don't think that will ever happen -- every builder in the nation could continue building high-end-only indefinitely and still never run out of work in our lifetimes.
We don't need to build housing for "ordinary middle-class people". We need to build housing, period. There's not any need for builders to "exhaust the high-end market and look to the working-class market". There's already huge swaths of SF full of units perfect for the working-class market. That's what they would be if there were other units for people at the high-end of the market to be in.
If you don't know SF at all, just be aware that there are very large neighborhoods that are stuffed absolutely full of what in a sane market would be working-class units.
Builders will build wherever there is profit, not only where profit is only the highest. Otherwise every watch manufacturer will be building bespoke Phillip Breugets and nobody will build $1 Walmart quartz watches, which obviously isn't the case.
> density is still 2x-4x the cost
Well of course where density is high, construction is more expensive. That's true in San Francisco and true in Houston. It's just that demand and supply in SF justifies more density than in Houston.
> every builder in the nation could continue building high-end-only indefinitely and still never run out of work in our lifetimes
Are you saying that demand for high-end housing is effectively infinite? I haven't seen any evidence for it, but if so, we could sure use the tax revenue to build state of the art public transit systems so suburban commutes wouldn't be so terrible...
I never said they were unsold. They sell. That's not the problem.