How to Fix San Francisco’s Housing Market | Hacker News Reader

How to Fix San Francisco’s Housing Market

fee.org

32 pointsandrenth20 comments

The cause of high housing costs which is known to economists is market inefficiencies or market failures called "rent-seeking" in this case the use of politics through zoning density restrictions to create artificial scarcity in the housing supply. Special interest groups (in this case landlords/land owners) pass these zoning laws to make their land artificially inflated and making tenants and new home buyers pay more than they would in an efficient market for housing.

The fix is really simply: combat the special interests and pass laws prohibiting the rent-seeking. Repeal zoning laws that are overly restrictive.

Harvard Economist Edward Glaeser discusses this in papers you can download. FT Columnist with BS, MS Economics Tim Harford discusses this in his book, "The Undercover Economist."

Not certain why people are proposing new solutions when the solution is already known. Helps if people study economics.

And how will you know if changing zone laws works?

It helps to look at Hong Kong: similar to SF scarcity of land, excellent public transport, high population density and skyscrapers everywhere, yet it's even more expensive to rent than in San Francisco.

The way I see it: if living in San Francisco is 3 times "nicer" than living in location X, so the rent is 3 times higher. Changing zoning laws does not change the pricing, it simply changes how many people will be living in SF, but as long as it's "3 times nicer" than X, it will continue being 3x the price.

So making it denser + cheaper would mean more people could be packed in -> prices rise again

I think you're mistaking SF and Hong Kong for being more similar than they are.

Hong Kong has about 7.2 million people in about 107 mi² of developable land[0]. In comparison, San Francisco has about 840,000 people in 47 mi² of land.

Additionally, San Francisco is just one piece of its urban area. There is a large amount of developed land outside of it that people can live in who can't afford the city proper. Hong Kong is much more self-contained, geographically and politically.

Furthermore, there is a vast amount of research showing that zoning laws hold tremendous (and quite possibly primary) impact over prices. To start, you might be interested in the book Zoning Rules! by William A. Fischel.

Excuse me for saying so, I can't help but think you made this comment with virtually no knowledge around zoning and urban development in general, and I don't want people to be misled.

[0] http://www.pland.gov.hk/pland_en/info_serv/statistic/landu.h...

> Excuse me for saying so

No need to apologize, you're right: I am no expert. These kinds of responses is why I come to and comment on HN, thanks for the link!

Speaking as a former HK resident, there's an awful lot of special-case stuff going on there historically, legally, and economically... so I'd be very hesitant before trying to make comparisons beyond "more density is technically possible".

That zoning map infuriates me. All these residential neighborhoods right along the Muni rail zoned to be single-family houses. I used to take the N-Judah to work downtown every day and the trains were at most half-full. The infrastructure is there, just build something already.

I used to take the N-Judah to work downtown every day and the trains were at most half-full.

How long ago? The N-Judah trains are packed like sardines inbound in the morning and outbound in the evening. They've started running empty trains out to Hillway because typically by UCSF the inbound trains are completely full. More housing in the Sunset would absolutely require improved transit.

In 2011 I took the N every weekday from 30th to Montgomery around 9-9:30am and back around 6-8pm and sardines are the perfect simile.

Nowadays during key commute hours, the N-Judah is quite a bit more crowded – often to shoulder-to-shoulder standing-room-only, or wait-for-the-next-train-because-there's-no-more-room, levels.

MUNI has added extra shuttle trains that just run the busiest part of the line (https://www.hoodline.com/2016/09/new-n-judah-shuttles-aim-to...), and the N-Judah will be the 1st line to get 3-car trains (https://www.hoodline.com/2017/02/n-judah-will-be-first-line-...).

But yes, they could run even more. And there should be far denser housing near dedicated rail lines.

I'd go so far as to say all lots, statewide, that are within a 5 minute walk of a rail station should have no height or housing-type restrictions other than those required for earthquake safety. (And yes, this goes for the commuter suburbs, too. If you get a BART station, you need to accept a bunch more housing – or the trains should skip that stop.)

  A slightly more moderate proposal favors an 80% land tax to allow for some margin of error in assessment.

... which, of course, is unconstitutional (Prop 13).

> which, of course, is unconstitutional

Which means that you'd need only to amend the California constitution to repeal or modify that amendment.

I'm with you in that I definitely do not favor violating a constitution of any sort, but because amendments are possible, we should not pretend that constitutions are set in stone, as they are amendable. We should also not attempt to pass policies that violate the constitution by methods other than amendment, of course.

California is unique in this regard, and is paying the price for it.

I'm sure it must be nice for older landowners to see windfall profits thanks to the productive activity of others, but surely there must be a better way of helping people save up for retirement than to make the area completely unaffordable for younger people.

This will change only when these older landowners lose political power

Who are these FEE folks? What's their angle?

The author sounds like a very classical economist.

> Who are these FEE folks? What's their angle?

One of dozens of 'free enterprise' think tanks sponsored by cash from the Koch network.. I don't think they're wrong about fixing SF's housing costs (aside from their solution being unconstitutional) but this sums up their ideology:

> FEE has published or hosted lectures by some of the finest minds of the modern age, including Ludwig von Mises, F.A. Hayek, Henry Hazlitt, Milton Friedman, James Buchanan, Vernon Smith, Israel Kirzner, Walter Williams, George Stigler, Frank Chodorov, John Chamberlain, F.A. “Baldy” Harper, and William F. Buckley, Jr., among many others.

https://www.charleskochinstitute.org/professional-education/...

building really tall buildings on a fault line seems like a great idea

Removing height restrictions isn't the only way to increase density.

Improving efficiency of land use can be accomplished by eliminating idle and under-productive use, through the tax policy recommended in the article (land value tax).

Because they haven't thought of that and have done zero research on it, so they just build buildings like they did a century ago, right?

The Japanese architects have figured out how to do exactly that. Japan experiences earthquake after earthquake, but Japanese cities are full of skyscrapers and I haven't heard of any of those having any catastrophic issues of the sort that you seem to be implying.

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