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Comment by RealityNow | Hacker News Reader

It blows my mind that virtually every major city in the developed world is facing this same problem, yet nobody is doing anything about it.

It's a pretty simple problem with a pretty simple solution. The problem is that local city councils have restricted the freedom to build through excessive zoning laws and regulations in order to increase housing prices for their own private investment benefit.

The solution is to relinquish them of this self-interested tyrant-like overbearing power and set these policies on the national level - basically how Japan does it. The more localized the power, the more self-interest is going to favor a minority of private individuals at the expense of society.

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A solution is to regulate it nationally. However, for the US I loathe that idea. I firmly believe communities have the right to regulate themselves in this way, which naturally produces wonderful diversity and character and autonomy and all that good stuff.

I like the option of looking at how/why entrenched landowners control those communities. If the city councils were more broadly representative, that might solve the problem.

If anything, New York City is the poster child for too-centralized regulation. Why are the codes not far more locally governed? Who knows.

While it might be ideal to have local control, cities such as my city of NYC respond to special interests -- in this case wealthy landlords. The local government serves wealthy landlords by making land artificially scarce and scarcity is reflected in higher prices. In microeconomics this is called "rent-seeking" which in this case is using politics to create profits far, far higher than costs. Thus Donald Trump and other wealthier landlords are getting huge sums of money from renters who are paying far, far more than they would in an efficient market. By responding to the campaign donations of wealthy landlords the local city councils have created a regressive tax and this is also a major form of inequality.

The local city councils respond to lobbying on the part of wealthy landlords by 1) zoning density restrictions, 2) overregulation and amount of red tape needed for approvals, and 3) overuse of historic landmark status.

Harvard Economist Edward Glaeser has written extensively about these problems. For example: Build Big Bill http://www.nydailynews.com/opinion/build-big-bill-article-1....

See also: 40 Percent of the Buildings in Manhattan Could Not Be Built Today https://www.nytimes.com/interactive/2016/05/19/upshot/forty-...

The solution is to use the one in used by Japan which is to have the federal government override the "rent-seeking" local city councils. The honest truth is that these city councils make renters and younger people pay far, far more for housing while giving Donald Trump and his fellow wealthy landlords far, far more money than their costs.

I wonder how this would practically work in somewhere like America, where the cities are so diverse. I have a hard time believing that the rules that are the best for a big city like LA and San Francisco are the same rules that would work for middle of nowhere Iowa.

I don't see why we can't just make some modifications to Japan's model. There may be a smaller population and land area, but how many cities of 13 million people with 43 million people in the metro area do we have?

I think the only problem with adopting Japan's model is we are so established with the current one.

There are just a few major metro areas in the US where much of the rent-seeking for wealthy landlords is much of a problem starting with SF, LA, SD, Boston, NYC, DC. Not all cities bow to the wishes of wealthy landlords by making land scarce through artificial political means with the resulting huge financial windfall for wealthy landlords at cost to renters and millennials trying to buy a home.

And the Japanese zoning model mitigates more than just the problem of exploitative rentiers buying and corrupting local government

You are right that this is part of what helps drive local diversity and character, but it's also one of the principal drivers of NIMBYism. It has tremendous impacts from high density zoning to proper infrastructure development and effects hundreds of millions of people in very real, very daily, negative ways.

These problems are greatly reduced in places with larger scale control of the zoning laws and in many of those places you also end up with lovely, highly diverse cities as well. Given good governance, neighborhoods and areas can be designated for various "character" initiatives as well and you end up with lovely places like Tokyo, Kyoto, Seoul and so on.

Not having this kind of larger scale vision is why it takes an hour to cross over a single river from West New York to Manhattan or from McLean, VA to Seneca, MD and 5-10 minutes to cross the river in Seoul from Gangnam to Geumho or between two points on the Sumida in Tokyo in 5-10 minutes.

This will not be a popular opinion, but whenever I see protection of privilege in the US these magical words are somehow involved:

    > have the right

Although I'm generally opposed to centralizing decision making, there seems to be proof that centralizing building restriction away from municipalities would help [1].

Restrictions on generating housing stock seems to be by far the biggest driver of income inequality and gentrification ("regulation accounts for 85% of the increase of house price dispersion from 1980 to 2009"). Not just gentrification within cities but the polarization of groups across a country.

[1] http://idea.uab.es/jmarket/2016-2017/ANDRII%20PARKHOMENKO/Pa...

"In markets with low regulation the supply of housing will accommodate most of the rise in demand and the prices will not change much. Every period elections are held to local governments. Residents vote for candidates, each with a proposed level of regulation, via probabilistic voting. The selected level of regulation will be determined by two competing sets of interests: those of renters and those of owners. Renters prefer less regulation because this decreases rents and house prices, thereby lowering the downpayment they need to pay in case they decide to buy. Owners prefer more regulation as it increases the value of their houses."

This paper's decision to assume regulation is a scalar value, and renters as being "obviously" against rent control and rules about building affordable housing stock renders the conclusion of correlation pretty dubious, let alone causation.

Property developers are largely the ones fighting for cutting building regulations, not renters. Including regulations against building a set number of affordable housing units.

Income and wealth inequality was primarily triggered by union busting, untaxing the rich and offshoring, not how many parking spaces you were obligated to build in Los Angeles.

Of course I forgot, capitalism is to blame for all our present day evils. I doubt you've read the whole thing before finding the snippet useful for bashing it.

Housing Stock regulation is indeed hard to compare, but compared to other regulations it is rather well suited.

>It blows my mind that virtually every major city in the developed world is facing this same problem, yet nobody is doing anything about it. It's a pretty simple problem with a pretty simple solution.

If it's a local problem with local solutions then why did it happen to more or less every major city in the developed world at the same time? Weird parking regulations are specific to Los Angeles.

It could be that wealth inequality is the primary cause of all of this but what do I know? I'm not the kind of person who would make a ton of cash if Los Angeles building regulations were slashed.

Ironically the architect actually indirectly points this proximate cause by pointing out that land prices have skyrocketed. He just didn't think to question why.

If land prices keep going up investors' incentive to treat apartments like bars of investment gold will keep going up too. If wealth inequality gets worse, more of that money will be stashed in land (luxury apartments), causing prices to rise. All of this will happen whether or not Los Angeles parking regulations are cut.

If California rolled back prop 13, on the other hand, that would help somewhat to de-goldify land and provide enough money to the state budget to build affordable housing the old fashioned way it has always been built: by the government.

Prop 13 doesn't apply to rentals.

Even if the incentives to build luxury apartments are gone, the codes still don't make other apartments all of a sudden economical. The parking garage beneath by west LA near UCLA rental is virtually empty because most people come here without cars. But they have to have it so...

But speculation is a problem, especially with Chinese investors who have already tapped out their own property tax-free markets. Just I don't think that is what is going on here.

Prop 13 untaxed land. Untaxed land combined wealth inequality, combined with a dearth of other investment opportunities after 2008, combined with very lax regulations of international capital flows led to property hoarding on an enormous scale.

Rich investors want to hoard the kind of properties they would want to live in. Hence luxury apartments and houses that take up way too much prime inner city land - not just in Los Angeles, but Singapore, Vancouver, London, Hong Kong and many, many more.

Hoarding obviously takes supply off the market and rents are obviously driven by supply, so rents have gone up.

>Even if the incentives to build luxury apartments are gone, the codes still don't make other apartments all of a sudden economical.

If land became a lax liability rather than an asset that gives you the license to tax others, the incentives to build high rises to put ordinary people in would be much stronger.

Of course, without doing something about wealth inequality all of that money would still flee into other asset classes. Bitcoin would probably do well :)

Why does everyone hate on prop13? It still allows taxes to go up, but only at the rate of inflation - it prevents normal people from being thrown out of their houses after 10 years due to tax adjustments

It's a regressive tax that shifts the tax burden away from rich old retirees to poorer younger workers who had the misfortune of being born later.

That is always how society works, those that existed before leverage the efforts of the young. 401k, social security, Medicare, etc

You'll benefit from this scenario at some point as well.

I don't find this situation comparable to those programs.

Boomers never paid any taxes on the extreme capital gains on their primary residences and I'm not holding my breath that prices will quintuple again in my lifetime. They got a huge something for nothing and the least they could do now is sell their houses at a huge profit and leave so workers with families can live closer to work.

If it only applied to natural persons' primary residences, you might have a point, but a lot of the benefit goes to commercial landlords holding vast swathes of real estate and paying practically no taxes on it. A better solution would be to allow people to defer property taxes on their primary residence until they die at which point it is taken out of their estate. That would still prevent people from being kicked out of their homes, but would also stop letting huge windfalls from property speculation go un-taxed.

> in order to increase housing prices for their own private investment benefit.

I think its more that most people just don't like change and want their neighborhoods to remain the same

If they really just wanted to increase their investments, up-zoning greatly increases the value of existing land in most cases.

What you've described is primarily an American problem, especially a Californian problem. As someone who spends a lot of time in Washington DC and The Netherlands it's not nearly as bad in either place. NIMBYism is particularly terrible in CA, but my experience in The Netherlands is that it doesn't cause near as many problems.

In The Netherlands you see that the stock of affordable public housing is rapidly dwindling in favor for expansive private upper class housing. The government introduced a more liberal market driven approach in the 90's but it still takes time for the real shock to arrive.

Waiting lists of 20 years or more are not unheard of. When I was younger and got on one of those lists it was "just" 10 years. So 10 years added in about 20 years I guess. Probably I would have waited for 15 years if I would've waited.

I find it pretty shocking personally to see a first world country still didn't fix it's housing shortage 70 years after WWII ended.

Perhaps providing housing shouldn't be about making money. That is the central conflict here.

Cities are starting to "unbundle" parking requirements from building requirements, SF is an example here.

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