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Comment by nxsynonym | Hacker News Reader

While the rising cost of housing is an easy target, why not put the pressure on the companies that are driving the influx of workers and out of control cost of living?

If tech companies are drawing people into cities and forcing out those who keep the city itself operating, why not have them subsidize and improve public transportation? Lower income housing? Encourage more remote work or move their headquarters out of the city centers? It seems crazy to me that people get driven out of their homes by real estate developers who re-develop due to tech-wages.

This example is a bit on the fringe, but it does illustrate the daily struggle of many normal people. 2+ hour commute is insane. And before someone comes in with the "why doesn't she get a new job closer to home?", you know it's not that easy - not to mention unfair to suggest that someone should change their entire life because their profession isn't flavor of the month.

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This isn't an issue of tech companies forcing anyone out. Bay area municipalities and NIMBY property owners have created a hostile regulatory environment for property developers, leading to a lack of new housing coming onto the market and driving rents upward.

True, but new housing wouldn't be needed if there wasn't such a high influx of people moving into the Bay area. Sure tech isn't the only player in the game, but they're surely one of the biggest. If less people were moving there for high paying jobs - rent wouldn't rise as quickly or as drastically.

> new housing wouldn't be needed

Bay Area housing supply has been growing less than demand for the last 30 years. New housing is needed, regardless of who is employing whom.

California building codes are pretty extreme from what I've seen, they go as far as measuring the pull force required to open a door for example. This seems like a place where a little deregulation would go a long way.

That's a nice idea, but this is a region where the ground you build on is your enemy.

Counterpoint: Tokyo.

I am highly confident that the regulation in Tokyo is stricter, not less strict

Building codes aren't the problem, it's zoning. If a developer had an empty acre in SF or Palo Alto, or permission to replace low rise housing with skyscrapers, they'd build.

The cost of building probably does have an effect on the margin, but it is so much less of a factor than restrictions on what can be built.

A recent article about building in Millbrae mentions developer fees of 26k per unit being build. I'm all for deregulation to make it easier to build, but the code compliance and fees are also part of the problem.

http://www.smdailyjournal.com/news/local/millbrae-bart-stati...

From the National Association of Home Builders, it looks like "average" is approximately $9,400 per unit in "fees". Not sure if that's apple to apples with the Bay Area, but in either way that fee just seems kind of crazy. Rows A-C, summing fees, on the Construction Costs table here: https://www.nahbclassic.org/generic.aspx?genericContentID=24...

When zoning aggressively blocks dense housing, I don't think it's the little code details that matter.

You are correct, I was conflating zoning and building codes a bit there. Zoning should take the lions share of blame when it comes to costs.

I didn't really understand zoning until I witnessed a bunch of Southern middle-class white moms agreeing with their middle-class black mom neighbor about how they all hoped that the new construction on the [formerly agricultural] lot next to the subdivision would be restaurants instead of apartment buildings, because the latter attracts "the wrong kind of people".

Then I looked at the zoning map for the municipality, and read the zoning codes.

From outward appearances, it's to keep the poor people away from the rich people. And not just at night when everyone goes home, either. All the time, everywhere. Jobs, schools, commutes, shopping, entertainment. It's the new age of redlining, with a global substitution of bank account sizes for skin colors.

I couldn't tell what degree of intent was there, but on the ground, the zoning board has reinvented the ghetto. The poor folks get to live next to the railroad tracks. Rich folks get to live next to the zone marked as protected wetland/watershed, so that it can never be developed.

The kind of behavior is the status quo everywhere not just the south. It's a byproduct of people only getting involved in these things when they think it's going to affect them in a negative way. I.e. Only the people who associate apartments with black people and don't like black people care about the issue.

Isn't the door pull thing for handicapped accessibility?

The price of land dwarfs the cost of construction. Outside of the Bay there are huge housing developments underway and although I am sure property developers would rather have less regulation they do not seem to be struggling to build homes. In a state with active fault lines and environmental pressures from much of it being in the desert deregulation is not going to help our long term prosperity or safety.

This is kind of part of the problem. Housing developers are enabling large hub cities to offload the cost of housing to smaller outlying towns. Of course, the developers aren't doing this willingly.

The other problem is that housing developers in California have a tendency to build huge, sprawling suburban communities. This just increases sprawl.

Imagine a 1 sq. mile tract of land. Assuming a housing developer builds a ton of two story, single family homes here, each on a 1/4 acre of land, we can calculate that they can build 2560 homes +/- 500 based on topography and landscaping etc. There are no reliable numbers as to the average of units in an apartment building. Therefore, we will have to make some assumptions. Let's go ahead and say that that the developer decides to build apartments instead of tract-homes. Each apartment building will be 2 acres in area. Even if the apartments are huge: 1500 sq ft +, we can calculate that a 2 acre apartment building can have about 20 units per floor. Lets say that these apartment buildings are a modest 2 stories tall. 20 * 2 = 40. That means, covering the same 1 sq. mile of land with modest apartment buildings could create 12800 residences. That's a 500% increase in residences.

In urban centers, zoning laws allow for much taller structures. Structures can be hybridized to allow for both commercial and residential tenants.

Building large, hybrid-use, multi-tenant structures will alleviate some of the pressure on the housing market and lead to shorter commutes for most people. This is because you can fit more people into a smaller land area. It's common sense I'm sure. So, why aren't developers building these structures? The short answer is that they can't. City zoning laws, angry property owners, and the lack of open land in desirable areas all get in the way.

Municipalities can choose that! But they don't, because the tax revenues from having jobs there is too lucrative.

Every year, you'll see parts of the bay area add xx,xxx new jobs but only x,xxx new homes.

This is what I would so much like Sacramento to legislate.

Severely limit commercial development in any municipality with less than a certain ratio of houses to jobs.

I don't understand what your point is. The Bay Area is a desirable place to be and demand isn't going to magically shrink.

Google tried to build housing in the bay area for their employees, and were denied permits by the municipality.

That's not the full story. Commercial property is much more profitable for a city than housing, so every city in the peninsula is trying to build office space, and trying to offload the cost of actually housing those new workers onto other cities. The tax code needs to be fixed to realign incentives. One proposal I heard was to make it so that the state shares the income tax of the employees that live in the city with the city. That might disincentivize low income housing, though.

This is why I've always been in favor of Hybrid zoning. Hybrid structures are even better in my opinion. You can have a building where the bottom floors are commercial space and the upper floors are residential space.

Or you can zone an area where both commercial and residential development are permitted. Sure, living right next to a metal shop or something isn't the most pleasant thing, but it's really nice if you work at that metal shop.

This is something I saw being developed in my home town before I moved away. Along the main "downtown" strip they built several new 2 story structures where the bottom floors were shops like whole foods and such. On the top floor were various types of apartments. These particular apartments were a bit on the expensive side mostly due to it being a kind of swanky neighborhood right along the beach. That said, the concept can be expanded upon to apply to more affordable areas.

In Japan, zoning is hybrid (includes all zones up to a given level, so you can have mixed residential/commercial), and height limits are based on shadow projection instead of some city commissioner. It seems to work better than America's obsession with suburbanization and having all your housing in a giant clump a 10 minute drive from all your shops.

http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html

Yep. Japan leads as a great example in this case.

> This is why I've always been in favor of Hybrid zoning. Hybrid structures are even better in my opinion. You can have a building where the bottom floors are commercial space and the upper floors are residential space.

Interestingly in the mission bay area there's a lot of unused commercial first floor space below residential apartment buildings. Some of it empty since the buildings went up 2012/2013.

Mission bay San Diego?

Why do you think that is?

San Francisco, sorry, should have mentioned that. I've really no clue, I'm kinda curious. They're still building new buildings with commercial ground level floors. Besides being empty and presumably not making money that way, they're also not particularly pretty...

I wonder if they're trying to predict the future. Perhaps they foresee business moving in in the future.

For CA, those housing units are negatives on the budget because of prop 13. It doesn't really matter where they are built.

I would be strongly in favor of reforming that law then. I have not seen anything regarding it come up on any of the recent ballots.

A repeal is hugely unpopular amongst many, since it would destroy house values and immediately make houses unaffordable for many owners on borderline incomes. You could try phasing it in, but housing values would take the change into account quickly, depending on how it's structured. Would be great for renters looking to buy, but catastrophic for recent buyers. That said, property taxes are very important as a feedback loop to discourage nimbyism that drives up prices.

Yes prop 13 is basically the reason behind the differential. And because it is a political non-starter it's misplaced incentives are baked into the CA real estate market.

Keep going up the chain of causality. Property Owners are so NIMBY because there's an economic incentive to behave that way. This is only the case because Prop 13 caps their property taxes. If California had property taxes that, like other states, could increase as the assessed value of your home increases, the incentive to oppose new building would be significantly lessened and it would then be in everyone's best interest to keep housing costs low, not just those who rent or are looking to buy.

Prop 13 is immoral and has not only wreaked havoc on real estate market in the state but has also gutted the state's public education system. It needs to be repealed before any progress on these housing issues can be made. There can be provisions to ensure that people don't lose their homes to rising property taxes...Texas, IIRC, has one that allows property taxes to accrue and only need to be paid when the title of the property changes hands, which seems like a good compromise. But the state's population is going to go up which means we're going to need to build a lot more housing, and our laws need to create an environment where that can happen.

> There can be provisions to ensure that people don't lose their homes to rising property taxes...Texas, IIRC, has one that allows property taxes to accrue and only need to be paid when the title of the property changes hands, which seems like a good compromise.

So it's not OK for rising rents to force property elderly owners to sell and move away, but it is OK for rising rents to force elderly renters to move away?

You can't defend property tax deferments for the elderly without also defending rent control for them. Either way you have the same problem of local residents thinking it's OK for everyone else to suffer lower supply and higher costs, as long as they aren't suffering.

> If California had property taxes that, like other states, could increase as the assessed value of your home increases, the incentive to oppose new building would be significantly lessened and it would then be in everyone's best interest to keep housing costs low, not just those who rent or are looking to buy.

That might make rational sense but it is not how homeowners actually behave.

I'v seen this extensively in multiple upper-middle income communities on the east coast. Houses that have tripled in relative value force their now retired owners to sell because they can't afford the higher property tax. Developers can buy above market because they demo the house and put down 2 houses that each sell for 75% the original home's value.

This scales for quite a long time, and is generally how suburbia transforms into, well, east San Jose.

It's not that homeowners make rational choices as a result, it's that over time they are pushed out and the rational choice is made by the larger market.

It seems like if you're retired and having trouble with property tax a reverse mortgage would be pretty attractive.

I wonder if a deal that removes Prop 13 but reduces state income taxes can be put on the ballot. That way you keep overall revenues same, but just change how it is collected.

Perhaps income and sales taxes could go down...California has some of the highest rates in the nation for both. But it would be a good idea to not have it net to zero considering Prop 13 originally resulted in deep cuts to public education in the state and the quality of schools has dropped significantly from pre-Prop 13 levels.

The Texas approach does sound like a good compromise. I'd be curious to know if this was proposed during the Prop 13 debate and what the public reaction was.

A very similar thing is happening here in Los Angeles. Luckily, the Mayor and city officials are fighting back to push through more multi-family housing. It's still going to take a while before housing prices stabilize though.

On the other hand, I feel that she's over-compensating a little.

No-one's saying the $1600/month that she was paying for a 1br in Alameda is "cheap" in any way...

But at $81K salary, her $1000/mo rent is only just touching 20% of her take home, which is in the "very comfortable" range (for reference, most property management companies want you to be "not exceeding 35% of take home income").

Minor note, because my thoughts were along similar lines - she was evicted from her $1600/month apt, and presumably would pay significantly more for it now.

I think the answer is she's making a choice based on her preferences:

1. Live and Work in SF make $80k, and live in small expensive housing

2. Work in SF and make $80k, live in Stockton and get more and pay less for a house, and spend a ton of time commuting

3. Live and Work in Stockton, make way less, live in a place larger than SF but Smaller than #2 and not have to commute

She chose #2 - others make different choices

For (3) you are of course assuming that there is a job in Stockton for her skill set.

There may not be which makes option 3 an non starter.

I think it's important to acknowledge a very different set of priorities for someone in their early 60s, who is:

1) Close to retirement age

2) Likely still saving as much as possible so she can retire

3) May have other expenses not detailed in the article, stemming from family needs, health concerns, etc.

Also note that a property management company is evaluating someone from the "risk of non-payment" perspective - not a financial advisor's.

There are so many misconceptions in this post...

> why not put the pressure on the companies that are driving the influx of workers and out of control cost of living?

What do you hope to accomplish with this "pressure"? That these companies hire fewer people?

> Lower income housing?

Housing costs are one of those nasty problems where throwing money at it just doesn't work (and I'm saying this as a democratic socialist whose proposed solution to most problems is "tax the rich in order to throw money at it"). Imagine if big tech companies pledged a billion dollars or whatever to build a bunch of housing units. What would happen? This: other developers would pull back on new construction, because the pledge would throw a wrench in the supply/demand, and you'd be right back where you started.

The correct solution is upzoning and, to be blunt, disenfranchisement of NIMBYs.

> If tech companies are drawing people into cities and forcing out those who keep the city itself operating, why not have them subsidize and improve public transportation?

Most of the big ones do: they offer a lot of incentives to not drive, including paying for employees to take public transport or offering shuttle buses (which at least keep them out of cars).

> move their headquarters out of the city centers?

They aren't in city centers: 4 of the Big 5 (Apple, Google, Microsoft and Facebook) are all headquartered in suburbs. Only Amazon is headquartered in a city center.

> It seems crazy to me that people get driven out of their homes by real estate developers who re-develop due to tech-wages.

Why does that seem crazy? It's just supply-and-demand.

I'll admit I'm not a city planner. I don't have the answers to the problems. It's just frustrating to see what's happening with these mega-cities and how it's affecting the lives of so many people negatively. Surely the benefit of having these boosted economies doesn't outweigh the negative aspects - or do they?

Bay area has a whole bucket of specific problems - but there are general shared trends that extend to other cities with big tech industries.

> Surely the benefit of having these boosted economies doesn't outweigh the negative aspects - or do they?

I think the answer is that with well-managed development, having boosted economies can have few or no negative aspects, but the Bay Area is sorely lacking that right now. As others have said, the lion's share of the blame is not with the tech companies (they're just hiring workers they need), but with the area's terrible NIMBY politics that are blocking the construction of more housing.

You assume that everyone working for a tech company is a 6 figure programmer. There are plenty of secretaries, social media coordinators, sales people etc. That likely make less than what a sanitation worker, cop firefighter, etc. make. It isn't so clear cut.

Would that be the purpose of property tax and state corporate taxes? Genuine question.

I have always imagined the benefit to a city of having big businesses move in was to bring in more tax through boosted economic activity that would allow them to improve the city overall. Perhaps I played too much Sim City.

I think in theory this is how it should work - but I think part of the issue is the multi-city sprawl that's happening. When an area of influence grows that big, who is held responsible? I'm sure no one is volunteering to pick up the slack and shoulder the burden of all the improvements.

Why should taxpayers subsidize unsustainable prices for the restaurants/shops/services?

If it's just left alone, the market will react to this. If a 1BR apt costs $2500/mo, then the price of a sandwich might go to $25 to be able to pay that sandwich-makers $75k/yr wage. And if SFers don't like paying $25 for a sandwich then they can vote for more density.

Nah, there are much more viable market solutions. There will be 4 sandwich makers sharing that apartment, or they will commute for hours, or the sandwiches will be made somewhere else and shipped in, or the sandwich shop will make you build your own sandwich, or it will understaff and you'll have to wait 30 minutes for your sandwich...

Why punish companies for being successful enough to create attractive, high-paying jobs? The consequences of doing that won't be very good for anyone. A slower economy will hurt the low-income workers a bit more than the high-income workers.

What we need is a solution that encourages and accommodates success, not one that punishes it.

Why not punish companies for creating jobs in an already crowded area? How many attractive, high-paying jobs in SF are tied to the city by any physical necessity? If companies want to avoid being punished, all they have to do is move their offices to a less crowded city.

It isn't crowded. SF is less dense then Brooklyn. The "city" of Palo Alto could easily use a few more stories.

Crowding is the whole point of cities: get lots of people and jobs together in a small space and let them benefit from each other. If lack of crowding is more important to someone than economic opportunity, they can go live in the countryside.

The benefits of centralization & economic opportunity for you but no one else isn't a stable equilibrium or a coherent policy goal. The only way you could plausibly achieve that over the long term is with border controls and immigration policy, something that's explicitly off the table for the interior of the United States per the Constitution.

If they move to a less-crowded city, and offer good jobs there, that city will become crowded, especially when former employees leave to start other companies in the same area.

That's how Silicon Valley became what it is. If a lot of tech companies moved to other cities, it would probably happen there, too.

I think there's a problem of congregation. i.e. Real network effects reinforcing labor concentration - to the exclusion of support business. Companies want their employees close at hand. Those same employees attract further, similar businesses nearby. I don't know how to change that. Tele-presence doesn't seem as in demand.

If tech companies are drawing people into cities and forcing out those who keep the city itself operating, why not have them subsidize and improve public transportation? Lower income housing?

Don't you think people are already trying to do this? There is resistance from many sides, which is, you know, the story here in general.

>why not put the pressure on the companies that are driving the influx of workers and out of control cost of living?

You're going to need some extremely powerful public policy interventions to push back on a force as powerful in human civilization as urbanization.

It's so much better for society and for the individuals who currently don't live in major cities to centralize into them. You're going to need some extreme regulation to reverse the incentives that have driven the push towards cities worldwide and for thousands of years.

And for what? To protect a relatively tiny constituency of people who currently live in cities and want them to stay small, against the giant national/worldwide population that wants economic opportunity, and to use its resources for something other than cars?

Yeah, someone who is 62 isn't just going to get another equivalent job close to home.

why not have them subsidize and improve public transportation?

Don't they do this already with property and state income taxes?

The taxes that states and municipalities are giving them breaks on in order to lure them into the region?

The SFMTA Commuter Shuttle Program is only allowed to recover costs of the program itself, for regulatory reasons.

Locals don't actually want to fix this problem -- ethnic groups are afraid of losing their homes, because historically that's what new housing construction has done.

All of SoMa was built by razing a predominantly black community and replacing it with what is there now. You can go to the SFMOMA and see photos of what it used to look like.

Just yesterday I was commenting here on this very situation, but she has already moved her home out of the city in search of less expensive rent. She really should find a job out of the city as well. If the highly paid workers in the city want to buy coffee or sandwiches or whatever, they can pay prices that reflect the true cost of living in the city and not some indirect subsidized price.

or just bring your own coffee and lunch?

She really should find a job out of the city as well. If the highly paid workers in the city want to buy coffee or sandwiches or whatever

...she's a public health adviser for the United States Department of Health and Human Services. I'm pretty sure she's not selling sandwiches.

The same principle applies.

How so? What do highly paid workers in the city have to do with her job?

She presumably provides a service to those in the area where she works. Whether she makes sandwiches or gives life advice, the price paid by the consumers of her service should be somewhat correlated with the cost of living in the area.

TL;DR on my own comment: she's in her early 60s with all that entails for jobs and job hunting. She's making the best of being basically trapped.

The same thing is happening in most other cities albeit perhaps more slowly, most of which have no particular industry to blame it on. It's a shortage caused by zoning.

https://www.axios.com/sky-high-home-prices-are-thwarting-thw...

...because these companies can just go somewhere else that won't pressure them, so when cities are faced with a billion dollar tech campus or none at all they often feel like they have to bend. Cities often even cut taxes to see big companies come into town. Capitalism will always win against public infrastructure.

It's not really "winning" so much as finding an economic equilibrium (unless that's what you mean by "capitalism"). I think the problem here is the regulation that prevents the construction of new homes. If you remove that artificial barrier, housing costs could decline. Alternatively, the municipalities could tax the real estate developers who are profiting from the regulation, but if you can get that resolution to pass muster then there probably wouldn't be any regulation to begin with.

good point

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