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Comment by majormajor | Hacker News Reader

I'd ask a slightly different question: why is so much of our economic policy centered around new and higher paying jobs in a certain area, in disconnect with the current residents preferences for housing policy? It seems like these things are controlled by very different interests that end up fighting in ways that treat the non-high-income/wealthy existing residents as collateral damage.

We want housing to be more affordable in LA, [a different but still local] we also want Amazon to come to town and bring in a bunch of new workers from out of town. Those two goals seems hard to reconcile.

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The challenge is 'we' is not a homogenous group within a city such as LA. In fact they are very much heterogenous groups lumped together.

We want affordable housing = existing residents who want to rent their affordable apartments or continue to own their single family house without additional traffic/school overcrowding and their network of friends to have that opportunity too, politicians who want to represent these folks

We want tech jobs, more office space, more apartments = real estate developers, young tech professionals who want job options, incoming residents who aren't aware of how uncrowded these neighborhoods used to be, politicians who want to represent these folks

So is there a way we can have those two sides hash things out in a more controlled manner? As well as the people not represented by either group? Right now we get the jobs, and we get the neighborhood protections and development restrictions, and in some ways everybody else loses.

Cities that can grow outwards, like Houston or Dallas, can punt on this problem for a lot longer than LA or SF or NY can, but I'm very interested in seeing what that looks like long-term. Maybe Dallas hits a continuing density-vs-sprawl equilibrium that results in mostly-reasonable prices w/ mostly-reasonable commute lengths (people seem pretty tolerant up to 45-min one direction, IME) just over a wider and wider footprint without ever needing to densify - not many natural barriers for a while. But maybe it doesn't.

Personally, I think the best option is to encourage the high growth companies in tech/finance/media to create secondary headquarters in nearby secondary cities that are ready to handle higher density growth (i.e high density residential and light rail systems, etc.).

SF/SV -> Sacramento

NYC -> Newark

LA -> San Diego

High level management can day trip it via 1-2 hour train/car/shuttle ride to the secondary headquarters without the expense/complexity of plane rides and overbite hotels, or conversely the employees can day trip it to primary headquarters. Plus there is no timezone difference for conference calls. And most importantly the employees can still be within driving distance of their social network and have a very similar quality of life (climate, outdoor recreation, etc.) but not all of their paycheck is spent on housing.

I’d love we’re this to happen, but it seems like the trend is to cram everyone in the same space - the ambiguous “network benefit” seems to be trumping economics a lot of the time.

> Personally, I think the best option is to encourage the high growth companies in tech/finance/media to create secondary headquarters in nearby secondary cities that are ready to handle higher density growth (i.e high density residential and light rail systems, etc.).

We already tried that. Google, Apple, etc. located themselves in the small orchard towns of Mountain View and Cupertino instead of the big San Francisco. San Jose responded by building up its downtown, anchored by Adobe, and investing in light rail. A similar story played out in L.A., with media companies moving to Burbank.

This didn't solve the problem. There's really no way around building housing.

The answer for software companies in particular seems obvious to me: remote work. I think that for the kind of work we do, in-person communication and synchronous collaboration are over-rated. I hope that the next generation of programmers will all have the freedom to stay in their home towns rather than having to congregate in a few cities, thus driving up costs. I know that this change requires a major culture shift, though.

Execs don’t go for it. That’s the primary reason it’s not been done at large scale companies - you do get better control and coordination in person, but not so much better that it outweighs the economics (IMO)

Remote work is harder for entry-level workers just out of university who haven't yet learned the communication skills needed to be effective working remotely.

At least, this is my own particular experience. It took me years to learn how to ask good questions. Before, I would either:

1) When I ran into something that seemed frustrating or inefficient, I would assume that the task was just difficult and I needed to put my head down and slog through it.

2) Ask broad questions to try and build a mental model that would let me work more efficiently and know what to focus on, hear the feedback "you're trying to understand the universe", and think that meant I should stop asking questions and just keep punching. It was only at my current employer (where everyone is in the same office and my tech lead and I could have in-person 1-on-1s) that I got feedback on how to be more specific and contextual in my questions.

> my tech lead and I could have in-person 1-on-1s

Do you think it matters that they were in-person? The fact that you called them 1-on-1s implies dedicated chunks of time for direct communication. Would they not have worked just as well over VoIP? Did you have to schedule time for 1-on-1s in the office, or was it more spontaneous?

FWIW, I'm visually impaired, and I spent most of my career so far on a distributed team where the same was true of my boss and most of my coworkers. So maybe there's some aspect of in-person communication that we're just used to doing without. Edit: Then again, remote work _is_ on the rise in the wider software industry.

> Do you think it matters that they were in-person?

yes.

I wish I had an explicit enough understanding that I could give you a solid explanation of why I believe this, but I don't.

Meanwhile Intel is in Bend OR Folsom CA Tacoma WA and a ton of other “smaller” towns in addition to Santa Clara. The only reason it seems for modern tech companies to put a satellite office up is so they can poach from the players that are already there, it’s seemed. Hoping amazon HQ2 can become a model.

Definitely true - that said, it is possible that it would have been much worse if all three had simultaneously attempted to locate their HQ all in SF.

I disagree that San Diego can handle the sprawl. It is sandwiched between seashore and mountains. LA is already naturally expanding to the Inland Empire, which is essentially flat plain.

Not to mention the border to the south and Camp Pendleton to the north. It really is boxed in.

San Diego is already a nightmare for commuters with the growth of tech in north county. I think major mass transit would have to go in first before additional growth would be feasible.

In most companies, the decision on headquarters relocation is primarily based on where the senior executives want to live. Actual economics are secondary.

For example Ebay UK's HQ is in Richmond (very posh v expensive suburb of London).

Its not on any of the main line's into London and not that well placed for anyone living in London let alone commuting in from more affordable places.

San Diego isn't a "secondary city" and is already pretty crowded and expensive.

> Cities that can grow outwards, like Houston or Dallas, can punt on this problem for a lot longer than LA or SF or NY can

The difference between Texas and California is not geographical but political. Texas is pro housing. California is anti housing.

I think the point was that if you are so sprawled out it's easy to build more houses without bothering people, so it does not become a political issue. (This thought is only based on pop density and without knowing anything about the political stances of e.g. Dallas and SF, and how that affects new projects in dense areas.)

The areas around SF are not dense at all. About half are nature preserves. That is, political decisions have been made to not build any more housing there.

"We" are heterogeneous, but we are also united by our membership in the working class. We can't ignore our brothers and sisters that share your class interests and should fight for them together.

Cities are the greatest economic drivers of societies the world over. Worldwide, people clamor to cities to improve their opportunities. Cities that don't manage this growth achieve congestion; cities that outright block growth experience longtime residents being priced out. Why wouldn't economic policy address one of the major challenges to improved opportunity?

Also, wouldn't you want your kids to be able to afford living in their hometown?

Many interests paint this as an all- or nothing- problem: "the developers just want to pave over Golden Gate Park!" "The NIMBYs just want their property values to increase!"

In reality, nobody credibly advocates this. Building high-density apartments in previously single-family home tracts is one solution. Paris is an excellent example of housing that is both beautiful and functional. Apartments are limited to six stories, and have good public transit available, so congestion isn't like Jakarta.

In reality, they do credibly advocate this and San Francisco is a key example:

> At the meeting, one woman fretted that the tall building would violate the privacy of a nearby public school.

> When Tillman said he saw his project as necessary so people like his daughter could afford to come back and live in the city, one particularly motivated activist said she wished his daughter was killed in a terrorist attack.

> Parroting many of the Mission activists' concerns, Commissioner Rich Hillis complained that the design was "bulky, and a bit out of character" with the neighborhood, while Commissioner Kathrin Moore said that erecting an 84-foot tall building would be like "plopping a foreign object into this area and not thinking about the consequences." Commissioner Dennis Richards said, "I think a project absolutely belongs here. The question is what kind of project."

https://reason.com/blog/2018/02/21/san-francisco-man-has-spe...

> Those two goals seems hard to reconcile.

Historically, cities responded to this by building more housing, thus reducing the tension. In the 1970s, in certain locales like the West Coast, they stopped doing that. Forty to fifty years later, a massive housing crisis resulted.

We could start by acknowledging our mistakes and working to correct them.

We are started an a startup (Openland, W18) to find a way to product more housing and during initial research i found that there are a lot of empty lots in LA that costs about $10k-50k. Tried to search in different states and found same lots at Long Island.

So why people are not trying to buy land and build something on it instead? Buying a house will cost magnitude more than buying land and building your own house. Building will take time and resources, but... paying for a loan for 30 years? I think i can spend two years building my own home for the fraction of a cost of buying existing one.

Why no one is doing this?

People are doing it, but building a home is a lot of work and usually ends up costing far more than anticipated unless you really know what you are doing.

May be the solution is simplifying building instead of dealing with existing one?

Even in SF there are a lot of land for housing! For example, there are hundreds of body repair/tyre shops in SF. Why city ever need them in the city where Uber wins over owning your own car? But you can't just buy them and build more housing - in most cases you need to wait several years to "clean up" the soil.

"Even in SF there are a lot of land for housing! For example, there are hundreds of body repair/tyre shops in SF."

Yeah, well...those places are already in use. And if you want to change that use, you first have to buy the land from the people who are already using it. And that's expensive, because people know what the land is worth. In other words: those auto repair shops are there for a reason. You can't just ignore the reason(s) and pretend that the land is vacant.

It's not as if every SF landowner is behaving in an economically suboptimal way because they're all stupid.

Sorry, it seems that i explained my ideas badly.

This is exactly what i am saying - it is economically suboptimal. They will be there until they are profitable.

But problem not in the land price itself, but also waiting for 3 years until you will be able to start new construction, this delay will increase actual price of this piece of land up to 30%.

There are many ways to reduce this delay.

"This is exactly what i am saying - it is economically suboptimal. They will be there until they are profitable."

No, you believe they're economically suboptimal, and you're making up excuses why reality disagrees with your theory.

"But problem not in the land price itself, but also waiting for 3 years until you will be able to start new construction, this delay will increase actual price of this piece of land up to 30%."

Proof of work required. You're going to have to prove that three years is a typical delay; that this results in the stated 30% price increases; and that this is the actual reason that your hypothetical auto-repair shops aren't all apartment complexes.

There's a simpler explanation: just as commercial rents are higher than residential rents, commercial uses of land are typically far more valuable than apartment buildings. If a redevelopment doesn't pay landowners a significant multiple of their current (commercial) revenue, they're not going to do it. Most apartment projects can't come close.

> this is the actual reason that your hypothetical auto-repair shops aren't all apartment complexes.

Sorry, i am not native speaker, but isn't it the same as "economically suboptional"?

> There's a simpler explanation

This neighbourhoods are mostly commercial districts that requires the first story to be commercial and other stories to be residential. Building up doesn't change commercial use of this buildings but just add more housing.

> No, you believe they're economically suboptimal, and you're making up excuses why reality disagrees with your theory.

I am not "believing", this is just a one hypothesis. I could be wrong, of course.

"Sorry, i am not native speaker, but isn't it the same as 'economically suboptional'?"

I'm saying that on average, whatever you observe in the world is already "economically optimal". You may believe that there's a better way to use land, but if reality doesn't agree with your beliefs, there's usually a good reason.

"This neighbourhoods are mostly commercial districts that requires the first story to be commercial and other stories to be residential. Building up doesn't change commercial use of this buildings but just add more housing."

It doesn't matter. If the trade doesn't benefit the current owner, it won't happen. Someone has to pay for the redevelopment, and I'd wager that in most cases, owners have to take on debt in order to finance redevelopment. So they go from having an annuity (fixed cash flow), to payments on debt, for a (possible) future gain. Maybe this is attractive for some owners. For many others, probably not.

So what about selling? Couldn't an enterprising developer buy the land and re-develop it for them?

Sure! Except: the current owner is making significant income from the business right now. That will go away, and they're going to want to be compensated for the loss. They're also not stupid, and know that the buyer is going to redevelop the land and charge more for it. Thus, they will (logically) ask for the buyer to pay them now for many years of future cashflow under the new use of the land.

In other words: owners know what the land is worth, and they're going to ask for it. The buyer is going to be paying not just for years of lost business income, but also, a significant percentage of her future revenue. And she's going to pay for redevelopment. And maybe that pays off, but it certainly doesn't pay off quickly -- and it isn't necessarily obvious that an apartment building is worth more than an auto repair shop. It depends on the health of the business!

This is why you can't just look at an auto-repair shop and say that it "should be" an apartment complex. It has nothing to do with regulation.

> I'm saying that on average, whatever you observe in the world is already "economically optimal". You may believe that there's a better way to use land, but if reality doesn't agree with your beliefs, there's usually a good reason.

I got it, this is just misunderstanding. I meant that upbuilding is "econimically suboptimal", but current situation is optimal.

> In other words: owners know what the land is worth Actually, no. Some of developers told us that the problem with market is that most of the land is not for sale because owners just don't know that they can sell on a good price, they are not thinking about this at all. Developers are willing to buy land up to x10 more that they are currently buying.

> It has nothing to do with regulation.

In regions where there are a huge crisis in housing local government can introduce a new type of a Tax - Underdevelopment Tax. This will reduce margins of the owners that hold their land for "investing" opportunity and force them to sell their land to developers. Even if this tax will be low, they will start to think about selling their land right now and this help to the market a lot.

A. It’s very easy to go over budget building a house, and therefore a riskier proposition for low-income people

B. It can be much harder (higher down payment/harder to qualify) to get a land loan and a construction loan, Vs. a mortgage + more expensive as you need to pay for all of that for the time the house is being constructed and also pay for a place to live...

C. Often times lot values imply the highest density development e.g. in order for the purchase price of a lot to make sense you can’t just build a single family home but need to build 3 town homes for the economics to workout

Pretty sure you can't just build a house in America. What about all the zoning, permits, regulations, planning, environmental impact etc.

The paperwork alone would be a nightmare!

Housing has come a long way since the days of the mail-order Sears & Roebuck assemble it yourself house.

There are a lot of startups and services to solve this problems. Unfortunately, This market is in its very early days.

Economic growth without a civic plan creates huge bubbles. The second growth slows in Seattle I can’t help but think the market will be flooded with units from people wanting to finally get out at the peak.

You say this like it’s a drawback. “Flooded with units” would be amazing and it’s exactly the condition YIMBYs are trying to engineer, because being “flooded with units” (relative to current population) is affordability.

I did not mean to imply that! I’d love it in fact.

Or the hood.

I remember driving through the Bronx with my dad in the 80s when he worked there. It looked like a war zone. Bubbles tend to pop, and bankrupt buildings get boarded up, not cheaper.

If that were true, downtown Detroit would still be as expensive as it was during the American auto boom.

Detroit is a failed city. Half the city was abandoned and much of it burnt to a crisp.

And then get picked up cheap and renovated by the young in the next cycle amid condemnation of the tragic gentrification destroying a working-class haven.

That was also a time of insane crime rates in NYC. People left to survive.

This discussion reminds me of people who dare not go to the gym because they're afraid of getting unsightly muscles. We're so very far from what you fear!

Easy. Real estate people print money in these situations, and they fund local political races.

"Real estate people" have virtually zero political power in the San Francisco Bay Area. Nobody has sympathy for them, not even the nonprofit ones. (Go look at how the anti-development left pillories Mercy Housing, of all organizations, in SF for daring to impose reasonable means testing at Midtown.)

Have you looked at what it takes to make housing pencil out in the city? Developers are not "printing money". Construction costs are incredibly high, especially with inclusionary zoning.

https://www.sfchronicle.com/politics/article/Powerful-intere...

I don’t live in SFO, but real estate and local politics are like white on rice. Developers are just one variant of real estate industry player. It’s often an old money game.

I'm glad you are considering this and get it.

> why is so much of our economic policy centered around new and higher paying jobs in a certain area

There are certainly hot spots in places like NY and SF, but it's not just one area. Lots of cities are growing. And it's not all due to evil corporations running amok, at a certain level it's just capitalism itself that requires growth - the GDP has to keep growing year over year, and the population probably has to grow slightly to provide for that growth. Immigrants move in, and children grow up and need somewhere to live. Add in the generational effect of baby boomers, i.e. that older people retiring and staying in their homes mean that we need more housing for the same number of jobs.

Specific booms like tech in SF may exacerbate the problem even more, but fundamentally our way of life just requires continual growth. This is at odds with the NIMBY attitude that I have a right for not just my home, but every building in my neighborhood, to stay exactly the same as the day I moved in. It's not at odds with affordable market rate housing, that just requires supply keeping up with demand.

There is a LOT of room in the country for growth, as you mention, and most of it has more room to expand and is starting from a much cheaper price point.

So fighting residential development locally to try to push companies to other areas may be a rational strategy for some.

I'm not convinced that perpetual population growth will always be required for economic growth.

> There is a LOT of room in the country for growth

No there isn't. All the places with viable logistics and water supply are pretty much full up. Urban areas need barge transport, good rail grades, aqueducts, and rivers to carry away waste. You can't plop a city down in the middle of nowhere. The energy economics mean it will never work. All the sites worth building on have been built on. A lot of the places supplied mostly by truck are of questionable viability in coming years.

Probably the only area of the country that could long term sustain a much higher population density is the great lakes region.

I’m sorry but the US is one of the least densely populated developed countries with abundant fresh water, energy and arable land.

If Oklahoma had the population density of the Netherlands it would have an additional 72 million people living in it...and oh by the way it’s got huge oil and gas reserves and some pretty enormous inland ports...

Your comparison illustrates my point. Oklahoma is not crisscrossed with efficient water transport and reliable annual fresh water. Oklahoma is probably overpopulated as it is.

The Netherlands is, too, in the long run. But for now it's economically sustainable.

> US is one of the least densely populated developed countries

None of the other developed countries have vast interior deserts. The east and west coasts and some parts of the Mississippi and Great Lakes watersheds are plenty overpopulated.

Other than Australia...

This is typical "flyover state" bull. The Midwest has tons of water, tons of space, easy travel, great amenities, and a business friendly environment. Colleges are affordable, housing is affordable, and crime is relatively low. But the in crowd has decided that the East and West coast are all that exists, and that everything else is a "vast interior desert."

The state has does have pretty significant water transport (look up the port of Muskogee and Catoosa), not to mention a great deal of rail and pipeline as well, no idea about the aquifers etc.

I wouldn’t want to live there, but seems like a lot of bulk commodities, and products come in and out of Oklahoma and there is still plenty of room...

Water transport is comparatively cheap. Urban areas throughout American history have been able to reliably source enough water for their needs. It gets difficult in deserts, but the US was blessed with many, many rivers and abundant rainfall, it's a crucial reason why we rose to prominence in the first place.

There are a few interesting studies in this area, California's agricultural section's tug-of-war with its residents for water is the biggest one that comes to mind, and the lesson you get is that industry uses up the lion's share of the water out of greed and sloth, but enough pressure will force them to curtail usage.

All the places with viable logistics have ALWAYS been full. Nobody sane overbuilds infrastructure by much: you can't afford it. Instead civilization is constantly in a cycle of upgrade as required. It has been this way for thousands of years.

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