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Comment by diablerouge | Hacker News Reader

I think you're underestimating the real estate market. A significant reason new developments cost so much is that the land they are built upon costs so much.

For example, in Portland Oregon, where I live, most new developments are being built on expensive real estate in central areas. As a result the apartments built there, even if they aren't particularly nice, end up going for high amounts. This is due to non-physical assets, like location and proximity to public transportation.

Your solution would give free reign to developers to cut costs and still rent the housing out for exorbitant amounts because the housing market in SF is already so ridiculous. It would take a lot more than 1 square mile to significantly affect the market.

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I have friends in Tokyo renting 1 bedrooms in the city center for $500 ~ $900 month.

Those buildings were not built as affordable housing. They became affordable housing when other developers built newer, nicer buildings somewhere else in Tokyo. Older buildings had to lower prices to keep tenants coming.

Unless there is a literally infinite supply of rich people, I don’t see how increasing supply cannot create more affordable housing.

Likewise, land values are so high because the completion over developable land is so fierce. As with buildings, increasing the supply of developable land will also lower prices.

It's counter intuitive but sometimes adding supply actually increases demand. Of course at some point you do run out of rich people, but there are a lot of rich people now so that can take a long, long time.

https://en.wikipedia.org/wiki/Induced_demand

This pertains to traffic, not housing market. This does not seem relevant to the dynamics of supply and demand for housing.

How big is a Tokyo 1 bedroom renting for $500/month? Are you sure it isn’t a < 50sqm micro-studio with shared bathrooms?

50 square meters would be very large for a 1 bedroom in Tokyo. My 3 bedroom two hours outside Tokyo was 85m^2 and cost around 2500/month.

Ya, they would be much smaller.

Rents in Tokyo appear cheap, until you look at them on a square meter basis.

This is an interesting contrast though - similarly in Paris, apartments can get much smaller than SF. The difference is, in SF, you simply don’t have the choice.

A lot of that has to do with American building and rental codes.

Never tried to rent in Tokyo, but I can imagine the prices are astronomical in any decent areas.

They really aren't, they are just small compared to western standards. You can get a two bedroom in Shinjuku for $1900/month, it's just going to be around 625 sqft. Transport in the Tokyo area is so good it's not really a big deal to live further out either.

A big reason is that the Japanese land zoning approach is far more rational than the US approach. Much has been written about it[1].

1. https://www.vox.com/2016/8/8/12390048/san-francisco-housing-...

That's astronomical for that amount of space.

Re the $500 per month friend; 1 kitchen/dining, bathroom, 1 separate bedroom, no living room. So nothing shared. Not sure the exact square meters, but it is very small.

The secret to the cheap price is simple: the building was built in the 1970s (ancient by Tokyo standards).

Edit: no need to take my word for it. A quick search on suumo.jp will show the abundance of Tokyo apartments available for under $900 (~¥100k).

Tokyo housing is very affordable.

I’ve seen some pretty shabby housing in Japan. Some lacked indoor heating even (well, Japan did invent the kotatsu for a reason). I don’t think it is very comparable to housing in say Sam Francisco. They get affordability through various means that wouldn’t be allowed in the states.

Japan has very high standards for buildings. Their building codes ensure structural integrity during earthquakes, prevent spread of fires, and ban usage of hazardous materials like asbestos. Japan also has environmental building codes that mandate levels of energy efficiency for new buildings. As in the US, they are still relatively new, but have been strengthening over time.

If there really is a law in the US against building homes without central heating, then it is a rather idiotic one.

I lived in a Japanese apartment without central heating. I bought a $75 space heater and was never cold.

The grandparent pointed out that the housing options in SF are luxury condos and $50 tents. Maybe that's because the laws in SF basically prevent developers from building anything in between? "Can't be more than x tall, can't be in these areas, must have x amount of parking, with x kind of heating, x amount of green space, and at least x sq feet per unit, " and on and on. With all those zoning and building regulations, it doesn't really surprise me that the only kind of housing you can reasonably develop and make a profit on is luxury condos.

> < 50sqm micro-studio

Ah, the spoiled Americans. Here in Poland I live in a 1br appartment (two rooms, kitchen, bathroom) that's 37 sqm. Perfect for one person, livable for two or even two and a child.

I lived in something that small in Switzerland. They even had immigrant families sharing that space. My only point was that we should compare apples to apples, not oranges.

In S.F and Vancouver, the city can't expand in most directions thanks to salt water. Therefore, the old buildings tend to be razed, in order to make room for a new buildings. This is a stark contrast to say, Houston or Calgary.

Up until this year, Vancouver had one of the highest proportions of single-family-housing zoning (over 60%). Vancouver is one of the worst cases of restricted (low-density) development in North America. Vancouver's housing problems are political, not geographical.

They're both, I have lived in Van. The politics aren't great there, but they were actually worse in prairie cities I've lived in. It's just that the geography prevented old buildings from being replaced so frequently in cities that were able to expand in every direction, which helped the poor quite inadvertently, yet considerably.

SF has plenty of room for growth without increasing the land area.

NYC, for example, has population density of 10.4k/sq km versus SF's 6.2k/sq km. Paris has ~20k / sq km.

Tokyo is hard to get a good stat for since Tokyo officially includes a handful of mostly unpopulated islands, but I think if the islands are excluded the density is around 8.5k/sq km.

> the land they are built upon costs so much

The land costs so much because so many people want it. So many people want it because they want a place to live. If you build up, you provide places to live with less land, reducing demand on lane. It doesn't matter if it's high value condos being built, you're still providing an increase in the housing supply, which reduces prices for the entire market. If the high end market gets more supply, prices fall there, allowing more people access to that market- which reduces demand in the next-lowest band of prices, repeating the process.

I'm desperately trying to find the article I read on it but Portland is actually a shining example of this working. (Someone tell me I didn't make that story up in my head, because I swear I saw it here!). Portland allowed high end condos to go up and low-end rentals went down in price.

The problem is that NIMBYs elect politicians who won't allow real development, because they want their houses to be "investments". But you can't have housing be a "good investment" vs the market, with prices of housing constantly increasing faster than inflation, while also having your children buy houses at the same price (inflation adjusted) that you did.

Then start new cities in open areas and create incentives (just in the beginning) for business to move jobs there. There's so much open space surrounding the bay area. In the east bay, From our clogged 6 lane highways, i can see nothing but green and yellow for miles as far as the eye can see.

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