The answer to California's housing crisis is more housing | Hacker News Reader

The answer to California's housing crisis is more housing

nytimes.com

103 pointsMagicPropmaker153 comments

You can't just demand more housing. You have to make people want it. This is why I'm strongly in favor of taxing land by area.

A ten story condo with 100 units takes up as much land as 8 houses with yards. By reducing everyone's taxes then making up the difference via a land tax, you effectively lower the taxes on people using high density land use homes. You make it a more desirable lifestyle.

Demand from voters leads to changes in law.

People already want it and developers would build it. But, at least in California, the problem is that local zoning laws make building it illegal.

Can someone explain how/why California has failed government policy?

And why more government involvement in sectors would be a good thing?

I understand the benefits of central planning, but when I see it fail locally, I wonder if the flaws outweigh benefits.

>Can someone explain how/why California has failed government policy?

The proposition system. People in California voted for laws that were in their interest without taking into account (or not caring about) the 2nd or 3rd order effects of the policy.

The result is that existing property owners are reaping massive sums of money while the rest are struggling to make ends meet.

This is part of it, the other part is there are too many local governments with the ability to zone! There are so many "Cities" in California. Sunnyvale is a city, Cupertino is a City, Santa Clara is a city (in the county of Santa Clara). Each one gets to zone.

TLDR: The government is deeply involved in housing and development, as the government controls what can be built and where. This is an effort to loosen government controls by limiting local governments ability to restrict housing development near transit hubs. Specifically, the state government is attempting to restrict local governments' ability to create limits on housing density in certain areas.

This is quite an interesting take, your state government is fighting local governments?

This is truly another dimension of the More/Less government dichotomy they teach you in school.

Btw, it seems the local governments are quite Anti growth? Am I understanding that correctly?

Correct. The city council is elected by residents of the city, and land owners have a strong financial incentive to elect representatives who will limit housing. (The shortage drives-up their property values)

You might think that renters living in the city would eventually outweigh the landowners and elect council members in favor of new housing, but instead SF passed a rent control measure which prevents the current renters from feeling the sting of the housing shortage so they aren't strongly incentivized to vote for more housing either.

I'd also add that people who have long commutes aren't represented in the city they work in, although they have a voice at the state level.

It's funny to see the incentives at play. The rent control mechanisms are a hidden redistribution channel from money collected by income taxes straight to pockets of landlords.

Ie. gov gives rent subsidies of $100 to poor. Landlords react by rising rent prices by $100 because od this new 'disposable income'. The poor don't feel any difference, only the working population which gets squeezed.

The money flows from workers and businesses through the poor straight to rentiers.

Assuming you aren't trying to intentionally throw shade on CA rent control:

Rent SUBSIDIES are a hidden redistribution as you discuss.

Rent CONTROL forces recent transplants to subsidize longtime residents

Ie. gov prevents raising rents to market levels for longtime tenants. They are less likely to move, driving up demand for the remaining housing, which is the only stock available for newer residents.

This then costs newcomers more, while longtime residents avoid paying the market rate on their housing - effectively subsidizing the in-place tenants.

Yes, and not just in CA.

It is. In my city at least. And at the federal level for landlords as well.

My local taxes depend on my land value + my house value.

Larger land, (or more desirable) more taxes.

In federal taxes, for a rental unit, you get a depreciation expense only on the value of the structure. Not on the land. So more valuable land vs. structure, less federal discount.

> My local taxes depend on my land value + my house value

Are they separate line items? Or combined? The difference matters.

My condo is taxed based on the whole value of the unit- which is something like 1/2 of the cost of a house in the same neighbourhood, which means I'm taxed about 1/2 of what they are. But I use 1/100th the amount of land they use. Meanwhile, the cost to the city in terms of infrastructure (pipes, roads, drainage, etc) is much lower than the houses in the subdivision down the road.

In effect, today's laws makes high-density-home owners subsidize the high cost of maintaining subdivisions by taxing on total value only. Switch it to 50% value and 50% land use, with explicit line items for each and you'll see more demand for high density housing.

> Meanwhile, the cost to the city in terms of infrastructure (pipes, roads, drainage, etc) is much lower than the houses in the subdivision down the road

The costs in terms of lots of services that aren't physical infrastructure scales with population, though, and for some services (or for adverse impacts that services don't fully mitigate) is also higher, rather than lower, for the same population when density is higher; e.g., crime rates per capita tend to go up with population density.

The base of the land value tax is the value of the land though. If the land is in the middle of a high population density area then the land is worth more and it generates more tax revenue.

The difference between this and property tax is that if you have a 12 story building on one piece of land and a 2 story building on the adjacent one, otherwise identical piece of land, they both pay the same tax, giving the second property owner more incentive to build.

And then what when everything has become skyscrapers? I think it’s perfectly ok that not everyplace wants this end result.

You only do this in the places where you want everything to become skyscrapers. There is no real need for it in Des Monies or other places that already have reasonable housing costs.

This is how the problem started in the first place.

“The difference matters” I don’t see how, but I don’t fully understand how your assessment works. My city’s assessment is close to the market value [1] for the whole property, so it’s a mute point.

Either way, they do give me a breakdown, which I agree is right (land about 33% of overall value).

Again, for rental properties, there is a disincentive to having low density housing (my condo value in a 20 story building is assessed as 20% land)

[1] close to what I believe I can sell the house for

Without getting into the numbers, this is the right approach:

Some people argue Property taxes vs Land Value taxes thinking it is roughly the same, and that althought it might change tax structure it wouldnt change rent prices.

But thats true if you look at it statically: dynamically, you make poeple in single family homes want to abandon them and sell them to developers, so you naturally turn an enemy (nimby) into an ally (sell for developers).

I’ve owned property in Virginia and California and both the counties I lived in break out the assessed value of you land and your property as separate line items on your bill. They do NOT break your payment into multiple lines.

For example, my current home is assessed as $150k land value and $350k house value for a total of $500k.

In my locale, assessments are required to be based on market value. The market doesn't assign a separate value to the house and the land.

No but the assessor can - and in every place I’ve owned property, does - give you a breakdown.

Heck, the breakdown is required information in your federal taxes if you want the depreciation expense.

And for all of us who don’t live in crazy-land CA, we have to get assessed since my purchase price (I.e. market value) ten years ago is meaningless today.

It sounds nice until people are forced out of their homes because suddenly the area becomes hip.

That's going to happen to areas no matter what. There is very little you can do about that.

What we can do is increase housing supply so that prices of all homes are lower.

For primary residences you could also do things like defer payment on the increases until sale, so no one is forced out of their home but the people who have huge capital gains do not also get a tax break. Rental property shouldn't need a special break though, if there's a housing shortage and prices are up it's very likely that rents are up too.

I wasn’t making a value judgement; just stating that my land vale does affect my taxes

Land taxes are a great idea, but they are even less popular than zoning changes.

Almost every housing law has carveouts for small buildings/landlords with few apartments since they are politically powerful and relatively sympathetic.

Advocating for land taxes rather than zoning changes is wishful thinking

It may be interesting to make land taxes progressive, rising exponentially based on the value of the land divided by the number of occupants.

Three adults sharing a flat would pay next to nothing, but not even Bill Gates could afford to make an inner city skyscraper his home.

And is that 100% a good thing slum landlords will abuse this to avoid paying taxes.

Chill. If you want to go overboard just advocate for nationalizing all land.

There is already land tax, but with proposition 13 people lock in low tax rates. So, if you've owned a home for a long time, you are gonna pay a lot lower taxes than someone, who recently bought a condo on land with the same value.

A land tax is different from a property tax. A land tax taxes only the unimproved land. A property tax taxes the improvements as well.

With a land tax two adjacent properties of equal size would be taxed the same, even if one is an eight story apartment building and the other is a parking lot. This strongly incentivizes improving the land to its highest and best use. Under a traditional property tax system erecting that building results in a large increase in property tax (as the value of the structure is now taxed) which dampens the motivation to build. Under California's prop 13, the parking lot probably has a tax valuation from decades ago and thus is taxed even less, further reducing the benefits to redeveloping the property.

The land tax along with the house. Perhaps, you believe the land should be taxed more highly and the house should be taxed less. When permitting is tough, the fact that you got the permits to build the house should increase the value of the land. While the structure may be taxed, it also can generate revenue. If land value is a high percentage of the value, property tax should have similar incentives.

LVT for the win.

It's been proposed first in california in 1890, as a solution to homelessness and poverty. So Im not feeling confident that will happen.

That would significantly increase the taxes on agricultural use. Is that your intent? To incentivize high density residential, while making it hard to grow food?

Land tax is calculated based on local rents, not state-wide single numbers.

LVT long time proposal is that most of the value in land rent is due to government spending and another activities positive externality.

There isn't much agricultural land, if any, in cities and suburbs. In the US, land is taxed at the local level (municipality and county), not at the state or federal level.

Not always. Here in KS side of Kansas City suburbs you will find crop fields between dense, multi-story developments. The agriculture land tax is applied throughout the state. The developers exploit this to pay vastly lower property taxes than if it were vacant land.

One instance in particular, they’ll run a harvester right next to a 6 story development, and it probably only takes 10 minutes of run-time. Pretty crazy, but it’s a tax savings.

KU seems to have an excellent emag staff, from your comments. Would you recommend sending a son there for EE (out of state)? Also, did you take any classes under Dr. John Schmalzel? I had a few classes with him and he went there.

Yes, if your son is interested in RF and RADAR/Remote Sensing, they have an excellent program.

No, looks like he was there before me. I did an MSEE in ‘96, under Moore and Gogineni.

There's a coordination problem with this, though -- how do you get all the different cities to all adopt this tax scheme, and if some don't, don't we just shift around density?

Right now, California's property taxes are highly restricted by Prop 13, an anti-tax measure that, among other things that restrict the ability of the legislature to levy taxes, caps property tax basis at purchase price plus 2% increase per year, far far less than real estate appreciation, and often less than general inflation.

So property tax is already controlled at the state level, and any change will require voters to enact it by proposition at the ballot box, statewide.

America is one of the world's largest exporters of agricultural products. There is no shortage of agricultural land that could and should be used for housing development.

Developing additional agricultural land on a large scale is incompatible with the carbon intensity reductions necessary to avoid incinerating the planet.

agricultural use means different zoning which will taxed differently.

The services used are proportional to bodies inhabiting, at least to some extent. Sewage, roads for example.

This is exactly wrong.

Services used are inversely proportional to bodies inhabiting.

In far-flung suburbia, you still need all those miles of roads and sewer pipes serving a relatively small number of people.

One of the papers did an excellent heat map of the Bay Area and pinpointed where all the traffic congestion originates. The eastern periphery of San Jose was the worst.

I think your two examples are actually the opposite.

I think there should be a national effort to "spread out" the economy and fight the trend towards centralization in a few areas. If you build more housing in CA, even more people will move there and the overcrowding will become even worse. There should be incentives for companies to move away from places like SV and NY.

More acceptance of remote work would help too but I wouldn't hold my breath for it.

This is an instance of Jevon's paradox. The more housing you build to meet housing need of people then even more people will come in creating even larger demand for housing.

https://en.m.wikipedia.org/wiki/Jevons_paradox

Jevons paradox is a nice example of bikeshedding. It doesn't change the decision making process at all because it looks like this:

supply < demand: build more housing.

demand > supply: build less housing

If demand grows faster than supply then it just means that you need to build more housing.

And let's be honest in a world with massive amounts of liquid capital but nothing worthwhile to invest into an infinite money sink that keeps increasing ROI the more you spend on it is actually almost magical and you know what? It's impossible in a world with physical constraints. You just haven't reached them yet.

Do you have any sort of academic citation that Jevon's paradox applies in any way to housing, or is this just an intuition?

I'm really curious about the pros and cons here. Neither way seems obviously better than the other. Why is concentration worse than distribution? Why is distribution better?

Concentration begetting more concentration combined with an unwillingness (don't underestimate SV's ability to dig in its heels) to develop leads to a real estate black hole for dollars, where an ever increasing portion of wealth is diverted to the competition for a place to live.

That's not tying up wealth, it's tying up money, and I don't see how that is even one of the many problems with the situation in e.g. SF.

> There should be incentives for companies to move away from places like SV and NY.

There are already tons of incentives and tax breaks like this for companies. Just for a recent example, see Amazon HQ2. Companies also have the added incentive of lower labor costs. It's clearly not enough yet.

"Just for a recent example, see Amazon HQ2."

That's a good example actually. It's hard to understand that NYC was offering subsidies to Amazon. NYC doesn't really need more people or more companies.

It's not a matter of need. If you get more companies there is more local demand for labor, which means more jobs and higher wages, which means more tax revenue. Giving a company that will bring in a billion dollars in new tax revenue half that much in incentives still nets you half a billion dollars.

The real issue is that this is true of everything. Cities compete with each other, but major metro hubs have such an intrinsic advantage that it allows them to suffer a large amount of corruption and waste and still not be uncompetitive. Until you're negotiating with a company large enough to bring with it its own economies of scale, and then it does make you uncompetitive, because Amazon could build HQ2 in the middle of the desert and a town would spring up around it regardless, in a way that a guy operating a food truck absolutely could not.

They don't actually want to do that because NYC still has its intrinsic advantages, but if it also has very high taxes which then go to waste and not toward providing useful services, the benefits have to be weighed against the costs. (And realistically there are also better alternatives like Virginia rather than literally the middle of the desert.)

Then the city becomes concerned that their high taxes and low efficiency are costing them Amazon so they come up with some kind of carve outs which they would need to keep Amazon but not the food truck or the real estate developer or doctor's office, and so it applies only to huge corporations and not to everybody else.

Which then creates an unfair advantage for major companies with that kind of leverage, and then they start eating everything and driving out small and medium businesses who can't compete when they're the only ones paying high taxes. And that's what makes people upset.

But you're never going to get Amazon if your offer is to tax them heavily and then waste the money. The way to be competitive on a level playing field is to cut out the waste in general so that nobody has to pay high taxes for low benefits.

I meant more in the sense that practically every town and city in North America was throwing tax breaks and incentives at Amazon to land HQ2.

I am not sure some areas that are growing are ideal from a water usage perspective, but I thought density was very efficient and should be promoted.

Density creates land scarcity which in turns gives a lot of power to landlords who collect the lion's share or economic benefits created by density.

Density should come hand in hand with power-rebalancing measures, e.g. tax property hikes, more efficient zoning, and government-controlled rent, but practically it doesn't happen.

Density is the response to land scarcity that takes away power from landlords, not the other way around. When there's massive land scarcity, but density is not allowed, it gives landlords far far more power than if density were allowed.

Land value taxation is one way to reduce speculative land use by landlords, but it's rarely used, unfortunately. And in California it would require overturning Prop 13, a hugely regressive tax policy that has been somehow falsely enshrined as helping the little guy out, when in reality it mostly helps landlords and speculative land hoarders.

>Density is the response to land scarcity that takes away power from landlords, not the other way around.

"Density" in my comment is population density, not construction density. Unfortunately, construction density (and height) is restricted by zoning and all kinds of bylaws. Most residential areas in North America allow only single-family houses and prohibit multi-tenant buildings with 3-4 floors or more. Landlords benefit from such zoning rules immensely, because they drive land price up.

Focusing jobs in one area reduces competition among landlords while fostering multiple job centers with amenities encourages competition including price competition

What "focuses" jobs in one area though? Is it a conscious choice to place a job in a location, or is it the density of the people and the skills that allows the jobs to exist at all?

The idea that jobs can be placed anywhere flies in the face of pretty much every single city's economic development efforts over the past few decades. It's not realistic, or reasonable.

What can be placed anywhere is housing. The only reason that we don't have higher density is a small number of landowners lobbying to keep everything identical to the way that it was when they moved in, and when they moved in they had just massively changed the landscape from fruit groves to suburban sprawl. They said: change to allow me, but no more. And now they benefit massively by restricting density around them.

If you’re talking about Silicon Valley that was converted from fruit groves to sprawl and a job center then how was that the result of density? In terms of density it’s not much different to many areas.

The focusing is done due to a whole host of reasons but certainly encouraging jobs to spread out is not a bad idea for a number of reasons - including having options and livability

People usually cite network effects, or more simply the VC and big money people live in sf and nyc and prefer their workers live there too. How many billionaires live in Boise?

Cities are popular because they are relatively efficient. You can build more towns and suburbs but they will be underserved because of the many pipelines a state has to manage that cities will receive priority for — road maintenance, DMVs, shipping hubs. If you live in a town and need any of these, you might have to travel a long way just to get your needs met.

Yes, but we have 4,000 cities in the US, yet only something like 1 first class tech hub and two second class tech hubs.

If we veer into market theory for a moment, it's better for everyone if there are many cities that are competitive places for technology companies.

Why is it better for everyone? I imagine we have the current hubs because with a more liquid job market it makes finding jobs and employees easier. It's probably also good for investment since having many potential acquirers nearby increases the chance of a positive exit.

I guess it's kind of an insurance against terrible (local) government policies if people move from city to city when one of them screws up. That doesn't sound like a terribly efficient system though.

Tech companies and rich investors don't take much space and you would be hard pressed to find homeowners who would go against their interest and prevent these potential homebuyers to move into the area.

> because developers mostly would build high-end units

This is such a frustrating perspective.

It's frustrating because, as propaganda, it's been extremely effective.

If you're an opponent of increased housing supply in California, you can roll out that talking point whenever threatened. It's tested, emotionally resonant, and most people don't have the time to be explained why it's wrong.

Supporters of increased housing in CA need to come up with their own powerful rhetoric, rather than whining about the fact that their opponents' rhetoric works.

(Whining further that bad rhetoric shouldn't be allowed is even worse--we live in a democracy; you have to influence people; rhetoric matters.)

I usually put it this way:

The wealthy are coming and they are going to take a house. If you build nice new condos, they’ll happily take them. But if you don’t, they’ll buy up run down duplexes, evict the tenants, and convert them into McMansions instead.

It's effective because there's a measure of truth in there, especially in California. Prop 13 will limit taxes on existing housing stock, so cities and counties will levy fees on new developments to make up for it. Additionally, the cost of labor in much of California is such that just building any structure is extremely expensive (to the extent that only luxury units will make any money for the developer).

Prop 13 allows a 2% increase a year. That's more than enough to keep up with inflation.

Housing price growth well exceeds inflation.

It is, in my experience, true. I live in an up and coming suburb of Detroit and every new apartment / condo building is incredibly skewed towards the high end.

In fact, a huge development project is going on in the downtown area currently. One of the requirements of the project was to set aside a certain percentage of the new units as affordable housing. When the developer was asked about the affordable housing at a city council meeting, they revealed they were targeting a price point of ~$1600/mo for a 1 bedroom. For context, the going rate in the city for a bedroom is $300-800/mo. There was no language specifying what exactly affordable housing so they can get away with it (something the city is working on for next time).

My point is, this is a real problem. You need to think about it and you need to actively prevent it in from happening in whatever legislation you put forward.

> I live in an up and coming suburb of Detroit and every new apartment / condo building is incredibly skewed towards the high end.

>new

And what happens to the old units? They are sold and rented to the non-super wealthy.

I also live in south east michigan and my neighborhood is undergoing gentrification, they are tearing down 1000 sq ft homes and replacing them with 3500 sq ft homes.

What is the problem? I couldn't fit my large family(and renters) in a 1000 sq foot home.

Old units in many places are frequently renovated and re-sold to upper-middle class and wealthy tenants. The end result is an erosion of housing stock for average and low-income residents.

But the said "upper-middle class and wealthy tenants" already bought the "new apartment / condo building" that were built in the first place.

It seems to me that opponents seem to think there is a phantom limitless pool of "upper-middle class" that buys up all the new high-end condo _and_ all the refurbished older units.

Logically speaking, this is not possible

There doesn't need to be a limitless supply. In many cities if buyers aren't found, property owners are content to leave them vacant. You can see this in the relatively higher rates of vacanies in condos compared to other kinds of housing.

Rhetoric matters much less than economic clout. Much of the "influence" you describe is from sustained marketing rather than through rhetoric. The rhetoric itself is almost irrelevant, in fact.

Because the cost to create a unit makes them high end from the start. You have to add fire suppression systems, elevators, seismic reinforced construction and pay for the land. NPR had a segment on it, listing the costs to build a modern day high rise unit and it there is no way to build it for low-income housing and make a profit. Even if given the land, at most it is break-even.

Low income would have to rely on housing that wasn't new. Kinda like cars, it wouldn't make sense to have car manufacturers to try to create a sub $10k car when you require air bags, backup cameras, tire pressure monitors etc.

Where has the middle gone? Is it either extreme luxury or low income assistance?

The middle is old luxury housing.

Is that a unique SV situation? Where I live, most new housing is close to or only slightly above general market price for the corresponding market segment (e.g. 2br condo, 3br SFH, etc). It usually seems to come with pretty ordinary trappings- ordinary countertops, ordinary fixtures, maybe the floors are laminate, etc. Luxury appointment can be found, but nobody's building five hundred units with gold inlay.

The notion that new construction being 'high-end' won't improve the market on the low-end is erroneous in markets where the spread of rent budgets of people forms smooth, continuous gradient. But the Bay Area is not such a market -- nor are places where significant cash infusions such as very high pay at the high-end or subsidies like military housing allowances to people of middle incomes will distort the field upwards. Then there's Prop 13, which disincentivizes the sale of legacy homes, removing many residents and homes in the middle of the income/rent spread from the liquidity of the market.

Developers want to build units that are 'high-end' because it's the best way to recoup their costs. Urban construction is expensive and many projects are made possible by a combination of loans, private equity funding, and government subsidies. The increase of supply in high-end apartments creates competitive pressure on older units, places with less amenities, places with dated design, and places in inferior locations. Since housing sorting resembles an auction, people with the highest rent budgets have the most options. Landlords of less ideal places will see some tenants filter out and replaced. Eventually, the replacements stop coming, because all people of higher rent budgets have already moved to more desirable places. Instead of letting apartments sit empty, the landlord might lower the rent while still staying within the profitability threshold.

This doesn't work every time. If people of high rent budgets never stop coming, they never have to lower prices: there's an undersupply on the high-end too. This is clearly the case in the Bay and other desirable areas of California.

A lot of today’s housing stock was originally built as higher-end units, and moved down the chain as it got older. The idea is that when higher-end units are built now, the wealthy vacate some of their current units, which then have downward price pressure and become middle-range units, and so on.

And it's self fulfilling too by those who limit housing construction. If only 10 units are built but there are 1000 units needed, those 10 units are going to be sold to the 1% wealthiest. If, seeing this, voters to restrict construction even more because the "wrong type" of person is buying, and only 1 unit is built, only the wealthiest buyer gets housing and it becomes even more "luxury."

The only way to start serving the needs of "normal" people with new construction is to issue permits for that full 1000, or maybe even better, try to get developers to build 1200 or 1500 and then compete for buyers, rather than having buyers compete for limited production.

Any new modern apartment is considered luxury. Its actually impossible to build non luxury apartments in Sf. It seems what people want is for builders to actively destroy the apartment after they build it so that it will be rented at a lower price.

> It seems what people want is for builders to actively destroy the apartment after they build it so that it will be rented at a lower price.

What some people want is subsidized building of units in exchange for rent limits.

Ok so what you want is subsidized luxury apartments. Because the quality of the apartment doesnt seem like its going down under your model.

> Ok so what you want is subsidized luxury apartments.

The main thing that makes an apartment luxury is location and being new; new construction in the Bay Area (except maybe an isolated single unit or small development in a particularly blighted area) is luxury inherently. The only thing that's not is old units, and you can't ramp up the supply of old housing units easily (about the closest is you could do a minimal inhabitable renovation on existing units that are too dilapidated to be legally inhabitable, but the supply of those is limited and IIUC it's often more expensive to do that than demolishing and rebuilding front scratch.

So, yes, that's literally the most cost effective way to increase the supply of affordable housing for anybody but the rich.

> The main thing that makes an apartment luxury is location and being new; new construction in the Bay Area (except maybe an isolated single unit or small development in a particularly blighted area) is luxury inherently.

Ok, so a 1 bedroom 2nd story apartment in San Francisco in a new building without air conditioning and without a dedicated doorman that costs $4000 a month is luxury but a $1200 a month apartment on the 25th floor of a highrise in Atlanta with a view of the entire city, a dedicated doorman that will bring groceries and packages to your door and air conditioning isn't?

Or are they both?

The San Francisco option is to be clear not a luxury apartment. It's just overpriced.

So what I'm saying is

this statement is flat out wrong.

>So, yes, that's literally the most cost effective way to increase the supply of affordable housing for anybody but the rich.

Just so we stop using terms that were invented for the sake of propaganda such as "affordable housing" and "luxury apartments" why don't we call a thing what it really is?

Affordable housing - a limited supply of apartments taken off the market and given off in a lottery to a lucky few who get to pay less than market rate for rent. The rent is subsidized by the rest of the people living in the city.

Luxury apartment - a normal apartment that is overpriced due to artificial scarcity. This artificial scarcity exists because of people using direct democracy to vote for laws that they believe to be in their interest without any understand of the second or third order effects of the law.

> Affordable housing - a limited supply of apartments taken off the market and given off in a lottery to a lucky few who get to pay less than market rate for rent

No, affordable housing for a given income level is defined by a cost formula. Achieving affordable housing for lower income levels is frequently done by the means you describe, because you literally cannot build it in quantity if it is distributed by normal market means because what is new will be desirable, and therefore both expensive and snapped up by the well-off, for that reason alone.

new construction in the Bay Area is luxury inherently

The very state of newness is in itself luxury? That's a pretty damning assessment.

Well it is. Leasing a new car is more expensive than buying a used one. But that's not an argument against manufacturing more cars.

Of the same model, yes. But a new Corolla can be cheaper than a used Lexus, or what have you

Serving the customers who can pay the most first is pretty much what happens in almost every industry but for some magical reason housing is "special". It's probably just that they have let their "customers" wait so much there is now a massive backlog of hundreds of thousands of them and in the current political climate it will take decade to serve all of them.

There is so much wasted/poorly optimized land in SF. I cringe whenever I see the massive surface level Safeway parking lot in Duboce/Church.

The whole dogpatch to India Basin and hunters point areas could be upzoned massively to accommodate a few hundred thousand new residents very easily. Lay down a good street grid, have a plan to eventually put the third street light rail underground or overhead to give massive transit capacity and have a complete free for all of new high rise (20+ stories) apartments there. You could do this without touching any zoning anywhere else in the city. Yet we can’t even do this. Similar “win-win” options exist all over the Bay Area that don’t get done, and you begin to realize the real reason is preserving property values. All new housing is bad. Thus there is no negotiation with existing vested interests. They’ll run the city into the ground until the state forces their hand in some way.

They should tear down the Fed Mint building behind that Safeway and turn it into housing. I don't even believe that branch does anything other than print proofs. A waste of space, but it's not happening during this presidency for sure.

Organizations that live on indefinitely- governments, universities, churches- don't give up land almost as a rule. One or two hundred years from now, they might really need this or that plot, and it could be nearly impossible to acquire then.

One easy to appreciate example are universities & other schools holding (& sometimes leasing) land adjacent to them. If they didn't, in the distant future if they need to expand, some scalper or holdout could cause large problems.

The US Federal government sells land/property all the time.

And as a consequence of the old adage "time is money", an indefinitely existing organization has an indefinite amount of money. Those institutions you mentioned have no issue buying whatever they want; holdouts be damned. A government pretty much has infinite money, churches are quite wealthy as a whole, and universities have a substantial pool of donors to tap despite having insanely large endowments that are quite well managed.

I don't think your argument holds up.

Definitely a few post office closures I’m aware of...

This is true, but I also think the answer is addressing the problem of seemingly all opportunity being concentrated in less than 10 cities. Cities face inevitable scaling limits.

There has always been regional inequality of opportunity, but never to this degree.

A great way to see the problem is to look at where the top ten most popular early personal computers came from. You will see places like Philadelphia (C64), Miami/Boca Raton (IBM), Dallas (TI), and Albuquerque (Altair). These days it would be almost all the Bay Area and maybe one from Seattle, NYC, Boston, or LA metro.

Strong disagree. Urban aggregation is a global phenomenon in modern times, literally every country is seeing a rise of “mega cities”. It’s because workers are choosing to move to these cities as these cities have more opportunities for workers due to efficiencies of scale. The most dynamic economies are encouraging moving to mega cities (ex: China). Cities might have “scaling limits” but there is no evidence that any city in the world has approached these limits.

https://en.m.wikipedia.org/wiki/Law_of_rent

> Cities face inevitable scaling limits.

The scaling limits being reached in CA are completely self imposed ones that have tested to the limit just how far it is possible to sprawl a city. All the way into the central valley it turns out.

> There has always been regional inequality of opportunity, but never to this degree.

This has been happening since people first settled in permanent locations. The trend isn't going to stop and the only way to reverse it would be to interfere pretty strongly with the market. What are you going to do, set up a central government agency that tells citizens where they can and can't live? That says how many "computer companies" are allowed to exist in a city and ban anyone from starting a new one? It's a fair observation but it's a pointless one that distracts from reality and actual solutions.

> What are you going to do, set up a central government agency that tells citizens where they can and can't live?

I didn't see api suggest government intervention. I imagine at some point, if FAANG doesn't adjust the wages for their direct, local employees or start to contribute more to supporting service sectors then they'll be forced to decentralize.

I see no insurmountable reasons preventing Google spreading to Wichita, Akron or Chatanooga, the employees just need to start demanding better living conditions. That said, it seems like younger folks want to live in environments more like Tokyo than Des Moines.

How does ownership of apartments work in California?

In the UK, owning a flat is decidedly inferior to owning a house. In large blocks you will almost always have a leasehold, which almost always means being subject to a whole host of onerous conditions from the actual building's owner.

Share of freehold arrangements exist in smaller properties like old converted houses. But that only increases density slightly, and these sorts of places aren't really built any more; new developments are usually huge tower blocks or little houses.

I'm looking at buying a place soon and will be going for a small freehold house simply because that's the only way to actually own property in the UK as far as I can tell. I've wasted far too much time on attempting to negotiate sane leasehold conditions.

Maybe just a matter of semantics, but high-density housing in the U.S. is mostly comprised of "condos" and "apartments".

Condos are owned but must comply with homeowners association (HOA) rules on upkeep and maintenance.

Apartments are rented and maintained by Landlord.

the most common way is to own a condominium. You own your apartment and a share of the common spaces / common infrastructure. The common stuff is administered by a homeowners association (HOA) that you as an owner are a part of. you typically then have a mortgage for the loan against the apartment and HOA dues to cover things like maintenance and insurance.

And what will be the source of the water for additional California residents to subsist on? We just went through a 7-year drought, and they seem to be becoming more frequent and longer; never mind that climate change is making it all worse, as the snow-pack gets smaller and melts quicker.

We can cut agriculture and build more dams somewhere to buffer more snow melt, but these are politically difficult to pull off, and of course have other negative effects on various constituencies (including migrant workers, like the ones who used to pick the crops where Silicon Valley now sits).

Not too long ago during the Camp/Paradise fires, just about everyone in northern CA was breathing a toxic cloud of burnt drywall, cars, chemicals, etc. for over a week. Think of the millions of gallons of water wasted, flame retardants dumped, and carbon emissions created. Californians need to live in denser construction near jobs. No more sprawling, low-level construction where fires can easily spread and jump from one building to the next.

The amount of water used in fighting fires amounts less than a drop in the bucket (pun intended), so your advice, while perhaps otherwise worthwhile, wouldn't make a measurable difference in the quest to provide sufficient water for population growth.

Californians need to live in denser construction near jobs. No more sprawling, low-level construction where fires can easily spread and jump from one building to the next.

I don't necessarily disagree with your conclusion, but you don't exactly solve the problem of fire propagation from house to house by putting everyone all into one building. A given suburban house might propagate and burn down. But if a 500 unit apartment building goes, you're losing 500 units, no ifs ands or buts.

Denser construction is generally more resistant against fires.

Could this crisis be an instance of induced demand? [1]

[1] https://en.wikipedia.org/wiki/Induced_demand

What is induced?

California has been growing at a rate slower than other states. When it comes to domestic migration, it exports more people to other states than it accepts.

When it comes to international migration, net migration is less than births minus deaths, and that's with a low birth rate.

In the early 1960s, California had a population of 15 million and built 250k-300k homes per year. Currently California has a population of 40 million and build 80k homes per year.

After the next census, California is expected to lose representation in the House because most other states are growing faster than California.

California has had a major major change in population and building styles since 1980, but policy decisions are still made under the assumption that we are living with the 1960s numbers for building and population.

Have there been any studies examining the impact on the market of banning career landlords and REITs? What happens if you restrict residential housing to being owned by a single person who cannot own anything else in that area, rather than letting capital have the run of the place and treating homes as an investment plaything?

Would this mean no apartment buildings? Many people prefer to rent, and banning that seems a little selfish and short sighted.

Many people have to rent, from a purely economic aspect owning is better than renting - there are social aspects to it as well.

Owning is better economically if you're going to stay in that house for a while. If you're living there less than a few years, all the costs associated with purchasing and selling g a house can hurt pretty bad.

> from a purely economic aspect owning is better than renting

This is not the case in many places, especially the Bay Area.

Renting is not banned, people can rent out the single unit they own.

Single family owners do the most damage to a housing crunch, not career landlords..

Short run, rents go up and purchas prices go down, fairly obviously since you restrict purchase demand and rental supply by excluding a big market segment from both of those roles.

Let's overturn Prop 13 first.

This is an evil idea. Why make people lose their home because some specu-vestor pays too much for the house next door, "revaluing" their property?

>government creates zoning laws that cause prices to skyrocket

>person wants more government

I've been confused about this perspective, can you break down the thought train you have?

Don’t confuse “more government” with “different policies”.

If abusive parents exist, our first thought shouldn’t be to ban the existence of parents.

They had six government, now they want seven government. It's always good to have spare government in case one of them breaks.

The problems with this is developers would love to abolish the green belt - but guess what when it came to selling the price wont go down.

If more housing was the answer then NYC would not have a housing problem. The answer is not more housing.

Then what is the answer? People want to live in NYC, LA and the Bay Area. They need homes in the places they want to live, and if they don't get them they won't stay put: they'll move to sprawl in New Jersey, Orange County and Livermore. And those places will suck, and we'll all pay the costs in infrastructure stress.

Build housing where the jobs are. That absolutely is the answer. Any other solution is isomorphic to "put the desirable jobs somewhere else", a puzzle the whole world[1] is trying to solve, and failing. Housing is something we know how to do.

[1] Except for the handful of desirable cities.

This is entirely wrong. We don't build nearly enough housing in NYC and that's why our rents are so high.

NYC offers a great deal -- it squeezes 5x the Bay Area housing stock into a tiny land area by building upwards. If anything, NYC doesnt do enough. Parts where the zoning allows 12stories (e.g., Brooklyn 4th Ave) should ideally be 24 stories or more. It is a heck of a lot more efficient to stack upwards rather than stack outwards. For those who want more space, you can go outwards, but for those who value shorter commutes, you can achieve that.

Lots more people happily choose to live in NYC than in SF.

Clearly NYC housing structure services 10x what SF does.

NYC is the largest metro ever, its size is not even comparable to bay area and still keeping its rent generally lower than bay area, even living in Manhattan is cheaper than south bay. I don't see how this can be a counterexample?

Absolutely agree! In my opinion the only way is to make smaller cities attractive! No matter how high or wide you build. People want to move to cities. Except they see a chance in smaller viliages. So we need more / attractive jobs in villages and better infrastructure. Including theaters, cinemas, shops, kindergartens etc etc.

Much easier said than done. For this to happen you’d have to convince multiple companies, hopefully across several industries, to risk opening offices and shops in such towns on nothing but faith that they’ll fill up in a somewhat timely manner, and then you have to convince a bunch of folks to move to these towns. Neither is particularly simple or straightforward.

And of course, there also a large portion of people who have no desire to live in towns or suburbs, and these plans wouldn’t appeal to them at all. I’m personally in this camp — I’ve had enough small town for a lifetime already.

I don't think it about people. In my old town a bunch of offices closed and moved to big city. They didn't hire new people. (probably also a way to get rid of old people which didn't want to commute 1 hour to the city)

Also : why must it be 4 million city? Shouldn't it a 500k also enough?

But right now, even those cities bled people. Moving to big cities.

For my situation at least (and likely for many who move to large cities), more people means more freedom in several ways. Better choice of jobs, often the ability to walk straight out of one job into another, more variety in social circles, more things to do, bigger dating pool, and improved likelihood that people have better things to concern themselves with than each other’s personal lives. It doesn’t come without downsides, but the negatives are comparatively trivial for many.

California has a ‘too many people problem’. Housing is less critical than transportation, infrastructure, fire safety, jobs for all demographic groups (as opposed to tech jobs for well born young white men), and so on. Building housing is like giving candy to calm a child’s tantrum.

Since you're race baiting, I'd like to point out that there are plenty of us white guys out here who are not from privileged backgrounds and who have worked very hard to get to where they are. Please stop with the prejudice, for all people.

I’m talking job growth and demographics. The answer isn’t to make everyone learn to code. We need jobs for other demographic groups. Look at San Francisco and the displacement that’s occurred. To pretend it’s orthogonal to race or age or parental ses is simply wrong. Yes, you and many others may be somewhat exceptional, somewhat. I’m referring to aggregate statistics, not exceptional cases.

All prices are determined by supply and demand.

You're complaining that demand is too high as a reason to not increase supply.

https://news.ycombinator.com/item?id=19771824

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