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Comment by knubie | Hacker News Reader

I see this conventional wisdom posted a lot here on hacker news and other forums, but is it really true? There are plenty of high density cities with high housing costs.

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High housing costs are always, without fail, a regulatory problem.

If the rents are high because of a lack of available units, you build more units or make more units available.

If you are at peak carrying capacity in a given city you need to expand infrastructure (vertically or horizontally) to support more & denser development.

The trick is both can require public spending to make work. You can't just rezone and let a city go and expect magic in the first case scenario. You often need government subsidized building of cheap apartments to spur the economy to build up and attract investment / higher paying residents to build generalized housing. Most developers are looking for the highest margin building they can do, and while in theory any potential profit from building should eventually be met there are only so many construction companies, especially urban highrise class builders, and they prioritize the best deal.

> If you are at peak carrying capacity in a given city you need to expand infrastructure...

Why not say, "sorry, we are full"?

Because here in the United States that isn’t something that you can say.

Not taking a side but it seems like that's what a lot of people were trying to say with the idea of the wall and everything.

Legal residents of a country choosing to relocate to a new city is a different issue than the enforcement of national borders.

Because full depends on infrastructure. Tokyo sits at ~37.5 million people demonstrating few cities are near any real limits. https://en.m.wikipedia.org/wiki/Greater_Tokyo_Area

Tokyo metro is 37 million, Tokyo city is 13 or so million. As always, City classifications are a bit weird in Asia (see Chongqing).

It’s not that different from New York City which is technically 8.6 million, but people over a much larger area commute to the city center which has real impact on housing costs. Thus the Metropolitan Statistical Area (20.3 million) and other such approximations. https://en.m.wikipedia.org/wiki/New_York_metropolitan_area

It really comes down to transit not where lines are drawn on a map.

As long as we are comparing apples to apples. Actually Chongqing is worse since you can’t really commute daily from the hinterland into the city (same with Beijing and even Shanghai). Japan is quite unique with commuter oriented HSR (eg tokaido line for Tokyo, though it would be a horrible expensive life to commute daily from Yokohama).

Well, that does happen implicitly, except the full statement is "Sorry, we are full to our limit of low income residents." They eventually get replaced by richer residents.

Cities in the United States have no mechanism to prevent nonresidents from moving in. If nonresidents want to move in and capacity is not expanding it will drive up prices and result in economic pressures on the poorest residents until they vacate enough space to reach an equilibrium. A city can control how many people get to live there, or it can work to ensure that all current residents can continue to live there, but the Takings Clause of the Constitution essentially prevents doing both. Saying "sorry, we are full" (like San Francisco) amounts to telling a large portion of your poorest residents to get out (like San Francisco). People are generally pretty bad at putting two and two together and realizing that their misfortune is the result of poor capacity planning by their city government, but they still tend to get angry and angry people tend to vote out whoever is currently running their city, so pissing off a large swath of residents is rarely a good strategy.

Cities may not be able to control nonresidents moving in directly, but their taxing authority is more than sufficient to strongly discourage it. A municipality could massively raise property taxes and grandfather in current city residents for example. It could then use the new revenues to ensure the current residents can continue to live there.

Yep, prop 13 and insane property prices serve that function in the SF Bay Area. If you buy now, you pay $2M upfront and ~$20k/yr property tax for a small ranch house, while your neighbor who has lived in a similar house for 40 years pays <$2k/yr, less on an inflation adjusted basis than when they moved in, thanks to prop 13. The cherry on top is that after paying a small fortune for your house, your municipal (and school) budgets are stretched thin, despite some of the highest land values in the country, because so few of the long time residents are paying anywhere near the nominal 1.x% rate. And then the long time residents loudly complain that infrastructure is buckling, and we can't afford to improve it, so we can't expand housing. It's maddening.

The flip side of that. I live outside California and my neighbor has lived in his place for over 30 years, and it was his dad's place for 30 years before that. Because property taxes go up with assessed value and because the area became more affluent around him, he is now faced with having to sell his business that his dad started to cover property taxes or lose his home.

If property taxes are unplayable then selling the house should net a lot of money. If he really just wants to stay there he could get a reverse mortgage at this point to pay property taxes. Unless he has already dipped into that equity.

What area?

But yeah, property taxes can be rough, they’re meant to ensure that you’re not sitting on land that could be used more productively. On the other hand, your neighbor’s investment in land has apparently paid off in terms of appreciation.

With prop 13, I’d support age-based property tax abatement, but the current way it’s set up is insane (commercial property gets the same treatment, the tax basis can be passed on to heirs, if you sell less than some fractional share of the land, it doesn’t trigger a reset, and some other insane provisions).

The need for massive investments in public transportation is a little more than just a regularly problem. The real solution is allowing but taxing new development and using that money to wisely pay for new infrastructure.

This rarely happens because developers want to pocket that difference, nimby wants zero development, and everyone wants to spend that money on their own ‘critical’ projects.

> High housing costs are always, without fail, a regulatory problem.

True, I would have built a 10,000 square foot single famly home with a massive yard in manhattan facing central park but those damn regulations are making it too expensive /s

>High housing costs are always, without fail, a regulatory problem.

It's not possible that desirable places may have more demand than physical space?

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