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The YIMBY argument mentioned in the article is that expensive new housing today becomes mid-range and eventually lower-end housing over decades as it ages. If you don’t put units into the front of that pipeline now, nothing comes out of the other end of it later. This seems plausible to me, and there is research stating the filtering effects may happen a lot faster than that on a regional level: https://www.citylab.com/perspective/2019/06/housing-supply-d...

More than that, "expensive" new housing is typically half the price of the single family homes next to it. It's just marketed as "luxury" because everything is. Typically the people protesting "luxury" housing already live in housing that's more expensive than what is getting built.

The role of new construction in affordability is more direct. The people who live in the shiny new places will just bid up the price of the next best thing if it isn't available, and this ripples down until the people at the bottom are priced out. So by building it, you're preventing other things from being bid up.

Desirable places are never going to be the absolute cheapest option, for sure, but they could be a lot cheaper. Here are some concrete (ha ha) examples:

https://www.sfchronicle.com/opinion/openforum/article/How-th...

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

https://www.sightline.org/2017/09/21/yes-you-can-build-your-...

> When I researched this I couldn't find any strong evidence suggesting that more building would lead to more affordable housing.

Tokyo's population has grown 1.5X over the last two decades while rents and property prices have been essentially flat.

There's absolutely zero evidence of "induced demand" for housing. And all available evidence suggests that 1: SF & CA have huge shortages of homes and 2: Building more is a good solution.

Please see this non-exhaustive list of things which all show building more housing leads to housing affordability.

* http://cityobservatory.org/another-housing-myth-debunked-nei...

* https://www.bizjournals.com/sanfrancisco/news/2019/12/02/how...

* https://jamesjgleeson.wordpress.com/2018/02/19/how-tokyo-bui...

* https://www.sfchronicle.com/opinion/openforum/article/How-th...

* https://medium.com/land-buildings-identity-and-values/what-i...

* https://fee.org/articles/why-isnt-rent-in-tokyo-out-of-contr...

* https://www.upjohn.org/research-highlights/new-construction-...

* https://www.theglobeandmail.com/canada/british-columbia/arti...

* https://medium.com/@eddiesun/no-vacancy-the-housing-crisis-l...

* https://twitter.com/noahpinion/status/1165339989774749696?s=...

While I vigorously support more construction in the SF metro area, I think expectations need to be set correctly as to the amount of construction required to actually bring prices down, instead of just slowing their rate of increase. It's a lot. I don't recall all the numbers, but I believe I saw something suggesting that we need to increase the rate of housing starts by a factor of 4 just to stabilize prices. To actually bring them down would require even more than that. Again, we should absolutely do it, in my opinion, but if we were to only double construction — difficult as that will already be, politically — and prices didn't plateau, people might conclude that it doesn't work. We need to make sure they know what it's going to take.

It's not so much induced demand as it is pent-up demand. Lots more people would already love to live here — indeed, many have moved away solely because of housing costs.

This is definitely a fair point. There's also - in my mind, living in a smaller town - the idea that it'd be nice if everyone coordinated to catch up mostly at the same time, so that it's not just Portland or Seattle or Boulder or San Diego or wherever... but everywhere.

The bigger point is that today allowing housing construction is a burden for cities. You hint that it would be good if all cities shared that burden.

This is especially true in California, due to Prop 13.

If we reformed the relevant rules, so cities profited from allowing new housing, I think a lot would change in this area!

Yeah, Prop. 13 is such a disaster.

Supposedly, the big selling point was that seniors on fixed incomes were getting priced out of their homes. But that would only happen because they have a substantial, appreciating asset. These aren't poor people who deserve our sympathy; they're relatively well-off people with a cash-flow problem! We could have solved their cash-flow problem without destroying our cities' tax bases by allowing them to defer some of their taxes [0] until their property was sold.

Here's a great article from 2014 that talks about it: https://techcrunch.com/2014/04/14/sf-housing/

As for cities profiting from allowing new housing, this might interest you: http://www.henrygeorge.org/pcontents.htm

[0] For example, the amount of tax due immediately could be allowed to grow at 2% annually, following the Prop. 13 formula. Also, the tax due at sale could be limited to, say, 70% of the gain on the sale. That limit would probably never take effect, in practice, but I've learned from previous occasions where I've proposed this that people tend to get hung up on the possibility that one might owe more in tax than one stood to make on the sale. In fact, if you run the numbers, it takes some very strange assumptions to make the deferred tax even approach getting that large; but this rule should assuage that concern. (Basically, you'd need several years of strong price growth followed by a sudden, huge collapse.)

Here’s a simple compromise that most people I know support:

Eliminate prop 13 for all but one property, both for individuals and for businesses. This would eliminate the current tax loophole for investment properties, and demand that tech companies that have scaled to more than one campus pay their fair share to the communities they are located in.

Also, have prop 13 valuations reset whenever the property changes hands (including inheritance, and, for commercial real estate, this would get rid of the “sell via a holding company” loophole).

Yeah, I’ve seen a lot of “we’ve been building a ton and prices are still high” comments on Nextdoor and heard the same in person. Not sure if it’s all in good faith, but some people at least seem to be persuaded by what you’re talking about.

"We've been building a ton" is false though. That's the error there.

the issue is the reference frame. We are building a lot relative to 2009 to 2013, but that time period was a historic aboslute low point in new housing starts, the "boom" that were in now has less new housing production that the majorith of previous "busts" since WWII

Yep, I think that has a lot to do with it.

Yes, I unironically want 4 million new homes in San Francisco.

The housing shortage in the Bay Area might be the single largest drag on American prosperity.

I think it makes sense. There is absolutely space.

BUT you couldn’t move the people through the city and bay area with current infrastructure.

Money (in big amounts) needs to be taken away from roadwork and poured into public transport.

moving 4 million people here would create the money to allow the infra changes

"Yes, I unironically want 4 million new homes in San Francisco."

Why would any SF resident care even a little bit what non-residents think of their housing situation?

"The housing shortage in the Bay Area might be the single largest drag on American prosperity."

Have you considered that someone's home, their life is not a function of 'industrial prosperity'? And that they're not interested in having their neighbourhood turned into a bunch of skyscrapers hosting Facebook Engineers?

It's possible they do - but it's entirely up to the residents to decide.

Facebook engineers are not the ones being forced out of the area.

Most new housing in the Bay will go to higher than average income earners, not poorer people, unfortunately. The Bay is a very dynamic city there vastly more people who would like to live there than actually do, given the right conditions. The Bay may have to contend with paying 'regular people' simply a lot more and contemplate actually sharing more of that wealth being created.

Why do you assume the person you’re replying to isn’t a SF resident? Their profile indicates they are, in fact.

I'm not assuming the residency of the commenter, my comments are directed to commenters in general. Everyone seems to have a strong view of how many homes SF ought to have, moreover, most are making false assumptions about the nature of the problem, and the unassailable civic virtue of their own motivations without respecting the valid lamentations of 'the other side'.

In particular, tech people, or even the intelligentsia in general, tend to have an odd disregard for cultural issues and tend to see 'housing' as entirely an economic or civic function (i.e. numbers, pricing, density, affordability) while disregarding the nature of the fact that these are communities and homes. (Witness the fact that everyone on this thread, and in most reference articles tend to talk about issues such as 'price')

I watched in my lifetime the city of Vancouver get bulldozed over and replace with a zillion apartment buildings. The money is nice, but otherwise, it's a brutally garish city, the architecture is thoughtless, it's just another 'pop up' city of the theme of the New Millenium / Pacific Rim. It will not age well. What's more - even as Van has evolved towards this super-high density Hong Kong / New York physicality, costs have skyrocketed and affordability has plummeted. This should be of no surprise of course, as almost everyone in the Western world, more density generally implies less affordability and certainly 'less space'. Have a look [1]. Texan cities like Dallas are considerably more affordable and considerably less dense.

Bulldozing most of a beautiful city possibly against the wishes of its citizens to drive some kind of risky civic/industrial experiment is ... an extreme view.

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

It’s also up to the residents to pay property taxes, and owners not to horde empty housing units as investments. Also, I’ve been a resident here for over a decasde, and I’m sick of paying small fortunes to landed gentry.

Bay area housing is a ponzi scheme, and younger families have to choose between their careers and buying in at nonsensical pricing.

Local governments suppress housing starts and intentionally snarl the roads to keep the house of cards standing.

Sooner or later the older residents will be outnumbered by people that moved here, and the reckoning will probably be swift and severe. As you said, it’ll be up to the residents to decide.

A few years back, there were signs in Cupertino saying “no four story apartments”. I agree. If you’re within 0.25 miles of transit, it should be illegal to build (or improve) anything that short. I’m guessing this isn’t what the NIMBYs had in mind though.

>housing shortage in the Bay Area might be the single largest drag on American prosperity.

Obviously HN skews towards tech but let’s not fall into the trap that SV is either representative or the center of “American prosperity” for the average citizen

You will just increase the number of unaffordable apartments. The added units will come with added traffic from the new wealthier residents, and higher prices on everything. It doesn’t seem like a win to me, unless you have very narrow goals.

These "wealthy residents" are poorer in their hometowns. They don't migrate out of fun. In middle of nowhere they may get 40k per year and in the bay area it may be 160k or more.

Your point is the same one I’m making. People come here because FANG and tech generally subsidize that movement. It’s great for tech profits and great for that one guy from Russia or wherever who can make 140k salary, but it’s a net negative for society. The housing crisis is the result. A greedy growth at any cost business culture, not senior citizens trying to avoid displacement in their golden years; that’s what caused the crisis. If those businesses all went belly up like in the dot com bust, we’d have the opposite problem, a housing glut and falling prices. Yet, if you removed all forms of nimbyism, things would remain almost exactly where they are at now. The housing problem is a problem of demand- the whole world can’t move to San Francisco just because that’s what a bunch of tech companies want. Nor can the whole world move to Manhattan or Tokyo or any other place with high housing prices and too many people.

> The housing problem is a problem of demand

Prices are set by the balance of demand and supply. The demand isn't going away. The supply is what we can do something about.

Even building expensive luxury apartments helps, unless no one can afford them at all (which is not what the builder wants to happen). The people who rent those aren't taking up spaces others could have afforded.

Demand is mediated by policy. Tax corporate real estate to create incentives for companies to locate where it’s beneficial to citizens. That’s one way to better manage demand. And we have to manage demand or we create a lot of failed cities like Detroit. Boomtowns are avoidable with sensible policy. We need those policies to keep people from exploiting humans herd like instincts for profit.

For cities like NYC and SF I think it’s clear there is a ton of induced demand.

If housing prices were cut in half in SF you’d see WAY more people moving here.

That's not induced demand, that's a standard demand curve. The price drops and more people buy it.

Induced demand is "adding supply increased the price"

The best example of induced demand ignores price.

Build more freeways and you get more drivers.

> The best example of induced demand ignores price.

> Build more freeways and you get more drivers.

That's like having a McDonalds without enough cashiers and then saying "hire more cashiers and you sell more hamburgers" is induced demand because the hamburgers cost the same but you sell more of them.

That's not induced demand, you're just changing the price. Having to wait in line (or sit in traffic) is a cost. If you reduce the cost, demand goes up, but that's just ordinary supply and demand again.

Comments above are correct, I'd also add that NYC and SF are "inducing demand" not by building housing, but by building office space at a rate 8x-12x that they are building residential dwelling units. Over the past ~10 years, for every home the SF bay has added it has added office space for 8 jobs. Adding housing doesn't create more demand for housiing, adding more offices creates more demand for housinig.

There is no shortage of homes in San Francisco.

Prices are a function of demand and that's it.

Every city has to ultimately decide what kind of community they want to have and then act accordingly.

As SF is an attractive city, every home ever built there will essentially be bought or occupied, there is nearly an unlimited number of people who would like to live there - so it's merely a matter of what kind of density and price they choose to have.

Do they want SF to be a city of skyscrapers, with tiny expensive flats like NYC?

Or a neighbourhood of fairly expensive homes as it is now.

Nobody anywhere will doubt that 'building significantly more homes' will reduce the average cost of homes but ultimately SF residents will decide what they want to do: if they don't want skyscrapers or high-density style buildings, it's their business.

SF is not a neighborhood of "fairly expensive homes". It is a neighborhood of some of the most expensive homes on the planet.

At a median home price of $1.7m, owning a home in SF is reserved for those grandfathered in or the wealthy.

The homes on Monte Rey are even more expensive but it's beside the point. There is plenty of inexpensive housing in Cali and the US to accommodate most needs.

Everyone deserves 'affordable housing' but not everyone deserves 'affordable housing' in the specific spot they want.

And FYI New York and Hong Kong even more expensive and much denser - should NYC 'triple its density'? Will that make thins better? Or maybe there's something missing from this logic.

> There's absolutely zero evidence of "induced demand" for housing.

There absolutely is. Here's a great paper studying the effect of removing rent control in Cambridge, MA (https://economics.mit.edu/files/9760) which found that rent in non-rent controlled units went up as a result of the removal. The effect is similar to what GP stated -- gentrification causes a feedback loop that can affect all housing.

All said, it is very possible (and I subscribe to the idea) that the Bay Area would not suffer from much induced demand because people are in the area for the economic opportunity, not for local amenities.

The fact that ending rent control increases prices does not support the claim that building more homes increases prices. They should have opposite effects according to basic supply and demand theory.

Ending rent control also should lead to lower prices in non rent controlled housing according to supply and demand.

The sequence of events that lead to a rise in prices are similar - that is there is evidence that more affluent people moving in to a local area can result in rents going up for others in that same area.

A good example is Jerry Brown's 10K Project — his plan to attract 10,000 people to live in downtown Oakland by 2001, which was the cornerstone of his tenure as mayor. The idea was that 10k affluent people would create a positive feedback loop of gentrification. As someone living in the area in the 90s-2000s, I can say it "worked" but at the expense of the working class as Oakland began gentrifying rapidly by 2010.

Raising the price of one good usually causes the price of substitute goods to go up. For example, if the price of wheat goes up because of import duties, the price of rice will also go up as people switch from wheat to rice.

In the rent control example, many people held on to RC apartments because they were a great deal, even though they weren't where they wanted to live. After RC ended, they moved to apartments they preferred (since there was no longer a big price differential), increasing demand (and thus price) for the originally non-RC apartments.

Agree with points 1 and 2. But build the homes in less dense areas where they be seen by the community as a net positive. Or add to existing density where appropriate. Try to add density in the suburbs is inefficient at best, frankly I’m not sure what it solves.

Huh? You mean the present sky-high housing prices in San Francisco, Los Angeles, New York and other cities is not due to a shortage of units?