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Comment by photochemsyn | Hacker News Reader

A SF school district is trying to solve the teacher housing problem by asking families to rent out rooms in their homes to teachers...

https://news.yahoo.com/san-francisco-families-asked-loan-162...

So - prospective teachers are expected to go to college, get into debt, get a master's in education, then get a job where they still have to live the life of a broke college student.

However, more market-rate housing won't solve the problem either, as teacher pay isn't enough to afford such housing. I suppose below-market housing could be reserved for teachers and other city employees, although then it has little impact on the size of the homeless population... It's all kind of dystopian.

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More housing of any kind is a benefit. It reduces competition.

Market rate housing helps everyone. If there is a brand new market rate condo for a meta employee to live in, they won't be competing for a shabby 1 br, and a teacher might afford it.

It increases competition if people who were forced to commute are given a space without an increase in available units.

Then it still reduces competition for houses within commuting distance of SF.

San Francisco has a building height limit of 40ft. They could build sufficient housing for everyone but have made it impossible.

You can build a lot of housing under 40ft. There are a lot of housing options in between "single family home" and "skyscraper apartment building".

And most of the land zoned residential is zoned for single family only

Not anymore, anywhere in CA: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml...

Only in name. SB-9 can be sidestepped by rezoning to RH-2 (two family), but adding requirements that make building anything other than single family infeasible. E.g. https://www.zfplaw.com/blog/2021/12/thinking-of-utilizing-sb...

Recalcitrant cities have maliciously complied with the law and are preventing economically feasible housing from being built by leveraging SB-9.

You're agreeing with him.

San Francisco has a limited area that is already fairly built-up. To increase the housing supply, the city can't just build anything, it has to build in a way that increases the density of housing. For example if you build four story building where every floor is just one unit, you haven't done much - and San Francisco's high housing costs and appeal to the very wealthy makes such luxury condo development very appealing to private developers. Moreover, developers see the large picture and see that if the housing shortage was actually solved they'd lose the premium they now get so this gives them a further incentive to not actually increase total density by much.

You don't build "market rate" or "below market rate" housing. You build housing and let the market figure itself out. There are enough old buildings in the city that will come down in price the moment there are better options available.

It's crazy how people forget supply and demand concepts the moment we start talking about housing.

The argument that building housing is useless because it's often more expensive housing, is absolutely bonkers. It increases supply, it is positive for everyone, even those that can't afford it and it liberates a space for them that would have been taken by that high income person.

Yup. If I talk about a compression algorithm and claim you can run it multiple times and always get a smaller file out the other end, I'll be instantly reminded of the Pigeon Hole Principle.

But then we talk about houses and occupants, and apparently that goes out the window. It's maddening.

People often make the mistake of focusing on the long tail of market failures with the intent of more government intervention to fix them, without thinking about the 98% of times that markets deliver additional wealth to everyone involved.

I wonder what the impact of investors with bottomless pockets for real-estate is on supply and demand?

If such investors exist wonderful. Keep building housing until the national debt is eliminated!

In reality at some point those investors will stop buying, at the point the return begins to diminish.

At what point? How does that eliminate the national debt? How do people get into houses?

If there’s investors to buy houses forever just keep building them and selling them to them. The government can do it and the national debt will be gone!

Obviously, this doesn’t work because the investors are limited and will stop buying if they can’t make money.

Of course what you're saying is true.

However, you're dealing with people that believe a market economy is fundamentally unethical. They believe that benefits such as housing should be assigned entirely according to the individual's need, not how much money they are willing or able to spend on it.

And who better than them as the judge of neediness?

So of course it makes sense that you have people protesting this development in the article, demanding that 100% of the units be "below market rate," despite the obvious economic unfeasibility of this. After all, profit taking or "rent seeking" is inherently unethical and exploitative.

They may have prevented 75 units from getting built, but at least they stopped a developer exploiting people's need for housing for profit. And, as a bonus, they send a message to other developers that you defy them at your peril.

Market forces will not fix this.

This requires planning, and markets do not make plans

I'm sure the Californian Politburo will sort out their planned economy woes soon.

Indeed. Housing is a substitutable good. When higher end units are not available the wealthy occupy what would have been working class units, driving up the price.

The solution on the level of markets is pretty simple. San Francisco builds enough units to meet demand. That would involve approving building projects that are very high-density per acre regardless of ostensible affordability.

Of course, neither home owners nor developers want this - home owners want to preserve their home values and developers want to build a few luxury condos - both aiming to profit from the housing shortage rather than solving it. The solution is actual public housing on a large scale but naturally the safe forces would work to slander and hold this approach back.

It's entirely possible that home owners are NIMBYing this due to perceived impacts on their house values.

But I'm not sure you're right about developers wanting to just develop a few luxury condos and artificially restrict the number of units they build. It seems like that would only work if there was a near monopoly on who was allowed / able to build in SF.

They make money on building units; not building units is not really benefitting them.

Per the article, the per-unit costs of all the planning / permitting / construction / land / special interest earmarks make the per-door cost to be the $1 million quoted. That already puts that into "luxury condo" price range. It might be that the ROI might be better for the developers if they decide to spend an extra $100k on premium tile so it really is "luxury". It might be that selling them as non-luxury really isn't profitable. After all, if as a customer you're going to need to spend at least $1.05 million on the unit (break even for developer + 5%), wouldn't you rather get a $1.25 million luxury apartment for not that much more? (1mill + 100k tile + 14% profit). For the developer in my made up scenario, they're making 3x the profit, while you're "only" spending 20% more on the more desirable luxury version.

I'm sure if the permitting process were quicker / easier, the barrier to entry for developers of all sizes would be lower. The per-door cost would be lower, and you wouldn't need a massive war chest of cash to ride the 3-year permit process. This would also make the economics on non-luxury units make sense.

But I'm not sure you're right about developers wanting to just develop a few luxury condos and artificially restrict the number of units they build.

I shouldn't have implied there necessarily was anything artificial or conspiratorial involved. I mean, some times there can be but it's quite possible that building a few high priced luxury units is the most profitable decision for an individual builder. Luxury condos cost a lot to build and can be sold for a high markup over costs. A many-unit building for average people is not going to have the same markup so even if you build more units, your total profit can be less.

Per the article, the per-unit costs of all the planning / permitting / construction / land / special interest earmarks make the per-door cost to be the $1 million quoted.

So you're saying regulations push builders to only build luxury housing - which is part of my point. I mean, lots of producers in lots of industries cry about regulations that increase their markup, an increase they pass to the consumer. They cry all the way to the bank about that.

> home owners want to preserve their home values.

I mean…can you blame them? Who really wants to lose money?

>The solution is actual public housing on a large scale

Please, no. Public housing has been an abysmal and utter failure, let’s not repeat mistakes that we know don’t work.

Rezoning land from 40ft height limit to unlimited would probably 10x the land value, in SF.

It seems obvious that reducing zoning would increase the value for the owner so I think blaming them for being stupid works out.

The idea is that construction barriers are removed so that the normal housing market is cheap enough for teachers to afford. As in, enough housing is built so that a teacher can just browse craiglist and find housing they can afford.

Well, it's still CA, so as soon as people realize there is a house for $250k in the Bay Area, or rental options for sub $1500, they will start moving there again. Not just one house, but even a million new houses will cause people to move there.

It's really unlikely that an extra million spaces for housing would not change the current market price.

But EVEN if this was true that there is someone outside waiting to move back for when prices drop just a little, then now we have at least a million more people that can afford to live in a city close to their work, instead of being forced out.

More housing is better than less. There are no scenarios where it's worse for market price to build more housing.

> then now we have at least a million more people that can afford to live in a city close to their work, instead of being forced out.

This is one of the most underrated aspects of the housing shortage. Some of the people harmed by the housing crunch are people paying significant portions of their income in the form of rents. But most are the people who aren't able to move to economically dynamic metros in the first place, and are thus relegated to living in a place with worse job prospects. The latter group has no voice in housing policy, and is effectively disenfranchised in housing politics despite feelings its effects.

Anyone can visit, but staying here means having a job. The migration to the Bay Area is because cities approved the construction of so many office buildings (and continue to do so).

As someone forced to move away from the bay area because of housing costs, as soon as housing comes down many of us expats (who have been able to build a sizable nest egg by NOT living in the bay area) will also compete to return. So plan for enough new units for current need + people forced to leave.

At some point increases in density will change the character of the city enough that some won’t want to return. If the Bay Area becomes Singapore it won’t be the Bay Area anymore.

Sure but the inevitable consequence of this is higher housing costs. If there's only 800k housing units, and a million people want to live there then 200k people are going to fail to find housing. There's no escaping the mismatch between supply and demand. If you don't build more housing, the character of the city will change too: it will become uniformly high-income since that's the only people who can afford to live there.

It's already on that path, and they either need to embrace it (pay janitors in San Francisco $150k a year) or change.

My personal suspicion is that the "desirable type" of town that San Francisco was is actually an unstable state, and the only way to permanently have it is to regularly move.

I don't think that will work. There's very little elasticity in the market, so to first order every dollar pumped into wages will be turned around and put into housing and drive up prices even further. There's only two ways out of this hole: you drive people away or you build more housing.

sounds like a great argument for being a nimby.

It's a game of musical chairs; there's no solution to 40 years of a multi-thousand annual shortfall in new units that doesn't involve building those units or otherwise making the equivalent housing capacity available.

The market rate is determined by supply. If you ban the production of new cars, you'll soon find that teachers can't afford a market rate 4 year old Honda either. The whole point of building new housing is that reduces market rate.

The easy fix is to let people build more housing, and pay their teachers more.

> more market-rate housing won't solve the problem either

If we created 10 billion homes priced at market-rate built at present costs, what do you anticipate the market rate would be?

> prospective teachers are expected to go to college, get into debt, get a master's in education, then get a job where they still have to live the life of a broke college student.

On the plus side, they do qualify for student loan forgiveness and if they stay until retirement, they get a pension. Public employees sacrifice current pay for future security.

Depends on how much more market-rate housing is created, right? Create enough and the market rate goes down

That's Milpitas, not San Francisco.

But it won't have the Milpitas monster to worry about! https://www.imdb.com/title/tt0073393/

Just to be clear, they don’t actually expect housing to be rented out to teachers in this way. What you do see in many cities around the bay is teacher specific adu and dwelling permitting. It seems to me the idea is to not actually make more, but to have a fig leaf where they can say to the state that their housing element is in compliance.

I don’t understand what drives people into thinking that housing is the only thing that isn’t priced based on supply and demand.

What if they doubled teacher pay...?

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