So the question is why isn't supply rising? Is it because existing landlords aren't funding housing construction or the difficulty of entering the market?
Surely it cannot be that the supply of land is that limited. Or is it? Due to zoning regulations?
Landlords lobbying against new development under various guises (environmental, "character", "history"); landlords very cheaply withholding vacant land from use (minimal taxes to pay, no rent to pay, no penalties for vacancy); landlords utilizing zoning regulations to prevent effective use of other people's land
In LA, you used to have a ton of extremely cheap studio apartments. We're talking $600 for a nice studio apartment with its own bathroom, you had SROs as well which while not luxury apartments, provided housing.
But the vast majority of this housing stock was very old and created before there was thousands upon thousands of regulations, for example most apartments in Los Angeles need to be constructed with parking. You have to have a certain amount of outdoor space, etc. So you end up having housing cost twice as much as it really needs to .
It's really sad too, because just 15 years ago or so you could have a minimum wage job and afford your own place. Now that's not really obtainable anywhere in the United States. I've met tons of young adults, some even ranging into their 30s who have really bad home lives but can't afford to move out .
Solutions to this are often really short-sighted, you have affordable housing units going up which are costing $600 to $700,000 for the city to build. Obviously this just doesn't work so you have a bizarre lottery system just to have a roof over your head.
Personally I think the solution would be a combination of subsidized high speed rail and an aggressive rethinking of what a town needs to be. Imagine being able to hop on a high speed train that goes about 150 miles an hour.
You could have a community of affordable housing that's a short train ride away from San Francisco, LA, or any other unaffordable city.
I've also noticed you have a very bizarre system where many working-class people, rail operators, firefighters, teachers, etc. They have super commutes which are ranging from 1 to 2 hours each way just to get to work.
I think a big part of the solution is remote work. Uncoupling as many jobs as possible from specific locations changes the game substantially.
It’s zoning, it’s environmental review, it’s historic/landmark review, it’s good neighbor agreements, it’s disorganized and/or corrupt permitting departments, etc. All of this gets weaponized against new supply. Ultimately. City electeds answer to voters, not builders, so they get the government they deserve.
Some places are building, adding supply, and consequently lowering prices. Austin is a prime example.
From JosephPolitano on X:
Last year, Austin MSA (population: 2.4M) permitted 21,300 units worth of 5+ unit apartment buildings—more than LA (pop: 12.8M) and SF (pop: 4.6M) combined.
San Francisco permitted 1,151 housing units over the last 15 months. Austin permitted 1,248 in January alone.
Austin averages 28+ units per day this year. San Francisco has allowed 15 units total in all of 2024.
By "not entirely", I mean that while land value often dominates, lowering it doesn't solve the problem, because even if you somehow acquired a city lot for $50k in the Bay Area, you wouldn't be able to build a house on that lot for $100k. So, solving one problem doesn't make it affordable.
There are a wide variety of issues at play: high interest rates, localized shortages of construction workers, rising material costs, zoning restrictions, local opposition and years of underbuilding.
In a good system, government doesn't subsidize cost. It just enters whenever the system is broken to work based on supply and demand of market.