Americans Voted Their Way into a Housing Crisis
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The incentives at a state level around housing might actually balance differently because at that level economic activity, jobs, etc. matter more than property taxes. Something that isn't often mentioned, because the focus is always on California or the US, is that property values are directly tied to the overwhelming majority of municipal budgets via property taxes incurred as a percentage of that value. Not only do constituents vote for more expensive residential property, local governments want expensive residential property even if their voters didn't.
This is exactly why California has been trying to move some of this power to the state level: local governments are fighting tooth and nail to hold on to their tax revenue.
ETA: The property tax thing is more complex, but still applies. States like Florida and California cap how much tax assessments can increase for property you own that is your primary residence.
This still encourages these states to drive up property values because it tempts you into cashing out via selling. Every state with this sort of cap also immediately reassesses real estate to the price it sells at the following year. A high property value versus the tax assessment is just a deferred revenue stream, so it's a driver to encourage consistent turnover in the market. The only real way to do that is to constantly drive prices up, which drives the cost of living up, which turns over the residents faster.
So capping tax assessments like that, just makes the cycle even more viscous, in my experience living in Florida for a time.
Fund municipalities more from the state level, through progressive income taxes (and/or potentially other funding sources). Property taxes don't have to go away, but if they're no longer the sole or primary source of funding for the municipality where they're being levied, that removes a very obvious source of problems.
Just as obviously, it will introduce other problems, but in my experience, when you come to recognize that a particular structure in finance/government/rules/etc is causing problems, it is easier to get in a mindset of identifying similar problems in the structures you set up to replace them. This does require a certain minimum degree of competency and a certain maximum degree of willingness to upset everyone else's applecart for one's own benefit among the powers that would be making the decisions, of course, which cannot always be a given.
Adding: I would also like to see more of a tax for subdividing land. The way the taxes are structured, I feel like it is set up for those already living here are paying for the development and then paying the bills for road maintenance, police and fire, schools, etc. Empty land does not need these services.
Many states (like WA) are on the budget system for property taxes: your assessed value effects your share of the taxes, but the overall property tax take is fixed. So if the property market booms or crashes, the amount collected is still the same. Playing around with freezing/capping assessments will only change how the tax burden is distributed (well, if it freezes for everyone then nothing really changes).
WA also pools property tax revenue for schools, which means richer western Washington districts subsidize poorer easter Washington districts. People still move around to be in the better school districts, however, since the advantages of those schools go beyond funding.
> Virtually every affluent residential neighborhood in Houston has strict private deed restrictions — and, remarkably many of those deed restrictions can be enforced by the city. ...
> Some neighborhoods are in effect using historic districts as a zoning substitute. ...
> Several years ago, the city also created a process by which residents and neighborhoods could petition for a minimum lot size or minimum building line, or setback from the street. ...
Or from https://therealdeal.com/texas/2023/03/16/dont-say-the-z-word...
> This lack of zoning has resulted in Houston using other legal and governance mechanisms, such as ordinances, a building code and deed restrictions to impose rules that function as a form of de facto zoning.
Sure there's plenty of houses in Detroit but you can't commute from Detroit to NYC or the Bay Area.
Single-family zoning was pioneered in Berkeley in 1916 specifically to prevent minorities from moving to white neighborhoods in Berkeley by pricing them out. After the Fair Housing Act passed outlawing restrictive covenants it became one of the most powerful lawful weapons to enforce class and race segregation in cities. [0] Now 96% of all residential land in California, over half of the Bay Area and 2/3 of SF is single-family exclusive zoning. The Bay Area, the single most economically productive place in the entire US has a population density of 600 people per square mile, in line with an average European agrarian hamlet.
Housing is not the only market in the history of the world that is immune to supply and demand. When supply is constrained to below demand, pricing rises to the highest level the market can bear. When supply exceeds demand, prices fall towards the cost of construction.
The premium capricious zoning policy in SF creates is estimated at $400,000 per unit. [1]
I don't understand how progressives took up the mantle of "no more housing thanks we're good, let's just apply rent control" as if rent control actually helps. In the face of an expanding population this is outright regressive policy. Studies in SF show that it reduced supply and increased prices. [2] If you have enough supply, prices don't increase, so you don't need rent control.
[edit] I once again remind readers that the housing market is interstate commerce and the federal government has the power to overturn all these silly zoning shenanigans. Japanese-style federalized zoning is a great way out of this. The Fair Housing Act itself was passed under the justification that housing is interstate commerce via the Dormant Commerce Clause. [3, 4]
[0] https://en.wikipedia.org/wiki/Single-family_zoning
[1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage
[2] https://www.gsb.stanford.edu/faculty-research/publications/e...
[3] https://nysba.org/how-the-dormant-commerce-clause-can-fight-...
[4] https://www.justice.gov/crt/housing-and-civil-enforcement-ca...
That said, building codes also drive up housing construction costs: originally intended for safety, building codes now also enforce energy efficiency (including window size, insulation, etc.), accessibility, sound transmission, material selection (for reasons other than safety), beyond the usual structural design, electrical/HVAC safety, and fire concerns.
This is before we even get to planning codes (i.e., zoning) which has restrictions on lot coverage, etc. that end up causing stronger correlations between land prices and unit costs.
This coincides with treating housing as an investment. Older generations (even Gen X) will flaunt how great it is that their house went up by X% in the last 5 years. It completely ignores that housing is meant to keep a roof over your head and not be treated as a spreadsheet line item in your portfolio.
It's totally possible to have housing be "affordable" (i.e., condos, apartments in multi-unit complexes) and "a good investment" -- buildable land close to amenities/jobs/etc. rises in value, and so selling to a developer who will add more units on that land can net the owner a solid profit.
The contradiction appears when you want the same units (i.e., SFHs in perpetuity) to be both affordable and appreciate in value.
We really don't though. If we sell our house, we have to buy another, and they have risen in price also. Basically, buying into the home market allows you to just keep your head above water, you can't actually get rich unless you sell your house and move to a cheaper real estate market, or you decide to speculate in property outside of your primary residence.
The homeowners came out in droves to complain and fight it.
Real estate is how wealth building happens in America, but in the Bay Area and many other places we can't accept that we need entry level housing - condos that trade for what a house used to cost 20 years ago ($300-500k) because nobody wants development near them and nobody wants developers making any money
We need the State (CA) or the Federal government to come in and say to cities and counties, if you deny housing development that fits within your zoning guidelines, you will be putting some important funding source at risk. Otherwise the logjam will continue
California is largely a special snowflake where you can have your property value go to infinity and there is NO penalty to you (your taxes only go up a max of 2%, which is less than inflation).
It seems like a trend that voters are moving their states and jurisdictions to a similar tax structure. For example, Pittsburgh hadn't reassessed property prices from like 2012 (the bottom of the Great Financial Crisis) - and is being sued by many people due to this. And I think Michigan moved to a system where there's a cap in property tax increases as well (not sure).
Other than that - everyone else gets taxed more if prices go up.
Financially, it's obviously a winning trade. But most people are too strapped in cash-flow to prefer the trade.
The average person votes for restrictions like this because everyone wants to live in the special snowflake neighborhood that is walkable and quiet and close to everything, where they have space to park their car and play with their kids in the yard, and they give negative f#cks about anyone moving in and not being able to afford even a shoebox.
They own their house and they like about it, and the could not care less about your struggles.
It's less that they are James Bond villains wanting their property prices to skyrocket. That's a side-effect.
This is an extreme (and common) example of black-and-white vitriol on this topic. The reality is that it is very reasonable to highly desire a "neighborhood that is walkable and quiet and close to everything, where they have space to park their car and play with their kids in the yard", and often a person's dream is not even that whole set of features. This desire is especially reasonable if you have committed a lot of your life choices to achieving that dream. The dream is strong in part because this lifestyle was within reasonable reach across many parts of the country for so many decades that it became synonymous with the very name of our nation. On the spectrum of things a person can want, this is definitely not on the "selfish seeming" end where baser things like fame, wealth, and power reside. Just because it is becoming less and less attainable doesn't mean a typical human will suddenly switch to, "oh well, I won't fight for that dream any more then." Multiply that fighting spirit by ten for people who have already finally won the dream and see it being taken away. It will take a very long time for that cultural transition to finish, assuming we keep going in this direction. Economic pragmatism can only inform the human spirit so much.
That's one half of what you said. The other is how we feel about other people. You can chase or attain the dream and vote in a way that preserves the qualities of your community that you fought for, and still have sympathy for others who don't have that kind of community. There is no cognitive dissonance there. Critically, it's important here to understand that there is a difference between, on the one hand, new people wanting to live somewhere because of the current distribution of job opportunities, regardless of how much more dense it must become for more people to live there, and, on the other hand, simply needing quality housing, which is both a much more impactful and much more fixable problem.
Like you (almost) said, for the vast majority of the people you are criticizing, it has nothing to do with home value. People want to live and die in neighborly, safe, clean communities with what feels historically to an American like a "little bit" of room to exist, and not be forced out of their homes by large increases in tax. People really, really want those things. And that's a reasonable thing for a human to fight for, even if it's becoming less and less attainable as the image of the future continues to develop. I.e. you're letting the shitty situation provoke you into harshly antagonizing reasonable people.
No, it was not.
1920s Chicago was a gross polluted mess hardly anyone in the US would want to live in today. Ditto for any major city in the US.
By the 1980s you were already deep into the modern car-era dystopia where the highways had been built and barely anything, anywhere in the US was walkable (far less places than you have today).
In between then, you have White Flight - which you wouldn't have had if the city was this Utopian paradise where everyone could easily afford a quite, walkable, cute home right next to everything.
If there was some brief point in time where everyone could easily a afford cute Craftsman in downtown Menlo Park on a part-time salary at the meat packing plant, it was VERY brief.
Since 1985 - wages are up 3.2x and rents are up 4.9x. The major difference is that you used to be able to rent an apartment in the city for cheap, and now you can't, because the city used to be dangerous and gross, and now it's not.
There is a reason why "everyone" wanted to buy a house in a suburban development 40 years ago, and why "everyone" wants to buy something in the city now.
"everyone" is in quotes before some special snowflake says - but my parents liked living in the city 40 years ago! And I want to start my own communal farm in the countryside now!
Because everyone is a YIMBY until until they own a SFH house in a nice neighborhood and a proposal to plop a Section 8 high rise next door comes up. Much the same way that sanctuary cities are "pro sanctuary" until tens of thousands of "asylum seekers" show up. It turns out there there actually _are_ consequences to these progressive policies that _will_ impact your life negatively, and it's all fun and games until it's your turn. That's precisely why you see these seemingly contradictory policies that exist in ostensibly very progressive municipalities. People want the feel-good policies, they just don't want the negative consequences to affect them.
I would argue that is because you’re buying with the wrong intention. If you just want a place to live, rather than expecting insane home appreciation that we have seen in the last decade, then I doubt this would be as much of an issue.
Personally, I think it’s because Americans have an aversion to high density housing. “I don’t want anyone living on top of me” is a common refrain I’ve heard, along with wanting a backyard. This was feasible when we had population levels of the 1940s, but not today.
> This is definitely a HCOL area, and my rent, which I think is substantially under market value
But that’s exactly it, right? Because it’s under market value they don’t get enough revenue to do things like proper sound isolation. I live in a modern apartment where there is no rent control, and I have none of these problems.
And I think the rent you pay will pay for mortgage somewhere else because the relative income is low in that area. How much more do you have to pay to get a mortgage in a similar area?
You're focusing on the wrong thing here. What motivates someone to not one day unexpectedly become neighbors with a Section 8 building is not primarily about property values, but rather avoiding the increase in crime and blight that will follow.
I would argue that these people are not progressive, but rather conservative. Not in the sense of current political climate (doubt there are many Trumpies) but in the general political sense.
That's not wrong, in the most direct sense rent control policies are doing that, but it's not the whole story either (as it sounds like you know).
I think this is mostly a caricature. Certainly there are people who don't understand the economics, but I think there are very few people who are saying "no more housing". However, what housing do we build and for whom? Who gets to live there and who profits? We're in this broken system where:
- local politicians do some amount of lip service to the need for affordable or below-market housing, and then roll back requirements for affordable unit percentages
- projects that get approved often find some way to reneg on their initial claims about how much of a project will be affordable, or do weird shenanigans like arrange to get their affordable units put in some other building, possibly in a different neighborhood. We have big affordable projects landing in Treasure Island (there's no public transit to speak of, the soil is toxic, and it's a food desert). I don't have the receipts on this, but I've been told some of the affordable units on Treasure Island were to let buildings on Yerba Buena meet their requirements without actually having BMR units in the building. Cuz rich people don't want to use the same elevator as non-rich people?
- a bunch of the "affordable" units don't make any financial sense and are effectively inaccessible, e.g. b/c the HOA fees mean that someone who meets the income requirements can't cover the mortgage + HOA + taxes.
- we have, depending on estimates, >52k vacant units in the city, including many luxury condos, which I think makes people reasonably skeptical about the efficacy of "trickle-down" housing making stuff accessible to people at the lower end of the market.
... so a new building might need to have 12% affordable units (they'll round down) which they'll try to put in the worst place they can find, and people who meet the income requirements to buy them may not even be able to actually afford them.
Meanwhile, Parcel K in Hayes Valley, despite having been designated for affordable housing for literally decades, has seen no development and many who have historically claimed the YIMBY label advocate against building housing there, because the people who can already afford the neighborhood prefer it as an open space.
In that context, I think most new residential buildings are extremely ineffective as a response to the housing affordability crisis. If they're not good at housing people who can't already get housing, what are they good at? I guess in some years they make money, which is, after all, what they were designed for. A progressive stance of wanting to build housing that more directly meets the greatest need, rather than more luxury units that rich people no longer want to buy, seems totally appropriate.
Also, when the price of market-rate vacant condos drops below the per-unit construction cost for affordable units (which I've heard is often > 1M), the city should have some mechanism to buy them at market rate and convert them to BMRs.
They will point to the fact that they only own 2% of homes overall, but they purchased 24% of sold inventory in 2022 and 40% in 2023. That is huge.
https://www.washingtontimes.com/news/2024/mar/15/in-shift-44...
“When combining closings between both larger, private equity and smaller, independent operations, investors accounted for 44% of the purchases of flips during the third quarter, the data reveals.” https://www.businessinsider.com/big-investors-purchasing-mor...
The impact of investors on the larger market is much less clear: https://www.minneapolisfed.org/article/2024/rise-in-investor...
I found the original submission worthwhile because it moves beyond these sorts of discussions. I didn't view it as focusing on zoning, but on highlighting how our local democratic structures themselves contribute to these issues. It has implications that go beyond just housing.