Good news - experimental verification of the law of supply and demand!
I'm sure the analysis is welcome though and I hope policy makers try to learn from this. We could densify most american cities quite a lot more.
I'm sure the analysis is welcome though and I hope policy makers try to learn from this. We could densify most american cities quite a lot more.
You can look at other neighborhoods such as palms in Los Angeles, which has the most aggressive housing build out in all of California. Median rent has increased - sometimes more housing can create more demand
Or in other words, is there any econometric evidence that building housing increased rents in Palms, or could we be confusing correlation with causation?
That's not science, it's dogmatism
Which is self interested. The paradox is renters being turned against their own interests by large landlords pitching anti-gentrification.
In a system where those with more capitol have more power, homeowners are the powers that be. They're more likely to vote and have more money for discretionary spending - like donating to politicians.
The greatest inequality difference is that between those with housing assets and those without. Yes the 1% are a problem but they are not the reason that young people can no longer afford housing without generational wealth, that's all due to the seemingly normal guy that's enforcing a class system based on home ownership versus non-ownership.
- many new building being very ugly (side note: ugly buildings no matter how green get torn down and are this not as green as building that are beautiful)
- increasing density bringing increased crime
- increased density actually turning out to be less efficient on a per capita tax basis (this is always wild to me, cities should be spending much less per capita than rural areas but arent)
Although it's not just NIMBY. There's a million rules about building housing and developing land from zoning, environmental, indigenous, or social ends. Which are arguably luxury self-benefiting priorities for people who already own houses. Plus all the activists who think the government can both make development extremely expensive via endless rules while affording to fund mass government housing at the same time.
Namely, when new housing is added, there are infrastructure considerations and corresponding expenses that translate to higher taxes. Civil planners have formulas for how much the student population will grow based on the housing density/type.
Schools built on parcels based on 1970's population now have to expand to fit more students or the township has to find and acquire new land to build a new school.
That requires raising taxes for bonds. A new school is several million dollars and then hiring staff. NJ has a legal limit of 25:1 in elementary. Add 100 students and you add at least 4 teachers that have to be supported by taxpayers. Expand the lunchroom, build a new gym, purchase new computers, all the ways up the chain for the next 12 years.
If you ever look at your municipal tax bill, you will find that education is going to be the biggest expense by far.
On top of that, roads may need to be widened. New roads have to be built and maintained. Municipal staff may need to increase.
Some services may actually benefit from economies of scale (waste collection). Most will not.
Imagine you bought a house in 1970 (i.e. my development) and you were paying $1000 annual property taxes. Now your property taxes are $12000 because of the increased spend on infrastructure and increased assessed value. You're a retiree and you've paid taxes for 2 or 3 generations of students. You live on a fixed income and your property taxes are a higher and higher proportion of your income. What do you do? Mortgage the house to pay taxes to fund more growth?
The problem is exacerbated because obviously people want to go where the good schools are, where it's low crime, good infra, easy access to transportation. That drives demand and puts pressure on services while also raising taxes to pay to fund municipal bonds for growth.
End of the day, my personal belief is that housing is a right. But I can also see why middle class folks, retirees end up pushing back when they get the bill in the form of increased property taxes. I've lived in my house 10 years now and my taxes have gone up ~$3500 in that time. Every school in the township had to expand to meet population growth with the additional units. Sure, my home value went up as well, but I can't cash that out. I can't imagine how it feels for retirees that are living in a family home here.
In my experience, most retirees have more rooms/land than they can make productive use of. I feel that there should be some pressure for them to sell that property to families who can use it more productively. That's the stick, but I feel there needs to be a carrot, where builders are constructing homes that these retirees will be drawn to. There are retirement communities in the southern US like "The Villages" https://www.thevillages.com/, but as the population here ages, we need to build these everywhere so retirees can move into the communities that meet their needs without being forced to leave their cities.
> I feel that there should be some pressure for them to sell that property to families who can use it more productively.
But there's nuance here, too: families. My wife's side is a big Italian family. Everyone's here. What do you do if your grand kids are all here? How do you support your adult kids and help them achieve financial security? Or leave and secure your own? Neither is an easy choice.
> There are retirement communities...
If the demand for housing is high, zoning fees can also be used to make developers pay for the infrastructure upfront. If done properly, their impact on housing costs should be minimal, as they mostly extract some of the added value created by the zoning from the landowner.
> If the demand for housing is high, zoning fees can also be used to make developers pay for the infrastructure upfront...
The developer for sure does not want to build a school and even if they build the school, they are not going to be paying for the teachers that are going to need to support the increased student body for every decade into the future; that's on the taxpayers.
More fundamentally, this is related to the principle of subsidiarity that is occasionally popular in the EU. Everything the government does should be done by the lowest level that can reasonably do it. And to enable that, local and state governments should have sufficiently wide tax bases.
At the state level, we have housing laws that mandate ratios of affordable housing. Many townships faught this in court (and lost) because schools and infrastructure are capital projects. Bonds are secured today against some future tax base.
Don't forget that developers and investors are voters too (and lobbyists) who are going to vote against the municipalities.
My point: it is a nuanced situation and not as simple as "Got mine FU" or "just build more". Build where? How do you pay for it fairly?
My solution was to widen the tax base to make the system work better.
The incentives around property taxes do not support significant new construction. If housing becomes more affordable, tax revenue per capita goes down, while local government spending stays the same or increases. Local governments should therefore not rely too much on property taxes.
Income taxes, on the other hand, are good. You are taxing things you want to grow, and you get more tax revenue when your policies are good to the people. Local governments might want to collect more income taxes and less property taxes.
When the demand for housing is high, zoning creates significant windfall to the landowner. Some of this windfall can be taxed to support infrastructure construction.
and if anything you taxes will go down because they are now spread across more households.
These are big capital expenses. My property taxes have never gone down, even as my township has expanded.
Part of this is that taxes are calculated on assessed value. Where I'm at, assessed value is a combination of lot size + structural improvement. Tax bill is assessed value * rate. Assessments have never gone down. The more people want to move here, the more values go up, the more capital projects need to be undertaken before new tax payers are contributing. It may take years to build a new development, but the multi-million dollar budget to expand the school and staff up teachers has to happen in tandem, before the new tax base exists.
My lot is from the 70's. It's huge. New lots are significantly smaller. Townhouses and apartments are very dense. New development does not yield savings in taxes in practice unless it is commercial development.
A big piece of farmland contributes taxes, but requires little in services. Convert that 50 acres into 50 units and now you need much more services and infrastructure compared to the 50 acre farm.
You underestimate just how much schools and teachers cost. Those 50 units might add 50-100 students. Capital projects start even before the units finish to prevent overcrowded schools. Contracts are signed for garbage and snow removal if 5 of those units are occupied or 50.
Housing growth is necessary, but it should also be spread out.
[0] https://www.pbs.org/newshour/politics/watch-trump-says-he-wa...
There are a lot of people with some power, which they use as they see fit. It all adds up to marginal and pseudo-random changes, as the state drifts toward... wherever it's going.
In any case, in America we often treat democracy as rule by the plurality anyway, it is often not a majority.
"Density at all costs" ignores a huge set of tradeoffs that are equally as damaging to a city. Things such as urban form, street experience, long-term adaptability, integration with existing fabric, economic resilience, etc. These are the things that make a city work in the long term.
I’m a big proponent of building more housing. But a lot of it is being doing in very short sided ways that lead to huge externalities.
I have no idea what any of this is supposed to mean as a negative to people being able to walk around their neighborhood for essentials. It sounds like a classic vague "what about culture" argument that can't be explained.
My hometown has had a huge push to add more housing to make things more affordable. What happened? Rents went down for a couple years then right back up. Except now the city has a bunch of more soulless condos and is horribly congested.
Sometimes preserving things and keeping them nice and simple even if it’s costs a bit of a premium is better.
So there were a bunch of people who wanted to live there and now can.
The first bit is a taste thing; obviously lots of people view modern sprawl as "soulless" too.
But the latter point is just plain wrong. Dense housing IMPROVES traffic congestion and shortens commutes, always, everywhere, markedly. And it's for a bleedingly obvious reason: pack people in closer together and they don't have to travel as far to get where they're going. QED.
What you're imagining is some kind of fantasy hometown, which never increased in population and whose economy never developed. I mean, it's true. Forgotten ghost towns have very little traffic and quirky soulful architecture, c.f. Detroit. Everyone agrees that's a bad thing, though.
You are conflating things, adding more people to an area increases congestion, period. Having dense housing vs not dense housing is better for congestion IF the people are already there.
>What you're imagining is some kind of fantasy hometown, which never increased in population and whose economy never developed. I mean, it's true. Forgotten ghost towns have very little traffic and quirky soulful architecture,
It is a highly desirable area, there is no issue with the economy, it will continue to be desirable if we don't destroy it. The "growth always good" crowd is pretty nuts in their views
Yes, but so what? That's tautological. "Adding more people" isn't an independent variable, it's the economic ground truth over which we're trying to optimize.
The point is that if you need to build N units of housing to match your M added economic activity, building them denser leads to less congestion.
I mean, duh. This really isn't a complicated idea.
Again, you're imagining a single community divorced from inconvenient ideas like "population growth" or "economic development" (and even going so far as to conflate those with "destruction").
Well, sorry. It's desirable because it's developing. You don't get to change the minds of all the people that want to live there, all you can do is help them decide where to live.
no.... it's not... what an incredibly naive take. Why don't you just leave out every nice small town in a beautiful location. "Who cares about keeping thing beautiful amiright??"
If you want soul move to New Orleans. Meanwhile people need comfortable places to live that don't make them indentured servants for the rest of their lives. I'll take a neighborhood with walkability and density over an old drafty brick building with no grocery stores any day.
No one ever said "no downsides", no one said "infinite growth" and the comment I replied to was just talking about standard apartments being "souless".
I've been racking my brain trying ti figure out what it looks like for US cities to pull out of the housing crisis, and I think it's either going to take about a generation, or there will be some catastrophic event (Great Depression II, WWIII) that changes the political landscape so drastically that nobody can really oppose housing anymore.
Read the article and the peer comments here; Austin’s boom came about from reducing regulatory constraints.
Nationally remove the artificial restrictions and the supply side will fix itself.
https://www.youtube.com/watch?v=LVuCZMLeWko
As renown corporate welfare recipient Bezos would say: "your margin is [our] opportunity."
If the only thing stopping development is that rich developers want to make more money, then maybe we should get rid of the rich developers and let the public decide what to build. It couldn't be worse and it'd be 20-60% cheaper too.
It could work, but both Singapore and Austria have less than 10 million people amd have a residency system where you just can't come in from the outside and get your subsidized housing in Vienna or Singapore. Singapore doesn't extend subsidized housing to its foreign residents, even permanent residents, and they make up 40% of the population!
Vienna is a bit better, as it applies it to all EU citizens who are resident in Austria, but you have to have lived at the same address there for 2 years, you just can't come in and claim one.
Last time I did the back-of-the-envelope math, financing permitting delays in San Francisco added 10% to the cost of new housing [1]. (Note: not the cost of permitting. Just the cost of financing the delay.)
This is deadweight loss that everyone in the transaction wins from eliminating. One could absolutely see lower prices and higher developer margins if this waste were cut.
Nobody ever thinks of the poor banks!
I thought about that. But a bank would rather lend in lots of high-confidence, low-duration deals than a small number of high-margin deals. The only people who lose when housing is built are incoment landowners. Because prices go down.
For the everyman banks not winning is catastrophic.