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The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

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Re: The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

#21

Post by maerF0x0 »

vtange wrote: post #5
hkmurakami wrote: post #3

It seems that we made a pact with the devil by positioning housing as an investment asset. By doing so, we've encouraged people to commit a very large fraction of their net worth into a rather illiquid asset, tying their financial fates to the future assessment of that asset. As a result, protecting the price and appreciation of this asset has come to overshadow the other crucial roles that housing plays in our socie…

It's a double whammy when you also consider that property taxes are generally based on real estate value. City and local governments are dependent on that income and have little incentive to see real estate values (and thus tax) go down.

Also governments get tax not on the value of a single property but the cumulative value of the properties (emphasis on the plurality) .

If my 1M house gets replaced with 10x 250k units the government has 2.5x its tax base. See how affordability and solid tax base can coincide?

Re: The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

#22

Post by twblalock »

toomuchtodo wrote: post #19
twblalock wrote: post #18

Earlier quoted context omitted.

> Why fight it when you can simply move work elsewhere? You can't really do that. You underestimate the powerful network effect Silicon Valley has on the tech industry. Almost all of the investors are here, and many of the world's best software engineers choose to live here and will not move elsewhere for work. There are only a few other cities that have a lot of software jobs and also a large pool of software talent…

Go remote. High quality engineers, project managers, designers, etc can be had all around the world, and if you're seeing a drop in team or employee performance from working remotely, you're not managing properly. Your argument about investors and quality developers only being in SFBA is a strawman. There are successful startups all over the world. Unicorns? Probably not, but that's a perception issue, not a quality…

> Your argument about investors and quality developers only being in SFBA is a strawman.

That was not my argument. I said most, or "almost all," not all. And that's true! Even the NYC startups have to come to the Bay Area to meet with VCs.

Re: The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

#23

Post by jhulla »

hkmurakami wrote: post #3

It seems that we made a pact with the devil by positioning housing as an investment asset. By doing so, we've encouraged people to commit a very large fraction of their net worth into a rather illiquid asset, tying their financial fates to the future assessment of that asset. As a result, protecting the price and appreciation of this asset has come to overshadow the other crucial roles that housing plays in our socie…

Housing is a taxpayer subsidized, inflation proof savings plan for the average citizen. It is also levered.

Open this chart of historical mortgage rates and click 'max': https://fred.stlouisfed.org/graph/?g=NUh

Since 1981, rates have declined and tax treatment has become more advantageous to existing owners.

With the current ZIRP/NIRP/QE regimes around the world, the leverage available to the average citizen has never been greater. That leverage has gone directly into housing.

If the leverage trends continue (see 'helicopter money'), housing (along with all other asset classes), will get further out of reach.

Re: The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

#24

Post by Retric »

maerF0x0 wrote: post #21
vtange wrote: post #5

Earlier quoted context omitted.

It's a double whammy when you also consider that property taxes are generally based on real estate value. City and local governments are dependent on that income and have little incentive to see real estate values (and thus tax) go down.

Also governments get tax not on the value of a single property but the cumulative value of the properties (emphasis on the plurality) . If my 1M house gets replaced with 10x 250k units the government has 2.5x its tax base. See how affordability and solid tax base can coincide?

Local government costs also go up as population increases.

Re: The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

#25

Post by twblalock »

diamondtrim wrote: post #20
twblalock wrote: post #12

Earlier quoted context omitted.

For those who aren't familiar with the Bay Area: East Palo Alto is a high-crime city. It is not the eastern part of the city of Palo Alto -- it is not even in the same county. It has such a high rate of crime that there were no grocery stores there for many years, because the shoplifting put them out of business. There are frequent gang-related shootings. And yet, it still costs more to live there than it does in mos…

Fun fact: Antarctica got its first ATM before East Palo Alto did. (Both in 1998)

I've been told that the huge Ikea-Home Depot shopping center in East Palo Alto was built on top of the most dangerous neighborhood in the city. Apparently it was contested gang territory, and the city used eminent domain to solve the problem by demolishing it and converting it to retail.

Re: The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

#26

Post by StanislavPetrov »

hkmurakami wrote: post #3

It seems that we made a pact with the devil by positioning housing as an investment asset. By doing so, we've encouraged people to commit a very large fraction of their net worth into a rather illiquid asset, tying their financial fates to the future assessment of that asset. As a result, protecting the price and appreciation of this asset has come to overshadow the other crucial roles that housing plays in our socie…

>It seems that we made a pact with the devil by positioning housing as an investment asset.

That was certainly a mistake, but the much larger mistake was made (and continues to be made) by the FED (and other central banks at the FED's insistence). FED efforts to prop up the housing and equities markets through QEinfinity, Operation Twist, the FOMC, and countless other FED mechanisms designed to prop up markets (and owners) at the expense of everyone else have led us to the situation we are in now. If not for FED chicanery, housing prices would fall precipitously to meet real demand. People would be able to afford a place to live and speculators would realize that homes are places to live and not investments.

>If I bought shares in AAPL at $50 (now $100+) and someone comes along asking that AAPL let them buy some shares for say, $65, I'm obviously not going to be happy since the value of my investment is under threat.

If nobody was willing to to pay more then $65 for your Apple shares, then in a free market, like it or not, your shares are worth only $65. Just because they were $100 at one point and you "arent happy" that they arent still worth $100, doesn't mean the government should step in and offer $100 when the market only offers $65. That's the problem we have now. In the fantasy world that the FED is trying to propagate they can continue to offer $100 no matter how low the actual demand for your stock is. In reality, all their efforts to prop up your stock have eliminated free markets, dried up "real" liquidity, and massively disrupted equity, bond, fx, and all other markets. The longer they try to extend and pretend the worse the problem gets. For example, the bank of Japan owns over 60% of all ETF's in Japan. 60%!! Things are not going to end well.

Re: The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

#27

Post by fpgeek »

vasilipupkin wrote: post #10
arkadiyt wrote: post #8

Earlier quoted context omitted.

"They can move elsewhere" is not a reason to not build more housing - it is reasonable (and desirable) for people to live in the city that they work in. If your argument is that they can pay 3,000 a month for the privilege of living 50 (!) miles away from work in Gilroy then that still doesn't do anything for the "teachers, police officers, and other working and middle class people" - you know, the people who actuall…

Indeed. but it's also unreasonable to expect that homeowners in a city should not be able to decide how much building they want to allow in their city. I mean, it's a Bay wide problem, why can't all the building be done right outside Palo Alto? why does Palo Alto have to shoulder the solution to this problem? I don't have a dog in this fight, but I certainly can understand current homeowners. They want to keep their…

> I mean, it's a Bay wide problem, why can't all the building be done right outside Palo Alto?

I mean, climate change is a worldwide problem, why can't all the cutting of greenhouse gas emissions be done outside the US?

Re: The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

#28

Post by Retric »

twblalock wrote: post #22
toomuchtodo wrote: post #19

Earlier quoted context omitted.

Go remote. High quality engineers, project managers, designers, etc can be had all around the world, and if you're seeing a drop in team or employee performance from working remotely, you're not managing properly. Your argument about investors and quality developers only being in SFBA is a strawman. There are successful startups all over the world. Unicorns? Probably not, but that's a perception issue, not a quality…

> Your argument about investors and quality developers only being in SFBA is a strawman. That was not my argument. I said most, or "almost all," not all. And that's true! Even the NYC startups have to come to the Bay Area to meet with VCs.

Having a founder fly out every week is still cheaper than building a startup in the Bay Area as soon as you leave the 3 people in one room stage.

The reason why it happens is the same reason why VC have historicly had negative returns; VC's as an industry make most of their money by convincing investors to part with there money not from actual returns. As such they like having a dog and pony show in the area while they try and fleece more people.

This sets up boom and bust cycles and many market distortions. As VC's still want positive returns it's just not their #1 goal.

Re: The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing

#30

Post by jhulla »

StanislavPetrov wrote: post #26
hkmurakami wrote: post #3

It seems that we made a pact with the devil by positioning housing as an investment asset. By doing so, we've encouraged people to commit a very large fraction of their net worth into a rather illiquid asset, tying their financial fates to the future assessment of that asset. As a result, protecting the price and appreciation of this asset has come to overshadow the other crucial roles that housing plays in our socie…

>It seems that we made a pact with the devil by positioning housing as an investment asset. That was certainly a mistake, but the much larger mistake was made (and continues to be made) by the FED (and other central banks at the FED's insistence). FED efforts to prop up the housing and equities markets through QEinfinity, Operation Twist, the FOMC, and countless other FED mechanisms designed to prop up markets (and o…

Get outta here with your free markets. In free markets, those that lose big get up off the table. In our TBTF markets, the bigger your loss, the greater the odds that your national Treasury will backstop you.

Have you helped out your local banker today?

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