The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing • Hacker News Board

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

#141

Post by lisper » Mon, Aug 15, 2016, 8:25 AM UTC

StanislavPetrov wrote: post #64

hkmurakami wrote: post #53

Earlier quoted context omitted.

Re:AAPL There's a market for $AAPL shares at $100+. Some people are happy paying this price. Some people think this is too high. There's similarly a market for Palo alto houses at $2.5m. Some people are happy paying this price. Some people think this is too high. When someone comes along asking AAPL to sell them shares of $AAPL for $65 when there's a market for them at $100+, you as the holder of other analogous $AAP…

You're missing the point. When there isn't a market for $AAPL shares at $100, but the government steps in to offer $100 to prop up the price of $AAPL stock, there is a problem. That is the issue with housing prices, stocks, bonds, debt, and everything else on the world stage. This central bank interference destroys price discovery and disrupts prices everywhere, including Palo Alto, even if they aren't directing bidd…

That, and also no one needs AAPL stock in order to live, but everyone needs housing. So the price distortions in housing affect society more severely than price distortions in AAPL stock.

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

#142

Post by ryporter » Mon, Aug 15, 2016, 8:30 AM UTC

ermterm wrote: post #35

As much as I appreciate all these articles expounding the plethora of issues stemming from housing in the Bay Area, I can't help but feel thoroughly discouraged. It seems that despite an abundance of chatter, we'll never see any change. If things were going to be fundamentally different, any time soon, we'd see indications of that. Instead it's just articles. Articles, on articles, on articles.

I think that California will eventually be forced to change as more and more people migrate to states to like Washington. The data only goes through 2010, but the Tax Foundation has a nice table for net migrations from state to state. [1] Also, anecdotally, try call up a moving company and inquiring about a move from the Bay Area to Seattle. The typical response I received was, "Oh, no problem. We have a steady stream of trucks moving people up there."

[1] http://interactive.taxfoundation.org/migration/

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

#143

Post by lisper » Mon, Aug 15, 2016, 8:35 AM UTC

jurassic wrote: post #121

I get depressed every time I think about the Bay Area housing situation. As half of an early-30s professional couple looking at our baby clock and anxious to start a family, I don't see how I can possibly provide a middle-class lifestyle for children while staying here. The choices are to join the bleeding edge of gentrification by moving into a slum like East Palo Alto or commit to severely degraded quality of life…

Wanting to live where you work is not "unreasonable millennial self-entitlement", but wanting to live in PA is. PA is one of the best places on earth. That makes it a scarce commodity. A lot more people want to live there than can possibly live there without fundamentally changing what makes it a nice place to live in the first place. If everyone who wanted to live in PA did it wouldn't be PA any more, it would be Westwood.

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

#144

Post by lpolovets » Mon, Aug 15, 2016, 8:49 AM UTC

jurassic wrote: post #121

I get depressed every time I think about the Bay Area housing situation. As half of an early-30s professional couple looking at our baby clock and anxious to start a family, I don't see how I can possibly provide a middle-class lifestyle for children while staying here. The choices are to join the bleeding edge of gentrification by moving into a slum like East Palo Alto or commit to severely degraded quality of life…

Not sure what part of the bay area you live/work in, but where have you been looking? I bought in Redwood City last year and the prices, while high relative to the rest of the country, are probably manageable for many professional Bay Area couples. You can get a decent 3 bedroom for $900k-$1.2m, which is probably ~$3k-$4k/mo for [mortgage + property taxes - tax breaks].

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

#145

Post by _ph_ » Mon, Aug 15, 2016, 8:49 AM UTC

We see the same problem here in Europe, maybe to a less extreme extend. We have a few economy hotspots with rapidly raising real estate prices. One fundamental problem is, that those people, who could change things have litte interest in changes. Homeowners like to see their property value rising and for cities life is easier without a growing population.

If one says: let free markets take care of that, the problem is exactly that there are no free markets. A free market would mean, that anyone owning a piece of land could build there without limitations. But zoning laws and building size regulations prevent exactly that. As a consequence, building permits have exploded in value like taxi concessions once did. They are no longer tied to the economy of building/owning a cab, but of a limited market.

Munich is one of the most expensive cities in Germany, but it is closely surrounded by farmland. The housing problem could be solved easily, if more of it were allowed for building. But as this happens only at a very small speed, land value can multiplay up to 100x when a building permit is issued. This multiplier shows how skewed the market is.

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

#146

Post by _ph_ » Mon, Aug 15, 2016, 9:18 AM UTC

sjg007 wrote: post #33

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…

The teachers, police and fire fighters all moved out a long time ago.

Isn't it a very unhealthy thing for a "community" to be protected and serviced by people who do no longer live there? Who get pushed out further and further from it?

A city, where you have separate classes of homeowners and all the service personal commuting in sounds pretty dystopian to me.

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

#147

Post by dredmorbius » Mon, Aug 15, 2016, 9:31 AM UTC

hkmurakami wrote: post #53

StanislavPetrov wrote: post #26

Earlier quoted context omitted.

>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…

Re:AAPL There's a market for $AAPL shares at $100+. Some people are happy paying this price. Some people think this is too high. There's similarly a market for Palo alto houses at $2.5m. Some people are happy paying this price. Some people think this is too high. When someone comes along asking AAPL to sell them shares of $AAPL for $65 when there's a market for them at $100+, you as the holder of other analogous $AAP…

People don't need AAPL shares to survive.

They do need housing. And food, and clothing, and a reasonable assurance of stability in their lives.

Start taking that away, and social fabric starts unravelling quickly.

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

#148

Post by crdoconnor » Mon, Aug 15, 2016, 9:53 AM UTC

ScottBurson wrote: post #40

StanislavPetrov wrote: post #26

Earlier quoted context omitted.

>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…

> If not for FED chicanery, housing prices would fall precipitously to meet real demand. Maybe in some places, but I don't think that would happen in Silicon Valley. As the article says, the population of Palo Alto doubles during work days. A lot of those people would rather live there than commute from wherever. Silicon Valley is not a creation of the Fed.

>Silicon Valley is not a creation of the Fed.

Silicon Valley itself isn't but the exaggerated SV house prices, exaggerated levels of VC funding and exaggerated valuations are all a function of the fed's ZIRP policy.

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

#149

Post by crdoconnor » Mon, Aug 15, 2016, 10:02 AM UTC

all2well wrote: post #99

bufordsharkley wrote: post #51

Earlier quoted context omitted.

The "technically correct" way to fix this would be to remove the investment potential of housing by taxing away land value (the grand old panacea of the Land Value Tax[0]). I think this is a good idea, but it's a disruptive one, and one unlikely to happen soon. But in the meantime, we might as well fix the policy that's in direct contradiction to this ideal: 1) Repeal prop 13. Full stop. 2) Intervene with exclusionar…

The thing about getting rid of prop 13 is you'd price out a lot of residents that bought a long time ago for something they don't have a whole lot of control over. If you thought that gentrification is bad now, churn in residents would got through the roof. Not to mention that you wouldn't solve the issue of shorter-term investments in land, or investments that include new constructions. Honestly, the real issue in t…

Repealing prop 13 would provide the cash needed to build more housing and infrastructure.

Landowners in SF are going to hate any effort to deal with the housing crisis because they profit so handsomely from it. They'll fight any attempt to fix it tooth and nail - with lobbying, bribery, public relations, etc. That's what the Howard Jarvis Taxpayer's Foundation and prop 13 was all about in the first place.

Really, the only solution to that is to single out the leeches and demonize them until they stop. There's no way they will ever be on our side and there's no way they will stop fighting while they still have the power to protect their entitlements.

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

#150

Post by dredmorbius » Mon, Aug 15, 2016, 10:12 AM UTC

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.

That's not the case, to a large extent, in California, thanks to Proposition 13.

The longer a property is held, the lower its assessed value relative-to-market. In cities with buy-an-hold populations (and Palo Alto tends to resemble this), that means a large part of the assessible property value is severely underassessed.

Mind: this means that surplus value of urbanisation goes to the property owner rather than to help provide city services.

The double-whammy is actually the opposite of what you suggest, and may well be a triple:

1. Prop 13 keeps property taxes down, meaning ...

2. There's an additional upside (and less downside) to inflating property values and ...

3. There's growing opposition to providing new and higher-density housing, as this would remove pressure from housing prices, and leave existing homeowners with a lower property value, itself useful for loan collateral, HELOC, etc.

Knowing long-time California natives who've been chased entirely out of the state, I'm starting to think the situation may become untenable. Or, perhaps, it's one more in line of economic population displacement, which began with Spanish missionaries displacing the aboriginal natives, American Anglos the Mexican successors to the Spanish, and now various new money, some domestic, some foreign, chasing out the 1950s - 1980s immigrant class, at least from the Bay Area.