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Oakland shows how to expand housing supply: tell developers they can build homes

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Re: Oakland shows how to expand housing supply: tell developers they can build homes

#21
post #12

How much do you think it will affect housing prices? Is there a model that can predict the effect? I'll be surprised if it helps a lot. Demand seems infinite.

> Is there a model that can predict the effect?

Yes, the model is called supply and demand. When you increase the quantity supplied, the only way the extra quantity can be sold, is if the price drops. If you increase the quantity supplied without reducing the price, the extra units will never be sold. Why would they... anyone who was willing to pay the previous price, would have already done so and will already have a home in SF/Oakland. The only way to fill the new units is to entice new residents who aren't willing to pay the previous price point.

Re: Oakland shows how to expand housing supply: tell developers they can build homes

#22
post #10
post #6

Earlier quoted context omitted.

Don’t many people love cities specifically because of density and the diversity of opportunities that usually follows?

There's a trade-off though, if it comes at the cost of smaller and worse living accomodation for themselves. And you have to be careful that the transport and other infrastructure can keep up. Transport in particular always seems to get ignored.

Right but lets focus on one problem at a time. With more people in the city, you have a bigger tax base, meaning more tax revenue, meaning you can spend more to improve infrastructure like public transit.

The population of SF has only increased by 111K (14%) in the last 20 years. Imagine what we could do with twice as many people contributing tax revenue?

Re: Oakland shows how to expand housing supply: tell developers they can build homes

#23
post #7

Earlier quoted context omitted.

Not being able to afford a house decreases quality of life infinitely more than some increased density.

If you can't afford a house there maybe you should consider moving somewhere more affordable.

Neither of you are incorrect as it's about preferences, but the real problem is one of balance.

A city needs all kinds of people. Affordability and density needs to be moderated so that there's enough diversity in families and employment to function well. Also some of the most affordable areas in the USA are also the most sparse.

Re: Oakland shows how to expand housing supply: tell developers they can build homes

#24

The whole topic of conversation around housing affordability is backwards. Specifically, housing affordability is 100%, entirely, a problem of artificial constraints on supply by city councils. (1) Americans consider housing to be an investment. An investment is only an investment if you expect a positive return over time. We generally want that investment to match or exceed inflation. (2) That's antithetical to the…

Two thoughts

1) Isn't a developer also making an investment when they build these high as hell micro-apartment apartment buildings?

2) How do you avoid a race to the bottom in terms of housing quality when you allow said micro-apartments? Do we want a culture where the poor are living in barely livable wage slave pods while the rich are living in abundant villas?

I'm all for affordable housing but it seems too nuanced to allow market forces to take care of it. I think the correct solution revolves around government subsidized/funded housing but that's a whole other can of beans.

Re: Oakland shows how to expand housing supply: tell developers they can build homes

#25
post #7

Earlier quoted context omitted.

If you can't afford a house there maybe you should consider moving somewhere more affordable.

Neither of you are incorrect as it's about preferences, but the real problem is one of balance. A city needs all kinds of people. Affordability and density needs to be moderated so that there's enough diversity in families and employment to function well. Also some of the most affordable areas in the USA are also the most sparse.

> A city needs all kinds of people to function and affordability and density needs to be moderated so that there's enough diversity in families and employment to function well.

I don't necessarily see how one follows the other. So long as there's diversity in, for instance, bedroom count on units, what difference does it make if the units are stacked horizontally as they are today or vertically? To be clear, I'd love your thoughts, I'm not sure myself.

> Also some of the most affordable areas in the USA are also the most sparse.

Indeed because building up is expensive, so it requires demand. There's no demand in the middle of Idaho even comparable to what SF has.

Further, I'm proposing scrapping constraints on new development, not taking peoples 2 story Sunset units via eminent domain and throwing up SoMa style 50 story skyscrapers.

I think it's not an unreasonable place to start by doubling all height restrictions across all of SF. No more of this prime real estate on 17th and Brannan (the SFMTA bus lot redevelopment) getting wanged by a 4 story cap. That should be 20+ no question.

Re: Oakland shows how to expand housing supply: tell developers they can build homes

#26

The whole topic of conversation around housing affordability is backwards. Specifically, housing affordability is 100%, entirely, a problem of artificial constraints on supply by city councils. (1) Americans consider housing to be an investment. An investment is only an investment if you expect a positive return over time. We generally want that investment to match or exceed inflation. (2) That's antithetical to the…

The problem is not 100% supply. Supply is just sub-component. In this case Oakland had been zoned for many of those buildings for decades now (Jerry Brown had a 10,000 homes plan). I'm moving in to a building that was entitled in 2007 but didn't open until a few months back... Locally developers couldn't get projects to pencil out. After SF hiked a bunch of rates Oakland suddenly became financially viable for them.

There are also the issues of tenant protections (most of the unsheltered people in Oakland lived here better living on the streets, and they still have jobs here) and making sure low-income affordable housing is built.

Re: Oakland shows how to expand housing supply: tell developers they can build homes

#27

The whole topic of conversation around housing affordability is backwards. Specifically, housing affordability is 100%, entirely, a problem of artificial constraints on supply by city councils. (1) Americans consider housing to be an investment. An investment is only an investment if you expect a positive return over time. We generally want that investment to match or exceed inflation. (2) That's antithetical to the…

I agree with what you’re saying, but that’s overly simplistic.

Infrastructure costs increase as you increase density. Charging an appropriate fee for new housing rather than limiting the growth is an efficient solution, but current methods allow for local corruption.

That’s just one of the hidden reasons for our current system. Another, is most people want to live as far as possible from poor people.

Re: Oakland shows how to expand housing supply: tell developers they can build homes

#28

The whole topic of conversation around housing affordability is backwards. Specifically, housing affordability is 100%, entirely, a problem of artificial constraints on supply by city councils. (1) Americans consider housing to be an investment. An investment is only an investment if you expect a positive return over time. We generally want that investment to match or exceed inflation. (2) That's antithetical to the…

There are important things to regulate to make housing affordable, and as others said rent control is not really one of them. What needs to be controlled is where information asymmetry exists.

Eg. quality control, you can't post-inspect a house easily, much less a high-rise. Also usually with new real estate development there's always some fraud-ish scheming going on. Not just with the safety, but regular consumer protection shouldn't be left to the courts, because that leads to a lot of wasted energy. (So anything from the hardcore crimes of developers taking the money and disappearing to developers missing the completion date and not compensating the buyers, because "sue me", and the obvious after handover warranty.)

Rent control is almost completely orthogonal to the whole problem. If lending becomes impossible people will just become owners and they will pay to banks. The problem is that it costs sooo much to build new units. (Because idiotic density limits.)

Re: Oakland shows how to expand housing supply: tell developers they can build homes

#29

The whole topic of conversation around housing affordability is backwards. Specifically, housing affordability is 100%, entirely, a problem of artificial constraints on supply by city councils. (1) Americans consider housing to be an investment. An investment is only an investment if you expect a positive return over time. We generally want that investment to match or exceed inflation. (2) That's antithetical to the…

Two thoughts 1) Isn't a developer also making an investment when they build these high as hell micro-apartment apartment buildings? 2) How do you avoid a race to the bottom in terms of housing quality when you allow said micro-apartments? Do we want a culture where the poor are living in barely livable wage slave pods while the rich are living in abundant villas? I'm all for affordable housing but it seems too nuance…

1) Isn't a developer also making an investment when they build these high as hell micro-apartment apartment buildings?

They are but they build and then sell off, developers develop, they tend not to own those units long-term. I believe this to be true regardless of market direction. Generally in the case of condos for sale, developers manage the complexes for a couple of years until enough units are sold off and the HOA takes them over.

If someone wants to run the whole building for rental, they can certainly still do that. You would just factor in that your rent would grow with inflation instead of geometrically when you're planning your building.

2) How do you avoid a race to the bottom in terms of housing quality when you allow said micro-apartments? Do we want a culture where the poor are living in barely livable wage slave pods while the rich are living in abundant villas?

Indeed, that is a risk, however the current solution of not providing these folks a place to live is a punt.

Re: government operation model, I actually agree with you wholeheartedly. Singapore's model where something like 80% of housing is built and managed by the HDB and 20% if totally free-market has worked very well there. I didn't want to bring that into the already-long-enough post as I felt it might distract from my point shrug. [1]

[1] https://en.wikipedia.org/wiki/Public_housing_in_Singapore

Re: Oakland shows how to expand housing supply: tell developers they can build homes

#30

The whole topic of conversation around housing affordability is backwards. Specifically, housing affordability is 100%, entirely, a problem of artificial constraints on supply by city councils. (1) Americans consider housing to be an investment. An investment is only an investment if you expect a positive return over time. We generally want that investment to match or exceed inflation. (2) That's antithetical to the…

"We don't talk about the lack of affordable AAPL shares do we? That's insane, it's an investment, we want it to go up. The less affordable, the better!"

I've always found our obsession with stock price amusing. It's the dividend that technically matters (and, with risk and growth potential, what ultimately should be setting the stock price).

When you sell your stock at a gain it just means that, while you owned it, the expectations of future dividends has done up. You're just bowing out of the future returns to enjoy them today.

So, seeing how people need retirement funds as well, expensive [0] AAPL means people can't afford to fund their retirement.

[0] What does "expensive" mean when shares are, individually, kinda cheap? First the fees to play are very high, unaffordable to low-income people. Second, it means that returns, interest rates, are low (price = return / interest rate as a quick rule of thumb).

So yea, we should be complaining that, not AAPL but financial instruments, are expensive!

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