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

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161–170 of 326 posts

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

#161

> the city passed a series of neighborhood plans in and around downtown that relaxed zoning and removed parking requirements, making it easier and cheaper to build. Wait, you mean deregulation isn’t just a republican talking point? And restrictive city (and state) governments were the problem this whole time???

I don't think anybody is pro or con "regulation" in the abstract. People disagree over whether specific regulations are good or bad.

Example: I live in DC and there's been recent controversy with the Historic Preservation Review Board essentially thinking solar panels are ugly. It's legit to have regulations regarding the appearance of homes if those neighborhoods want them, but at the same time is short-sighted to block solar panels. I'm sure you're for some regulations and not others, no reason to make this ideological.

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

#162
post #80

Earlier quoted context omitted.

> (1) Americans consider housing to be an investment. Apparently I'm the lone dissenter on this, but I think for many people this is a side benefit that they may hope for, but the primary objective is simply to own a home that they can live in and raise a family.

I always like to say that everyone is short a house, and your first property is just covering that short position. It's only properties after that first one that are investments.

That's quite catchy. But nonetheless, people can "cover" by renting or buying. And in particular, to the degree that mortgage payments are greater than the equivalent rent, one is indeed investing in the real estate market. This is often good, but it can actually turn out much worse than (say) simply parking the money in an index fund.

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

#163
post #30

Earlier quoted context omitted.

"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, t…

> So yea, we should be complaining that, not AAPL but financial instruments, are expensive! And to the point of this topic I think this contributes to housing woes, atleast in major markets where there's a very low rental yields. I can afford to rent in my area, but I can't afford to buy because (with an identical unit in the same neighborhood) my monthly costs would go up by $1000 or $1500 or so, even with 20% down.…

>(because on the contrary, if you could buy bonds yielding 5% why would you hold rental properties that yield less before maintenance?)

Because you're able to get a mortgage for lower interest than that?

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

#164

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. T…

Yeah, for one thing we have a chicken or egg problem with construction labor being expensive due to the high cost of housing.

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

#165
post #8

See also: Friday's “Don’t Blame Tech Bros for the Housing Crisis” column: https://www.nytimes.com/2019/11/30/opinion/sunday/housing-cr...

Real galaxy brain take there. “Housing prices have always fluctuated, therefore these fluctuations are unrelated to this other highly correlated factor”. Not that I disagree much with the substance of pointing out Prop 13, etc, but you should also definitely blame tech for loading an entire industry into a metro area.

> blame tech

It confuses the issue to anthropomorphize an industry category.

I don't think it's fair to blame rank-and-file tech workers. In today's scary economy, you can't blame anyone for entering a growth industry and taking a good job that's offered. Who wouldn't want a great salary, good benefits, a safe comfortable workplace, and a stable work-life balance?

The more interesting question is why are there so many tech jobs and why do they pay so well? Facebook had 35,587 full-time employees in 2018. What the hell are all of those people doing that Facebook can pay them so much?

My hunch is that this is a consequence of perilously low corporate taxes. Giant companies simply have more money than they know what to do with, so they are throwing it any place that seems reasonable. In particular, they're trying to build bigger and bigger moats to outcompete the other tech giants. The biggest moat of all is skilled humans since it takes so long to increas the supply of them. So they're throwing money at tech workers mostly to keep other companies from scooping them up.

Being essentially on retainer is great for the people who luck into that field, but it seriously screws up the economies of the few cities where it happens. Other job categories that aren't dominated by huge companies competing for each other's skilled workers don't end up driving up wages to the same degree so everyone else gets priced out.

I think the real answer is to start taxing these companies appropriately. You can look at their current behavior as wealth distribution that only trickles down to tech employees. If the wealth is going to be distributed, I'd rather some of it go to teachers, nurses, sanitation workers, and waiters too.

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

#166

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…

"Micro apartments", short term rentals, lower than hotel level of service. this is what we need. These housing restrictions raise the minimum affordable rent causing people to live with their parents or find roommates which is risky. And it's funny, because times have certainly changed and got stricter in regards to minimum livability. My mom's apartment in manhatten as a child had the bathtub in the kitchen, it's st…

> I don't need a window in my bedroom.

Until there's a fire. Some regulations actually make sense.

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

#167

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…

Many people who own houses don't want the value/price of their homes to go up, because that means property taxes will go up.

Not in California, thanks to Prop 13. Homeowners can have their cake and eat it too.

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

#168

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…

Multi-family buildings and commercial real estate are investments. Primary residences are not, and I think it’s actually quite rare for owners of a single family residence to view it as an investment the same way they view a 401k as an investment. They’re often been seen as a store of value and are definitely seen as a place to grow old in.

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

#169
post #80

Earlier quoted context omitted.

> (1) Americans consider housing to be an investment. Apparently I'm the lone dissenter on this, but I think for many people this is a side benefit that they may hope for, but the primary objective is simply to own a home that they can live in and raise a family.

I always like to say that everyone is short a house, and your first property is just covering that short position. It's only properties after that first one that are investments.

Another way I say it is that buying a house is a hedge against homelessness.

TBH I stole that from an article I read a while ago that I can't seem to Google now...

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

#170

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) developers can make what’s called “development margin” on the improvement of the site (fixing a house, building a multi family on top of a vacant lot, etc.). The margin is the (sale price - acquisition cost - building cost - planning cost) / (total cost).

This is separate from the YoY post property tax equity appreciation of a housing unit by simply buying and holding.

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