Housing markets: The spectre haunting San Francisco

I wonder how that cap-and-trade system would be gamed by different interests?

The city would have to zone for the growth, or trade for credits. But zoning isn't the same as construction. It's hard to imagine an alternative without putting the city in the construction business, but it opens up loopholes. The existing system of "housing elements" http://www.hcd.ca.gov/hpd/hrc/plan/he/ seems broadly similar, and leads to some strange planning decisions.

http://goo.gl/VMla1K

> "...it wasn’t a proud day for the council because they’re basically saying it’s a scam and a shell game, but they’re voting for it."

By San Francisco, I suspect they mean the San Francisco Bay area. While building in SF proper would decrease rents there, we can't have everyone who wants to move to the Bay Area live in San Francisco proper.

Keeping this in mind, SF proper has a natural and inherent economic rent. So there is only so much pressure more building could relieve in SF proper. That said, I don't think many people would have much issue with being able to afford a place in San Mateo, Mountain View or San Jose, even Fremont. The problem is the whole bay area is averse to build up. So the only current option for those not able to afford the housing, is to commute two hours each way --South from Gilroy, East from Livermore/Tracy, northeast Coco county, etc. or doubling, tripling up and sharing rent. But that's not an option for many families.

It'd be physically difficult to have more than 6 million people living in San Francisco, no matter what density we built. So there would be some limit, just not the current approximate 800 odd thousand. The solution is to have an integrated Bay Area plan to accommodate as many people as the area can support. We must also keep in mind the ecological impact of sustaining more people in a semi arid region so perhaps desalination plants to offset water demand. Most of all, a regional government capable of making hard decisions rather than one which gives in to boisterous interest groups (rent control, height & shade restrictions, prop 13, and the adversity to pubic transit.

Why doesn't someone raise a VC fund to build another Silicon Valley somewhere else? I personally don't think it involves that much magic. Just build a brand new giant university in a relatively cheap place where you've bought up a ridiculous amount of land. Hire a bunch of Ivy League professors to teach there and establish departments. Market heavily. Around the university, build tons of housing for students. Further out, mixed office parks and all the goodies that people like about SF... lots of selection of food, drink, culture, etc. and pay up front so that a reasonable percentage of this is there before anybody shows up. Throw in some partnerships with big name companies and some VC firms to locate some startups there.

Expensive, yes. Profitable, I would think so. Sign me up to live there when it's built. I'd love to work for a similar salary and save a good 30% of it per year (while still leaving healthy profit margins for the investors).

Note to downvoters: You do realize that the US government essentially provided this sort of start to Silicon Valley right, and that after that there were a couple now-billionaire real estate investors who provided a lot of the office space?

  The problem is the whole bay area is averse to build up.

Mostly true. However, that somewhat diminishes the degree by which SF especially is averse to construction, and more worryingly is averse to outsiders of all kinds - not just culturally misplaced Midwestern-ers - which is quite telling. Its a special brand of NIMBYism not found elsewhere.

The following comment is also from the Economist piece and sheds light on the kind of jaundiced eyes - I don't know what else one would call it - that long time SF residents view outsiders with. This sentiment is something I highly identify with and is rarely talked about, when the issue of SF housing is hotly debated.

The author is a Kansas City native who has moved to SF to wait tables :

  2) San Francisco can be elitist and exclusionary towards outsiders. Some 
  San Francisco residents look any non-Brooklyn part of the country with dismissal
  and/or disdain, creating a distinct form of self-defeating snobbery.

  I also felt this elitism when I would look at all the row houses in the Richmond
  and Sunset and how few where being torn down to build more efficient apartment 
  buildings. The message was, and is,- we have ours and we don't care about your 
  struggles.

  I also felt this excluding elitism when I would learn about legacy apartment
  dwellers who live in great locations and pay a fraction of the market price 
  because of government controls. The government kept rental prices artificially
  low for established renters and rental prices artificially high for outsiders 
  looking to move in and rent.

  The casual snobbery, the lack of new construction, and a preference for 
  established renters made the city feel unwelcoming to outsiders. Which is ironic,
  because most people I met in San Francisco were born and raised elsewhere.

[1] The rest of his comment is eminently readable too; I've truncated it because I felt I've hijacked this thread enough.

http://www.economist.com/comment/2360736#comment-2360736