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Housing markets: The spectre haunting San Francisco

economist.com

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Re: Housing markets: The spectre haunting San Francisco

#91

Post by tptacek »

mc32 wrote: post #80
rayiner wrote: post #73

Earlier quoted context omitted.

It's worth pointing out that the on-paper density of Manhattan is highly misleading. The daytime population of Manhattan on a weekday, including commuters and tourists, is 3.5-4 million people (versus about 1 million for San Francisco). The city is built to handle that amount of population, not the smaller resident-only population. I was in Manhattan right after Sandy, when the trains were still not running, and it l…

Comparison with Manhattan is unhelpful. I think better comparisons are Singapore and Tokyo. Bay area residents bristle st the idea of tall towers --specially given the geological faults running beneath. Given that, Tokyo's approach of midrises interspersed with highrises would probably be the best hope. We could at least double or triple the population in SF proper. It would help tremendously if surrounding cities al…

It helps Manhattan a lot that it has one of the world's best-engineered public transportation systems to connect it to the other boroughs and to Jersey.

The problem with construction booms in East and South Bay is that the transportation infrastructure in SFBA is barely keeping up with the population as-is, and however asymptotically it approaches "adequate" today, it is also one of the country's most poorly managed systems: it's underinvested, hemmed in by a dysfunctional political system, freighted with union, tenure, and retirement problems, and poorly maintained.

Re: Housing markets: The spectre haunting San Francisco

#92

Post by [deleted] »

gdubs wrote: post #83

A lot of focus on zoning and new construction limits when the housing crises comes up -- but what about foreign investment? I'd be curious to hear an argument over residency requirements. It's very appealing for a foreign investor to park their cash in real estate. The more that gets bought up and remains unoccupied, the tighter the market, and the more that prices continue to rise...

[deleted]

Re: Housing markets: The spectre haunting San Francisco

#93

Post by [deleted] »

mc32 wrote: post #14

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 wi…

[deleted]

Re: Housing markets: The spectre haunting San Francisco

#94

Post by andrewfong »

jmckib wrote: post #71
andrewfong wrote: post #51

Earlier quoted context omitted.

> The point they make in the article is that the rich are going to move to SF anyway That's what I'm actually unsure about. The article states it as a given without data or addressing regional effects. There are at least some well-to-do individuals who would purchase non-luxury housing in the North Bay, Berkeley, and the Peninsula rather than SF proper. You can obviously point to activity in places like the Mission a…

> That's leverage the poor have in extracting some kind of negotiated benefit, like better public transit, education rights, re-distributive taxes, and so forth. Blocking luxury housing from being built is bad for poor and rich alike. So I suppose the poor could use it as leverage, in the same way a bank robber could use a suicide vest as leverage, but is this really a good idea? :)

My point is that the poor lose either way, so yeah, it could be a good idea. Obviously a matter of degree though.

Re: Housing markets: The spectre haunting San Francisco

#95

Post by BurningFrog »

TheOtherHobbes wrote: post #58
BurningFrog wrote: post #42

Earlier quoted context omitted.

> you could even argue that [...] building more luxury housing in SF would actually increase rents locally You can argue a lot of things. But the relationship between supply, demand and prices is very thoroughly studied. Facts are known! I have never heard of such an effect happening in the real world, but then again I'm no expert. If anyone can provide a reference to an example, I am willing to be enlightened.

Facts are only facts if they're actually factual. There are numerous known exceptions to simplistic supply/demand arguments, including Giffen goods, Veblen status, lack of insight on either side, information arbitrage, and so on. It's not impossible some of them apply to city housing markets. What annoys me about arguments about housing is that housing is clearly a systems problem, not a one-or-two-variable optimisat…

> It's not impossible some of them apply to city housing markets.

Yeah, that's why I asked for real world examples.

But I still haven't seen any. If this actually happens, there should be real world examples that people would bring up in these arguments, right?

> Supply and demand storytelling doesn't even begin to come close to providing a useful model of that network.

I don't want to be rude, but isn't this just this standard anti science handwaving? "The world is far more complex than western civilization can grasp, therefore my gut feel must be the real truth!"

I mean, it's fine to say a model isn't perfect, but unless you have a better one to replace it with, or at least a clear example of something wrong, you're not really helping.

To me the SF housing market conforms perfectly with the supply and demand model: With a huge rise in demand, and supply being kept almost constant, it predicts the kind of strong price rises we've seen last few years.

Re: Housing markets: The spectre haunting San Francisco

#96

Post by adaml_623 »

gamblor956 wrote: post #90
gdubs wrote: post #83

A lot of focus on zoning and new construction limits when the housing crises comes up -- but what about foreign investment? I'd be curious to hear an argument over residency requirements. It's very appealing for a foreign investor to park their cash in real estate. The more that gets bought up and remains unoccupied, the tighter the market, and the more that prices continue to rise...

In DTLA alone, we have foreign investment (mostly Chinese and Taiwanese) to thank for the construction of nearly 2,000 new apartment units over the past 3 years (including units still under construction), with an additional 2,000 apartments and 1,000 condos planned over the next 5 years.

You realise that you didn't answer the OP question. There is no point having new apartments if no one actually lives in them.

http://www.theguardian.com/business/2014/dec/04/property-inv...

Re: Housing markets: The spectre haunting San Francisco

#97

Post by nerfhammer »

TheOtherHobbes wrote: post #58
BurningFrog wrote: post #42

Earlier quoted context omitted.

> you could even argue that [...] building more luxury housing in SF would actually increase rents locally You can argue a lot of things. But the relationship between supply, demand and prices is very thoroughly studied. Facts are known! I have never heard of such an effect happening in the real world, but then again I'm no expert. If anyone can provide a reference to an example, I am willing to be enlightened.

Facts are only facts if they're actually factual. There are numerous known exceptions to simplistic supply/demand arguments, including Giffen goods, Veblen status, lack of insight on either side, information arbitrage, and so on. It's not impossible some of them apply to city housing markets. What annoys me about arguments about housing is that housing is clearly a systems problem, not a one-or-two-variable optimisat…

> There are numerous known exceptions to simplistic supply/demand arguments, including Giffen goods, Veblen status, lack of insight on either side, information arbitrage, and so on.

> It's not impossible some of them apply to city housing markets.

If you think there is such effects you should make the case, rather than hint that they might exist.

> Supply and demand storytelling doesn't even begin to come close to providing a useful model of that network.

I think 95% of economists would take issue with that statement

Re: Housing markets: The spectre haunting San Francisco

#98

Post by nerfhammer »

switch007 wrote: post #43
ianbicking wrote: post #10

Earlier quoted context omitted.

Something I'm coming to learn: for any bureaucratic system, those who are most capable of taking advantage of the system are the privileged. Every time we try to arrange a benefit for the poor, infirmed, disadvantaged, disabled, we create a tool for the more privileged to advance themselves. The poor hit a rough spot and they can't hold onto their homes – only the well off can hold their property for decades. Even re…

It's as if somehow the privileged elite are actually in control!

It's just that thinking like this switches people into demonization mode rather than problem-solving mode.

Re: Housing markets: The spectre haunting San Francisco

#99

Post by pjdemers1 »

nullc wrote: post #36
caseyf7 wrote: post #24

SF has felt unbearably constrained before. Then 2001 happened and there were tumbleweeds on 101. The people that were left had dozens of friends that left. Tech is fundamentally stronger this time around, but not by that much. Everyone is talking about the supply and demand of housing, but we also need to consider the supply and demand of six figure jobs.

Presumably part of the reason for the ghost town effect wasn't just the demand shifted but because the landlords (or banks) wouldn't blink. There presumably always a price which would have mitigated the churn, but the market failed to find it fast enough to avoid the undershoot.

During the 2001-2003 bust, rents fell quite a bit along 101 and the south bay. For an average apartment, from ~4,000 to ~2,500. High end apartments fell from ~8,000 to ~3,500

Re: Housing markets: The spectre haunting San Francisco

#100

Post by BurningFrog »

andrewfong wrote: post #46
BurningFrog wrote: post #42

Earlier quoted context omitted.

> you could even argue that [...] building more luxury housing in SF would actually increase rents locally You can argue a lot of things. But the relationship between supply, demand and prices is very thoroughly studied. Facts are known! I have never heard of such an effect happening in the real world, but then again I'm no expert. If anyone can provide a reference to an example, I am willing to be enlightened.

Increasing supply lowers the mean price for the market as a whole . The laws of supply and demand do not rule out local changes that run contrary to the overall market depending on the nature of the new supply. To pick one particular example, Facebook's construction of 394 apartments next to its campus is actually driving up home prices in that part of Menlo Park because the apartments are nowhere near sufficient to…

Thanks for providing a real world example!

But I think the data can be interpreted in several ways.

If home prices are rising while apartments are being constructed, that doesn't have mean the price increase is caused by the construction.

For one thing, these units won't exist until 2016¹, so supply hasn't actually increased. It could also be that the area needs 1000 units to offset the increased demand. Or, as you imply, that the higher level of services make the area more attractive, rather than the added units themselves.

I would like to see actual studies by real economists to change my thoughts on this.

¹ http://www.mercurynews.com/business/ci_27717752/facebook-flo...

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