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To solve affordability crisis, Bay Area housing stock must grow 50% in 20 years

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Re: To solve affordability crisis, Bay Area housing stock must grow 50% in 20 years

#51

Post by epistasis »

conanbatt wrote: post #29
epistasis wrote: post #21

Earlier quoted context omitted.

I think it's becoming increasingly apparent that the Bay Area needs a regional government that can supercede tiny municipalities. Wise governance is impossible with lots of small outposts preventing sensible planning for the region, because they are only interested in advancing short-term interests of a small number of people. Democracy does not function well in that environment. If the Bay Area doesn't step up to do…

The housing situation is a California wide problem. The bigger government is the first one messing up housing.

I agree that it's a California wide problem, though I think the cause is slightly different in different parts of the state. What do you mean by:

> The bigger government is the first one messing up housing.

Do you mean that State policies are the ones messing up housing? I think that Prop 13 and CEQA get named sometimes for stopping housing development, but a far bigger hurdle are the local zoning policies, and the veto power of local communities.

Are you suggesting something like a state-wide policy of by-right development for plans that meet local code and zoning regulations? That would definitely help reduce building costs, but it won't be enough to allow the amount of housing that is suggested in the original article.

Re: To solve affordability crisis, Bay Area housing stock must grow 50% in 20 years

#52

Post by nwah1 »

jartelt wrote: post #47
conanbatt wrote: post #28

Earlier quoted context omitted.

Henry George would shed a tear. I do believe that the thing that would change the housing stock situation for SF is to remove sales taxes and add land value taxes. Just that change alone will make workers and renters richer overnight, and would change the anti-development mindset of owners quite a bit, considering that low-dense units will pay the highest amount.

Wouldn't a decent portion of the land value tax just be passed on to renters in the form of higher rent charged by their landlord?

No, because the supply of land is perfectly inelastic, and it already commands the highest price that can be obtained.

"A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground."

- Adam Smith, Wealth of Nations

"It is in vain in a Country whose great Fund is Land, to hope to lay the publick charge of the Government on any thing else; there at last it will terminate. The Merchant (do what you can) will not bear it, the Labourer cannot, and therefore the Landholder must: And whether he were best do it, by laying it directly, where it will at last settle, or by letting it come to him by the sinking of his Rents, which when they are once fallen every one knows are not easily raised again, let him consider."

- John Locke, "Some Considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money"

Re: To solve affordability crisis, Bay Area housing stock must grow 50% in 20 years

#53

Post by raiflip »

rb808 wrote: post #8

Because big dense cities like NY are affordable?

I have a friend who recently bought a house with his fiancee in a decent neighborhood for 250k, which for more rent-minded folk corresponds to monthly payments of 1180. Add in maintenance and the monthly payments increase to about 1600 a month, or 800 a person. Using a standard affordability modifier of 40, and a single person could afford the house on a 64k income, or two people with 32k each. Given the median income in the US is 59k thats very affordable.

The commute into Manhattan is about an hour, while not ideal its not that bad considering you're sitting on a train for that time, and its more of a self-inflicted wound given if NYC got its act together we could have much better public transportation. On top of that if you can afford it you can move closer by for a faster commute, and most people on hacker news are probably at least decently paid tech professionals.

Personally I have about a 20 minute commute and can easily afford the place I'm staying at. Generally if you're not dating/married you live with roommates, and if you are married then you have two incomes. I know other tech professionals in NYC that can afford their own place as well.

Re: To solve affordability crisis, Bay Area housing stock must grow 50% in 20 years

#54

Post by a_c_s »

rb808 wrote: post #8

Because big dense cities like NY are affordable?

NYC was quite affordable when nobody wanted to live there (like the 1970's). Once the city was 'cleaned up', demand for housing has increased and, as much as people bemoan all of the construction, housing units haven't matched pace.

The result has been predictable and inevitable when supply is growing slowly and demand is growing rapidly: increased prices.

Re: To solve affordability crisis, Bay Area housing stock must grow 50% in 20 years

#55

Post by snidane »

jartelt wrote: post #47
conanbatt wrote: post #28

Earlier quoted context omitted.

Henry George would shed a tear. I do believe that the thing that would change the housing stock situation for SF is to remove sales taxes and add land value taxes. Just that change alone will make workers and renters richer overnight, and would change the anti-development mindset of owners quite a bit, considering that low-dense units will pay the highest amount.

Wouldn't a decent portion of the land value tax just be passed on to renters in the form of higher rent charged by their landlord?

The landlord can try. But when you introduce land tax and all those vacant apartments and lots come to market suddenly, I'd wish him luck with succeeding to shift the tax burden onto renters.

It's known that land tax together with similar antimonopoly taxes can't be shifted. What's nice is that not only this type of tax doesn't slow down the market, but on the contrary makes it more effective. Essentially without rent capture (antimonopoly tax) there is an open sink in the economy, so no matter how hard people work, all this value exits out of the economy, mostly in form of parked money in real estate.

As George predicted, all technological progress will just yield higher real estate prices and everybody will be working even harder than before.

Re: To solve affordability crisis, Bay Area housing stock must grow 50% in 20 years

#57

Post by mywittyname »

frgtpsswrdlame wrote: post #13

If this is true then I think the Bay will need to let go of it's ideas towards rezoning. Deregulatory zoning adjustments just won't be able to stimulate this level of building. Why not just build out and do greenfield development but put some mandatory density requirements in place for new building?

I think it's time for eminent domain. Local landowners are using their wealth and political influence to deprive others of shelter for personal profit.

The federal government forcing the sale of land for high-density development would probably be enough to spook landowners into seeing reason.

Re: To solve affordability crisis, Bay Area housing stock must grow 50% in 20 years

#58

Post by jartelt »

snidane wrote: post #55
jartelt wrote: post #47

Earlier quoted context omitted.

Wouldn't a decent portion of the land value tax just be passed on to renters in the form of higher rent charged by their landlord?

The landlord can try. But when you introduce land tax and all those vacant apartments and lots come to market suddenly, I'd wish him luck with succeeding to shift the tax burden onto renters. It's known that land tax together with similar antimonopoly taxes can't be shifted. What's nice is that not only this type of tax doesn't slow down the market, but on the contrary makes it more effective. Essentially without ren…

Thank you for the explanation! I am still not sure I believe that what you predict would happen to a large degree in the Bay Area.

I agree a land tax would push the owners of vacant lots to develop them. But, the NIBMY owners of single family homes will still fight against the building of new apartment complexes and try to constrain housing supply (to prop up their property values). I certainly would hope that more apartments would be built though!

Re: To solve affordability crisis, Bay Area housing stock must grow 50% in 20 years

#59

Post by mywittyname »

nwah1 wrote: post #52
jartelt wrote: post #47

Earlier quoted context omitted.

Wouldn't a decent portion of the land value tax just be passed on to renters in the form of higher rent charged by their landlord?

No, because the supply of land is perfectly inelastic, and it already commands the highest price that can be obtained. "A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground." - Adam Smith, Wealth of Nations "It is in vain in a Country whose great…

I think you should cite actual research rather than thought-experiments from 18th century philosophers.

Re: To solve affordability crisis, Bay Area housing stock must grow 50% in 20 years

#60

Post by conanbatt »

epistasis wrote: post #51
conanbatt wrote: post #29

Earlier quoted context omitted.

The housing situation is a California wide problem. The bigger government is the first one messing up housing.

I agree that it's a California wide problem, though I think the cause is slightly different in different parts of the state. What do you mean by: > The bigger government is the first one messing up housing. Do you mean that State policies are the ones messing up housing? I think that Prop 13 and CEQA get named sometimes for stopping housing development, but a far bigger hurdle are the local zoning policies, and the v…

All the cities in california are failing to build for the demand. SF and LA are obvious because they are the biggest, but its a state level problem.

The core problem to me is taxation: California should have a Land value tax, but instead of that, it rewards owners with things like prop 13, and punishes workers by using sales taxes and income taxes.

Just changing that taxation would change everything: owners would not block development anymore because their land has negative worth unless it houses multiple people. Right now a big building that houses 1000 people pays more property taxes than a few houses that house 10. A Land value tax would shift the burden and make the few houses super expensive, while rent remains the same, and workes see increases in income and also in cheaper goods.

Of this there is no economic doubt in my mind. But politically, neither rent control nor prop 13 are revokable,so my assessment is that SF will hit a ceiling of growth. Maybe the last property owners will be left holding the bag as their expectations of growth will never come about. And then another city will pick up the slack, one without this issue.

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