Skylynr, the 'Uber of nanoassembled highrises', last night replaced 44 San Francisco Victorians with apartment buildings.
Reached for comment, SF's Planning Department said the overnight construction violates a city moratorium, to study displacement issues, now in its 14th year.
The Board of Supervisors plans to address the issue in an emergency session next Tuesday. A Skylynr spokesperson says over 4,000 new residents, in the nearly 2,000 new apartments, will be registered as voters on the San Francisco Department of Elections blockchain before that meeting.
By November, over half the city's voters may be residents of the on-demand skyscrapers popping up across the city, most built by Skylynr or its competitors Instatower and Zipartments.
Of course, of the 4,000 new residents, only 12% voted. The postage requirement was still required, and nearly all the new residents didn't bother to send in their ballots.
And half of those got confused and voted to increase the "affordable housing" requirement to 50% of new housing stock, making non-Skylynr housing prohibitively expensive to build, and requiring citizen approval (by referendum) of all new developments in the Historic Market Street Corridor, including all areas east of Golden Gate Park.
Perhaps you put this in the future to make the overnight construction possible.
But in some parts of the world, the same fait accompli can be achieved the old fashioned way. Just make sure the official enforcing the moratorium has a wife or nephew or someone with a large stake in Skylynr. With such tricks, we will soon house all the world's urban poor. Pity that California is not yet so "advanced".
“We lived in the Portland Avenue Stacks, a sprawling hive of discolored tin shoeboxes rusting on the shores of I-40, just west of Oklahoma City’s decaying skyscraper core.”
Just quoting the last paragraph. This is the kind of honesty people need.
> Intellectual honesty requires taking numbers seriously. Either we prioritize making the Bay Area affordable for all of us or we don’t. The less housing we build, the more wealth will be trapped in high housing prices. Unless we decide to grow our housing stock to accommodate our economy, we are continuing to choose the interests of those who are rich or who already own their homes over the interests of the struggling middle and working classes.
At what point though can we declare the choice has been made and just lean in to whatever conclusion has been decided?
It seems like we’re always stuck in an indecisive state of choosing between the interests of the wealthy and the interests of the struggling, and we can never get out unless we make the “right” choice (which is always implied to be the interests of the struggling)
Maybe the choice has already been made, and people just don’t like the outcome. What then? Barring a massive catastrophe or economic downturn I don’t see the Bay Area housing problem getting better in my lifetime.
> The homeowners aren’t selfish, they are motivated. Why would they act against something that would clearly devalue them?
That isn't actually what happens -- and the misunderstanding is what causes so much of the conflict.
If you rezone for high density, the price per square foot goes down, but the price per acre goes way up -- because suddenly developers will pay you a mint for your land so they can knock down your house and build a high rise there.
The people who theoretically lose out are the people who own property way out in the suburbs, because most people won't want to live there and spend two hours in traffic every day once they can afford to live in the city. But even they don't really lose out because now they can afford to live in the city and the value of not having to sit in traffic every day is worth more than what they're losing on their house.
The whole thing is just a huge misunderstanding. A cynic might suggest the narrative was devised by the banks to drive up mortgage loan principal amounts. Or the car companies to keep people from living in places with viable mass transit.
It's a death spiral waiting to happen. Companies will move away from areas where their employees can't get hosting. Not many have to move before the rest start to follow, and the speculative part of the home valuations disappear.
Either they let the pressure out gradually or the thing is going to pop.
> Companies will move away from areas where their employees can't get hosting.
And if that happens in even a small degree, housing prices will drop, relieving the problem. It's only a problem if their is a sharply threshold where below which no one moves out, but just above which lots of companies do. That's not entirely implausible, but it's not all that probable.
> Not many have to move before the rest start to follow
That right there is the highly speculative part; if it's true, you have an out of control positive feedback loop, but otherwise it's a self-controlling negative feedback loop.
They have been saying that for years, and instead the opposite has happened. Most IT work could be done remotely, yet the vast majority of companies want staff on site. Almost every job I have had has involved distributed teams yet I am still expected to be in an office most of the time.
Has that ever panned out in practice? I mean, has a city economy in the US or somewhere else in the world ever popped because of too high housing prices?
The future of the Bay Area will be outsourcing lower waged jobs that also includes software engineers, QA staff, administrative, etc. to other areas of the state or country where cost of living is less expensive. It's already happening, just ask around.
Again, because the value turned around by SWE peeps etc. for tech companies has an actual cap. You can't pay a QA/SW engineer $500k/year just so they can afford live in the Bay Area. They'd have to be one hell of a QA/SW engineer if that was the case. I just don't think it's worth it for tech companies at some point.
After all that happens, the jobs left here will be primarily managerial; c-level execs, product managers, business analysts etc.
Those too, if the housing situation doesn't improve, will be outsourced to lower cost of living areas as well.
Again, it's inevitable given the numbers.
Much of the wealth being generated in this area is being sunk back into real estate. The high wages in tech in the Bay Area are high because they're subsidizing a corrupt housing market.
Eventually the only people left in the Bay Area will be executives and really high-paid lawyers.
Those are not all executives and high-paid lawyers.
One of the biggest reasons why a 1300 sq.ft. house in Sunnyvale now sells for $2M is because a lot of engineers are perfectly capable of paying for it.
In my tract, 5 houses out of 35 have changed owners in the past years (it's a neighborhood with lots of first owners who are now in their eighties). I've talked to all the newcomers.
Without exception, they are dual income engineering families who work for Google, Facebook, Apple and some other tech giants.
That's $400k income per year and plenty to cover a $1.725M 30 year 4.1% mortgage payment of $8500 per month.
Right, and the parent was specifically pointing out that it's unsustainable to pay that median (the parent used $500k as a made-up but plausible future value).
I'm pretty happy with the salary that I make as a SF-dwelling/working software developer, but I recognize that it's absolutely insane when compared to same-industry salaries in locations with less ridiculous housing markets.
At some point, companies are going to throw in the towel and decide it just doesn't make financial sense to pay their employees that much just for the privilege of being located in the bay area. Then the jobs move away and you end up with a local recession. This will be hard to do initially for companies sized like Google or Facebook, but a ton of smaller companies can open offices elsewhere and slowly transition staff away. They're already doing it, even.
So, Google pulled down 9.9B in profits last quarter. That means if they've got 88k employees, they could hand out somewhere around an EXTRA $450k to every single employee every year and still be in the green.
Facebook looks roughly the same.
The leverage of a software engineer to produce money is really quite astounding when you get them in large herds.
I'm pretty sure the Bay Area is going to be just fine.
> Eventually the only people left in the Bay Area will be executives and really high-paid lawyers.
I don't think that's sustainable. This is called working your way so far up the supply chain that you pop off the top and fall out.
Eventually the entire supply chain below you collectively asks the question: "Why are we paying these people? What do they do anyway?" Then the supply chain starts looking for ways to wiggle out from under you.
If density increases the people who will benefit the most are current landowners. If you have single family home on a big lot, its value will go up many times if you can suddenly build an apartment building on it.
Most current home owners have no interest in selling to a developer or developing ourselves. We just want to continue live in conditions that were present when we bought it: a nice house with a garden on a quiet street.
Yes, that is selfish, but I'm not going to apologize for not wanting an apartment complex next door. That said, I'm not going to vote against a state level politician who wants to relax zoning laws to improve affordable housing.
The conditions do change though, even if the buildings don't: you'll gradually be surrounded by different people as prices climb and climb. Perhaps, sooner or later, they'll look down on you as the undesirable they don't want nearby.
No, it frequently does have to do with the inhabitants. That's why you saw Forest Hill homeowners kill an affordable housing development because "the new development would house 'severely mentally ill' and 'severely drug addicted' people" [1].
You buy a house in a nice neighborhood with nice single family houses and well kept gardens and very little traffic. You like it that way. You pay a lot for that.
You don't like it when some of those houses are replaced by an apartment complex.
The part where the person thinks they have some right to tell others what to do with their properly-zoned property while simultaneously refusing to pay for that right?
Woah. Someone said "all homeowners benefit from increased density in their neighborhood". Tom replied that as a homeowner he didn't feel he benefited from increased density, and explained why.
He didn't tell anyone what to do. What are you so upset about?
> All homeowners benefit when the teachers, police officers, nurses, librarians, postal workers, garbage collectors, mechanics, plumbers, construction workers, retail clerks, gym trainers, restaurant servers, hairdressers, taxi drivers, artists, etc. etc. etc. can afford to live somewhere within a reasonable commute distance.
No, they don't. All homeowners don't have the same utility function. Not living near people of different socio-economic strata is a very important factor in some people's utility function.
> When the only people who can afford to live within 40 miles are senior software engineers, surgeons, hedge fund quants, corporate executives, and large landowners, the whole community becomes a fake and lifeless place.
The features you see as “fake and lifeless” are what many people actively desire and seek out. Aesthetics are highly subjective.
Changing zoning would only directly impact a tiny fraction of current home owners. High rises allow for vastly increased density so only 1-5% of the city could change to cover a 50% population increase.
> We just want to continue live in conditions that were present when we bought it: a nice house with a garden on a quiet street.
Speak for yourself. Not all homeowners want less density. I wouldn't have become a homeowner if the only houses available had yards with picket fences.
The problem with the SF and the Bay Area is that home owners actually have fairly strong ownership rights to the land surrounding their home. At least in the sense of being able to stop anything being constructed there.
You can think of it as an interesting experiment in collective land ownership.
I think the parent was referring to: homelessness on the rise, lower-income residents being forced out, the need for many service workers to transport themselves to the city because they can't afford to live here anymore, housing speculation and foreign investment leaving units empty and driving up prices, etc. All of that "changes the character of the city", IMO for the worse. One reason (of many) for these changes is obstructionist behavior toward building housing and increasing density.
At least that's what I'd be referring to if I were to make the parent's argument.
You'd think it wouldn't take so much effort to defend the claim "if you build enough housing, people won't be homeless", but it does. So let's go with a prominent example: Tokyo.
Neighborhoods in Tokyo have no local control over zoning, and houses are widely understood to be a depreciating asset, not an investment. So Tokyo builds enough housing and homeowners can't pull up the ladder behind them.
The homelessness rate in Tokyo is astonishingly low and decreasing: just 1600 people in a metropolis of 13.6 million. Almost everybody can afford to live somewhere, because there is enough housing for everybody to live somewhere.
You may think I'm saying that your neighborhood has to look like the Ginza area, and I'm not saying that at all. Tokyo contains some calm, beautiful, residential-focused cities such as Setagaya. (If this is confusing: a metropolis can contain a city.)
Japan culture is very different than US. There is inherent respect obtained from having a job, any job, and dedicated yourself to it no matter how small. Being without a job or worse, homeless, brings much shame to that person and their family. There is strong social pressure to maintain your career and pour many many hours into it.
There's strong social pressure to maintain your career and pour many hours into it in the US, too.
That doesn't have very much to do with whether there are enough places to live. If the places where the careers are have fewer available places to live than they have people, it doesn't matter how dedicated you are, you can still fall out the bottom of the market.
Correct me if I'm wrong, but it sounds like you're implying that homeless people in the US are homeless because they aren't ashamed enough of their situation to work harder and find a job, any job. That's... a gross misunderstanding of the problem, if so.
I think Tokyo is a good counter to the nonsense perpetuated in SF that the law of supply and demand doesn’t somehow apply to housing.
Homelessness however is more a multi-headed beast, and Japanese culture likely plays as much into a lack of people on the street as does housing availability.
I am pretty sure if the price was high enough they would be interested. "Everyone is a bit coin operated" as Ed Zander said when I worked at Mortorola.
No, not at all. But I don't see why wanting things to stay similar to when you bought the house is any more selfish than wanting to barge yourself into an area that may not be able to absorb the additional population.
I think it's a bit obtuse to suggest that someone who had the luck to be born a little earlier and move into an area somehow has some sort of a natural right to keep others out through obstructionist policies, and expecting them to act with compassion is somehow selfish.
But I suppose that's par for the course for the US, where individual expression and selfishness is valued over collective good.
You keep talking about "natural right", but nowhere did I mention that. I just said that I don't believe what they're doing is any more selfish than what the people moving in are doing.
Not saying my opinion one way or another, but there is definitely a “natural right” just in the simple sense of physically being present before others.
How so? All "rights" are manufactured by humans. We would like to say that "life, liberty, and the pursuit of happiness" are "natural rights", but they're not: a bunch of people just agree that they should be, so they are. (And imperfectly, at that! We wouldn't have capital punishment or prisons if we actually believed in these rights.)
And if we recognized "physically being present before others" as a natural right, I imagine the Native Americans would have a much better situation than they do. Thinking that's a right for some but not for others is the height of hypocrisy, but that seems to be what a lot of incumbent property owners here seem to believe.
Sorry, I didn't mean to say "right" as in the kind manufactured by humans. I just meant that two people can not be in the same place at once. It's a right in a very literal sense, I.e. it's "right".
I agree with you about housing but natural rights exist regardless of legal recognition. Rape, murder, genocide, and slavery are all wrong regardless what a bunch of people agree about. That's what natural rights are. They are things that can be violated by an all powerful dictator. But the dictator would be wrong and terrible for doing so.
That being said, I'm hard pressed to call desired housing density a natural right.
You're correct: the most important right, if you follow NIMBY conversations, is the god-given right to a free parking spot for your dockless automobile wherever you may happen to go with it.
Yes, in the short term, there are two things that happen: 1) land values go up, 2) housing costs go down.
The first may benefit current land owners a lot, but the second is absolutely essential for lower incomes to succeed at all.
This is not a zero-sum move, and is fact hugely beneficial to everyone. When there's fixed housing supply, that's when things are closer to a zero-sum economic game.
The reality is that the apartment building goes up and you house is worth nothing unless the government allows an eminent domain for your property or a developer with the bucks to buy out the neighborhood shows up.
Until that happens, your house lost a third of its value because there's an apartment next door. If you're unlucky, rates go up and you're stuck.
Is it really controversial to say that a regular single family house in a single family house neighborhood will go down in value when somebody decides to plant an apartment complex right next to do?
Honestly? I appreciate your willingness to engage in this thread, but I have to say I really don’t care if it does or if it doesn’t.
Making a real estate purchase is a risk. Making a huge one is a huge risk. Right now, the Bay Area is prioritizing rewarding the obscenely wealthy and rewarding massive risk-taking by the moderately wealthy.
If those risks don’t pan out, but people can afford to live here, I’m not that upset.
The counter-point is that if I was a homeowner in the Bay Area, I want to protect my property as much as possible, and I'll use my political power to do that.
People who are disrupted by this can build character by living in a van or move to any of the hundreds of metro areas that are more affordable -- it's not my problem. If you work for some tech company, you should appreciate that controlling a resource like a technology or real property has benefits.
FWIW, I chose the latter option and live in a mid sized urban core. I make about half of what I'd make in the Bay Area, but my costs are probably about 80% less, even factoring in private school. So if you make a choice to live in a van as a rational actor, that's your choice. Own it.
> The counter-point is that if I was a homeowner in the Bay Area, I want to protect my property as much as possible, and I'll use my political power to do that.
I totally get that, but it's a) unfortunate that when one buys a home, their financial self-interest becomes immediately opposed to the needs of the overwhelming majority in this city who rent, and b) ridiculous that city politics safeguards the value of these risky bets by homeowners at the expense of literally everyone else.
> city politics safeguards the value of these risky bets by homeowners
Mainly because homeowners are more engaged in the city politics? If renters or would-be homeowners were more engaged, this would have been a totally different situation.
You might be surprised to find that most renters have jobs, and can’t get away from those jobs during the day to attend neighborhood and city council meetings.
> If those risks don’t pan out...I'm not that upset.
But see, now you have introduced an "us vs them" mentality to this discussion with homeowners on one side and non-homeowners on the other. If I, a homeowner with 800K mortgage, is going to face people like you who want to act in a way that will reduce the price of my home below 800K thus wiping out my equity in my home and saddling me with an underwater mortgage, then I am going to fight tooth and nail against any new housing.
Figuring out how to add new housing without affecting the value of existing homes would go a long way towards getting buy-in from existing homeowners.
The us-vs-them situation exists whether you like it or not. I have the means to purchase in SF and have not done so, not in small part because it would position my self-interest counter to so many in this city who aren’t as lucky as I’ve been. Every act of public policy creates winners and losers. Not acting just preserves the status quo of homeowners as winners and everyone else as losers. Feel-good-yet-practically-impossible suggestions like yours are effectively arguments in favor of an unlimited extension of this status quo.
You took a large gamble with a massive sum of money—what is literally a lifetime of earnings for most families in the US—and are now arguing that the city should continue to prioritize the positive outcome of your gamble over the needs of the hundreds of thousands in this city who are struggling to get by.
This leveraged gamble has been growing at a rate of 8–9%, and with typical mortgages here it’s reasonable to guess you’re seeing over a 12% return on that gamble annually as a result, after mortgage interest and property taxes. Pardon my complete lack of empathy for the hardship you might endure should your gamble only return 5%, were we to consider the needs of the rest of this city over your own.
I think the downvotes are unwarranted, but the point being made is that in a land-scarce environment like SF, a developer would pay out the nose to buy your single-family home, tear it down, and build something with higher density... if the land was zoned for it.
Sure, once this happens enough times, and supply starts to meet demand, you're absolutely right in that a single-family home's value will drop when it's adjacent to an apartment complex.
(Then again, it could also be quite valuable to someone who wants a single-family home when the norm becomes larger complexes.)
Also note that the current value of your home is driven almost entirely by artificial scarcity. There's nothing intrinsic about it that makes it worth so much.
I think the reason is that people living in places like SFO are effectively locked out of the market. They are angry and passionate about it, and I sympathize.
The problem from my perspective is that the "crisis" of housing is really a boomtown phenomenon. The problem exists because companies can afford to pay people enough, which won't last forever.
Wait, so do you think single family housing prices will go up if the city bulldozes all of the high density housing downtown and south of market street?
You're saying that if you have the only single family house in a high density area that house will actually be worth less?
I think it's very unlikely either of those things would be true.
Even the first few help. You have rich people taking up houses and apartments made for middle class (or possibly even working class), as only rich people can now afford to live in them. If there’s more housing stock, even “luxury” units, they can vacate the lower end units, making room for middle class.
You're correct, but this goes against the idea that it's greedy house owners that are causing all the problems. Maybe they're selfish (I would argue most people are), but it's in their best financial interest for the Bay Area population to increase. The land value will go up, and the relative supply of houses/people goes down. Let's say that right now only 10% (made up number) of the people in the Bay Area can own a house (because of supply, not price). In general that means that the houses are purchased by the wealthiest 10%. If the population goes up 50% now you have to be in the top 7% to afford a house. Yeah, it's a little more complex than this, but in general housing prices aren't going down by building apartments. No one buys a house because they can't find an apartment for sale.
If people really want to address the housing issues, they need to start actually listening to people who object to more housing instead of just calling them names. There are legitimate downsides to more housing and higher population that will need to be addressed.
Actually no, or not the way you mean. This is a legitimate moral trap: the "policy" at hand is construction permitting and land zoning, and those are almost exclusively local laws and regulations set at the city and county level.
Those governments, by design, serve the interests of their local citizens. That is, the population they serve is inherently skewed toward existing property owners. You can't fix this by complaining about money in politics or whatever, that's not why it's happening.
The solution has to be at the broader government level (i.e. in Sacramento in this case), wrenching back some of the control that has traditionally been local in the interests of the broader population and not just, say, Palo Alto residents.
While there's no denying there's a strong bias towards property owners, it doesn't have to be this way. Renters can and should vote to change policies to favor them. SF is 63% renters!
It is unfortunate that the most disenfranchised demographics are the ones least likely to vote/organize.
That's true, but potentially not enough. The fraction of the population that is renting now is still (by definition in the case of a hot market!) much smaller than the fraction of the demographic that wants to move to the area and needs to be served by a just housing policy.
The renters - if they would vote (they typically don't) however have it in there interest to have more development: more places to rent places downward pressure on rent prices and thus limits their costs. Unlike homeowners (who benefit form prop 13), a renter faces the potential of their costs increasing yearly. If the large group that wants to move in can find a a place without having to displace someone else that limits landlords ability to raise rent. Renters now have to take rent increases because if they don't someone else will, but if the renter can respond by moving elsewhere instead...
Of course this assumes renters actually vote. As noted before, most do not. Thus the tyranny of the minority situation.
It sounds like you may have missed one of the GP's points when you're blaming renters for not voting. I'll reiterate it with a specific example, although I am on the east coast.
Lots of people want to live in Cambridge, MA. Cambridge is lovely, walkable, and bursting with jobs. But not everyone who wants to can live in Cambridge, because Cambridge has large areas of inappropriately low density that homeowners fight to preserve.
Many people who work in Cambridge live in Everett. Everett is kinda shitty. It doesn't even have good transit to and from Cambridge.
People who live in Everett and want to live in Cambridge can't vote on Cambridge housing policy. They can only vote in Everett.
Local control of zoning sounds so democratic, but it's a tool of rent-seeking, exclusion, and discrimination.
GP made the claim that 63% of SF is renters. While you are correct that there are those who wish they had a vote who cannot, the power is actually in the hands of current renters if they would vote.
This assumes that the claim that 63% of SF is renters is correct. I don't know the truth of that.
As a renter who has lived in the bay area for 14 years (last 8 in SF), my interests absolutely align with those of the newcomers who want to move into the area or city. I would love for more supply which would lower the rent I pay, and also make it more financially safe for me to purchase property.
Btw, European Union lets every resident vote in local (city and town) elections. Only for the parliamentary and presidential elections, you need to be a citizen to vote.
At this point I'm strongly in favor of the nuclear option: a state-level proposition to implement uniform pro-density zoning reforms.
It should also include at least a selective repeal of proposition 13 for non-occupant residences and a re-assessment of all such residences to tax those who are using our real estate as a financial instrument rather than a place to live.
I'd also be in favor of an extra tax on out-of-state residences held by non-occupants and on out-of-state non-occupant purchases.
I'd be in favor of this applied federally and being based on amount (percent, not dollar) of property taxes paid on the property even though it would hurt me personally.
Non-residents cannot hold governments accountable (by voting) for how they use the money which allows the towns to side step one of the core principals of democracy (not to mention that non residents don't have as good information on which to evaluate the performance of local government since many local issues will not affect non-residents). I would have no problem taxing people who enable this by having income or vacation properties in towns they don't live and taxing local property owners who vote for the people who do it.
A complete repeal is politically impossible, but there are two changes that should be made. One, as mentioned above, is to restrict it to owner-occupied residences only. The other is to change the 2% annual increase limit from a limit on the amount of tax assessed to a limit on the amount due in a given year. If the assessed tax exceeds that limit, the locality would receive a lien for the difference, this lien becoming due only when the property is sold.
This accomplishes the original goal of the initiative — to keep fixed-income seniors in their homes — without starving localities of property tax money and disincentivizing them from allowing new housing to be built.
Politically, passing these changes would still be hellishly difficult, particularly the second one, which is not so easy to understand. One way of putting the problem is that Prop. 13 represents a massive transfer of wealth from future California residents to present ones. Of course, the future ones can't vote against it since they don't live here yet.
Personally I think we should just go for the first one, which is why I didn't mention anything else. Proposition 13 limits should be for owner occupied residences only. This would go a long way to fixing the financialization of real estate problem, which is an often under-discussed contributing factor.
You'd get a lot less resistance there. You're not messing with cost of living for owner occupied homes, just second properties, investment properties, and of course all those foreign cash buyers using our real estate as a money laundering vehicle.
As a renter, that would be very painful for me, as my landlord would simply pass the cost of higher property taxes directly to me. (My building isn't subject to rent control.) For buildings subject to rent control, I would expect this would just cause landlords to spend less on improvements to the properties.
If your landlord gets a property tax cut, would they pass on the savings to you? No.
They are leasing you your place at market rate. The market rate is affected by supply / demand of rental units, not landlord costs. The only way they could pass the extra tax onto you is if you are not market rate and there is a law that allows them to do this, or if increasing property taxes on apartment buildings decreases the supply of rental units - an unlikely scenario.
> The only way they could pass the extra tax onto you is if you are not market rate and there is a law that allows them to do this
Not sure what you mean by this: my landlord can raise my rent for whatever reason (or no reason), by any amount they desire.
I can choose whether or not I want to pay it, of course. But I imagine moderate increases to cover at least some (and maybe all?) of the cost of a property tax increase would be swallowed by most renters, given that moving is also a cost, and often a large one.
> If your landlord gets a property tax cut, would they pass on the savings to you? No.
In fact, we have empirical evidence for this. The campaign for Prop. 13 claimed that landlords would pass on the savings, but after it was passed, no corresponding drop in rents was observed.
They are. The caveat here is that in the long run, the attractiveness of owning rental property is affected by the ROI, which is affected, to some extent, by property tax rates. A case could be made that Prop. 13 has expanded the rental supply by increasing the returns to property owners. So even though rents at any given time are determined by supply and demand, over time there should be some tendency for the system to self-correct.
The question, though, is the magnitude of this effect compared to the other forces acting on supply. I think it's small. The value appreciation being enjoyed by rental property owners greatly outweighs the small increase in property taxes they would pay without Prop. 13.
One of the reasons Prop 13 happened was to go hand in hand with rent control and help offset the negative costs of rent control. (An advantage for the owner and renter). So I think you'd need to get rid of rent control to get rid of Prop 13 for a large group of people and that would be very hard.
That's how I heard it. Turns out Berkeley got rent control in 1972 while Prop 13 was passed in 1978. But generally you're right.
It's still my understanding that landlords of multiple units who have tenants in rent control would have a massive problem with the repeal of Prop 13. It's one of the things that go hand in hand with rent control and keep costs low. They would have a strong argument for being unable to maintain their buildings and run a business without Prop 13.
A number of landlords skimp on maintaining their buildings when they have a number of people on rent control. The buildings become quite dated and unkempt. However Prop 13 does make the business sustainable for those receiving very little rent from tenants of 30+ years.
They should change the 2% limit to change according to the CPI. Interest rates were crazy high in the years when it passed, now that rates are low it's rewarding those who bought when rates were high (and prices were low). Prop 13 just defies all sense
Repeal 13 and lower the property taxes from 1.3% to 0.6%.
Of course, about 80 to 90% of the existing homeowners (in many neighborhoods most people bought they're homes more than 20 years ago, you can verify this for yourself on zillow) won't like that, as they're currently paying about 0.1 to 0.05%! So, it's a pretty hard sell.
This will never happen. If you want to see a single issue unite hard right wing conservatives and far left wing liberals or single handedly bring down a political party, try taking on Prop 13. Just about every homeowner in the state views this as an existential threat and will bring hellfire and damnation down on any politician that so much as mentions repealing Prop 13. Plus, there are so many other options that have a better chance at making an actual impact.
I'm much more in favor of incentivizing people to support positive change than just bringing out the big sticks. How about giving everyone in the neighboorhood a property tax credit if they vote to upzone? Or giving companies big tax breaks if they allow 50% of their workforce to work remotely (tackling both housing and transportation issues)?
That's correct, so I think the only chance we have is phased approach. Not repealing prop 13 as of now but start with excluding new homeowners from it (or at least increase limits on annual reassessments for them (from current no more than 2% a year)).
There is an idea of excluding commercial properties from Prop 13 too (I think they shouldn't have to be covered to begin with, the whole idea of prop 13 was to "keep that old lady in her house when she has retired and cannot keep up with raising expenses").
Also props 58 and 193 allow to inherit Prop 13 tax assessment by children and grandchildren (again against original idea of prop 13 to just help elderly with living in their places when retired) so Prop 13 expanded that way to became multi-generational.
We can consider excluding non-primary residences from it too.
Also in this case if you want to help someone to keep property they cannot afford then maybe tax assessment reduction should be based on new owner's income level and not on a year deceased relatives bought place
Why? I'm totally fine with a measure that helps keep fixed-income residents in their homes when property taxes would otherwise eat them alive. I see no reason why we need to keep that property tax burden affordable when that resident passes away and the property goes to their heirs, who presumably already live somewhere else, paying taxes they can afford. If they can't cover the newly-assessed property tax on their relative's residence, then they should sell it and stay where they are.
Maybe grandfather in existing property owners, but expire it when it sells. At some point the narrative has to flip to the Granny in her 1.5m home paying $1200/yr in taxes vs. the young family next door struggling with kids, student loans, and a $16k/yr property tax bill. Where's the fairness in that?
Unfortunately doing so will just reintroduce the problem it was meant to combat: People being forced out of their homes because of property tax. That's definitely not a desirable thing, either.
I hope that housing gets built. SoCal needs as much housing built as possible, and even with SB35 what is possible is limited. At least NIMBY towns and residents can't permanently block projects anymore, that is a huge improvement (which will reduce development lag & stoppage).
>The solution has to be at the broader government level (i.e. in Sacramento in this case), wrenching back some of the control that has traditionally been local in the interests of the broader population and not just, say, Palo Alto residents.
The current hole was dug by local governments being very involved in telling property owners what they could and couldn't do over many decades.
Why will recursion fix the problem?
The bay area is rich enough and enough of that is tied up in property that if it perceives it needs to buy influence in government in order to keep it's wealth it will probably be able to do so then the problem will be even more entrenched because it will be entrenched at the state level.
> policy makers that serve the hand that feeds them?
More like, California and Federal level policymakers have been too lenient and let town and city level politicians make too much selfish policy that hurts the state and country level economy and progress.
The economic powerhouse areas don't belong only to their current residents. Everyone in the country has a right to strive for wealth and a better life by moving to economically active regions. We shouldn't create a society where your economic class is determined by where you happened to be born.
Slamming the door behind you and looking down on the poors is a common neoliberal philosophy though, its really disconcerting how many people are apt to blame those below them in earnings/stature for being in said situation. No leniency is given, nor help. Very un-Christian, but most of those who claim to be Christian/Catholic do not follow the core teachings of said religion, instead choosing to follow neoliberalism ideology.
Its wretched, but that is the society we live in today! Why haven't you picked yourself up by your bootstraps yet? /s
Just a reminder that the growth rates for SF, SV, Seattle, Portland are all pretty puny compared to the growth rates of, e.g. Detroit at its peak. Hell they're not even that crazy compared to growth rates those cities have handled before.
People just aren't interested in any perceived threat to their property values so they're strangling growth based on an entitlement mindset. No, sirs and ma'ams, your home's price appreciation isn't a right.
I think it's also clear that Detroit is not a growth model you'd want to emulate. With the benefit of hindsight, it's clear that Detroit ended up with way too much low-productivity infrastructure that the current residents of the area can't afford to maintain.
Detroit's infrastructure was fine. Detroit's problem is suburbanization. The population of the Detroit metro area is up 1 million people since 1950 and the population of Detroit itself is down 1.2 million people since 1950. Most of the people and nearly all of the people with money left the city and moved to the surrounding suburbs.
However, any system that allows people to rent seek by creating building restrictions that protect their property values is not an optimal solution. So sure, they can vote but they should not be able to vote on zoning.
What about nuisances or factories or what have you? Well, that's easy enough to take care of through noise ordinances. Land use zoning is mostly a well intentioned but terrible in practice policy idea.
1. Less room to spread out in the Bay Area. Detroit does not have many high-rises, and as far as I can tell, it has had a large number of single-family dwellings condemned/abandoned etc. during the recession. Also, Detroit is in a seismically stable zone.
2. Large number of incoming people who do not have a say in local politics in the Bay Area. To my knowledge, many of the incoming workers are here on visas, and they are largely apolitical, unable, or uninterested to cast a vote. Most of the busy workers do not have the time or the inclination to participate in local politics. I imagine this must not have been the case in Detroit, where unions were strong.
The other problem is that many Bay Area residents who bought their properties when interest rates were quite high (I had an older colleague who bought his house at 24% or so interest rate --- unimaginable nowadays), and the Federal Government had not embarked on a protracted QE, QE2 ... phase of pumping money into the economy, so to a certain extent, buying a house in the Bay Area has always been hard (not impossible, though, which it is now, for most people); as a result these existing homeowners (who ploughed a significant portion of their incomes into their homes) feel entitled to keep their insane property values that way.
1. This is not the issue. If it were, suburban low density Palo Alto would be absorbing new people at a fine clip. The problem is the lack of building.
2. This is much closer to the heart of it. Local politics allows homeowners to veto good housing policy in the interest of protecting their investments. However, Detroits expansion had nothing to do with the unions lobbying for housing policy, there just wasn't much in the way of zoning laws and people built where there was demand.
In any case, the only thing that's going to fix the housing crisis over there is zoning reform. Believe me I feel your pain, I live in Manhattan. At least we're doing some building, though not nearly as much as we should. If it were up to me all (most) of the three story sixpacks in Bushwick would be bulldozed for six story tenements.
Yeah, I think the way the 5 boroughs are organised is great for New York. People who are okay with high-density housing flock to Manhattan and those that want to have suburbs, leafy streets and green lawns stay in Long Island, West Chester etc. The key enabling factor is the (now decrepit) public transportation system. The Bay Area, again, has nothing like it (once again, possibly due to the crazy geography of the place).
But New Yorkers beware. The Subway is at risk of being destroyed by idiot Cuomo. It's already leagues behind London (which does it cheaper and better), not to mention Tokyo and others.
> The key enabling factor is the (now decrepit) public transportation system. The Bay Area, again, has nothing like it (once again, possibly due to the crazy geography of the place).
I'd put this more on the Bay Area's low population than on the geography.
Plus the myriad of municipalities that all want a say. It's no coincidence that the BART doesn't go all the way down the Peninsula, stopping just before Burlingame. The rich homeowners there didn't want the SF riff-raff coming to their town, therefore commuters are stuck with the Caltrain.
How? The area west of 280 is mostly protected land, so it's hard to build. Some of the empty areas out by Alviso/Milpitas are superfund sites. Apparently it's much harder than it looks to reclaim the Bay and build on it (best chance of opening up large amounts of land). Is there some map that shows areas that can be developed?
Also, Santa Clara county is chock-full of EPA superfund sites. Lots of soil and groundwater contamination.
Depends! Increased density should drive up the price of land.
However, if you are in a neighborhood of single family homes and a huge multi family building is constructed on your block, your home price will go down because there will be enough supply to meet demand, taking pressure off the single family homes.
If you are in an already dense city and regulations are relaxed so that more high rises can be built in more neighborhoods, the price of your condo all else being equal will be lower because there will be more supply. The land price may well go up but your individual apartment would likely be worth less.
a huge multi family building is constructed on your block
which is why NIMBYs should at least be in favor of gentle density - duplexes and triplexes, small walk-ups, etc. But they fight those like the end-of-days too.
And then you're back to the original argument: the appreciation of your neighbor's property isn't some kind of god-given right, no more than that of yours is.
Look, I don't want to destroy the value of the largest "asset"[0] most people will own. But... what's the alternative here? The incumbents just get to grow fat off riches that they absolutely lucked into and played minimal part in creating, while lower-income residents get forced out of their homes? We just give up on the bay area as a worthwhile economy, have all the tech companies pull out, and then home prices crash?
[0] People really really love to believe their primary residence is an asset/investment, because it cost them so much money to acquire it, that it just has to be. If they'd consider it just a cost of living, a liability even, we'd have such fewer financial issues in housing markets.
I don't think entitlement or rights need to come in to it. It's entirely possible to have a want and act on that want without invoking moral righteousness.
we are at record low growth rates for "peaking" in the development cycle.
The problem is (1) we haven't built that much since 2008 anywhere, so any change seems like its a flood (2) most growth pre 2008 was greenfield SFH development, most growth happening now is in established communities
I know we'd all love to fix the bay area housing problem here. The most obvious answer is to increase the supply. But, fixing the zoning laws and allowing developers to build isn't the only thing that's standing in the way. The problems are too numerous to fix: NIMBYs sueing developers, CEQA, Proposition 13, AND don't forget about the underlying labor cost (all our middle class people's aren't going to come back, after having been forced out). The bay area has forever lost it's ability to produce cost effective housing. One article I read, said that San Jose rents would have to increase another 25% to 4.75$ per sq foot, just to allow developers to break even on high rise construction! This points to some serious fundamental problem with our economy here in the bay area and it's not going to fixed with just one or two adjustments to the above reasons. We've kindof Venezuela'd our bay area economy here.
By all means, let's work to fix the problem. But, for anyone who wants to get cost effective housing in the next 30 years: I'm sorry to say it, its time to bail out. We need to start lobbying software companies to get the heck out of the bay area and CA in general.
Let's get Elon musk to build one of those hyperTubes to some city like Austin, Denver, Albuquerkee, or madison, WI. maybe some of us could commute in for 4 days a week or something.
High-rise construction is expensive, but high-rises aren't necessary for density. Wood-built low- and mid-rise is far more cost efficient, especially when you don't require 1-2 parking spaces per unit.
The reason why we get too many high-rises and too few low-rises is because of regulatory burden. In particular, the long, drawn-out, and capricious manner in which the laws are administered and challenged. In that kind of environment high-rises become more common simply because of the economy of scale--a high-rise developer has resources and the wherewithal to see the project through where developers of smaller developments do not.
The most important thing for commerce and especially real estate development is consistency and predictability. Proposition 13 and the cost of labor can be dealt because they're known quantities. Zoning boards and CEQA[1] are the real killers as the unpredictability compounds, many fold, the nominal regulatory burden.
[1] Compare NEQA to CEQA. The Federal NEQA law isn't much of an impediment to development anymore because an efficient ecosystem has developed--specialized assessment agencies that do the work quickly and cheaply, and relatively efficient administration of the regulatory regime. The cost of a NEQA impact statement is a known quantity and is easily budgeted. By contrast, under CEQA it's much easier for NIMBYs to challenge impact statements, which means the time and budget required for getting over the CEQA hurdle can be indefinite.
>Wood-built low- and mid-rise is far more cost efficient
And also tends to be drastically worse build quality and sound isolation. Given a mid-rise or a high-rise built in the same year, you definitely want to live in the high-rise, all else being equal.
Higher quality multi-family buildings that middle-class people could see themselves living in would go a long way towards changing public opinion. Unfortunately, our multifamily housing stock is bifurcated between shoddily built crap for the poor, and ultra-luxury high-rises for oligarchical investors. If people don't want to live in a building themselves, it's harder to accept its externalities for the benefit of others. Most people do live in apartments as students and young adults, and they'd never go back.
For another city to be a plausible substitute for Silicon Valley, it needs California's moonlighting-protection law. Without that, you can't reproduce this environment.
It lets you own your ideas and work that you perform at home, such as a startup you run on the side. In other states, your employer will typically have you sign a work contract granting the employer all rights to everything you create at any time and any location.
Also: It's literally on top of a fault line, most of the land is unsuitable for skyscrapers due to soil liquefaction during an earthquake, 80% of the area surrounding downtown is water
>I'm sorry to say it, its time to bail out. We need to start lobbying software companies to get the heck out of the bay area
Agreed. SF is just a bad location to build a large city.
The only thing they have in common is that they're both near a fault line. Tokyo has a foundation of solid bedrock so soil liquefaction is not an issue. Very little of the area surrounding downtown Tokyo is sea, compared to San Francisco, which is a peninsula around 10 km wide.
Most of SF actually has quite shallow bedrock. As for the part that doesn't, it already has subways and tall buildings (except for the part near Ocean Beach). But anyway, we wouldn't actually need any tall buildings to solve the housing crisis; 4-to-6-story apartments would do the trick.
>If being surrounded by water is an insurmountable problem, how do you explain the tall buildings and subways in Manhattan?
I'm not saying the water inhibits construction. It just limits the area where you can expand. Look at New York on Google maps and zoom out a bit. The metropolitan area expands in all directions except the very south. Now look at Tokyo. It also expands in all directions except the south-east. Now look at San Fransisco. The north, west, and east are blocked by the Pacific Ocean. There are single long bridges to the north and Oakland, but they serve as choke points limiting movement. Much of the area to the north is also a national park.
I've been saying it for a while: YCombinator could show a lot of leadership if they started up YCombinator Toledo or something, to spread the startup scene out to other areas, areas with lower costs of living and the like.
"The bay area has forever lost it's ability to produce cost effective housing."
Strong statement, if slightly ungrammatical. I think this is a challenge to visionary thinkers and leaders to change the game. Engineering is one part, as is regulatory capture and regressive real estate laws and norms, weak state government in the state, and highly atrophied political participation. What could change that? I can think of one thing, and one thing only, that would "shake up" the status quo.
Ya, as a current renter I've wondered what a giant earthquake would do to housing prices.
On the one hand, lots of people lose their investments and are forced to sell their land or take out loans to rebuild. You might be able to buy land or a damaged property for a good deal. Contractors would all be completely overbooked and the price to rebuild would likely be quite high for some time. Some who have never experienced earthquakes might get scared out of the region altogether.
On the other hand the houses that survive are now part of a much smaller pool of available, livable houses and there's still a lot of money in the region so I could see prices for these houses shoot through the roof.
Or Google, Apple, Facebook could grow the next 200,000 jobs somewhere else?
Everyone talks about housing affordability and NIMBYs and we get into class warfare and home-appreciation snobbery, but the simple thing I can't understand is how will the area's transportation infrastructure scale up? There's no credible solution.
Ok, but what about your kids? Are they going to live with you forever? Are they going to be able to afford $2m homes? I've never met so many 30 year olds who live with their parents as I did when I lived in South Bay.
You can't wave the problem away with "eh, transplants".
Unfortunately, until the big guys and the startup scene decide to move elsewhere, or at least spread out beyond the Bay Area, that's not very practical advice. I recently had a couple interviews with Google, and basically, for the positions they wanted me for, I would be required to move to Mountain View. So your advice in my situation would boil down to "Don't work for Google."
What is often missing from this discussion is financialization of housing markets. As long as housing units are chips for a game among banks and wealthy patrons it is not clear we will be able to build enough homes to satiate artificially inflated demand.
Unfortunately, vague statements assigning blame to ambiguous external actors (like yours) are very much a part of the discussion. Demand isn't artificially inflated. More people want to live here than there are housing units. So we need to build more, or agree only the most privileged deserve to reside in the Bay Area.
Absent from the vast majority of these threads is the critical component in this "crisis":
Property can be purchased and held onto for purely speculative purposes, thereby draining the inventory pool, and raising the cost of housing for residents of the city.
This has been happening in the bay area for a very long time. Wealthy Chinese investors who do not LIVE in the bay area, have purchased an incredible amount of inventory over the last decade and it has remained vacant / unused.
Of course we need more building, that's obvious. But what we also need is to immediately disallow the purchase of land by foreign entities that is not used for habitation. I have yet to hear a constructive argument for why that shouldn't be banned at a constitutional level. Housing may not be a "right" per se, but it's certainly in the communities best interest to use available housing for that communities interest, not the interest of wealthy foreign investors.
You need to provide statistics for extraordinary claims about housing being purchased by foreign investors and not used. Common sense says it should be a very marginal phenomenon. After all, renting out property should almost always be worth it with the high housing prices in the area.
I’ve been wondering about that when it comes to rent-controlled places like SF. It seems « tenant occupied » properties sell for less than equivalent empty places. Then is it worth it to let a tenant in who might just drive down the price of the place if you decide to sell a couple of years later?
> But what we also need is to immediately disallow the purchase of land by foreign entities that is not used for habitation.
Why limit that to just foreign entities? Also that's trivially bypassable, just get someone to live in the house; it's used for habitation now.
But frankly ending CEQA and capricious zoning boards (and all the other legal authorities/mechanisms that NIMBYs use to delay/obstruct housing) is a far more robust method of killing off this sort of speculative purchasing, since the only reason all this speculative purchasing happens is because there's a gross undersupply of housing and thus prices are guaranteed to increase at staggering rates.
What is far more likely is that people will simply leave the Bay Area, and demand will fall. It's far easier to create tech clusters in other cities than it is to convince a bunch of NIMBY boomers that other people need places to live, too.
People are leaving actually, to the point that U-Haul is having a hard time keeping up with demand. The trucks aren't coming back here.
"Rent a moving truck from Las Vegas to San Jose and you'll pay about $100. In the opposite direction, the same truck will cost you 16 times that, or nearly $2,000."
>> people will simply leave the Bay Area, and demand will fall
Short of a bubble popping, it usually doesnt work like a cusp, but rather, things remain on the edge of extremity (i.e.: dual income couple plowing 70% of income into insane mortgage.)
Network effects are powerful. But beyond the original secondary tech centres of Seattle, Boston, and NYC, there are now thriving tech scenes in all sorts of smaller markets--Portland, Denver, Austin, etc.
It's easy to see every major tech company having a base in SFBA for the foreseeable future, but it's also easy to see being a working programmer living in one of those smaller markets and actually being a homeowner being a much bigger thing going forward.
The entire current population of the bay area (~9M) would fit within 165 of the 10,000 square miles of the CSA, if built at Parisian densities. That is less than 2% of the land.
This is what boggles my mind: despite such a minimal land requirement, nobody in the entire fucking region will budge. Put it somewhere else, they say. It has become a game of musical chairs where nobody gets up for the next round.
State intervention is the only thing that will solve this problem.
Or, as the calculus on living in the Bay Area shifts [0], top tier talent starts to direct itself elsewhere. This stems growth in the Bay Area since founding successful companies in lower cost areas will be possible, housing investment slows as a result of that, and the market naturally cools down a bit [1].
[0] Don't fool yourself into thinking that only people without the income or capital to live well in the Bay Area would leave it. There are intangibles (culture, traffic, distance to skiing, etc.) that, for some people, are non-optimal. For others, it's perfect. That's okay, humans are a varied lot (and it's a good thing).
[1] Nothing major, it will remain expensive due to geography and talent/creativity/capital density.
It's not really about tech companies, although the tech companies don't help. Contemporary conversation about Bay Area housing always makes it sound like some impossible dream that is hampered by hordes of techies. It seems to me that most of those concerns are red herrings; it's actually about zoning, local opposition, and government incompetence. The other HN comment ITT summarizes it pretty well: https://news.ycombinator.com/item?id=16970532
An amazing amount of land opened up in the Bay Area that could have been used for housing developement with the closing of many military bases (The Presidio, Treasure Island, Alameda Naval station, Concord Naval Base, Hunters Point) and the closing of salt production in the South Bay. While a few of these areas are finally seeing some construction[1] 20 years later, the density is often low and the amount of acres set aside for green space seems excessive to me. Treasure Island, for instance, is 465 acres with 300 of those acres as parks. Cargill handed over 15,000 acres of salt ponds to state and federal agencies for wetland restoration in 2002. No housing planned. For comparison all of San Francisco is 30,000 acres.
Salt ponds being turned into natural wetland is a HUGE win for the environment, particularly water quality and fisheries. Being entirely mud, they are literally the worst place to build in an earthquake-prone region.
"Affordability" just means a balance between jobs (which produce people needing housing) and the supply of houses. There are TWO ways of fixing supply and demand problems like that. It is insane that the city of Cupertino has allowed the construction of offices for 26K jobs but only has housing for 58K people. It is insane that Mountain View has allowed the construction of offices for 30K jobs but only provided places for 77K people to live. Those two cities and others collect all the sweet revenue and burden the rest of the Bay Area with costs of housing and commuting.
Rather than insisting that cities must build housing, we should insist they balance jobs and homes. I'm angry that my home town, Fremont, had a plan to reserve space for both homes and jobs, but is forced by the state to accept home construction and we have no money to build the schools needed to accommodate the new population.
Someone who recognizes the opportunity to develop tech centers between the coasts is going to cash in big. Zappos and Tesla seem to have had their fingers on that pulse by settling in the Reno/Sparks area.
For the past 20 years or so, every state has tried doing just that. Very few have been anywhere near successful, and those that have end up with housing problems similar to (maybe not as severe as) SV.
I don't mean to be dismissive of your general sentiment, I think we agree - I just think your example is a bit superlative.
I think when viewing exponential trends we need to consider the maximum 'carrying capacity' - typically when something is growing exponentially there is some latent 'available energy' that is being consumed to fuel the growth. Once consumption reaches parity with that energy production - growth may continue for a bit longer as 'excess reserves' are drained, but a trend reversal becomes inevitable.
> even the worst cities of 2018 will be unaffordable for the regular person.
In your city example, I'd argue that once a city is too expensive for any 'regular' person it will create a negative feedback loop: if unable to source enough labor to satisfy the service demands of the wealthy residents, those residents will begin leaving, reducing housing prices until the problem is at least somewhat mitigated.
The great irony is that there are plenty of people in the SF bay area who think Tokyo is more expensive than SF just like it was decades ago, even though it's not true anymore.
Tokyo is still very expensive relative to Japanese incomes. Is it more expensive than SF on an adjusted basis? Hard to say, but it’s not as clear as you’re asserting.
If anything, magacities like Tokyo and London show us that you can build like crazy, and still end up a very expensive place to live.
How much of San Francisco’s billion dollars of debt would be mitigated by tax revenue associated with a 50% increase in taxable population? Would the tax revenue over 20 years make up for the infrastructure buildout costs and the legal costs of fighting NIMBY folks to increase density?
It's the same all over the world. Politicians seem to have too close ties with developers and real estate investors and they put unhealthy zoning laws in effect to drive prices into absurd regions and boost tax income as well. People should contact their representatives and ask them to change this. It worked in Span (admittedly, they overdid it), it would work anywhere.
Unfortunately, there's no easy workaround for the situation. Perhaps an "Uber for commuters" would work, together with some sort of coordinated purchase/rent of affordable housing in areas ~1 hour commute from those chokepoints? (i.e. get 100 people to move to a small village together, then fill 2 busses every day with commuters to SF).
Are you sure that the zoning laws are driven by developers and real estate investors?
In most Bay Area cities, they are the wishes of the residents who do not want more development.
My neighborhood in Sunnyvale was recently rezoned to be single story only and that process is entirely driven by the residents, not the politicians. It was the 25th neighborhood in Sunnyvale to do so, and it cost around $200 per resident to file an application. No a single resident was against it.
50 ft is plenty, 3 stories, and has little to do with greed.
The new zoning rules in our neighborhood limit height to 17 ft.
And greed wasn't the driving factor either.
People are much more concerned about the new neighbor tearing down the single story house next door and building an ugly two story McMansion from which you can look straight down in their garden/pool.
It sounds like a small problem if all tech companies want to stay in a small geographical area and if they work with each other to resolve it... They should look at what China is doing if they need ideas.
Hey maybe some other parts of the world need populating too. This obsession with location location location is quaint to me in the age of telecom. Maybe the Bay Area is just Done. It'll turn into every other Rich Person Town and the people who need to get real s* done will go somewhere else.
Legacy industry is no excuse to keep cramming more people onto a tiny peninsula in California. It sucks for people in the middle and lower involved right now but honestly I encourage them to move at all costs.
I would think this could be solved by allowing remote work when viable, and making sure there is plenty of internet in rural areas. I would love to live on 5-500 acres somewhere and work on the porch. There's plenty of land to go around; we're just stuck in the 20th century way of thinking about work in a digital age. Strange.
If 60,000 people continue to move from there to Texas every year then 20 years from now when the area has lost over a million residents the housing prices might well flatten organically. This madness is causing housing prices to climb in Texas though.
It's not a _terrible_ analogy though.
I haven't been to all the major US cities but I got a bit of a Portland vibe from Austin. It's definitely not what I expected from my first time in Texas (I'm a West Coast Canadian).
Or worded another way: If Bay Area Housing grows slightly more than 2% per year the affordability crisis will be solved within 20 years. ( 1.5(1/20) ~ 1.0205 )
Several ways, including congestion taxes and more public transportation options, like it's been pointed out.
But, also, a 50% increase in housing supply means higher density of population, with higher buildings instead of single family homes and therefore more comercial space in large populated areas, meaning more jobs will be at walking/biking/short-bus-ride distance.
Congestion taxes are a terrible idea, as they usually hit those who are least likely to be able to change the time they have to commute at, and are usually the ones least likely to afford it.
Sorry but you are totally naive if you think a 50% increase is possible in that time frame. You just can’t, or don’t want to do the math. What you are suggesting amounts to jail cells with no infrastructure.
I don't think wklauss was expressing an opinion either way on whether a 50% increase is feasible, only what the effects would be with respect to transit.
He said the freeways can support 50% growth over 20 years. That’s lunacy. Look at the history of our freeway system. Ok, if you want to insist that flying cars will come in the next 10 years maybe. But to say congestion pricing is to say, roads for rich people, everyone else stays in their cubicle like happy inmates. Just unreal to see putatively intelligent people engage in such a discussion.
Jail cells? It's not polite to put rude words in others' mouths.
There are limitations on current build rates though; we'll have to massively increase the construction work force to do anything like this, as it's already not quite able to meet demand here.
You’re suggesting these people won’t drive anywhere. There’s no way to support that growth given the limitations in our roadways. Traffic is already terrible, imagine 4 or 5 hours to get from oakland to San Francisco.
This is a big change of topic. I had a different topic about allowing people to live without cars, if you'd like to talk about that, let's do it on that other comment thread.
Most people I know in San Francisco don't own cars and certainly don't make use of freeways as part of their commute. With high-density cities and good public transit, you really have much less need for cars.
Also, given that cars are inherently dangerous, cause environmental harm, and take up a lot of space, it seems like it's in the public interest to discourage car ownership/use.
San Francisco is just one part of the problem, the other part is Silicon Valley. In SV, housing is even more expensive than SF, and public transportation is dismal at best. Rush hour in the San Jose area rivals that of LA, NY, etc.
Most people I know in San Francisco don't own cars
You must not know a big cross section of people then. Maybe in the downtown core, but a trip across the city will show very little available street parking and most houses with garages filled with cars.
It's a small minority of the city that don't have cars.
Yeah, I certainly don't claim that the people I interact with are representative of San Francisco as a whole. From some article I found from a few years ago[1], the vast majority of new residents don't have cars, but overall about 30% of total residents don't have cars. Most of my coworkers don't live downtown, and they get to work using BART, Muni, bus, or bike. When they need to get somewhere not on public transit, they use Lyft or Uber. In both of the two places I've lived in SF so far, I roomed with two other people, and none of us wanted the parking space, so we rented it out to someone else.
My point is that in many cases, there exists a reasonable city design and style of living where car ownership feels unnecessary and is better seen as a luxury than a right. Certainly there are many situations where car ownership makes sense, but I worry that people are sometimes too attached to the idea of car ownership and either incorrectly view it as a necessity or assume that everyone else needs a car as well.
We really need to stop assuming that people are going to make heavy freeway use, and permit more scalable transit.
Run BART the short way between SF and SJ, build many clusters of high density along heavy transit routes. Let the current freeway dependent population continue to use them, but build housing so that people can get to jobs without using single-occupancy passenger cars.
They need to assume people will use transit and also roads, and increase the capacty of both. The capacity of the bay area road network has been systematically decreased over the last ten years, even as the population has grown.
Also, compared to most other places, traffic laws out here are ridiculously inefficient. For example, light cycles that include a “yield on left turn” step and then skip the left arrow if the lane has cleared are incredibly rare. Also, instead of “left lane fast, right lane slow”, the law is “use whatever lane you’re comfortable in”.
Simply ripping out the “improvements” made in the last decade and bringing traffic laws in line with the rest of the US would increase road capacity by double digit percentages.
(The lack of progress on public transit is also embarrassing, especially given the tax and income levels around here)
I agree, and my phrasing was imprecise; we do need to assume that roads will be used to some degree, but we also need to allow for types of living that don't use freeways, or even perhaps allow living without a car.
Right now local regulations require large amounts of parking, which means large amounts of the most valuable space devoted just to cars, and forcing people to pay for the car. If you're forced to pay an additional 10% in rent to cover the space used for parking, then you're probably going to get a car.
If people were allowed to make the decision to not have cars and reap the financial benefits, we'd see a bigger shift.
As it is, car use is regulated into the way that we build things.
The capacity of the road network cannot be increased forever. The Bay already has some damn big freeways, and Texas has already shown that "wider" does not mean "uncongested", with their 26-lane Katy Freeway, one of the most congested in the country...
"We really need to stop assuming that people are going to make heavy freeway use, and permit more scalable transit."
I don't think we can stop that assumption until we have much better public transit. Cause if the trains aren't running where I need to go, when I need to get there, I have to drive.
The housing crisis is fundamentally a transportation problem. The bay area has intentionally made it impractical to own a car, so everyone is forced seek housing within walking distance of a limited number of public transit lines. The "war on sprawl" and lack of affordable housing are two sides of the same coin.
Owning cars is quite practical in the bay area.
You might argue that COMMUTING in a car is impractical, but then again, I just commuted 20 miles down 101 in the heart of silicon valley in under 20 minutes this morning, so, I don't know.
I'd say relatively few people commute on the limited number of public transit lines you say everyone has to live near.
More investment into transportation will accelerate the demise of san francisco.
It can only be funded by higher sales taxes that workers pay, that end up rising the value of land and thus rent. It falls doubly on workers and renters.
Forcing people to live near transit is a good thing. The problem is thebat are doesn’t allow building dense hosuing near transit lines (common sense!) and so very few people can actually let people live near transit.
Lots of people want to be there, and not enough housing is being built for them all.
It doesn't help that a lot of the people moving there, are doing so because of high tech job salaries, meaning they're more able to absorb the high rent costs.
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 that, it's likely that the State of California will have to start implementing policies, and that's not going to be as good as a regional government and planning.
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.
Seconded opinion for strong regional government with zoning control. If the property owner fiefdoms aren't going to address the problem, it's time to take solving that problem away from them.
To give an example of how bad this is, the city of Atherton has sued Caltrain 7 times over the electrification project, the latest one related to (wait for it..) the use of 5 45 foot poles instead of 10 35 foot ones. https://www.almanacnews.com/news/2018/03/01/caltrain-and-ath...
And this despite the fact it comprises less than a mile of the track and doesn't even stop at the Atherton station during weekdays.
How can anyone expect this problem to get any better without major changes to zoning control and major revisions to the property tax/rent subsidies? I'm not holding my breath, and neither are all the other people that are starting to think about leaving.
Wait, the fact that local residents can't even use the big ugly mass transit line going through their neighbourhood is meant to make them somehow more sympathetic to it?
As I understand it, there is discussion to start using the station again after they finish electrification, which of course assumes the town doesn't try to stop that somehow. It will also reduce air (and probably noise) pollution to nearby properties, because the trains will no longer be running huge motors spewing massive amounts of diesel exhaust while flying through the town.
None of that matters. Atherton is the wealthiest zip code in the country, and is comprised completely of high-end houses and mansions owned by the super rich, most of whom couldn't care less about mass transit or regional growth issues. They've got theirs, the hell with everybody else. Their strategy for keeping it this way is to fight all change, even if it's mutually beneficial.
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.
Totally agree that Prop 13 is a huge problem, it's a hugely regressive tax that seems completely out of place in a state that's supposed to be liberal or even leftist. California's liberalism is only skin deep, particularly among the wealthy, who pull their kids of out public school increasingly too.
Modern liberalism is contrary to the free market. If the market were allowed to work, you wouldn’t have a housing shortage. The housing shortage is because of liberalism, not despite it. You don’t have housing shortages in Houston. High density projects are typically opposed (in Houston) by the NPR-listening liberals inside the loop. For example, the Houston Heights, Upper Kirby District and other enclaves of very liberal, higher income people. In Katy, Texas (a Houston suburb,) if you want to build a 25 story condo development — you build it. Try the same thing inside of liberal areas of Houston, no way, they’ll fight it with all they’ve got while proudly displaying campaign signs from Democrat politicians.
Democrats, in my experience, are very anti-development, using hot-button words like “environment” or “historic preservation” as tools to support their NIMBYism.
I was at a restaurant in Cupertino last week and overheard some gents talking about a proposed new housing project in San Francisco and they said that the meeting consisted of people making arguments like, “but this project would anger Mother Earth.” Apparently, there is a Druid constituency with whom the Bay Area has to contend.
This isn’t an indictment of “liberalism” — merely an observation that rich liberals can be the worst sort. The vast majority of Silicon Valley are self-styled liberals, without a conservative within 100 miles, yet despite the name, the folks in charge are about as regressive as they come.
This is a large topic change from Prop 13 being a very conservative policy, and not liberal or leftist, but I'd like to challenge it a bit.
As far as liberals being contrary to markets, I disagree 100%. In most parts of the world "liberal" means using market based approaches to solving problems. The neo-liberals are extremely pro-market, and though I'm not one, that's definitely a thing.
There are some leftists who are anti-markets, just as there are lots of rightists that are anti-markets. NIMBYism crosses both liberal and conservative, and is mostly homeowners. Homeowners in California are highly enriched for conservatives.
Being anti-housing is something that has crossed party lines in California and it's not terribly useful to analyze it in the terms of national politics. Remember that California was the home of both Nixon and Reagan, and their policies have had long lasting effects on the state, so it's not a strictly liberal place.
Prop 13 which is decidedly against liberal values (basically a Grover Norquist anti-tax by any means possible policy), and that's the particular policy that the original poster was talking about. I don't think it's the biggest impediment, though it may be a small one for motivating people, IMHO.
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 personally believe SF is just f'ed. Its not a problem of choosing a solution, its a political problem. It would require politically unfeasble solutions. Removing rent control, changing sales taxes to land value taxes, reducing superfluous city government spending, etc.
San francisco will not change without a back-breaking situation: tech companies moving away, homelessness getting to untenable levels, median workers leaving the city, etc. Its already happening, but not hard enough to curb the expected profits of the last generation of landowners.
All the new construction I see in the south bay area are 3-4 story townhouses, condos and apartments. However they are still going to be expensive given the demand. However the bigger problem is transportation. The roads are getting worse during peak rush hour and I don't see much room to improve it further. I've been a long time resident of the bay area and a lot of neighbors are complaining of the traffic leaking into the surface streets to shortcut the packed freeways. Some are voicing complaints to protest additional housing until the transportation is improved.
I think it's doable, you just have to keep going a bit.
Is Tyler Cowen right, then? “Basically SF is ed?” No. San Francisco could be just fine. The thing about San Francisco is that while greenfields have been exhausted in the city, the San Francisco Bay Area is largely undeveloped. We are always arguing over San Francisco, or Palo Alto (ick). Outside of the 47 square miles of San Francisco proper are almost 3200 square miles in San Mateo, Santa Clara, Alameda, and Contra Costa counties. (I’ll leave out the hoity-toity North Bay counties — Marin, Sonoma, Napa — but if it’s Latin-America-style land reform you want, the vines there are ripe for revolution!) Nobody wants new suburban sprawl, thank goodness. But dense development is not sprawl, even when it is greenfield development.
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.
That makes no sense at all. It's gov't policies that created the high prices. So the gov't then turns around and says "we're taking your property because the price is too high"?
Manhattan (and parts of Brooklyn) != NY. I wouldn't call it "cheap", but there are plenty of places in NYC where one can rent a bedroom for under $1,000 a month easily (and maybe closer to $500/m in some places). That, coupled with not having a car, actually makes quality of life very good if you're someone who seeks out city living.
I know plenty of people that make $30k-$40k/y in NYC and can afford to live in Bushwick with a few roommates and live nice lives. Single train commute into Manhattan, plenty of things to do that don't cost a lot of money, no need to worry about a car, etc.
Edit: a lot of people are replying that having roommates isn't tenable for $x or long-term. I agree, and I don't think we disagree.
Solving a housing affordability problem for people making $15/h starting their careers is part of the overall picture - housing available for people at every income level. An experienced worker with a family won't be looking to live in a 3br apartment with two roommates, but that same 3br apartment that was affordable can also house a family of 4 with two wage-earning parents.
NYC is _filled_ with people in all sorts of jobs who, because there is housing stock available in many levels, can afford to live alone, with a family in an apartment in Queens, or in a house in NJ.
It's not panacea - transit is not as reliable as I wish it was, goods are expensive, but it works for a lot of people
> live with (...) a few roommates and live nice lives
Those two together don't compute for most people. I'd say only a minority of people are fine with living permanently in a dorm-like environment. Historically, having to share a house/flat with strangers has always been a sign of poverty.
> I know plenty of people that make $30k-$40k/y in NYC and can afford to live in Bushwick with a few roommates
This sounds fun for a bit and then you grow up. If the Bay Area wants experienced workers filling non-tech/finance/medical jobs, they’ll need to better than this.
Your point is valid and you shouldn't be downvoted. Empirically, we know that high density of residential units is correlated with high rent.
Why is this? It ultimately comes back to the Law of Rent. The amount that landlords are able to charge directly corresponds to the produce obtainable at that location over their next best alternative... and that alternative is likewise set that way up until you reach the "margin" which is the best available rent-free location.
Since all land has been homesteaded, there's not much of a ceiling on rents... they tend towards the entire nominal productivity of the site. And the more desirable that site is, the more astronomical the rent.
We want locations to be desirable, so in effect we actually do want rent to be high. It's just important that everyone share in that rising wealth. In other words, we need to create a high demand for labor, by shifting taxes from labor onto idle landlords. Land speculators are like patent trolls atop the surface of the planet.
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.
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"
Actually they will be able to ask for higher rents, as with lower sales and income taxes, the renters suddenly have extra cash that will eventually trickle towards rent.
That's if there are actually reductions in income/sales taxes. If the LVT money is instead invested in say mass transit, the population as a whole benefits, but rents don't increase, because money supply doesn't increase.
This is subtly wrong. Taxing rents instead of labor and consumer goods makes leasing less profitable (assuming government expenditures don't favor landlords) and creates opportunities in labor and consumer goods, in which erstwhile landlords can engage.
Milton friedman was an advocate of LVT, and I think stiglitz or krugman as well. There is economic consensus on LVT being good, although how good it is is hard to know, as LVT is a very hard tax to politically pass.
One way of thinking about why this won't happen is that most landlords charge the highest rent they think they can get. They don't just think, "I'll set the rent at my costs and a little profit. I'm not interested in making even more money." Some smaller owners might have personal relationships with their renters and not charge market rates, but I think more and more these days those landlords are rare. Maybe landlords will be able to up the rents because the reduction of other taxes will give people who pay rents more money, but that would be a small secondary effect I would guess.
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.
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!
I didn't mean to validate that there was a causal connection, I was just agreeing with the general claim that yes, indeed, dense places (cities)... whether in terms of supply or demand are generally more expensive than other places.
Knowing why is important, though, and the law of rent explains the mechanics.
I'm in agreement with the idea that more building should occur. I'm just cautioning that even if someone destroyed every housing regulation in existence, or even if lots of public housing were built, we shouldn't be surprised if rents remain super high.
In the technology space we're used to seeing costs plummet from year to year. A land title system, by contrast, will predictably see increasing prices over time, while simultaneously extracting a flow of rent.
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.
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.
>Add in maintenance and the monthly payments increase to about 1600 a month
$400ish a month in maintenance seems very optimistic in my personal experience. There's always little bits of work to be done in a residence, and will be compounded when something major inevitably ends up going tits-up and needs replaced or serviced. Then on top of all of that, you have to have insurances and whatnot. Owning a house is great, but there's a fair bit more to it than just swapping the phrase "rent" for "mortgage payment" in regards to expenses.
>Given the median income in the US is 59k
For clarity, this is the median household income rather than individual.
I live in NYC, you can find cheap places if you look around Queens, Brooklyn, or Jersey City. None of them have the troubles of Oakland (crime).
Eg, Queens is very safe, but kinda "boring", hence the cheap prices.
Is $1800 really "cheap"? That might be cheap to people who are making close to 6-figures, but that isn't remotely affordable for a large percentage of the population.
Life-long Brooklyn resident here. Not it isnt cheap...i dont think anyone claimed it was cheap -- they just claimed that high-density housing (like Manhattan and northern Brooklyn) is more effective on a relative scale as compared to the Bay Area.
I've tried to make the math work every which way - the Bay Are is just out of control, even compared to NYC prices. NYC compensates quite well by building upwards rather than outwards, this has a second benefit of reducing commutes (again, on a relative scale compared to the Bay Area.)
Yes, very. NYC isn't just Manhattan, it also includes the other boroughs like queens, brooklyn, and the bronx. Areas that are within commuting distance by public transport of basically anywhere else in the entire city. This is light years different from the situation in SF.
Skylynr, the 'Uber of nanoassembled highrises', last night replaced 44 San Francisco Victorians with apartment buildings.
Reached for comment, SF's Planning Department said the overnight construction violates a city moratorium, to study displacement issues, now in its 14th year.
The Board of Supervisors plans to address the issue in an emergency session next Tuesday. A Skylynr spokesperson says over 4,000 new residents, in the nearly 2,000 new apartments, will be registered as voters on the San Francisco Department of Elections blockchain before that meeting.
By November, over half the city's voters may be residents of the on-demand skyscrapers popping up across the city, most built by Skylynr or its competitors Instatower and Zipartments.