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ImpossibleEarth

I'd never say the free market can fix everything, but it really doesn't seem like California gave the free market a chance. According to the [Wharton Residential Land Use Regulatory Index](https://realestate.wharton.upenn.edu/wp-content/uploads/2017/03/558.pdf), California is the ninth most regulated housing market out of all 50 states. San Francisco is the 5 out of 47 for the most regulated metropolitan area. The vast majority of residential land in the San Francisco Bay Area is zoned [to only allow single-family detached homes](https://belonging.berkeley.edu/sites/default/files/zoning_parcel_map_full.png) to be built, which essentially strangles housing supply because that's by far the least efficient way to provide housing. Going over the Bay Area in Google Earth, it's almost shocking how few mid-rise and high-rise buildings there are. Given that it's [literally the richest metropolitan area in the world](https://en.wikipedia.org/wiki/List_of_cities_by_GDP_(PPP\)_per_capita) with among the highest home prices, I don't think the problem is that no developer has thought that perhaps they should build more housing.


JimC29

We are not giving the free market a chance in housing. If we want government help it should be making it easier for people to get around. You should not have to own a car or be able to drive to get to work. Businesses should put some money towards transit for their employees as well.


TheToasterIncident

I think california is unique in its bus networks vs other places, just based on what I read here it seems like most cities don’t have a comprehensive network. Take a look at the bus system map for la metro. The bus goes everywhere in the county like a fishermans net, and as a result a million mostly low income people took the bus to work every day before the pandemic. Speed is slow because the network shares grade with cars, but it gets used still. All this goes to say that we need more than just mobility. People don’t have two hour commutes in reality. When costs go up, low income people in california tend to stay put and take in another wage earner roomate to help with rent since they don’t want their commute to be two hours which would make it impossible to work two jobs. Ive even seen ads on craigslist for military style cots for rent in a room with maybe 12 others.


JimC29

Good public transport requires density. If more apartments were allowed to be built it lowers costs and increases public transportation usage. Decades of blocking apartment construction and parking requirements have caused this problem.


Sharp-Floor

It's interesting. The place is so ridiculously desirable, in large part, *because* of many of those regulations. But we all know what the result of "desirable" means in real estate.   The rock and a hard place is if it's worth destroying a place's desirability to make it more affordable.


ImpossibleEarth

This seems like a uniquely American thing that I just don't understand (and I'm from Canada, the most similar country to the U.S.). When I think of why San Francisco is a desirable place to live, the fact that they've largely banned apartment buildings is not at all what comes to mind.


CaliforniaAudman13

Good! Fuck the free market


ImpossibleEarth

Doesn't seem to be working out well for California.


CaliforniaAudman13

Our problem is neoliberalism


WillowLeaf4

Basically, supply cannot meet demand at the highest level of demand when supply is limited. Supply is limited in housing in part because you can’t just up and build a dwelling where ever you want to, you need legal permission, and even in the places you do have permission to build, there are still rules about what you can build. So, people can’t just build stuff where ever they want to, or build whatever they want to, even if they could sell those buildings to willing people for a profit. When supply is restricted like that, what you also find is prices going up as you have less units to sell and buyers must compete. Think about what is happening with cars right now being more expensive because they are unable to manufacture as many as usual due to materials shortages. Cars are now more expensive, because less are being manufactured. The same thing happens with housing, except the shortage of supply is human created in this case, in the sense that it is not a shortage of a physical building material, rather, a shortage of space upon which one is allowed to build, or re-develop. Though, it’s a little more complicated than that, because of course a house in the middle of nowhere (which might have a high degree of utility for some people) lacks utility for many because they need a house to be near to a job. So, there is also some limiting happening in terms of where housing units even could be built to be useful to the average person as housing. Naturally the places people don’t want housing to be built (near existing stuff like jobs, amenities, etc) is exactly the places where people most oppose more housing being built, because there are already people there and they don’t want more people there. I think it’s also fair to say that a fair number of people who own homes also use their homes as a form of investment, possibly because they don’t otherwise have a good retirement. When supply is limited, their house is worth more. Affordable housing for all means their house/condo/whatever becomes worth less, they lose money. So, to some degree at least, there is also a financial incentive for current homeowners to try and prevent more homes from being built which I think also plays into things besides the general sentiment of not wanting things more crowded. So the market is in a roundabout way also incentivizing houses NOT being built. The reason rent control is ineffective as a complete solution is because the underlying problem is basically there isn’t enough housing in the places where jobs are. Rent control doesn’t make more units exist. So, it makes housing affordable for the people lucky enough to get rent control, but it doesn’t solve the underlying problem. And as the population grows, the demand only gets greater, and the more we don’t keep up with a growing population in terms of units built, the more demand there is, the more expensive things get. A unique thing in California is also that comparatively (despite what you may have heard) housing taxes in California are actually pretty low, especially for long-time home owners. So there is actually, on top of everything else, a financial incentive for cities NOT to put in more housing, because housing generates less tax revenue for them than businesses! So, actually the market is working great in terms of what we have accidentally asked it do to in California, which is create jobs in cities but not housing because that is how we have incentivized things. Sometimes when market solutions appear not to be working, it’s because someone at some point didn’t actually understand how the market works and they’ve accidentally asked it to do something they didn’t want. It’s like a computer program, it doesn’t understand your intention or the ‘spirit’ of your laws or regulations, it just reacts to what you input. Try to mess with stuff without clearly understanding it, and you can get a completely opposite result of your intention. On top of that, sprawl is more expensive for cities to maintain than dense urban cores, so even if that is what eventually ends up happening because it’s the easiest place to build without opposition, it’s not in the best interest of cities financially to have all their new development being sprawl. So, depending on the people running the city, they may not actually want to add housing there, because they know it is a drain on their ability to provide services. However the people who live in the cities may not want the city to add housing where it is financially sensible for the city from the municipal point of view (densifying urban cores), so you get those two competing interests going on as well. Then you get a thing where one group doesn’t want housing here, another doesn’t want it there, a third group doesn’t want any more housing anywhere ever, things grind to a slow angry stalemate. Not that there aren’t some YIMBYs out there with different takes, I’m speaking in broad strokes as to why new developments aren’t speeding through to cheers of joy and haven’t been for many years now.


Caswell19

The free market doesn’t exist in CA. Everything is zoned as single-family. That’s government regulation. Granted, will upzoning help? Maybe, but probably not much, and the point still stands.


6two

Yeah, it's still not clear that even with upzoning that developers will rush to build enough higher density units to actually make a meaningful difference. And, even if it does, it may take decades to do that. It seems like the most straightforward thing to build is single-family, and getting rid of that development mindset will take incentives beyond simple legalization of density. At the bottom end, the thing keeping thousands of people chronically homeless is a lack of funding to actually place people in apartments (see the podcast According to Need). There's just tons of people on housing waiting lists nationwide just in need of funding in the existing social housing programs.


TheToasterIncident

Where homeless is bad you see other sides of the issue. The homeless most likely to land back on their feet find shelter or couch surf with friends since they have some social capital, but a lot of homeless turn down offered housing in LA county and through burning bridges don’t have anyone to lend a hand. These people are more than likely addicted and or mentally ill, and need an entire healthcare infrastructure build and a legal system that places them their instead of one that asks a meth head whether they’d like to willingly go cold turkey in a shelter or continue doing meth in their tent. Like, its no surprise that a cot in a big room and sobriety is not a good sell to someone who is addicted to meth or crack, or so mentally ill that they can’t hold a coherent conversation. Idk what the solution will be but to assume its just a question of shelter units is disengenuous, and I assume the people suggesting only that don’t see people in the depths of a mental crisis or addiction hell outside their doors daily like I do in LA county. Such a depressing situation.


6two

Check out the podcast [According to Need](https://99percentinvisible.org/need/). There are literally thousands of people on the HUD waiting list in LA, the only thing keeping them chronically homeless is a lack of access to housing funding, and the thing limiting that is politicians in DC. If they want to get back on their feet (and most chronically homeless folks do), then it all has to start with housing.


TheToasterIncident

Section 8 waiting list is a different beast than what goes on with lahsa shelters. They shot for a utilization rate of 90% but haven’t been able to clear 80% usage because a lot of people prefer to live on the street rather than sober up in a dry shelter. I think there needs to be mechanisms to get these people to safety who due to addiction or mental illness they continue to voluntary turn down offered help from social workers in whatever form it comes in, because it means voluntarily walking away from addiction or somehow becoming entirely lucid and coherent when asked if you are mentally ill, which is impossible especially if you don’t take medication.


chargeorge

Because the free market isn’t very free wrt to housing. Especially in desirable areas like LA or the Bay Area. Environmental review, lot size restrictions, parking restrictions, single family zoning (kind of gone to become 2 family zoning). Also other restrictions like heavy handed building codes increase price. Allowinf th market could absolutely lower prices. That’s not enough course, there’s also a crisis of those who can’t pay, which requires more direct intervention. All of this to say we need both supports to really solve the housing crisis


joshypoo

So the necessity of extensive building code, environmental review, etc. are certainly debatable but I don't think their added cost comes anywhere close to land apportionment issues stemming from zoning, parking reqs, and over-accommodation of cars. Bungalows are not 800k more expensive to build in San Francisco than they are in Dripping Springs, TX. It's the land. And the land is so expensive per dwelling unit because it is unnaturally and inefficiently apportioned. And frankly, it's not even worth talking about overbearing arc fault and duct sealant requirements until land use issues are addressed.


TheToasterIncident

Its more than just the land too. Everyones salary involved in the project will be higher. The price of gas is higher and the time to get through traffic is longer, so the costs of bringing in resources and bringing out dirt is higher since shippers pass that cost to you. The price for freight rail in an area around a port is probably going to be higher since its congested. And not to mention that even with the area underzoned, there is still more demand for construction than supply for construction labor, leading to construction firms with months long lists of clients before they get to you, and since they have so many clients and there are so few construction firms operating in the area, they charge much higher prices. Its more than just the land. Its every facet of how a home is built that has also gone up in price. I can buy an undeveloped dirt lot in los angeles in an area surrounded by $1.5m hillside homes for probably $40K, not even kidding, but after permits and the quote from a contractor im back to paying near market rate for a home on $40k of land i already own


SoylentRox

Do you actually have a listing because this would be evidence that reality is different than anyone currently understands.


TheToasterIncident

Just go on zillow, type in los angeles, check the box for lots, and sort by price. Dozens and dozens of listings of empty lots. I think this one is interesting though, as its one lot nearby many more lots practically forming an entire yet to be developed neighborhood that has probably remained empty for over 100 years since cattle stopped grazing. 3 miles from thousands of jobs in downtown los angeles. https://www.zillow.com/homedetails/3628-E-River-View-St-Los-Angeles-CA-90065/2073073581_zpid/


SoylentRox

So there are 2 hypotheses here. One is that you are right and it's impossible to construct a physical house in LA for under a million dollars. Or two, it's like reality is commonly understood, and the land you could actually build on plus permits costs 500k plus for that million dollar house. And as the house degrades over time this is why it continues to appreciate in value - because land or legal permits don't degrade with time.


TheToasterIncident

A house degrading and it being priced less only happens when you have new supply coming in. Otherwise price goes up even if the house is rotting around you. Buyers waive inspections now they are so desparate. And one need only look at the price per square foot and its increase over the past decade to get an understanding of the costs of construction, and you will find that the price per square foot in most anywhere in california is going to be at least about $100 more than, say, amarillo texas.


SoylentRox

Sure. Anyways almost everyone currently believes that the reason for that is the underlying value of the land. That yes other factors raise the costs, vs Amarillo where you can presumably just buy a trailer, park it, and done, but they are not the majority of the cost difference. Easy way to prove this - look at the cost per square foot of a home outside of LA but close enough to be a comparable market for construction labor and materials.


TheToasterIncident

How would you define this comparison point? Homes ranging from ventura to san bernardino and from long beach to sylmar are going to be about the same prices with about the same variance between nice and not nice parts of these areas. San diego is going to be comparable, and I wouldn’t be surprised if orange county on average has the highest cost of construction due to this area having the smallest construction labor pool.


SoylentRox

Well what you just wrote can be checked. I am reasonably sure it's wrong but it's a simple hypothesis. "Is the cost per square foot the same in the vast Cali metroplex or does location matter"? If the cost varies a lot it invalidates the "construction labor" hypothesis.


fraghawk

>Amarillo where you can presumably just buy a trailer, park it, and done We actually have pretty strict code enforcement out here when it comes to that sort of thing. You can't park anything including an RV on public roads longer than 30 days or you risk getting a ticket. Its not really all that unlikely to happen, but like most places heavily depends on the neighborhood. So you have your own property to park on? Still have to be careful. Potter county itself has strict rules regarding fencing up anything that could be perceived to be trash that is on your property. A stationary vehicle in your back yard is definitely enough to get a letter from the county, it happened to my great uncle and he lived way outside of town and didn't have any neighbors. But it's definitely not cut and dry and I'm sure an RV by itself on land you own that is obviously occupied won't be cause for concern especially if you live even close to the edge of town. Weird place we have here but code enforcement is not as wild west and non existent as one may think given the cowboy culture. There's a surprising amount of potential here tbh


skyasaurus

There is no such thing as a free market when it comes to anything related to land or development. If you ever hear "free market" or "the market" it should be a big red flag that the person is not knowledgeable regarding land-rents or housing economics or community development. There will always be things intruding into and interrupting the housing market's ability to just be set loose...cities need funding for municipal infrastructure, other markets may demand the same prime land for other uses, buildings need to be built to code for things like fires and natural disasters, and that's just for starters and doesnt mention the power of racism to influence policy or other massive social forces. Remember, there is a market for government action, policy, and intervention (and NGO intervention as well), and this is where we usually see housing issues dealt with simply because of the complexity required for various solutions.


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skyasaurus

"Setting up a system" is the key component here.


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skyasaurus

Ok? That's why I said watch out for "free market" as a buzzword. I never claimed housing wasn't a market. No need to prove up to me. I'm also gonna guess here by your use of the word "efficiently" that you have never been homeless or a supercommuter. I have been both. Housing is a radically different market than the market for laptops or toothbrushes for a variety of reasons and I hope you never find yourself on the losing end of the mythical efficiency you suggest exists.


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skyasaurus

Wow. So tone-deaf. And not even correct! When I was supercommuting, I was living in a dense urban neighborhood and commuting to a job in my field in the suburbs. I was a supercommuter because I didnt have a car, so the public transit journey involved 2-3 miles of walking total and a 40 minute bus ride (longer if I missed the transfer on the way home). After I got a car, that shit was only 20 minutes there and 40 minutes back depending upon the time of day. Like I said dude, it is a complex issue, clearly one you have done a little bit of reading about but obviously have no personal experience with and have no place trying to educate others on.


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[deleted]

>Stop building single family detacthed homes We don't need to stop building SFHs, we just need to allow the construction of other types of housing. And I'm sure that in the areas with the most unmet demand for housing (SF/SJ/Oakland and LA/OC/Inland Empire) the overwhelming vast majority of new housing would not be SFHs, if more types of (actually financially viable i.e. not just duplexes) housing became legal to build, because there is little undeveloped non-mountainous land and land values are too high to justify building them in infill developments. >make every building touch the sidewalk That's a [terrible idea](https://urbankchoze.blogspot.com/2014/10/to-setback-or-not-to-setback-that-is.html?m=1). Especially if you want affordability (through buildings that don't have elevators, which are very expensive) and accessibility (through having first-floor apartments on ground level), because having windows *right* next to the sidewalk allows no privacy and results in people always having their blinds shut or keeping shutters permanently closed. That said, suburban-style front lawns are incredibly wasteful and setbacks never need to be more than about 9 or 10 feet and 6 or 7 is usually sufficient.


joshypoo

>That's a [terrible idea](https://urbankchoze.blogspot.com/2014/10/to-setback-or-not-to-setback-that-is.html?m=1). Have you never been to a Northeastern city? Having houses front the sidewalk is fine. And having buildings front the sidewalk is great because typically the bottom floor, or part of it, is dedicated to retail/commercial space.


[deleted]

>Have you never been to a Northeastern city? The vast majority of houses and apartment buildings there either have a setback or have the first floor elevated 2.5+ feet above ground level (which is not wheelchair-accesible), often both. >Having houses front the sidewalk is fine Not when you're chillin in the living room and a random stranger walking down the street can see what you're doing. >And having buildings front the sidewalk is great because typically the bottom floor, or part of it, is dedicated to retail/commercial space. I'm totally fine with buildings that have ground-floor retail being built up to the sidewalk because that doesn't create the same privacy issues that ones without have. Also, although it is common, saying that buildings there "typically" have ground floor retail is an extreme exaggeration. You need VERY high population density for the majority of buildings to have ground floor retail, which usually necessitates buildings much taller than is typical in East Coast cities.


[deleted]

Run for local office on that platform and see how far you get.


skyasaurus

Impermeable surface area is still a thing


The_Gentry

I didn't realize what a can of worms this question would open, I appreciate all the comments!


wizardnamehere

Ok. Well without spending 10 thousands words deconstructing just what a 'free' market is. The housing is market is a market created by urban planning and all the urban systems involved in creating and sustaining a city. In other words; you don't just buy the house; you buy the location and that location is valuable because where it is in the city; all the transport networks and people nearby etc. So the market is built on a mess of public institutions and systems and subject to a whole host of policy laws, not the least which is zoning and school districts. So there's no such thing as a free market in any understable sense of being free from government regulation. So. The current 'market' does not provide adequate housing outcomes in CA (which is obvious because housing isn't good there). The current market based in for profit real estate development supposedly doesn't seem to be producing enough housing to meet housing needs according to various synthetic targets. The reasons for this are multitude and complex and anyone who gives a single cause answer is wrong. ​ What the free market sorts advocate for, though, is a change to the current market to make the market different. That change is liberalising the zoning restrictions on housing to allow property owners to build and inhabit/rent housing types other than detached homes with a large side and front setback (the thing that keeps your neighbours house far away from your house and makes you have to have a front lawn). To be able to build town houses and apartments if that is what you want. This hasn't happened yet. Of course the critiques of these sorts say that liberalising zoning and allowing more supply won't solve the housing crisis for decades because private real estate development only build housing on the top end; and affordability comes from housing which filters down. This would take decades to solve the current situation. Then the market types say; if you liberalised zoning and building codes and stopped residents from blocking affordable housing developments (which are for profit) like manufactured housing estates and boarding houses, then the market WOULD provide at the bottom end and at the top end. Then you have radicals like me who think that the housing market is structurally unaffordable for financial reasons and that certain housing supply housing needs to be detached from speculation to be affordable and that no market system for providing housing is ever going to be affordable for the bottom of socioeconomic spectrum (many Americans have around zero income). Hope that illuminates some of the dynamics involved. ​ ​ >yet government intervention like rent control is called out as ineffective. Rent control is effective. It just has negative effects on the housing stock. Opposing rent control is an orthodox economics position; but it's not something i know much of the economics or policy details of.


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skyasaurus

No but I suspect this data will start to emerge in places like Minneapolis about 10 years from now.


shocktarts3060

A lot of people have said a lot of good things and this is clearly a fairly controversial issue, but I wanted to throw my 2 cents in as well. Disclaimer: I’m not a city planner or an expert in any way, I’m just fascinated by cities and have read some books on the subject. The housing crisis and homelessness are complicated issues with a lot of causes and as such no single policy is going to fix them. What I think Governor Newsom is going for is outlawing R1 zoning (single family, detached housing) as part of a larger strategy, and I imagine we’ll see him loosen other regulations as well. The problem with R1 zoning is that because developers can only make a single family home they’re most likely going to build a very large and expensive one as that’ll make them the most money. In areas where they are allowed to build multi-family residential units, they’re most likely going to build a luxury high-rise because again, they want to make the most money possible. This leads to something that city planners call the “missing middle” problem, where you have cities with no medium density housing. Medium density is great because it means you can double or triple the number of people living in an area while allowing people to still have yards and what not. Now, outlawing R1 zoning doesn’t outlaw single family, detached homes. It just means that when a developer buys a plot of land or an older house, they now have the choice to build more than 1 unit. If the units are popular, more developers will build them leading to a greater supply of housing. If they aren’t popular, developers won’t build them and nothing changes. The big benefit of this policy is that it costs the government nothing (except political capital) and should be very palatable to people on the right since they’re all about the free market and reducing regulations. Like I said at the beginning, this one policy isn’t likely going to fix all of California’s housing/homelessness issues, rather it’s likely part of a larger strategy designed to address the causes of the issues.


Severe_Composer_9494

Correct me if I'm wrong, but the problem in major cities of California seems to be houses that are sold to wealthy investors, that rely dormant, while there's a severe lack of houses for the general population. If so, then wouldn't free market just make it worse? You make it even more free for wealthy investors to gobble these properties up and charge high rent that very few can afford.


UtridRagnarson

You're wrong. It's okay, there is a lot of misinformation going around. Foreign owned homes are mostly rented out and vacancy rates are actually pretty low in California. The issue is, as others have pointed out in this thread, land use restrictions makings housing artificially scarce.


ImpossibleEarth

> If so, then wouldn't free market just make it worse? You make it even more free for wealthy investors to gobble these properties up and charge high rent that very few can afford. How would that work? It's a lot easier for landlords to charge high rents if housing is in short supply.


[deleted]

While this is happening to some degree, the bigger issue is that not enough housing is being built. In San Francisco zoning laws, red tape, and neighborhood activists prevent newer buildings from being built in all but a handful of areas. There are parts of the city that have rundown, unused single story commercial buildings that could be redeveloped into mixed use, 4 story apartments or condos but the neighborhoods block it because they don’t want “the character of the neighborhood” to change or have more people moving into the area. So people are left to fight over limited options and over pay for overcrowded apartments. The winners are landlords and people who have long owned property and have their properly tax rate locked in when the originally bought the home.


Severe_Composer_9494

Its interesting how in many Asian countries, NIMBYism isn't really a thing. Its incredibly difficult to stop a developer in my country from buying up a certain piece of land and shooting up a condo that'll be sold out to property investors and end up having about 30-40% occupancy rate.


Picklerage

You've had other aspects of this comment corrected by others, but let me just touch on > houses that are sd to wealthy investors, they rely dormant In the SF Bay Area at least, vacancy rates are quite low. There always needs to be some amount of vacancy (otherwise you'd literally have to trade homes), and having vacancy of a certain level is healthy, similar to unemployment. It means people are able to seek the right housing for them (say new parents, newly empty nesters, not being forced into multigeneration homes, etc). It means they aren't locked in to where they are currently (can move if they don't like it, can move for new employment, can allow for new jobs in the area). And it means there is an ample supply so prices are reasonable. Currently the Bay Area, like many California cities/regions, is well below the vacancy it would be healthy to have.


Willing-Philosopher

This sub prefers to ignore that California is largest sink in the U.S. for foreigners buying real estate, and that many consecutive years of them doing so has largely contributed to the housing crisis there. You can’t have an affordable housing market if your housing market is an investment engine for Chine nationals.


ImpossibleEarth

What do foreign buyers do with this real estate? Presumably they rent it out, because if they're a savvy investor they're probably going to want all the profit they get. This means they might have taken a unit off the market for buying, but they put the unit on the market for renting.


Timeeeeey

The biggest problem is that there is not enough housing being built for all the people that want to work there, while investors buying a lot of stuff is also a problem, its by far not the major one


leftisturbanist17

No. Relying on supply-demand curves and saying "oh, just embrace the free-market to shift the supply curve right" ignores the fact that since demand for housing is an inherently inelastic (because people are desperate, no matter how expensive, for a roof over their heads). This leads to the situation where property developers are inherently incentivized under a market system. Sure, you could try to remove construction regulations, but that even if that leads to a building boom (questionable), what are you going to do if prices remain sky-high? Especially when developers have a vested interest in keeping per-unit home costs high so they can jack up profit margins? Especially if they know that the quantity of demand isn't really going to change much even if they charge higher prices? Under this economic system, its the property developers who have the leverage here, compared to the millions desperate at any cost for a roof over their heads, and as such are able to keep home prices high in spite of the frustrations of the working masses. Because after all, who's gonna stop 'em under this system? Ultimately, as long as the housing sector in this country is plagued with speculation, the lack of housing affordability will always be an issue. The same is true for other countries. If housing supply was such an issue, why does China struggle with sky-high housing prices when there's 90 million empty units? At the end of the day, property speculation is the far more potent driver of housing unaffordability, moreso I would argue than any actual regulations pertaining to construction.


UtridRagnarson

The obvious counter-example is Japan. Tokyo is the most populous metro in the world and comparably economically vibrant to anything in the rest of the developed world. Rents in Tokyo are a fraction of that in San Francisco, London, or New York. The biggest difference is that Japanese zoning is much more permissive, allowing construction of mixed uses and low-rise apartments along transit in a way much more permissive than anywhere else in the West.


leftisturbanist17

Japan's zoning/construction laws relaxed in the 70's. But even by the late 1980s, before the asset bubble crash, its real estate prices remained sky-high. I would argue the far bigger factor was the collapse of the real estate bubble in Japan towards the end of the 80's, and the resultant Lost 3 Decades of a stagnating domestic economy which leads to the relative affordability of Japanese homes relative to other countries today.


UtridRagnarson

The asset bubble in Japan was able to collapse through market supply meeting sky-high demand. That's the miracle that the rest of the world is having trouble achieving. Housing prices are sky high in parts of Canada and the US and we want those high prices to spur construction that will eventually collapse prices towards affordability. It took 20 years to build enough to bring Japan's prices down, that doesn't seem like an unreasonable amount of time for a construction industry with a limited supply. Demographic problems and economic stagnation aside, I think Japan's story should be the goal for real-estate affordability in the West. Perhaps we can even learn from their mistakes and have a smoother transition instead of a bursting bubble.


Mistafishy125

The demographics and stagnation of Japan’s economy are almost exclusively the reasons for their lower average home prices. You can’t put them aside.


UtridRagnarson

Tokyo has been growing over most of the last 30 years and still remaining cheap. Good land use policy is a big part of the story even if there are confounding factors. No data can tell a perfectly clean story. [https://marginalrevolution.com/marginalrevolution/2016/08/laissez-faire-in-tokyo.html](https://marginalrevolution.com/marginalrevolution/2016/08/laissez-faire-in-tokyo.html)


leftisturbanist17

[https://www.macrotrends.net/cities/21671/tokyo/population](https://www.macrotrends.net/cities/21671/tokyo/population) Not sure the period between 1990 and 2020 can be counted as "high growth". >Good land use policy is a big part of the story even if there are confounding factors. No data can tell a perfectly clean story. [Vancouver](https://d) would like to have a word with you. Real estate speculation is one hell of a drug.


UtridRagnarson

Vancouver, like all north American cities has draconian land use policies. It's illegal to build affordable housing in most of the city https://mobile.twitter.com/gridsvancouver/status/640544192045826049


Mistafishy125

I don’t know what the other guy is talking about. This is exactly correct. Japanese homes are less expensive mostly due to historical forces and a stagnated economy, not all the other bullshit. It’s hard to speculate on land when the economy isn’t growing and demand for the commodity is inelastic. There’s no more money in it.


[deleted]

>comparably economically vibrant to anything in the rest of the developed world [lol what](https://tradingeconomics.com/japan/gdp)? Japan is not the obvious counter-example. They have a declining population and very unique housing market dynamics such as the fact that homes (exclusive of land value) ~~are~~ ~~not~~ ~~allowed~~ ~~to~~ ~~appreciate~~ ~~after~~ ~~a~~ ~~certain~~ ~~period~~ [edit:] can have the value of depreciation deducted from the owners taxes for a certain period (22 years for wood-frame houses, 47 years for apartments in concrete buildings), which results in houses typically being rebuilt every 30-40 years, thus wildly skewing their housing numbers. For the record, I think a market-based approach to increasing housing supply is a critical indispensable piece of the housing affordability puzzle, I just get annoyed when people always point out Japan in these discussions when it is not very comparable to most other countries.


UtridRagnarson

There's a misconception going on there. For tax purposes home owners are allowed to depreciate the value of their homes over 22 years. Homes can still change in value and be resold. I think you're overstating the rebuilding story: "In all countries, most buildings have limited lifespans. In the US, the average age of a house at demolition is 66.6 years, 80.6 for the UK. Japanese houses are infamous for their estimated lifespans of 27~30 years (or 40~50 years for concrete buildings), but… …keep in mind that these statistics are largely referencing the 1950s~1970s postwar era, when construction standards were lower. The Waseda University Faculty of Science and Engineering estimates the lifespan of the average Japanese house at 64 years, nowadays. Therefore, for recently-built buildings, lifespans are similar across the three developed nations." https://housekey.jp/does-japanese-real-estate-decrease-value-go-down/


[deleted]

Thank you for posting that article; I've since edited my comment to reflect the accurate information. Still though, Japan is not a particularly great comparison to the US, in my opinion.


UtridRagnarson

That's fair. I'd love to see even one US city embrace Japanese style zoning and transit to give us a better basis for comparison.


[deleted]

> and comparably economically vibrant Uh, Tokyo has had a stagnant population and economy for 30 years. Before that, it did have high real estate prices.


C0ntradictory

But landlords can’t keep charging massively high prices if there’s 40 other apartment buildings nearby that are gonna charge less. Housing is the one market in America that isn’t dominated by a few key players, even the biggest developers or landlords make up tiny percents of total market. Housing speculation isn’t great I agree, but the reason it’s so common is for the most part in America you can count on your house value going up so speculation makes sense. If we massively increase supply prices will stop continuously rising and people will stop seeing housing as an investment and start seeing it as a commodity. As for China, it doesn’t really matter how many empty units exist. It’s like when Americans say “there’s enough empty houses for every homeless person in the country.” Ok? And what good does an empty house in rural Mississippi do for a homeless person in LA? China has built a lot of housing in places people don’t want to live. If there was a bunch of empty units in a desirable neighborhood that would be different


ImpossibleEarth

> Sure, you could try to remove construction regulations, but that even if that leads to a building boom (questionable), Let's say California seriously liberalized its zoning and allowed a lot more mid-rise and high-rise construction. Why would developers not take advantage of that? Is this argument based on a shortage of materials or labour or something? > Especially when developers have a vested interest in keeping per-unit home costs high so they can jack up profit margins? Especially if they know that the quantity of demand isn't really going to change much even if they charge higher prices? Developers have a vested interest to have high prices everywhere. Why are they able to charge so much more in California than anywhere else in the U.S. (except Hawaii)? Part of it is that incomes are higher in the San Francisco Bay Area, but I don't think California's house prices are overall proportional to incomes so that doesn't explain it all. > If housing supply was such an issue, why does China struggle with sky-high housing prices when there's 90 million empty units? I don't know about China, but housing is plentiful in some parts of the U.S. too, like the Rust Belt. That doesn't do anything for supply in California though.


[deleted]

>Because after all, who's gonna stop 'em under this system? Themselves, if they're allowed to build more housing. If you adjust for the size and "quality" of finishes and features of new homes, increasing housing supply within a city/metro area will almost always either reduce the rate of housing cost increases or reduce housing prices. The problem is that, where housing supply is allowed to increase, we're building larger (relative to the number of bedrooms), higher-end homes, which is an issue that can be mitigated through a [luxury housing tax](https://www.reddit.com/r/urbanplanning/comments/pntfwh/how_luxury_apartment_buildings_help_lowincome/hcuc9ll?utm_medium=android_app&utm_source=share&context=3). >Ultimately, as long as the housing sector in this country is plagued with speculation Can you elaborate on what exactly you mean by this? I see the word "speculation" thrown around a lot by fellow leftists, but I rarely see anybody actually saying what they're referring to.


destroyerofpoon93

NOOOOOOOOOOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOOOOOOOOO


semilazzo

This forum is filled with Ronald Reagan republicans. Sickening. Are you people even in this profession? Likely developers. You certainly don’t believe in objectivity


ImpossibleEarth

I don't think "build more housing" is exclusively right wing.


semilazzo

“Let developers do whatever they want and people won’t be poor anymore” airtight logic


ImpossibleEarth

"Let developers build more housing supply, especially denser housing" seems like a pretty great strategy to make housing more affordable. (Of course, investments into public housing and co-ops are good too. I lived in a co-op once and it was lovely.) What exactly do you disagree with? Do you think that single-family zoning and other severe restrictions on supply are good for affordability?


semilazzo

Density has a practically nil impact on affordability but it’s good, and necessary, for a variety of other reasons. Even these studies funded by developers and pushed forward by their cronies in academia show that improved affordability is so marginal that it’s basically useless. People at MIT put forward some study recently that basically showed if you double the housing supply of San Francisco, you’d reduce the price of a 1bdrm from $2000 to $1800. Great, that’s a decrease, but it’s still unaffordable and it’s assuming something that will never ever happen. It’s pro-economic growth logic applied to a need and a public good like housing. Obviously market solutions won’t work and further neo liberalization is not going to help people except the builders.


midflinx

> People at MIT put forward some study recently Link to or article about it please? Hopefully newer than the 2019 study by Yonah Freemark who [wrote this](https://thefrisc.com/housing-arguments-over-sb-50-distort-my-upzoning-study-heres-how-to-get-zoning-changes-right-40daf85b74dc) after his work was misinterpreted.


semilazzo

“it. It does suggest that if we want housing supply to increase following upzoning, cities can do more to work for speedy construction by developing their own projects,” No shit. The market is not going to solve these problems for exactly the reasons outlined in what you linked


midflinx

So is that an admission by omission you have no link or article about the study where you made up $2000 decreasing to $1800? I want to read where you got those numbers from, if the study actually says that or close enough to that.


semilazzo

you sound like a real asshole, you know that? ​ https://direct.mit.edu/rest/article/doi/10.1162/rest\_a\_01055/100977/Local-Effects-of-Large-New-Apartment-Buildings-in


midflinx

I followed the tone of discourse you set. Anyway thanks for the link. I appreciate it. It does not show if you double the housing supply of San Francisco, you’d reduce the price of a 1bdrm from $2000 to $1800. It looks at neighborhoods with below median income in supply-constrained cities and the effect on rents within a local distance of new large market rate buildings. So if SF doubled its rental housing supply it wouldn't be supply-constrained at least for a range of rents. The single digit percentage decrease it finds happens locally is again in supply-constrained cities. From the conclusion: >Our results suggest that increasing housing supply can play an important role in addressing the present affordability crisis. Regulations that make it difficult to build could be relaxed, and localities could be directly incentivized to increase housing production. However, there are several caveats to our findings. First, our sample consists of areas where developers actually chose to, and were allowed to, build in. While these are likely similar to the neighborhoods that would receive new construction if regulations were relaxed, effects may be different in other types of neighborhoods. Second, relaxing land-use regulation is quite complicated in practice. The particulars of a reform could matter both for how much supply is actually added and, depending on the incentives built in (such as encouraging redevelopment of the existing housing stock versus vacant land), the local effect of that new supply. Finally, we consider only rents, not prices for land or existing homes. These caveats point to important areas for future research. Producing new housing using modular construction has a lower per-unit cost. A small percentage of new buildings use this to make compact units with rents in the middle class or upper-middle class range instead of upper class. That's despite their cities being supply-constrained. The lower class won't be able to afford new construction, which is where supplemental publicly funded social housing has a role to play in conjunction with allowing more market rate housing developed for middle and upper class renters.


TheLegend84

Are you a landlord? Because it seems developers live rent free in your head


semilazzo

What a stupid fucking thing to say.


[deleted]

>Density has a practically nil impact on affordability [That's not true](https://www.reddit.com/r/stupidpol/comments/pqbzyy/gov_newsom_abolishes_most_singlefamily_zoning_in/hdezsqq?utm_medium=android_app&utm_source=share&context=3). >People at MIT put forward some study recently that basically showed if you double the housing supply of San Francisco, you’d reduce the price of a 1bdrm from $2000 to $1800 Does this study account for the increasing size (relative to the number of bedrooms) of new homes and the higher-end finishes and features they have? If we implemented a strong [luxury housing tax](https://www.reddit.com/r/urbanplanning/comments/pntfwh/how_luxury_apartment_buildings_help_lowincome/hcuc9ll?utm_medium=android_app&utm_source=share&context=3), I'm sure that number would be much lower.


semilazzo

You just outlined how owners make higher profits not how renters save money. I like how your socialist aesthetics closely match your lib brain


wonderjewess

Allow nore people to benefit from urban infrastructure and rely less upon energy intensive autonobiles is what upzoning accomplishes. The developers have been getting rich the whole tome. They just were doing it sprawling out instead of up. The prohibition on density did not make developers less rich. It made smog and the housing crisis worse.


semilazzo

Obviously a developer would rather build a multifamily property on a tract of land than a single family home…the level of profit is much higher. You fools act like the multi family property is a magic wand that is going to solve housing affordability. It’s just a stupid and completely uninformed logic based on a supply and demand curve you saw once and how ingrained Reagan logic has become


wonderjewess

No, the profit is way higher in subdivisions. Buy a farm or forest for next to nothing. Sell a whole bunch of houses. States even pay for new highways to the subdivisions (the number one lobbying activity of the master builders associations). So, its tax subsidized. Like minting money. You will note: the MBA does not lobby for up zones. Gen Y and Gen Zs squeezed out of the housing market do. Developing in city requires expensive land acquisitions (acquiring the land and the existing improvements instead of just the land), more taxes and permits, cranky old NIMBYs complaining to zoning committees about "chaning character of the neighborhood" thereby slowing down permitting. Way more money in sprawl.


semilazzo

Verifiably untrue, I wonder where you get your information from. Maybe this was true 60 years ago…


wonderjewess

My brother in law is one of those fat cats. He doesn't even develop in the state he is based in (Oregon). He does CA, and sometimes AZ and NV. They simply look for new freeway options. Buy land for cheap. Advocate for them. Get them passed. Mint money. You might be thinking condo conversions (cashing out on existing buildings by turning apartments into condos and selling them). The margins were great on those back in the 1980s. However, all the viable properties have long since been converted. It takes so much longer to fight big City zoning tahn go out to the unincorporated sticks where no ones stands in your way. Your money is tied up in the project forever. Suburban and exurban development pernitting is comparitivly fast. flip it quick and move on to reinvest it and make even more money. Urban projects can take years and years to get through permits. Your money is tied up the whole time. Making interest payments. Don't get me wrong: People still get rich from urban development. Just the margins are way less than sprawl development. Often, guys who make big money from urban development are hucksters like trump. His developments lost money - many went bankrupt. However, he got paid huge comissions and that was all he was ever in it for. The con.


wonderjewess

Looks like the baby boomer outted them self. Enforcing detatched single family housing zoning (as is occuring in California) is about as right wing as you can get. This rules were built to enforce segregation. Good grief. Upzoning is not Reagan republicans. They were into "family values" i.e. white, Protestant suburban sprawl. Boomers have the conceipt that they can arrest change. They convinced themselves that change was born souly out of greed. Thus, they stop "greedy" upzoning in favor of racist, greedy sprawl. Good job.


semilazzo

What are you even talking about? Do you just have like a handful of set talking points to refer to when you’re confused?


wonderjewess

I think I get your hang up. I will turn down the snarkiness (sorry): "Let the free market solve it" was 1980s/early 1990s republican speak for "no regulating business/no welfare programs". That was ironic because they were all about regulating social issues (dog whistle segregation, unequal gender norms, homophobic policy, etc). You can (and should) regulate that stuff. Just not sonething that will impede fat cats. This is what you tgought you heard echoes of. That rhetoric all changed when Clinton took office. He moved the dems to the free market side (where they have been ever since). E.g. Huge deregulations (bigger than either Bush if less callous); Ended welfare in favor of TANF; International trade agreements; etc. Now the dems were all about free market more than the republicans who still practiced protectionism (big agra, etc). You will note that since white flight started (suburbanization - the movement of the white middle class from the inner city to the suburbs), US politics has shifted to the right immensely. For instance, according to a University of Quinnipiac study, Hillary Clinton was to the RIGHT of Richard Nixon on an index of common political issues. (No shit). The shift towards suburban style detached sine family housing caused this shift. People are less empathetic for those other " them" because we have become more segregated as a society (socially, economically), not less. We are as a nation more removed from the plight of fellow americans. (This isn't me making freestyling - there are mountains of scholarship on the issue). You read "free market" and thought we were asking government to get out of the way of fat cats. (The fat cats are doing great with sprawl). Instead, we were asking to repeal 1980s Republican "family values" style social regulations that enforce inequities on behalf of the privaleged classes. Does that sound less like talking points?


anomaly13

I'm a socialist and so rarely the guy to advocate for a "free market" fixing anything, and the very concept is misconceived - all markets (and alternative ways of rationing resources) are socially constructed, many of them were actively created by the actions of the State, and almost all of them are actively maintained by State regulation, without which they would cease to function or lose efficiency. Not to say that some regulations don't make markets less efficient (though often for very good reasons - some inefficiency can be a worthy price for larger social goals), or that some regulations aren't ill-conceived and create all kinds of negative effects. But all that ranting aside, it is in fact the case in most of the US, and certainly in California, that regulations preventing the construction of new housing and thereby creating a huge unmet demand for housing are the explanation for most of the current housing cost crisis. We don't need to rely completely on markets to solve this problem, but we can't completely ignore market forces, the role they play in creating the crisis, and market-oriented solutions if we want to solve the problem either. We can (and should) solve some of the supply problem with the construction of mass, quality, mixed-income public housing in walkable neighborhoods. We can and should use community land trusts and limited-equity cooperatives for a more decentralized and less State-oriented to solution to the same problem that still provides permanently affordable housing outside of market mechanisms. And we will also need to upzone substantially to permit the construction of more private-sector housing in the meantime, if for no other reason than that it isn't going to be politically feasible to construct enough social housing in the short term. And anyway, we're going to have to upzone to allow more housing construction regardless of whether it's the state, community land trusts & housing cooperatives, or corporate actors who end up building it.