Honestly, the end of the article gets into what's actually necessary to change to fix the housing situation. There's a ton of locally-optimal but globally-detrimental decisions to not build places - so what's necessary is a regional zoning czar for the Bay Area that can tell people to shut the hell up and allow people to build.
Nobody really has the power to do this, and the voters are demanding NIMBY policies, so I'm not holding my breath. The next best strategy is coming up with an acceptable measure of how many people a certain plot of land "should" house and taxing/subsidizing landowners based on how much housing they actually provide on the land. That's technically not an ad-valorem tax, so would dodge Prop 13, while still pricing out people who really should make room for better use of the land.
Sure, you can vote against zoning or building high density housing, but it's going to cost you. The price will be your prorated cost share of moving the project somewhere else. Don't want that tower block next to your house? Fine, pay $1M to have it moved.
You could combine this with a reverse auction of subsidies. As in, yes, I'll take that tower block for $500k.
Eventually the market clears and the problems get solved.
No matter where you'd like to pin the blame for the SF housing crisis, be it zoning, NIMBYism, new money, gentrification, or anything else, there is one thing I think we can be pretty confident about:
The only solution to the problem is for the city to build its way out of it.
There is no rent control regime that will, in the medium term, prevent money from ultimately swamping local concerns. Real estate is a good, not a moral principle, and most people who own real estate have a number.
I would be interested in anyone with a counterexample of a US metro area that withstood sustained market interest, without extensive new building, without skyrocket housing prices and the demographic shifts that come with them.
Talking to a few activists about this solution and most of them say that "building your way" out of it only makes sense if you are also building affordable housing.
I don't see a builder voluntarily building low-cost housing in the Mission district, just more luxury condos. A municipal ordinance that removes restrictions while imposing a requirement to build affordable housing along with more luxury condos might be the right solution.
Fortunately, the market isn't just SFO. Eventually the prices are so out of whack, and the governance and tax structure gets onerous enough that people and businesses head off to other places. New York City and State circa 1965 is a great example of this phenomenon.
There were sleepy small towns and farms within 15-20 miles of Manhattan welo into the 70s.
Oh, the "bros" (and less sardonically, the tech crowd in general -- independent of age, ethnicity and gender) themselves aren't to blame. They are but passive agents.
However, the influx of their paychecks is quite obviously a factor. Attempts to deny this fact are just that... denial.
I used to support the view articulated in this article, but I'm more skeptical now.
If higher density were the solution I would expect to see highly dense cities have cheaper real estate than less dense cities. Instead, it's just the opposite.
That's because of the other side of the economic equation: demand.
And therein lies the devil. I hypothesize that increasing the supply of housing in a city actually increases demand in such a way that the supply increase has little downward effect on housing costs.
It makes sense why this is the case. If more people live in a city, then there's more people who are likely to move there. If you know a bunch of classmates who are all moving to San Francisco after graduation that's going to make you more likely to move to San Francisco too.
So yes, supply exerts downward pressure on housing costs, but I would bet that heigthened density then causes a near commensurate increase in demand such that the supply increase has little effect.
This is just wrong. Every reputable economist I've come across disagrees with what you're saying. As with climate change, if we ignore experts, we will needlessly careen toward disaster.
Conservative economists like Edward Glaeser have long opposed restrictive zoning[1]. President Obama’s Chief Economist sees that “income inequality across cities remains entrenched and may even be exacerbated” as a result of restrictive zoning[2]. According to Nobel laureate and New York Times columnist Paul Krugman, “this is an issue on which you don’t have to be a conservative to believe that we have too much regulation.”[3]
The problem is that the increased density is happening anyway.
It isn't that if we build more housing, more people will come, which will bring more people in an exponential cycle. The reality is that tech workers are coming anyway, and paying whatever is required of them to live in SF. They aren't being stopped by high rents, because high as they are, they can afford them.
However, they are raising prices for people that can't afford it. That pushes other people out.
The result is that whether we build or not, tech workers will live in the city. Building more won't bring more of them. The only question is whether other people can live there too.
I'm curious, how does a place like Hong Kong handle this? It's another large city that's locked on 3 sides by water (they do have other islands but I imagine the population is not signifiant on those).
I know rent in the city even in the fancy condos is expensive but they still have their working class workers. Where do they live?
I live on the "urban frontier" in Oakland (east side of Lake Merritt) and it's pretty nice, I don't feel endangered at all.
South of me there's just huge swaths of residential and commercial land that can be developed - and I think will be developed. The main problem is that there are not enough professional/middle class people living there now. But once some move in, more will follow (as has happened in other parts of Oakland).
My point is that the Bay Area has quite a bit of capacity for further development once you step out of SF.
I'm not sure why San Francisco being an enormously popular place that lots of people want to live in is a reason why we need to raze San Francisco and build something else there instead, vs. and not a reason why we shouldn't go to one of the many other shite places that everyone hates, raze that, and build more San Francsico.
The amount of tech workers buying up housing is also up for debate. Though this article focuses on cash transactions (perhaps mortgaged ones don't contain occupational data?), it paints a picture of other white collar professions performing the majority of cash purchases of housing in the Bay Area.
The data was taken from a company that controls 10% of the real estate market in the Bay Area.
Cash inflows from overseas are also a major contributor. The exemption of real estate from money laundering regulations makes it a sink for a lot of shady revenues.
Keep in mind neither tech nor entertainment was ever California's main industry. It is and always has been real estate. Money from real estate flows down stream into MANY pockets.
A year or two ago, ~8% of SF's population worked "in tech".
It seems like median tech salaries are in the very low six-figure range. 120k/year gross will (assuming no car or loan expenses) pay for -at most- $3500/month rent with typical utilities, Internet, and food expenditures. Even then, that leaves you with $2,500/year to save for emergencies or retirement.
Where's the money coming from? It's likely not coming from the majority of tech workers.
What happens when it runs out? I... really don't know. Whatever happens, it will take quite some time for landlords to adjust their rates to match the new reality. In the interim, I would expect even more "grassroots" hate generated for tech workers.
Money doesn't "run out." It circulates. Unless you see less of a future for tech sector in SF in the future, waiting out this problem is not an option.
I have a basic question about prop 13. I though the point of not increasing property assessments is so that if rich people start bidding house prices around you, your property taxes don't start to increase.
But as I dug into this, this doesn't make sense. The community has certain expenses. These get divided based on the value of the homes. If all homes double in price but the community expenses stay the same, it is irrelevant to have different assessment amounts on homes. I've heard the term "mil rate" and am not sure what that is, but is perhaps relevant. Any experts willing to clarify?
"Mil rate" the number of thousandths of the property value assessed in tax each year. i.e. 20 mils = 2% of the annual property value is taxed. The actual property tax owed is rate x assessments.
Zoning is a demand-side control residents use to raise rents and housing prices. Tech is a supply-side control residents use.
In other cities and countries, Tech is a proxy for Immigration -- it could be any industry drawing people in. There's other cities in the US, as well as virtually all of them in Canada, Australia, and New Zealand, where the twin controls of demand-side zoning and supply-side immigration are used to raise housing costs, both sale prices and rents.
In New Zealand, because the largest city, Auckland, and the smaller ones surrounding it make up over half the country's population, this is seen very clearly because the city government and national government are virtually the same thing. Government representatives speak in a wink wink nudge nudge manner, talking about fast-tracking new housing stock in Auckland and controlling immigration, but making sure house owners know they're not serious so they don't lose votes.
So we should blame both demand-side Zoning and supply-side Tech (i.e. Immigration) for housing crises.
Building up SF or SV is not the solution, High Speed Rail is the solution. Get on a HSR train, travel 20 - 40 miles out of the city in under 30 minutes. People would still have access to SF, SV and the jobs but would be scattered upwards of 40 - 60 miles from SF, SV. It also fixes NIMBY; you can either have HSR or be surrounded by large apartment blocks.
Low density zoning—especially suburban, single family zoning—is tantamount to segregation. We must end it. It forces people who want to save money by purchasing less land to live somewhere else. That is, it forces lower-income people to live in different neighborhoods than higher-income people. And given America's racial disparities in income, these laws segregate by race, too.
I just wish the tech industry had taken root somewhere less NIMBYish that actually wanted growth and I'm hoping that SF gets what it wants and the tech industry just leaves.
The Bay area has grown enormously. There were fruit orchards in Silicon Valley not (relatively speaking) all that long ago. No, I don't see the tech industry leaving. A lot of people like the Bay area for reasons that have nothing to do with tech jobs. It's also the case however that it's simply not possible (or desirable) for everyone in tech to work and live in a geographically constrained peninsula and people/companies need to deal with that reality.
This week I saw exactly one building under construction between SFO and Menlo Park. That's utterly insane. I should have seen a couple dozen just from the highway.
As someone from outside the US with no horse in the race, I'm seriously annoyed that entrenched landowners work hard to prevent new construction and that in turn keeps housing unaffordable for a generation of young people that are already worse off than their parents. Thanks guys...
It is mind-numbing the extent to which everyone playing a role in this housing crisis wants to wriggle out of their share of the blame more than they want to actually solve the problem.
I was one of the people constantly seeking a single source of blame for this until I read a book about systems thinking. Completely changed my life. The problem is I now see how the competing interests of all the players make this an almost completely intractable problem.
A huge influx of highly-paid workers is partially to blame for the housing crisis. So are activists who prevent any new construction. So are politicians who make policies making new construction prohibitively expensive. Etc etc etc. Everyone plays a role, but nobody wants to give anything up, so the people who lose, as always, are the people who are already marginalized.
We need less writing like this and more writing that gives people a bird's-eye view of the entire problem.
[+] [-] ThrustVectoring|10 years ago|reply
Nobody really has the power to do this, and the voters are demanding NIMBY policies, so I'm not holding my breath. The next best strategy is coming up with an acceptable measure of how many people a certain plot of land "should" house and taxing/subsidizing landowners based on how much housing they actually provide on the land. That's technically not an ad-valorem tax, so would dodge Prop 13, while still pricing out people who really should make room for better use of the land.
[+] [-] nimby|10 years ago|reply
Sure, you can vote against zoning or building high density housing, but it's going to cost you. The price will be your prorated cost share of moving the project somewhere else. Don't want that tower block next to your house? Fine, pay $1M to have it moved.
You could combine this with a reverse auction of subsidies. As in, yes, I'll take that tower block for $500k.
Eventually the market clears and the problems get solved.
[+] [-] foota|10 years ago|reply
[+] [-] falsestprophet|10 years ago|reply
The State of California has the power to fix this and, presumably, the motivation to lift this albatross from the neck of the economy.
[+] [-] bufordsharkley|10 years ago|reply
[+] [-] tptacek|10 years ago|reply
The only solution to the problem is for the city to build its way out of it.
There is no rent control regime that will, in the medium term, prevent money from ultimately swamping local concerns. Real estate is a good, not a moral principle, and most people who own real estate have a number.
I would be interested in anyone with a counterexample of a US metro area that withstood sustained market interest, without extensive new building, without skyrocket housing prices and the demographic shifts that come with them.
[+] [-] pj_mukh|10 years ago|reply
I don't see a builder voluntarily building low-cost housing in the Mission district, just more luxury condos. A municipal ordinance that removes restrictions while imposing a requirement to build affordable housing along with more luxury condos might be the right solution.
[+] [-] Spooky23|10 years ago|reply
Fortunately, the market isn't just SFO. Eventually the prices are so out of whack, and the governance and tax structure gets onerous enough that people and businesses head off to other places. New York City and State circa 1965 is a great example of this phenomenon.
There were sleepy small towns and farms within 15-20 miles of Manhattan welo into the 70s.
[+] [-] grillvogel|10 years ago|reply
no, the only solution is to improve transit and infrastructure
[+] [-] duaneb|10 years ago|reply
I dunno, accepting that most other places on the planet would be a better place to {move|start a business} might be a decent place.
[+] [-] mmanfrin|10 years ago|reply
Brogrammers ruining this city.
[+] [-] kafkaesq|10 years ago|reply
However, the influx of their paychecks is quite obviously a factor. Attempts to deny this fact are just that... denial.
[+] [-] tryitnow|10 years ago|reply
If higher density were the solution I would expect to see highly dense cities have cheaper real estate than less dense cities. Instead, it's just the opposite.
That's because of the other side of the economic equation: demand.
And therein lies the devil. I hypothesize that increasing the supply of housing in a city actually increases demand in such a way that the supply increase has little downward effect on housing costs.
It makes sense why this is the case. If more people live in a city, then there's more people who are likely to move there. If you know a bunch of classmates who are all moving to San Francisco after graduation that's going to make you more likely to move to San Francisco too.
So yes, supply exerts downward pressure on housing costs, but I would bet that heigthened density then causes a near commensurate increase in demand such that the supply increase has little effect.
[+] [-] natrius|10 years ago|reply
Conservative economists like Edward Glaeser have long opposed restrictive zoning[1]. President Obama’s Chief Economist sees that “income inequality across cities remains entrenched and may even be exacerbated” as a result of restrictive zoning[2]. According to Nobel laureate and New York Times columnist Paul Krugman, “this is an issue on which you don’t have to be a conservative to believe that we have too much regulation.”[3]
[1] http://www.city-journal.org/2008/18_3_houston.html
[2] https://m.whitehouse.gov/sites/default/files/page/files/2015...
[3] http://www.nytimes.com/2015/11/30/opinion/inequality-and-the...
[+] [-] brighteyes|10 years ago|reply
It isn't that if we build more housing, more people will come, which will bring more people in an exponential cycle. The reality is that tech workers are coming anyway, and paying whatever is required of them to live in SF. They aren't being stopped by high rents, because high as they are, they can afford them.
However, they are raising prices for people that can't afford it. That pushes other people out.
The result is that whether we build or not, tech workers will live in the city. Building more won't bring more of them. The only question is whether other people can live there too.
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] HaloZero|10 years ago|reply
I know rent in the city even in the fancy condos is expensive but they still have their working class workers. Where do they live?
[+] [-] ghaff|10 years ago|reply
http://www.hk-magazine.com/article/10676/coffin-homes-subdiv...
[+] [-] sbov|10 years ago|reply
[+] [-] santaclaus|10 years ago|reply
Or Manhattan, for that matter.
[+] [-] tryitnow|10 years ago|reply
South of me there's just huge swaths of residential and commercial land that can be developed - and I think will be developed. The main problem is that there are not enough professional/middle class people living there now. But once some move in, more will follow (as has happened in other parts of Oakland).
My point is that the Bay Area has quite a bit of capacity for further development once you step out of SF.
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] djillionsmix|10 years ago|reply
Other than myopic entitlement, I mean.
[+] [-] linkregister|10 years ago|reply
The data was taken from a company that controls 10% of the real estate market in the Bay Area.
http://realestateconsulting.com/tech-buyers-only-a-small-por...
[+] [-] kafkaesq|10 years ago|reply
[+] [-] fiatmoney|10 years ago|reply
[+] [-] jseliger|10 years ago|reply
2. Even if it is, housing is actually an amazing American export: http://www.slate.com/blogs/moneybox/2013/05/19/exporting_hou..., though it's rarely recognized as such outside of the literature.
[+] [-] bkjelden|10 years ago|reply
[+] [-] hardcandy|10 years ago|reply
[+] [-] cylinder|10 years ago|reply
The real story here is poor commuting infrastructure. Not enough of it and the existing is slow or unreliable.
[+] [-] Finnucane|10 years ago|reply
[+] [-] simoncion|10 years ago|reply
It seems like median tech salaries are in the very low six-figure range. 120k/year gross will (assuming no car or loan expenses) pay for -at most- $3500/month rent with typical utilities, Internet, and food expenditures. Even then, that leaves you with $2,500/year to save for emergencies or retirement.
Where's the money coming from? It's likely not coming from the majority of tech workers.
What happens when it runs out? I... really don't know. Whatever happens, it will take quite some time for landlords to adjust their rates to match the new reality. In the interim, I would expect even more "grassroots" hate generated for tech workers.
[+] [-] pzone|10 years ago|reply
[+] [-] tostitos1979|10 years ago|reply
But as I dug into this, this doesn't make sense. The community has certain expenses. These get divided based on the value of the homes. If all homes double in price but the community expenses stay the same, it is irrelevant to have different assessment amounts on homes. I've heard the term "mil rate" and am not sure what that is, but is perhaps relevant. Any experts willing to clarify?
[+] [-] jowiar|10 years ago|reply
https://en.m.wikipedia.org/wiki/Property_tax
[+] [-] vorg|10 years ago|reply
In other cities and countries, Tech is a proxy for Immigration -- it could be any industry drawing people in. There's other cities in the US, as well as virtually all of them in Canada, Australia, and New Zealand, where the twin controls of demand-side zoning and supply-side immigration are used to raise housing costs, both sale prices and rents.
In New Zealand, because the largest city, Auckland, and the smaller ones surrounding it make up over half the country's population, this is seen very clearly because the city government and national government are virtually the same thing. Government representatives speak in a wink wink nudge nudge manner, talking about fast-tracking new housing stock in Auckland and controlling immigration, but making sure house owners know they're not serious so they don't lose votes.
So we should blame both demand-side Zoning and supply-side Tech (i.e. Immigration) for housing crises.
[+] [-] MrMullen|10 years ago|reply
[+] [-] ilyanep|10 years ago|reply
[+] [-] natrius|10 years ago|reply
https://medium.com/@niranbabalola/we-must-repeal-our-segrega...
[+] [-] Eridrus|10 years ago|reply
[+] [-] ghaff|10 years ago|reply
[+] [-] Tempest1981|10 years ago|reply
[+] [-] forrestthewoods|10 years ago|reply
[+] [-] twblalock|10 years ago|reply
Most of the 101 corridor has been built up for decades. The construction is not happening right next to the freeway.
[+] [-] DrScump|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] eloff|10 years ago|reply
[+] [-] beatpanda|10 years ago|reply
I was one of the people constantly seeking a single source of blame for this until I read a book about systems thinking. Completely changed my life. The problem is I now see how the competing interests of all the players make this an almost completely intractable problem.
A huge influx of highly-paid workers is partially to blame for the housing crisis. So are activists who prevent any new construction. So are politicians who make policies making new construction prohibitively expensive. Etc etc etc. Everyone plays a role, but nobody wants to give anything up, so the people who lose, as always, are the people who are already marginalized.
We need less writing like this and more writing that gives people a bird's-eye view of the entire problem.
[+] [-] methodover|10 years ago|reply
I'm just curious, but what could new tech workers give up, exactly?
Entrenched local interests could ease up on building restrictions. That's what they'd give up.
Politicians who make anti-construction policies could stop doing that. That's what they'd give up.
I don't understand what migrants like myself (a programmer who moved here a few years ago to work at a startup) are supposed to give up.