16 ms·

If 1 million people live in a city, and you add 10 million more apartments, would that lower the price of each apartment? Of course, because you increased the s

by seibelj 11y ago

If 1 million people live in a city, and you add 10 million more apartments, would that lower the price of each apartment? Of course, because you increased the supply. Adding housing absolutely decreases the average price of housing. This is supply and demand. Now, does adding a small amount of housing have any appreciable effect on average price? No. Therefore, the solution is massive construction of new housing.

JoeAltmaier 11y ago
Um, you can't wave a wand and get more housing. It has to go for a rent, that pays the developer for the construction AND land price including annual property tax. In a high-land-value area, available housing will only be built for those that can afford it. No magic bullet.
- simoncion 11y ago
  Couple of things: * Generally, in CA, unless a property changes hands, its annual property tax increase is capped at 2% per year. * AIUI, SF could waive any property tax increases for residential properties that would have been triggered by flattening the existing structures in order to build much more rental housing. [0] [0] I'm not convinced that there would be any if the property didn't change hands, but it has been years since I read Prop 13.
  - dragonwriter 11y ago
    > Generally, in CA, unless a property changes hands, its annual property tax increase is capped at 2% per year. I think you are referring to the maximum increase in tax basis value (which is only equal to the maximum property tax increase if it is taxed at the maximum value already, though that's probably the case, given the low cap on property tax rates also in Prop 13.) And you are oversimplifying in a way which is misleading in this discussion: new construction triggers full cash value assessment not limited to the annual 2% increase. > AIUI, SF could waive any property tax increases for residential properties that would have been triggered by flattening the existing structures in order to build much more rental housing. To the extent that they could, where would the sense be in that? Accommodating more people, but reducing the public available to provide services needed by those people?
    - simoncion 11y ago
      > And you are oversimplifying in a way which is misleading in this discussion: new construction triggers full cash value assessment not limited to the annual 2% increase. 1) That's why I listed two points, rather than just one. :) 2) According to the Alameda County Assessor's office, the situation is not as grim as you seem to paint it (for every situation except the "building flattening" situation): "Only the portion of the property which was newly constructed is subject to reassessment at market value. For example, if a family room is added to an existing home, only that portion is reassessed and the existing home will retain its previously established Proposition 13 base year value." [0] This might partially explain all the damned San Francisco apartments with funky vintage 1970's-era single-paned windows. :P > To the extent that they could, where would the sense be in that? To encourage the build-out of housing in an area that has roughly between three and ten new people move in for each new housing unit constructed annually? 1) It's not like SF is currently starving for cash. 2) In the -very, very unlikely- scenario that only the ultra-wealthy, pensioners, and property "investors" occupy San Francisco, what happens to the tax base? What happens to the character of the city? [0] https://www.acgov.org/assessor/about_property_assessment/new-construction.htm https://www.acgov.org/assessor/about_property_assessment/new...
      - linkydinkandyou 11y ago
        Isn't 2%/year enough of a property tax increase? Why should I suddenly get a tax bill I can't afford because some idiot bought the house next door to me for too much money, causing my "property value" to skyrocket?
        yummyfajitas 11y ago
        Because you don't own your home, you are renting it from the state. The state has just discovered that it has a higher market value and can use the money to fund all sorts of cool CA government projects. Maybe one day Jerry Brown will find enough money to adopt Narendra Modi style initiatives to end open defecation.
        simoncion 11y ago
- jacobolus 11y ago
  The “wand” here is zoning. All the pale yellow areas in this map are zoned to allow only low density residential, mostly one unit per lot: http://www.sf-planning.org/index.aspx?page=1569 http://www.sf-planning.org/index.aspx?page=1569 If you re-zone some significant portion of the western and southern 3/4 of San Francisco by zones that allow for e.g. the construction of 4–5 story low-rise apartment buildings (ideally allowing ground floor retail), there will be room for dramatically more housing units to be built. Developers are currently rushing to build on every bit of available land in SF that allows medium density construction (all the bits of that map that aren’t pale yellow). All of the parking lots, warehouses, and little one-story buildings in such areas are being converted to luxury condos at maximum speed. With better transit and municipal planning throughout the Bay Area, there are many places where it would be possible to dramatically expand housing stock and bring housing rent down to more reasonable levels.
  - teacup50 11y ago
    If this even worked in the short-term (and so far, no city that has tried this has been successful in making a meaningful dent in the problem), you'd just be delaying the inevitable, and once that inevitable hit, the affordability problem would be even worse. You can't increase housing supply without affecting demand. You also can't increase housing supply to meet demand ... unless you actually make the area so undesirable that demand itself drops, meeting you halfway.
    - jessaustin 11y ago
      This observation could be made about anything. If more restaurants open, more people will go out to eat. If more people go out to eat, restaurants will make more money. A vicious cycle! Soon everyone in the world will eat lunch in our city, every day! The humanity! In fact, interesting yet flawed theories of supply and demand are seldom used to justify some sort of "protect existing restaurateurs' oligopoly" law. That isn't to say that it isn't valid to limit the number or type of restaurant in any particular area for e.g. safety reasons. But that has to be process-based, not just a declaration that this neighborhood has enough. You can't argue that allowing single-family structures to be replaced by e.g. townhomes in a reasonable fashion is somehow beyond us as a society.
pbreit 11y ago
Plus, in your fantasyland, demand would plummet. Who would want to live there?
- simoncion 11y ago
  People don't seem to be fleeing SF in droves because of the Trinity Towers project. It's possible to have very-high-density housing and have a desirable city; look at NYC or Tokyo. Hell, aside from the fact that it becomes a ghost town after regular business hours, many parts of FiDi are really attractive places.
  - teacup50 11y ago
    Yes, let's look at NYC and Tokyo: despite all that density, the problem of housing availability remains. If I recall correctly, only 9% of police officers that work in Manhattan live in Manhattan -- and Manhattan boasts an average density of 70k people per square mile.
    - simoncion 11y ago
      Notice how the thrust of your comment "Even dense construction doesn't fix the demand problem" is at odds with the claim in pbreit's comment: > Plus, in your fantasyland, demand would plummet. Who would want to live there? I assumed that pbriet was making a claim that went something like "Cities that are packed with skyscrapers are barren hellscapes that noone wishes to live in.". To address that claim, I provided my subjective opinion of a section of San Francisco that is packed with skyscrapers, and reported what appears to be the community reaction to a new high-density high-rise apartment building in SoMA.
      - teacup50 11y ago
        It's not in conflict; the "fantasyland" of 10M new apartments would house the entire existing population of all boroughs of NYC, and almost that of Tokyo. Meanwhile, those cities have high density (but nothing as ridiculous as +10M apartment archeologies) and haven't solved the problem.
dragonwriter 11y ago
> If 1 million people live in a city, and you add 10 million more apartments, would that lower the price of each apartment? Of course, because you increased the supply. Short term, sure. Long term, less clear. More people living in the city = more demand for various goods and services = more businesses competing for space with residences and more jobs and, thus, housing demand = higher market clearing prices for housing. > Adding housing absolutely decreases the average price of housing. This is supply and demand. You are assuming that the you can increase the supply without affecting demand. This is naïve.
wpietri 11y ago
If a freeway is full of cars and you add lots more freeway, won't that make more space for cars? The obvious answer is yes, but the obvious answer is often wrong. Adding more freeway can create more demand, meaning no progress is made. [1] [2] Right now the major constraint on having a larger tech industry in SF is the real estate expense; both offices and apartments are through the roof. It's so bad that established companies are opening or expanding offices elsewhere, and even many startups are trying other things. They wouldn't be doing that if they could keep expanding here, so no, adding lots more housing might do nothing but create more demand. Also, saying "massive construction of new housing" so glibly suggests that there is a lot of empty land just waiting for construction. Take a look at a map of San Francisco: there are buildings almost everywhere, and the people in them are generally pretty happy where they are. Where there are no buildings, we mostly have parks, which people are also quite fond of. Mencken wrote: "For every complex problem there is an answer that is clear, simple, and wrong." As here, an number of those answers come from applying Econ 101 in a way where one might as well be saying, "Assume a spherical cow..." [3] [1] http://www.wired.com/2014/06/wuwt-traffic-induced-demand/ http://www.wired.com/2014/06/wuwt-traffic-induced-demand/ [2] https://en.wikipedia.org/wiki/Induced_demand https://en.wikipedia.org/wiki/Induced_demand [1] https://en.wikipedia.org/wiki/Spherical_cow https://en.wikipedia.org/wiki/Spherical_cow
- hglman 11y ago
  San Fransisco has a lot of land zoned single family. http://www.sf-planning.org/modules/showdocument.aspx?documentid=9016 http://www.sf-planning.org/modules/showdocument.aspx?documen... You could easily rezone and up the density by a factor of 4 or 5.
  - wpietri 11y ago
    Have you tried asking people living in those homes about your "easy" plan? The one that would involve them living somewhere else for a couple of years during construction and then moving back to a smaller, less appealing place? As I said, San Francisco residents mostly seem pretty happy where they are.

by seibelj 11y ago

JoeAltmaier 11y ago

Um, you can't wave a wand and get more housing. It has to go for a rent, that pays the developer for the construction AND land price including annual property tax. In a high-land-value area, available housing will only be built for those that can afford it. No magic bullet.

simoncion 11y ago
Couple of things: * Generally, in CA, unless a property changes hands, its annual property tax increase is capped at 2% per year. * AIUI, SF could waive any property tax increases for residential properties that would have been triggered by flattening the existing structures in order to build much more rental housing. [0] [0] I'm not convinced that there would be any if the property didn't change hands, but it has been years since I read Prop 13.
- dragonwriter 11y ago
  > Generally, in CA, unless a property changes hands, its annual property tax increase is capped at 2% per year. I think you are referring to the maximum increase in tax basis value (which is only equal to the maximum property tax increase if it is taxed at the maximum value already, though that's probably the case, given the low cap on property tax rates also in Prop 13.) And you are oversimplifying in a way which is misleading in this discussion: new construction triggers full cash value assessment not limited to the annual 2% increase. > AIUI, SF could waive any property tax increases for residential properties that would have been triggered by flattening the existing structures in order to build much more rental housing. To the extent that they could, where would the sense be in that? Accommodating more people, but reducing the public available to provide services needed by those people?
  - simoncion 11y ago
    > And you are oversimplifying in a way which is misleading in this discussion: new construction triggers full cash value assessment not limited to the annual 2% increase. 1) That's why I listed two points, rather than just one. :) 2) According to the Alameda County Assessor's office, the situation is not as grim as you seem to paint it (for every situation except the "building flattening" situation): "Only the portion of the property which was newly constructed is subject to reassessment at market value. For example, if a family room is added to an existing home, only that portion is reassessed and the existing home will retain its previously established Proposition 13 base year value." [0] This might partially explain all the damned San Francisco apartments with funky vintage 1970's-era single-paned windows. :P > To the extent that they could, where would the sense be in that? To encourage the build-out of housing in an area that has roughly between three and ten new people move in for each new housing unit constructed annually? 1) It's not like SF is currently starving for cash. 2) In the -very, very unlikely- scenario that only the ultra-wealthy, pensioners, and property "investors" occupy San Francisco, what happens to the tax base? What happens to the character of the city? [0] https://www.acgov.org/assessor/about_property_assessment/new-construction.htm https://www.acgov.org/assessor/about_property_assessment/new...
    - linkydinkandyou 11y ago
      Isn't 2%/year enough of a property tax increase? Why should I suddenly get a tax bill I can't afford because some idiot bought the house next door to me for too much money, causing my "property value" to skyrocket?
      - yummyfajitas 11y ago
        Because you don't own your home, you are renting it from the state. The state has just discovered that it has a higher market value and can use the money to fund all sorts of cool CA government projects. Maybe one day Jerry Brown will find enough money to adopt Narendra Modi style initiatives to end open defecation.
      - simoncion 11y ago
jacobolus 11y ago
The “wand” here is zoning. All the pale yellow areas in this map are zoned to allow only low density residential, mostly one unit per lot: http://www.sf-planning.org/index.aspx?page=1569 http://www.sf-planning.org/index.aspx?page=1569 If you re-zone some significant portion of the western and southern 3/4 of San Francisco by zones that allow for e.g. the construction of 4–5 story low-rise apartment buildings (ideally allowing ground floor retail), there will be room for dramatically more housing units to be built. Developers are currently rushing to build on every bit of available land in SF that allows medium density construction (all the bits of that map that aren’t pale yellow). All of the parking lots, warehouses, and little one-story buildings in such areas are being converted to luxury condos at maximum speed. With better transit and municipal planning throughout the Bay Area, there are many places where it would be possible to dramatically expand housing stock and bring housing rent down to more reasonable levels.
- teacup50 11y ago
  If this even worked in the short-term (and so far, no city that has tried this has been successful in making a meaningful dent in the problem), you'd just be delaying the inevitable, and once that inevitable hit, the affordability problem would be even worse. You can't increase housing supply without affecting demand. You also can't increase housing supply to meet demand ... unless you actually make the area so undesirable that demand itself drops, meeting you halfway.
  - jessaustin 11y ago
    This observation could be made about anything. If more restaurants open, more people will go out to eat. If more people go out to eat, restaurants will make more money. A vicious cycle! Soon everyone in the world will eat lunch in our city, every day! The humanity! In fact, interesting yet flawed theories of supply and demand are seldom used to justify some sort of "protect existing restaurateurs' oligopoly" law. That isn't to say that it isn't valid to limit the number or type of restaurant in any particular area for e.g. safety reasons. But that has to be process-based, not just a declaration that this neighborhood has enough. You can't argue that allowing single-family structures to be replaced by e.g. townhomes in a reasonable fashion is somehow beyond us as a society.

pbreit 11y ago

Plus, in your fantasyland, demand would plummet. Who would want to live there?

simoncion 11y ago
People don't seem to be fleeing SF in droves because of the Trinity Towers project. It's possible to have very-high-density housing and have a desirable city; look at NYC or Tokyo. Hell, aside from the fact that it becomes a ghost town after regular business hours, many parts of FiDi are really attractive places.
- teacup50 11y ago
  Yes, let's look at NYC and Tokyo: despite all that density, the problem of housing availability remains. If I recall correctly, only 9% of police officers that work in Manhattan live in Manhattan -- and Manhattan boasts an average density of 70k people per square mile.
  - simoncion 11y ago
    Notice how the thrust of your comment "Even dense construction doesn't fix the demand problem" is at odds with the claim in pbreit's comment: > Plus, in your fantasyland, demand would plummet. Who would want to live there? I assumed that pbriet was making a claim that went something like "Cities that are packed with skyscrapers are barren hellscapes that noone wishes to live in.". To address that claim, I provided my subjective opinion of a section of San Francisco that is packed with skyscrapers, and reported what appears to be the community reaction to a new high-density high-rise apartment building in SoMA.
    - teacup50 11y ago
      It's not in conflict; the "fantasyland" of 10M new apartments would house the entire existing population of all boroughs of NYC, and almost that of Tokyo. Meanwhile, those cities have high density (but nothing as ridiculous as +10M apartment archeologies) and haven't solved the problem.

dragonwriter 11y ago

> If 1 million people live in a city, and you add 10 million more apartments, would that lower the price of each apartment? Of course, because you increased the supply. Short term, sure. Long term, less clear. More people living in the city = more demand for various goods and services = more businesses competing for space with residences and more jobs and, thus, housing demand = higher market clearing prices for housing. > Adding housing absolutely decreases the average price of housing. This is supply and demand. You are assuming that the you can increase the supply without affecting demand. This is naïve.

wpietri 11y ago

If a freeway is full of cars and you add lots more freeway, won't that make more space for cars? The obvious answer is yes, but the obvious answer is often wrong. Adding more freeway can create more demand, meaning no progress is made. [1] [2] Right now the major constraint on having a larger tech industry in SF is the real estate expense; both offices and apartments are through the roof. It's so bad that established companies are opening or expanding offices elsewhere, and even many startups are trying other things. They wouldn't be doing that if they could keep expanding here, so no, adding lots more housing might do nothing but create more demand. Also, saying "massive construction of new housing" so glibly suggests that there is a lot of empty land just waiting for construction. Take a look at a map of San Francisco: there are buildings almost everywhere, and the people in them are generally pretty happy where they are. Where there are no buildings, we mostly have parks, which people are also quite fond of. Mencken wrote: "For every complex problem there is an answer that is clear, simple, and wrong." As here, an number of those answers come from applying Econ 101 in a way where one might as well be saying, "Assume a spherical cow..." [3] [1] http://www.wired.com/2014/06/wuwt-traffic-induced-demand/ http://www.wired.com/2014/06/wuwt-traffic-induced-demand/ [2] https://en.wikipedia.org/wiki/Induced_demand https://en.wikipedia.org/wiki/Induced_demand [1] https://en.wikipedia.org/wiki/Spherical_cow https://en.wikipedia.org/wiki/Spherical_cow

hglman 11y ago
San Fransisco has a lot of land zoned single family. http://www.sf-planning.org/modules/showdocument.aspx?documentid=9016 http://www.sf-planning.org/modules/showdocument.aspx?documen... You could easily rezone and up the density by a factor of 4 or 5.
- wpietri 11y ago
  Have you tried asking people living in those homes about your "easy" plan? The one that would involve them living somewhere else for a couple of years during construction and then moving back to a smaller, less appealing place? As I said, San Francisco residents mostly seem pretty happy where they are.