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>I don't understand how anyone can say with a straight face that adding more housing exacerbates the problem of not having enough housing. Say you have a build

>I don't understand how anyone can say with a straight face that adding more housing exacerbates the problem of not having enough housing. Say you have a building with 3 units all of a type that do not appeal to foreign investors and wealthy people looking for pied-a-terres, and thus are occupied by people who live and perhaps work in San Francisco. Tear it down and replace it with a building with 10 units, all of which do appeal to the aforementioned investors and wealthy people. Then say 8 units get sold to investors who leave the units unoccupied most of the time, and 2 units get sold to people who want to live in the neighborhood. You've now reduced the amount of housing stock available to San Franciscans, even though you've increased the total number of units. We've had discussions here on HN relatively recently where people discuss housing price inflation in London caused by foreign investors. Vancouver also has a large number of condo high-rises that sit mostly empty most of the time, because they're not occupied. That can just as easily happen in San Francisco. Obviously that won't happen if we build 10 million units. But we're not going to build 10 million units. The danger is that San Francisco builds enough units to attract additional investor demand, but not enough to satiate that demand. Which could leave actual San Franciscans worse off.

s0uthPaw88 11y ago
Can you provide links to back up your assertion that investors would buy housing and then not utilize the space? Seems like a bad investment then...
- abritinthebay 11y ago
  Well it does make sense short term but it would be a bloody stupid thing to do medium to long-term.
- mtviewdave 11y ago
  Here's a discussion from last week about an article on the situation in the UK: https://news.ycombinator.com/item?id=10158180 https://news.ycombinator.com/item?id=10158180 Here's a couple articles on the situation in Vancouver: http://www.theglobeandmail.com/life/home-and-garden/real-estate/its-a-problem-when-vancouver-condos-sell-but-the-lights-stay-off/article11147711/ http://www.theglobeandmail.com/life/home-and-garden/real-est... http://www.theglobeandmail.com/news/british-columbia/vancouvers-vacancies-point-to-investors-not-residents/article10044403/ http://www.theglobeandmail.com/news/british-columbia/vancouv... If you Google "Vancouver empty condos" you'll get an entire page of links.
mahyarm 11y ago
I'm from that land called Vancouver, BC. BC in general has NIMBY policies. The cost of construction is also higher. Maybe not as bad as the bay area, but enough to exasperate the problem. BC is also not experiencing a population boom fueled by an economic boom like SF is. It hasn't for the past 20 years, the SFBA has experienced it twice. London and Vancouver are created by loose investor immigrant laws and tax incentives for the rich. You could get Canadian citizenship as an 'investor' by basically buying a house until very recently. On top of that, you get special tax treatment for the first several years of citizenship if your rich by Canada. Canada's real estate bubble never popped. China has a large amount of ongoing capital flight, Vancouver is nice and stable, and a relatively quick flight back to China. Vancouver has a huge Chinese immigrant community. All of this combined plus the general Canadian real estate bubble & laws creates Vancouver. --------------- London is even worse. In the UK they have a nom-dom resident tax law, where you basically just pay a flat tax of ~$40k/yr and have no taxation on your foreign income as a rich person. London is a hub city for the world too. The UK also has very low property tax rates. All of these facts combined create London. If the UK wants to reverse London, then getting rid of non-dom tax laws, adding wealthy-only property taxes and treating them as normal tax residents will reverse the trend fairly quickly. -------------- The USA is not an attractive place to be rich resident, unless your wealth comes from a US corporation. The USA has a high relative tax load, citizenship based taxation (only place in the world!), harsh anti-corruption / anti-money laundering laws, a very powerful, wealthy and motivated tax collection agency, a global financial surveillance apparatus, estate tax, a long and annoying immigration process and so on. All of this puts a damper on the super wealthy making another London. Also the state of a place doesn't really matter, the 'investors' would be interested in molding crack houses. They have the money to turn it into whatever they want. You can do a total rebuild in SF as long as you keep the same square footage. One ancedote is a heavily molded crack shack in my neighborhood listed at ~$600k and sold for ~$900k. Like I was getting an allergy attack just walking into this place for a few minutes. Also see the same thing in Vancouver with this comedy game: http://www.crackshackormansion.com/ http://www.crackshackormansion.com/ In summary: Build more, build tall, we need more 30 story residential apartment complexes! The laws of supply and demand do work! Ideally right beside BART and Muni tunnel stations. The mission became overpriced despite being a bad part of town because of BART.
Zach_the_Lizard 11y ago
The problem is that when you stop building housing, the old, crappy housing increases in value. The investors then start purchasing these units and, if they want, gut them and make the interiors modern. Everyone else is priced out. Look at New York. People are paying thousands a month to live in crappy 19th century tenements that used to be in dangerous and poor neighborhoods. Really, you can't win by not building housing. "Them Chinese are buying our housing! Let's stop building housing! That'll show them! Now instead of owning 0.1% of housing, they'll own 10%!" How does that make sense? The foreign investors aren't going to buy 100% of a city. They can't afford it; the total property value of NYC alone is over $800 billion. As they buy, value goes up. If we let builders respond to this demand, they will keep producing new units to make up for foreign investors. They don't have infinite money, so stop pretending they do.
- mtviewdave 11y ago
  I wasn't advocating not building. I was just giving an example of how housing markets are more complicated than a simple supply/demand formulation. In these discussions here on housing in San Francisco a pretty strict dichotomy seems to taken hold. A lot of people believe that either you're a fan of The Rent is Too Damn High, and believe that the problem is just zoning and if you just get rid of zoning then all the housing problem in San Francisco will be solved by the power of the free market. Or if you don't believe that, then you're a NIMBY who wants to see zero construction and either doesn't believe in free-market economics, or who wants to restrict construction so as to increase the value of their own property. It's a tiresome bit of groupthink not worthy of the intelligence of the folks here. Just because I think the situation is more complicated than a simple supply/demand equation doesn't mean I'm anti-growth. And for the record, I'm a home owner in Mountain View, and in the last city council election I voted for the pro-housing-construction slate of candidates. I also think The Rent Is Too Damn High is a rather stupid book.

s0uthPaw88 11y ago

Can you provide links to back up your assertion that investors would buy housing and then not utilize the space? Seems like a bad investment then...

abritinthebay 11y ago
Well it does make sense short term but it would be a bloody stupid thing to do medium to long-term.
mtviewdave 11y ago
Here's a discussion from last week about an article on the situation in the UK: https://news.ycombinator.com/item?id=10158180 https://news.ycombinator.com/item?id=10158180 Here's a couple articles on the situation in Vancouver: http://www.theglobeandmail.com/life/home-and-garden/real-estate/its-a-problem-when-vancouver-condos-sell-but-the-lights-stay-off/article11147711/ http://www.theglobeandmail.com/life/home-and-garden/real-est... http://www.theglobeandmail.com/news/british-columbia/vancouvers-vacancies-point-to-investors-not-residents/article10044403/ http://www.theglobeandmail.com/news/british-columbia/vancouv... If you Google "Vancouver empty condos" you'll get an entire page of links.

mahyarm 11y ago

I'm from that land called Vancouver, BC. BC in general has NIMBY policies. The cost of construction is also higher. Maybe not as bad as the bay area, but enough to exasperate the problem. BC is also not experiencing a population boom fueled by an economic boom like SF is. It hasn't for the past 20 years, the SFBA has experienced it twice. London and Vancouver are created by loose investor immigrant laws and tax incentives for the rich. You could get Canadian citizenship as an 'investor' by basically buying a house until very recently. On top of that, you get special tax treatment for the first several years of citizenship if your rich by Canada. Canada's real estate bubble never popped. China has a large amount of ongoing capital flight, Vancouver is nice and stable, and a relatively quick flight back to China. Vancouver has a huge Chinese immigrant community. All of this combined plus the general Canadian real estate bubble & laws creates Vancouver. --------------- London is even worse. In the UK they have a nom-dom resident tax law, where you basically just pay a flat tax of ~$40k/yr and have no taxation on your foreign income as a rich person. London is a hub city for the world too. The UK also has very low property tax rates. All of these facts combined create London. If the UK wants to reverse London, then getting rid of non-dom tax laws, adding wealthy-only property taxes and treating them as normal tax residents will reverse the trend fairly quickly. -------------- The USA is not an attractive place to be rich resident, unless your wealth comes from a US corporation. The USA has a high relative tax load, citizenship based taxation (only place in the world!), harsh anti-corruption / anti-money laundering laws, a very powerful, wealthy and motivated tax collection agency, a global financial surveillance apparatus, estate tax, a long and annoying immigration process and so on. All of this puts a damper on the super wealthy making another London. Also the state of a place doesn't really matter, the 'investors' would be interested in molding crack houses. They have the money to turn it into whatever they want. You can do a total rebuild in SF as long as you keep the same square footage. One ancedote is a heavily molded crack shack in my neighborhood listed at ~$600k and sold for ~$900k. Like I was getting an allergy attack just walking into this place for a few minutes. Also see the same thing in Vancouver with this comedy game: http://www.crackshackormansion.com/ http://www.crackshackormansion.com/ In summary: Build more, build tall, we need more 30 story residential apartment complexes! The laws of supply and demand do work! Ideally right beside BART and Muni tunnel stations. The mission became overpriced despite being a bad part of town because of BART.

Zach_the_Lizard 11y ago

The problem is that when you stop building housing, the old, crappy housing increases in value. The investors then start purchasing these units and, if they want, gut them and make the interiors modern. Everyone else is priced out. Look at New York. People are paying thousands a month to live in crappy 19th century tenements that used to be in dangerous and poor neighborhoods. Really, you can't win by not building housing. "Them Chinese are buying our housing! Let's stop building housing! That'll show them! Now instead of owning 0.1% of housing, they'll own 10%!" How does that make sense? The foreign investors aren't going to buy 100% of a city. They can't afford it; the total property value of NYC alone is over $800 billion. As they buy, value goes up. If we let builders respond to this demand, they will keep producing new units to make up for foreign investors. They don't have infinite money, so stop pretending they do.

mtviewdave 11y ago
I wasn't advocating not building. I was just giving an example of how housing markets are more complicated than a simple supply/demand formulation. In these discussions here on housing in San Francisco a pretty strict dichotomy seems to taken hold. A lot of people believe that either you're a fan of The Rent is Too Damn High, and believe that the problem is just zoning and if you just get rid of zoning then all the housing problem in San Francisco will be solved by the power of the free market. Or if you don't believe that, then you're a NIMBY who wants to see zero construction and either doesn't believe in free-market economics, or who wants to restrict construction so as to increase the value of their own property. It's a tiresome bit of groupthink not worthy of the intelligence of the folks here. Just because I think the situation is more complicated than a simple supply/demand equation doesn't mean I'm anti-growth. And for the record, I'm a home owner in Mountain View, and in the last city council election I voted for the pro-housing-construction slate of candidates. I also think The Rent Is Too Damn High is a rather stupid book.