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Oh, come now...if it were that certain, the article wouldn't have gone out of its way to explore the question. There's actually no guarantee at all that the mar

by timr 10y ago

Oh, come now...if it were that certain, the article wouldn't have gone out of its way to explore the question. There's actually no guarantee at all that the markets for high-end and low-end goods are linked. The price of Lamborghinis doesn't have much to do with the price of Kias.

tptacek 10y ago
What a strange analogy. There's no scarcity to Kias at all; the car is built to command a particular price point. There's a huge surplus of drivable cars. That's not the case with SF real estate, even a little bit.
- timr 10y ago
  The metaphor is fine. You're making my argument: there's no inherent reason that the prices of luxury products should influence the prices of commodity products. In fact, barring exceptional circumstances (i.e. shortages) they usually don't. It isn't safe to assume that "construction" will lower rents for everyone. Even here. Despite conventional wisdom and lots of hand-waving justifications, there's actually very little evidence that building more luxury units impacts low-end housing prices on anything but the long term. Even the author of this piece is falling back to long-term averages to make his argument, and the results are...tepid. A 2% reduction in aggregate, long-term rents for every 1% of new housing built is not a screaming endorsement for indiscriminate construction. If you have data that shows otherwise, feel free to cite it.
  - tptacek 10y ago
    There are a fixed number of residential slots in the SF real estate market. There is undersupply at every level of the market. If a slot is labeled "luxury", lower-income people will not move in there. But the converse isn't true: higher-income people will take "low-income" slots (see: the Mission) if that's all that's available. No part of this market in any way resembles the market for Lamborghinis and Kias.
    - timr 10y ago
      Yeah, I understand what you're saying: there's a shortage of housing, and there's not a shortage of economy cars. But that's not a rebuttal to the argument I'm making. The question is whether or not new luxury housing makes rents cheaper for poor folks, today. Even here, in the epicenter of a housing crisis, there's not a lot of evidence that it does. But there's evidence that preferentially building low-income housing does make a difference. This isn't a controversial or irrational or counter-intuitive argument: there are a lot of great reasons that a rich person might choose to live in a cheaper apartment. It isn't a given that rich people will self-segregate to luxury buildings because "luxury". So at the end of the day, you're back to aggregate supply vs. aggregate demand. And if that's the case, why not build for low-income people instead?
      - tptacek 10y ago
        Is there a coherent argument you can make that doesn't depend on upper-income people shunning lower-income neighborhoods in San Francisco? Because the evidence strongly suggests that they don't: that when luxury housing is unavailable, upper-income people in the Bay Area move on to claim lower-income housing. (I lived in Bayview for a bit, and I was hardly the only tech person I knew who lived there.)
        timr 10y ago
        "Is there a coherent argument you can make that doesn't depend on upper-income people shunning lower-income neighborhoods in San Francisco? Because the evidence strongly suggests that they don't" I'm not claiming that they do. I'm arguing the opposite: if you build only luxury, it doesn't help poor people much, because most people will try to get the cheapest, nicest housing they can find. Building luxury units helps only to the extent that building anything here helps -- and if we believe the OP, it doesn't help very much at all. Basically, this: you lived in Bayview, so you know who lives there. Knocking down every existing low-density home in Bayview and replacing it with market-rate housing would displace a huge number of poor folks. It probably also helps lower aggregate rents for everyone in SF by $40 a month or whatever, but that's thin gruel to the people who were there before. This is the fundamental dilemma facing all construction in San Francisco.

by timr 10y ago

tptacek 10y ago

What a strange analogy. There's no scarcity to Kias at all; the car is built to command a particular price point. There's a huge surplus of drivable cars. That's not the case with SF real estate, even a little bit.

timr 10y ago
The metaphor is fine. You're making my argument: there's no inherent reason that the prices of luxury products should influence the prices of commodity products. In fact, barring exceptional circumstances (i.e. shortages) they usually don't. It isn't safe to assume that "construction" will lower rents for everyone. Even here. Despite conventional wisdom and lots of hand-waving justifications, there's actually very little evidence that building more luxury units impacts low-end housing prices on anything but the long term. Even the author of this piece is falling back to long-term averages to make his argument, and the results are...tepid. A 2% reduction in aggregate, long-term rents for every 1% of new housing built is not a screaming endorsement for indiscriminate construction. If you have data that shows otherwise, feel free to cite it.
- tptacek 10y ago
  There are a fixed number of residential slots in the SF real estate market. There is undersupply at every level of the market. If a slot is labeled "luxury", lower-income people will not move in there. But the converse isn't true: higher-income people will take "low-income" slots (see: the Mission) if that's all that's available. No part of this market in any way resembles the market for Lamborghinis and Kias.
  - timr 10y ago
    Yeah, I understand what you're saying: there's a shortage of housing, and there's not a shortage of economy cars. But that's not a rebuttal to the argument I'm making. The question is whether or not new luxury housing makes rents cheaper for poor folks, today. Even here, in the epicenter of a housing crisis, there's not a lot of evidence that it does. But there's evidence that preferentially building low-income housing does make a difference. This isn't a controversial or irrational or counter-intuitive argument: there are a lot of great reasons that a rich person might choose to live in a cheaper apartment. It isn't a given that rich people will self-segregate to luxury buildings because "luxury". So at the end of the day, you're back to aggregate supply vs. aggregate demand. And if that's the case, why not build for low-income people instead?
    - tptacek 10y ago
      Is there a coherent argument you can make that doesn't depend on upper-income people shunning lower-income neighborhoods in San Francisco? Because the evidence strongly suggests that they don't: that when luxury housing is unavailable, upper-income people in the Bay Area move on to claim lower-income housing. (I lived in Bayview for a bit, and I was hardly the only tech person I knew who lived there.)
      - timr 10y ago
        "Is there a coherent argument you can make that doesn't depend on upper-income people shunning lower-income neighborhoods in San Francisco? Because the evidence strongly suggests that they don't" I'm not claiming that they do. I'm arguing the opposite: if you build only luxury, it doesn't help poor people much, because most people will try to get the cheapest, nicest housing they can find. Building luxury units helps only to the extent that building anything here helps -- and if we believe the OP, it doesn't help very much at all. Basically, this: you lived in Bayview, so you know who lives there. Knocking down every existing low-density home in Bayview and replacing it with market-rate housing would displace a huge number of poor folks. It probably also helps lower aggregate rents for everyone in SF by $40 a month or whatever, but that's thin gruel to the people who were there before. This is the fundamental dilemma facing all construction in San Francisco.