8 ms·

Exactly. High house prices are caused by a scarcity of houses. This scarcity is often due to restrictive local laws to release more land for housing and/or the

Exactly. High house prices are caused by a scarcity of houses. This scarcity is often due to restrictive local laws to release more land for housing and/or the permission to build up if there isn't sufficient land.

anigbrowl 10y ago
It's worth bearing in mind that most of said laws are the creation of existing property owners, who just happen to form the main tax base.
- lupin_sansei 10y ago
  What they call in Economics - Baptists (environmental objection to sprawl, objections to building higher rise etc) and Bootleggers (people who benefit from selling high priced houses, land tax receivers etc)
- stuckagain 10y ago
  On account of Proposition 13, existing property owners in fact do not form the main tax base. Personal income taxes are in total greater than property taxes in California. If you earn more wages your income taxes increase, but if your property appreciates your property taxes do not increase. Property owners get to vote and they stand to realize 100% of their capital gains, but they aren't really subject to taxation.
  - hkmurakami 10y ago
    And hence we have the boom-bust cycles of the California tax base, with alternating waves of budget surpluses and steep shortfalls.
    - zaroth 10y ago
      This is due mainly to CA's very progressive tax rate, it makes the lions share of income based on capital gains and therefore the tax revenue much more variable than in other states. This is unrelated to property taxes, which go to the city/town not the state.
  - WildUtah 10y ago
    Property owners do not get to vote in the USA, not even in the Bay Area. Citizens get to vote. Citizens that own property are very motivated to vote against construction and so far have shown extreme solidarity against allowing dense construction even in small zones. Meanwhile renters, who appear to be a slim majority of citizens in the area, are not organized and do not vote reliably. How much any one group may or may not contribute in taxes has very little to do with political outcomes since taxes don't vote. At most there is an indirect effect as city budgets drive strategies to collect more revenue by officials. Those officials still answer only to voting citizens.
    - Zach_the_Lizard 10y ago
      >Meanwhile renters, who appear to be a slim majority of citizens in the area, are not organized and do not vote reliably. Rent control / stabilization gives them an incentive to not allow construction as perhaps they, like all humans, oppose change but now don't have to face the negative consequences of opposing it. 50% of apartments in NYC are under some form of rent control / stabilization.
    - Decade 10y ago
      Even worse, renters groups and community organizations are divided. I never joined the San Francisco Renters Federation because of its devotion to rent control and its hostility to landlords. Similarly, the Council of Community Housing Organizations is focused on raising money to the detriment of making housing. When the Bay Area Renters Federation and Grow San Francisco started, I felt some joy. Finally, after all these years, here is a housing movement that I can support. http://www.sfyimby.org/ http://www.sfyimby.org/
      - Decade 10y ago
        Oh. I meant, I never joined the San Francisco Tenants Union.
- toby 10y ago
  I think you'll find (in general) that the people most opposed to new housing (long time residents) are the ones paying the lowest property taxes, due to Prop 13. Newer homebuyers who are paying taxes on the actual market-value of their homes tend to spend far less time at Supervisor meetings.
  - pfarnsworth 10y ago
    Actually I think you'll find that your guess is completely wrong. Long term residents don't face as much issue with new housing because they already have made the lion share of their gains. Newer homebuyers are the most at risk if higher supply causes their 1.5M house to drop to 1.2M because of higher number of houses in the area.
    - toby 10y ago
      This is all true of course, but it's not what I said. While it might be more economically rational for newer homebuyers to be the ones fighting development, it hasn't been my observation that they are. Obviously I could be wrong, I'd love to hear stories of rampant NIMBYism among the newly-landed.
      - pfarnsworth 10y ago
        My anecdote counters your anecdote. I find that the newest members of a neighborhood are the ones most likely to fight new development. The older people care but they don't have as much vested interest because they don't lose as much money.
        XenophileJKO 10y ago
        Where I live in Mountain View, it is definitely the older residents that are the most vocal against increasing density.
        umanwizard 10y ago
        You're equivocating between "homeowners" and "residents". Even newer homeowners are likely to have lived in the area longer than many residents.
Hydraulix989 10y ago
There's a lot of empty houses in Palo Alto owned by overseas investors. That is a huge problem, really limiting our housing supply.
- lazaroclapp 10y ago
  Is this really the case? Or are there a lot of occupied (as in, rentals) houses owned by overseas investors? Why would it make any sense to leave a property in the bay area empty if you can add rent to the benefits of your investment?
  - pfarnsworth 10y ago
    Because they are so rich that renting is a hassle. They don't need the extra money. The exact same thing happens in Vancouver, BC and their is a new law that fines people that leave their house empty.
  - lupin_sansei 10y ago
    Often investors in Australia leave houses empty as there are different laws around capital gains taxes for investment properties (rentals) vs primary residence (which you don't have to actually live in all the time). It's often cheaper to not rent a property out and to get the lower CGT rate than to receive rent but have a 30% CGT when it's sold.
    - deleted 10y ago
      [deleted]
  - Hydraulix989 10y ago
    Have you ever been a landlord? It's a huge hassle (it's impossible to do property management remotely, let alone in a foreign country), and if you have the wrong tenants (an easy mistake to make if you aren't experienced enough), things can end up going pretty badly!
    - ams6110 10y ago
Tempest1981 10y ago
Even if the cost of housing dropped 30%, do you think our bus drivers could afford a house/townhouse? And do you think we can build enough housing to cause, say, a 10% drop, or a 30% drop? (Not saying we shouldn't try... just that it'll have a minor effect.)
- Retric 10y ago
  An 80% drop is probably achievable, it's also not going to happen. Housing in the US is a horrable mix of bad incentives resulting in a large drag on the economy. The indirect costs where a taxi is more expencive because rent is more expencive means homeoners should be better off with a drop in prices. However, everyone acts like their own investment is the only important thing.
- sAuronas 10y ago
  You don't need an [overall] "drop" in prices. You need housing prices within a broader range. The other problem is Prop 13, which freezes taxes for the current homeowner, thereby incentivizing the fight against new development. Forget that I mentioned Prop 13 for a second and just imagine cities in the Bay moving mountains (or rather, single-story/use retail) to incentivize the construction of four times as much housing at all price ranges. There is a reason a place like Atlanta is affordable - they build. How we build is another topic but just focusing on underutilized properties and getting permissions and rights out of the way faster would make a huge difference in the cost - to - build. I come on HN to talk this a lot because I am a developer turned developer and if housing where as easy to build as software...you could drive a bus and not have to sleep in it.
- surfmike 10y ago
  Probably not a house or townhouse, but there are many cities in the world where hardly anyone can afford that anyway. We should aspire to create affordable, nice apartments. You can raise a family of four comfortably (not by American standards, but world standards) in a 1000sqft apartment.
crdoconnor 10y ago
High house prices are also driven by low interest rates and low property taxes. The land value (as opposed to the value of the buildings on top) is being extracted by landowners rather than the community. If instead it was taxed (by raising property taxes or LVT), this would have three follow on effects: * Treating housing as a bar of gold would stop (buying it as a store of value and leaving it empty). This would free up a lot of space. * The proceeds of the tax could be used to build more housing without slashing other parts of the budget. * Rich home owners - those who need the money the least - would stop getting effective handouts from those who need the money the most (renters).

anigbrowl 10y ago

It's worth bearing in mind that most of said laws are the creation of existing property owners, who just happen to form the main tax base.

lupin_sansei 10y ago
What they call in Economics - Baptists (environmental objection to sprawl, objections to building higher rise etc) and Bootleggers (people who benefit from selling high priced houses, land tax receivers etc)
stuckagain 10y ago
On account of Proposition 13, existing property owners in fact do not form the main tax base. Personal income taxes are in total greater than property taxes in California. If you earn more wages your income taxes increase, but if your property appreciates your property taxes do not increase. Property owners get to vote and they stand to realize 100% of their capital gains, but they aren't really subject to taxation.
- hkmurakami 10y ago
  And hence we have the boom-bust cycles of the California tax base, with alternating waves of budget surpluses and steep shortfalls.
  - zaroth 10y ago
    This is due mainly to CA's very progressive tax rate, it makes the lions share of income based on capital gains and therefore the tax revenue much more variable than in other states. This is unrelated to property taxes, which go to the city/town not the state.
- WildUtah 10y ago
  Property owners do not get to vote in the USA, not even in the Bay Area. Citizens get to vote. Citizens that own property are very motivated to vote against construction and so far have shown extreme solidarity against allowing dense construction even in small zones. Meanwhile renters, who appear to be a slim majority of citizens in the area, are not organized and do not vote reliably. How much any one group may or may not contribute in taxes has very little to do with political outcomes since taxes don't vote. At most there is an indirect effect as city budgets drive strategies to collect more revenue by officials. Those officials still answer only to voting citizens.
  - Zach_the_Lizard 10y ago
    >Meanwhile renters, who appear to be a slim majority of citizens in the area, are not organized and do not vote reliably. Rent control / stabilization gives them an incentive to not allow construction as perhaps they, like all humans, oppose change but now don't have to face the negative consequences of opposing it. 50% of apartments in NYC are under some form of rent control / stabilization.
  - Decade 10y ago
    Even worse, renters groups and community organizations are divided. I never joined the San Francisco Renters Federation because of its devotion to rent control and its hostility to landlords. Similarly, the Council of Community Housing Organizations is focused on raising money to the detriment of making housing. When the Bay Area Renters Federation and Grow San Francisco started, I felt some joy. Finally, after all these years, here is a housing movement that I can support. http://www.sfyimby.org/ http://www.sfyimby.org/
    - Decade 10y ago
      Oh. I meant, I never joined the San Francisco Tenants Union.
toby 10y ago
I think you'll find (in general) that the people most opposed to new housing (long time residents) are the ones paying the lowest property taxes, due to Prop 13. Newer homebuyers who are paying taxes on the actual market-value of their homes tend to spend far less time at Supervisor meetings.
- pfarnsworth 10y ago
  Actually I think you'll find that your guess is completely wrong. Long term residents don't face as much issue with new housing because they already have made the lion share of their gains. Newer homebuyers are the most at risk if higher supply causes their 1.5M house to drop to 1.2M because of higher number of houses in the area.
  - toby 10y ago
    This is all true of course, but it's not what I said. While it might be more economically rational for newer homebuyers to be the ones fighting development, it hasn't been my observation that they are. Obviously I could be wrong, I'd love to hear stories of rampant NIMBYism among the newly-landed.
    - pfarnsworth 10y ago
      My anecdote counters your anecdote. I find that the newest members of a neighborhood are the ones most likely to fight new development. The older people care but they don't have as much vested interest because they don't lose as much money.
      - XenophileJKO 10y ago
        Where I live in Mountain View, it is definitely the older residents that are the most vocal against increasing density.
      - umanwizard 10y ago
        You're equivocating between "homeowners" and "residents". Even newer homeowners are likely to have lived in the area longer than many residents.

Hydraulix989 10y ago

There's a lot of empty houses in Palo Alto owned by overseas investors. That is a huge problem, really limiting our housing supply.

lazaroclapp 10y ago
Is this really the case? Or are there a lot of occupied (as in, rentals) houses owned by overseas investors? Why would it make any sense to leave a property in the bay area empty if you can add rent to the benefits of your investment?
- pfarnsworth 10y ago
  Because they are so rich that renting is a hassle. They don't need the extra money. The exact same thing happens in Vancouver, BC and their is a new law that fines people that leave their house empty.
- lupin_sansei 10y ago
  Often investors in Australia leave houses empty as there are different laws around capital gains taxes for investment properties (rentals) vs primary residence (which you don't have to actually live in all the time). It's often cheaper to not rent a property out and to get the lower CGT rate than to receive rent but have a 30% CGT when it's sold.
  - deleted 10y ago
    [deleted]
- Hydraulix989 10y ago
  Have you ever been a landlord? It's a huge hassle (it's impossible to do property management remotely, let alone in a foreign country), and if you have the wrong tenants (an easy mistake to make if you aren't experienced enough), things can end up going pretty badly!
  - ams6110 10y ago

Tempest1981 10y ago

Even if the cost of housing dropped 30%, do you think our bus drivers could afford a house/townhouse? And do you think we can build enough housing to cause, say, a 10% drop, or a 30% drop? (Not saying we shouldn't try... just that it'll have a minor effect.)

Retric 10y ago
An 80% drop is probably achievable, it's also not going to happen. Housing in the US is a horrable mix of bad incentives resulting in a large drag on the economy. The indirect costs where a taxi is more expencive because rent is more expencive means homeoners should be better off with a drop in prices. However, everyone acts like their own investment is the only important thing.
sAuronas 10y ago
You don't need an [overall] "drop" in prices. You need housing prices within a broader range. The other problem is Prop 13, which freezes taxes for the current homeowner, thereby incentivizing the fight against new development. Forget that I mentioned Prop 13 for a second and just imagine cities in the Bay moving mountains (or rather, single-story/use retail) to incentivize the construction of four times as much housing at all price ranges. There is a reason a place like Atlanta is affordable - they build. How we build is another topic but just focusing on underutilized properties and getting permissions and rights out of the way faster would make a huge difference in the cost - to - build. I come on HN to talk this a lot because I am a developer turned developer and if housing where as easy to build as software...you could drive a bus and not have to sleep in it.
surfmike 10y ago
Probably not a house or townhouse, but there are many cities in the world where hardly anyone can afford that anyway. We should aspire to create affordable, nice apartments. You can raise a family of four comfortably (not by American standards, but world standards) in a 1000sqft apartment.

crdoconnor 10y ago

High house prices are also driven by low interest rates and low property taxes. The land value (as opposed to the value of the buildings on top) is being extracted by landowners rather than the community. If instead it was taxed (by raising property taxes or LVT), this would have three follow on effects: * Treating housing as a bar of gold would stop (buying it as a store of value and leaving it empty). This would free up a lot of space. * The proceeds of the tax could be used to build more housing without slashing other parts of the budget. * Rich home owners - those who need the money the least - would stop getting effective handouts from those who need the money the most (renters).