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> By the paper’s calculations, a home in the San Francisco area should cost around $281,000. This makes very little sense to me - San Francisco is surrounded b

> By the paper’s calculations, a home in the San Francisco area should cost around $281,000. This makes very little sense to me - San Francisco is surrounded by water on three sides and borders other towns/cities on the 4th, so how does one account for the demand of new housing once the existing housing is built? In other words, let's say we increase density sufficiently, so that we flood the market with new homes (apartments for SF) and drive the price down to 281k. As time passes and population increases, with a fixed land supply, you'll need to build denser. But you have people already living in the homes you'll need to tear down. How do you force enough of them to move so that you always maintain enough housing stock to keep prices low? It has been done with marginal success in non-market economies. For example, in USSR, when new apartment buildings were to be built where older ones currently stood, government simply ordered people to relocate to "improved" new apartments, usually located in undesirable areas of the city. This is hardly fair. A US version of that could use eminent domain powers, but I somehow doubt the people of the city would support that. Another question is whether people will want to live in that level of density. Eventually, you'll have price stratification based on height and access to sunlight. In NYC, you already see sunlight or lack of it as a significant pricing factor. Street noise is another factor. That said, it doesn't mean there isn't some sort of sane middle ground. SF could use more development, just like the westside of LA, but it won't result in $281k price point.

rtpg 10y ago
"The people of the city" It depends on what proportion of the city owns their home. If most people are renters, of course they want the price of housing to go down! If there's one good rallying cry against capitalism as an effective means of societal advance, it's rent seeking and the conflicts it causes. I bring it up every time this topic comes up, but NYC is not the only way to make a "big city". Tokyo is nice, high density, but there are trees all over the place. All for 1/5th the rent of SF. A well designed big city is not one that just has taller buildings. It has better service distribution, so there are, overall, less cars. There aren't just a grid of avenues (that's too convenient for cars!), but many roads that are smaller. Building development is not allowed to block out sunlight from other buildings. Street noise is handled by making only a couple large avenues, with most streets being extremely small and low-traffic. Yes, it makes traffic worse for some people. Don't have as many people driving all over.
- mcguire 10y ago
  http://www.economist.com/node/13415153 http://www.economist.com/node/13415153 [2009] http://www.economist.com/blogs/freeexchange/2012/08/lost-decades http://www.economist.com/blogs/freeexchange/2012/08/lost-dec... [2012] https://en.m.wikipedia.org/wiki/Lost_Decade_%28Japan%29?wprov=sfla1 https://en.m.wikipedia.org/wiki/Lost_Decade_%28Japan%29?wpro...
  - mcguire 10y ago
    So, the fact that Japan spent two decades in an economic flatline after the collapse of an asset (specifically, property) bubble has no influence on the current price of property?
- sologoub 10y ago
  I have not been to Tokyo, but I still don't see how you make a plot of land as small as SF support 4-5 million people without still creating serious compromises to quality of life for the lower end of the price range. You still need to displace people for new development. Renters, just like owners do not want to move to make room for "new comers". Even if the move is close in proximity. EDIT: Another example - Santa Monica, CA. Renters hold the legislative power (64.1% renter population), but the opposite of what you describe happens - the renter-elected city council members oppose growth and renter-led coalitions block development of great projects. Sources: https://en.m.wikipedia.org/wiki/Santa_Monica,_California https://en.m.wikipedia.org/wiki/Santa_Monica,_California http://la.curbed.com/2015/8/21/9928090/pretty-expoadjacent-office-space-rising-on-the-grave-of-the-bergamot http://la.curbed.com/2015/8/21/9928090/pretty-expoadjacent-o...
  - twblalock 10y ago
    > I have not been to Tokyo, but I still don't see how you make a plot of land as small as SF support 4-5 million people without still creating serious compromises to quality of life for the lower end of the price range. Well, you should go there and see for yourself how much better it is. I have done that, and I can tell you without any hesitation that I would rather be poor in Tokyo than in San Francisco or any other major city in the US. You can get across Tokyo on a train for the equivalent of a few dollars, there is universal health care, rent and home prices are lower, and Tokyo is more cosmopolitan. Unless you are looking for software engineering jobs, Tokyo is a better place to live. And on top of all of that, the population of the Tokyo metropolitan area is almost as large as the entire population of California.
mattnewton 10y ago
Easy, they build up on new places, which they aren't allowed to do now.
- randomdata 10y ago
  The parent asked about what happens after we've built up. Unless population growth grinds to a halt, the buildings will have to grow taller still at some point. If the market needs 20 floor structures today, and 40 floor structures in a decade, he asks how do you take 20 floors of people out of their homes in order to tear down and rebuild sufficiently dense housing.
  - brutus1213 10y ago
    Build up more as tech gets better (i.e. taller buildings)? Have better transport so the boundaries of the city get even larger (e.g. twin cities)?
  - namlem 10y ago
    Most large cities, except for Hong Kong, still have plenty of room to build up. You don't tear down the 20-floor buildings to build the 40-floor ones, you tear down the 6-floor ones in the next neighborhood. It's much cheaper to buy them out.
TheCoelacanth 10y ago
You don't need a command economy or eminent domain to pursue lower prices. There are numerous policies that could be changed to have that effect: * Get rid of Prop 13. It discourages property owners from selling or re-developing their property leading to higher prices. * Get rid of the mortgage interest deduction. It is a subsidy to homeowners which causes higher prices. * Get rid of zoning regulations that prevent property owners who want to re-develop their property from building higher density. * Institute a land value tax. Instead of the current property tax structure which charges people who are under-utilizing land less than people who are utilizing it more efficiently, charge them the same amount to encourage the land to be used for the most valuable use.

rtpg 10y ago

"The people of the city" It depends on what proportion of the city owns their home. If most people are renters, of course they want the price of housing to go down! If there's one good rallying cry against capitalism as an effective means of societal advance, it's rent seeking and the conflicts it causes. I bring it up every time this topic comes up, but NYC is not the only way to make a "big city". Tokyo is nice, high density, but there are trees all over the place. All for 1/5th the rent of SF. A well designed big city is not one that just has taller buildings. It has better service distribution, so there are, overall, less cars. There aren't just a grid of avenues (that's too convenient for cars!), but many roads that are smaller. Building development is not allowed to block out sunlight from other buildings. Street noise is handled by making only a couple large avenues, with most streets being extremely small and low-traffic. Yes, it makes traffic worse for some people. Don't have as many people driving all over.

mcguire 10y ago
http://www.economist.com/node/13415153 http://www.economist.com/node/13415153 [2009] http://www.economist.com/blogs/freeexchange/2012/08/lost-decades http://www.economist.com/blogs/freeexchange/2012/08/lost-dec... [2012] https://en.m.wikipedia.org/wiki/Lost_Decade_%28Japan%29?wprov=sfla1 https://en.m.wikipedia.org/wiki/Lost_Decade_%28Japan%29?wpro...
- mcguire 10y ago
  So, the fact that Japan spent two decades in an economic flatline after the collapse of an asset (specifically, property) bubble has no influence on the current price of property?
sologoub 10y ago
I have not been to Tokyo, but I still don't see how you make a plot of land as small as SF support 4-5 million people without still creating serious compromises to quality of life for the lower end of the price range. You still need to displace people for new development. Renters, just like owners do not want to move to make room for "new comers". Even if the move is close in proximity. EDIT: Another example - Santa Monica, CA. Renters hold the legislative power (64.1% renter population), but the opposite of what you describe happens - the renter-elected city council members oppose growth and renter-led coalitions block development of great projects. Sources: https://en.m.wikipedia.org/wiki/Santa_Monica,_California https://en.m.wikipedia.org/wiki/Santa_Monica,_California http://la.curbed.com/2015/8/21/9928090/pretty-expoadjacent-office-space-rising-on-the-grave-of-the-bergamot http://la.curbed.com/2015/8/21/9928090/pretty-expoadjacent-o...
- twblalock 10y ago
  > I have not been to Tokyo, but I still don't see how you make a plot of land as small as SF support 4-5 million people without still creating serious compromises to quality of life for the lower end of the price range. Well, you should go there and see for yourself how much better it is. I have done that, and I can tell you without any hesitation that I would rather be poor in Tokyo than in San Francisco or any other major city in the US. You can get across Tokyo on a train for the equivalent of a few dollars, there is universal health care, rent and home prices are lower, and Tokyo is more cosmopolitan. Unless you are looking for software engineering jobs, Tokyo is a better place to live. And on top of all of that, the population of the Tokyo metropolitan area is almost as large as the entire population of California.

mattnewton 10y ago

Easy, they build up on new places, which they aren't allowed to do now.

randomdata 10y ago
The parent asked about what happens after we've built up. Unless population growth grinds to a halt, the buildings will have to grow taller still at some point. If the market needs 20 floor structures today, and 40 floor structures in a decade, he asks how do you take 20 floors of people out of their homes in order to tear down and rebuild sufficiently dense housing.
- brutus1213 10y ago
  Build up more as tech gets better (i.e. taller buildings)? Have better transport so the boundaries of the city get even larger (e.g. twin cities)?
- namlem 10y ago
  Most large cities, except for Hong Kong, still have plenty of room to build up. You don't tear down the 20-floor buildings to build the 40-floor ones, you tear down the 6-floor ones in the next neighborhood. It's much cheaper to buy them out.

TheCoelacanth 10y ago

You don't need a command economy or eminent domain to pursue lower prices. There are numerous policies that could be changed to have that effect: * Get rid of Prop 13. It discourages property owners from selling or re-developing their property leading to higher prices. * Get rid of the mortgage interest deduction. It is a subsidy to homeowners which causes higher prices. * Get rid of zoning regulations that prevent property owners who want to re-develop their property from building higher density. * Institute a land value tax. Instead of the current property tax structure which charges people who are under-utilizing land less than people who are utilizing it more efficiently, charge them the same amount to encourage the land to be used for the most valuable use.