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The question I have has several parts, but fundamentally I wonder if the housing supply could even be increased enough to materially affect housing prices. Not

The question I have has several parts, but fundamentally I wonder if the housing supply could even be increased enough to materially affect housing prices. Not saying that the housing supply isn't excessively restricted, but how much can restrictions be decreased and how much difference would it make? An analogy is building freeways to relieve traffic congestion. What regularly happens is that additional roads or adding lanes to existing roads provides temporary respite from traffic jams. But before too long the roads are jam-packed again, the problem isn't solved, just have more cars clogging traffic. I suspect adding more housing won't lower housing prices, just bring some more people into the area. BTW this is what's happening here in Portland OR, where a building boom has been going on for years. The area population has increased, housing prices are still out of range for many people.

nitrogen 9y ago
But before too long the roads are jam-packed again, the problem isn't solved, just have more cars clogging traffic. Isn't that a good thing, indicating greater economic activity?
- kevinburke 9y ago
  It's a well known feature of transportation planning that traffic expands to fill available road space: http://www.culturechange.org/issue8/traffic%20expands.htm http://www.culturechange.org/issue8/traffic%20expands.htm The argument is, if the traffic is just going to expand to fill the new roads we build, then why not build more densely instead and help people have shorter commutes. Also some arguments around vicious cycles of building more roads, leading to more traffic, leading to demand for more, bigger roads, etc, vs. supporting biking/walking/public transit
  - CuriouslyC 9y ago
    The problem with density is that it assumes that housing will be efficiently allocated so it reduces people's need to commute. Unfortunately there are a lot of other factors involved and density in some cases ends up making traffic worse.
kevinburke 9y ago
> fundamentally I wonder if the housing supply could even be increased enough to materially affect housing prices. Yes, it can; SF built 5,000 units last year, a record, and rents and owner move-in evictions finally declined. At the very least, building more housing can prevent further large price rises. > BTW this is what's happening here in Portland OR, where a building boom has been going on for years. The area population has increased, housing prices are still out of range for many people. The question is what would happen if you didn't build the housing. I contend that the people moving in would outbid everyone for the existing housing stock, which would drive rent increases even more than rents are currently going up. It may be that the new housing is just keeping things at a base level. Flipped on its head the logic here doesn't really make sense; destroying existing housing stock would be disastrous for rents and prices, it makes sense that building more would help prevent increases.
- jrapdx3 9y ago
  You might be right, possibly housing prices could be higher. If in fact prices have stabilized or leveled out (it's sure hard to get up to date info of that kind), it suggests there's an equilibrium between increasing population and housing availability. The more housing the higher the population will go for any particular average housing price point. Simplistically, price = population/amount of housing. I think an issue is building new housing attracts an influx of population up to the point that housing is not too expensive, keeping the average price point about the same. Conversely, outflux of population would cause prices to plummet, which has happened in the past during recessions and high unemployment. In effect, housing stocks then are reduced by being removed from the market, but that's not exactly healthy for the community either. > I contend that the people moving in would outbid everyone for the existing housing stock, which would drive rent increases even more than rents are currently going up. That's possible, but unless people moving in are much wealthier than the people already there, the price could only rise a certain amount before no one could afford it and sales would fall off. That's similar to certain (expensive) condo prices around here, but still seems there's a ceiling effect. Your comment inspires me to talk with some real estate folks I know, it's been a while since getting their perspective on the market.
saosebastiao 9y ago
If you consider the fact that developers have been building at near peak-Dubai paces in Seattle for salable prices that are much lower than the bay area, I'd say you're worried about nothing of consequence. If you merely let them, they'll build until they can't cover their costs.
- rcpt 9y ago
  > building at near peak-Dubai paces in Seattle I'm curious about this - do you have some data? Not that I doubt it's true, I'm simply interested in how one would quantify this kinda thing.
  - jld 9y ago
    I can't speak to the Dubai comparison, but Seattle is bringing 10,000 apartments online this year. http://www.seattletimes.com/business/real-estate/seattles-record-apartment-boom-is-ready-to-explode/ http://www.seattletimes.com/business/real-estate/seattles-re...
    - mcv 9y ago
      Does that count as near-Dubai speed? Amsterdam is building 50,000 appartments over the next 10 years, and that's considered not enough. But there's simply no space to grow here. These are the last few empty corners of the city being filled in.
      - mattmanser 9y ago
        But 50,000 / 10 = 5,000 per year, half the rate?
        chronic940 9y ago
        Lol
        mcv 9y ago
        Yeah, but still same order of magnitude. I would have expected near-Dubai speed to be more than that. Though admittedly Seattle is smaller than Amsterdam. I expected it to be bigger (because Amsterdam isn't all that big).
scythe 9y ago
In order to increase the housing supply "significantly", you need to increase zoning limits in >10% of the relevant population-weighted land area. However balkanization makes it impossible to do this through a single political entity. The solution IMO is a "trigger" law that will increase zoning heights in a suburb when the nearby suburbs pass similar laws. This prevents any one town from becoming gentrified if they raise their growth rate above the regional norm.
- kevinburke 9y ago
  The biggest impediment to building in CA isn't zoning laws; most areas are zoned for way more density than they are built to. As an example, Habitat for Humanity wants to build 6 stories of below-market-rate condos in Redwood City, which complies with zoning codes, but are being opposed by a lawyer who lives on the block, because it's "out of character" with the other buildings in the neighborhood. It's a byzantine approval process that includes City Councils who are 100% responsible for local housing decisions, and are elected and responsible only to current city residents. Zealous Planning Commission boards who consider things like shadows and wind when making decisions, EIR (environmental impact report) appeals, CEQA lawsuits, a constitutional housing amendment (Prop 13) that incentivizes existing homeowners to oppose new development, and more... (It help if more areas were upzoned, but it's not the reason by any stretch)
  - literallycancer 9y ago
    >Zealous Planning Commission boards who consider things like shadows and wind when making decisions, EIR (environmental impact report) appeals, CEQA lawsuits, a constitutional housing amendment (Prop 13) that incentivizes existing homeowners to oppose new development, and more... On the other hand, you don't want to end up with this[1], so considering things like shadows and/or view obstruction has some merits. 1 - https://en.wikipedia.org/wiki/Vera_Coking#/media/File:View_of_house_between_two_casinos_-_Town_of_Atlantic_City,_North_end_of_Absecon_Island,_South_of_Absecon_Channel,_Atlantic_City,_Atlantic_County,_NJ_HABS_NJ,1-ATCI,19-3_(CT).tif https://en.wikipedia.org/wiki/Vera_Coking#/media/File:View_o...
- jrapdx3 9y ago
Retric 9y ago
US population has continued to grow so individual new roads or housing will never be enough on their own. It's the rate of new roads and housing that's important. Consider the Big dig was extremely expensive and made significant long term impact, but another one would still help.
aaron695 9y ago
> What regularly happens is that additional roads or adding lanes to existing roads provides temporary respite from traffic jams. But before too long the roads are jam-packed again, the problem isn't solved, just have more cars clogging traffic. I've never seen proof of this, do you have any studies? I know it's blah blahs law which I can't remember but outside of academia I never see a real world case. If you just mean they fill again from growth well that makes sense. Without building them they would be even worse. I've never see a cited case where improving infrastructure makes everyone worse off.
- ghaff 9y ago
  There are some references in the Wikipedia article on Induced Demand. Most of the cited cases deal with heavily trafficked roads being removed and demand decreasing as a result. https://en.wikipedia.org/wiki/Induced_demand https://en.wikipedia.org/wiki/Induced_demand
  - aaron695 9y ago
    That's it. I find the examples on wiki a little sketchy and some are flat out anecdotal. I do agree it will increase the total traffic as you improve the system but the concept it can ever make it worse or the same in the entire system doesn't make sense. Peoples need to travel by car is not totally fluid. Jobs stay the same and many people catch public transport for reasons other than convenience.
    - ghaff 9y ago
      I'm not sure I've heard the claim that adding capacity actually makes traffic worse other things being equal. It's more that, as you say, people will time-shift, take alternate transportation, take a different route, move, change jobs, etc. to keep a commute under a particular time. It's sort of another version of the "work expands to fill the time allotted to it" maxim. And if it's not commuting we're talking about, some people will just choose not to drive into a city for dinner, etc. because it's too much of a hassle.
pascalxus 9y ago
CA has been constricting the supply for the last 30 years, so it's not going to be fixed overnight! I guess it would take 10+ years of non-stop building to get housing anywhere close to the nationwide level, just a wild guess.
jeffbax 9y ago
Supply is the only way to get out of the problem facing US cities today, and it's entirely a regulatory problem: http://marginalrevolution.com/marginalrevolution/2016/08/laissez-faire-in-tokyo.html http://marginalrevolution.com/marginalrevolution/2016/08/lai... http://noahpinionblog.blogspot.com/2017/05/the-nimby-challenge.html http://noahpinionblog.blogspot.com/2017/05/the-nimby-challen...

nitrogen 9y ago

But before too long the roads are jam-packed again, the problem isn't solved, just have more cars clogging traffic. Isn't that a good thing, indicating greater economic activity?

kevinburke 9y ago
It's a well known feature of transportation planning that traffic expands to fill available road space: http://www.culturechange.org/issue8/traffic%20expands.htm http://www.culturechange.org/issue8/traffic%20expands.htm The argument is, if the traffic is just going to expand to fill the new roads we build, then why not build more densely instead and help people have shorter commutes. Also some arguments around vicious cycles of building more roads, leading to more traffic, leading to demand for more, bigger roads, etc, vs. supporting biking/walking/public transit
- CuriouslyC 9y ago
  The problem with density is that it assumes that housing will be efficiently allocated so it reduces people's need to commute. Unfortunately there are a lot of other factors involved and density in some cases ends up making traffic worse.

kevinburke 9y ago

> fundamentally I wonder if the housing supply could even be increased enough to materially affect housing prices. Yes, it can; SF built 5,000 units last year, a record, and rents and owner move-in evictions finally declined. At the very least, building more housing can prevent further large price rises. > BTW this is what's happening here in Portland OR, where a building boom has been going on for years. The area population has increased, housing prices are still out of range for many people. The question is what would happen if you didn't build the housing. I contend that the people moving in would outbid everyone for the existing housing stock, which would drive rent increases even more than rents are currently going up. It may be that the new housing is just keeping things at a base level. Flipped on its head the logic here doesn't really make sense; destroying existing housing stock would be disastrous for rents and prices, it makes sense that building more would help prevent increases.

jrapdx3 9y ago
You might be right, possibly housing prices could be higher. If in fact prices have stabilized or leveled out (it's sure hard to get up to date info of that kind), it suggests there's an equilibrium between increasing population and housing availability. The more housing the higher the population will go for any particular average housing price point. Simplistically, price = population/amount of housing. I think an issue is building new housing attracts an influx of population up to the point that housing is not too expensive, keeping the average price point about the same. Conversely, outflux of population would cause prices to plummet, which has happened in the past during recessions and high unemployment. In effect, housing stocks then are reduced by being removed from the market, but that's not exactly healthy for the community either. > I contend that the people moving in would outbid everyone for the existing housing stock, which would drive rent increases even more than rents are currently going up. That's possible, but unless people moving in are much wealthier than the people already there, the price could only rise a certain amount before no one could afford it and sales would fall off. That's similar to certain (expensive) condo prices around here, but still seems there's a ceiling effect. Your comment inspires me to talk with some real estate folks I know, it's been a while since getting their perspective on the market.

saosebastiao 9y ago

If you consider the fact that developers have been building at near peak-Dubai paces in Seattle for salable prices that are much lower than the bay area, I'd say you're worried about nothing of consequence. If you merely let them, they'll build until they can't cover their costs.

rcpt 9y ago
> building at near peak-Dubai paces in Seattle I'm curious about this - do you have some data? Not that I doubt it's true, I'm simply interested in how one would quantify this kinda thing.
- jld 9y ago
  I can't speak to the Dubai comparison, but Seattle is bringing 10,000 apartments online this year. http://www.seattletimes.com/business/real-estate/seattles-record-apartment-boom-is-ready-to-explode/ http://www.seattletimes.com/business/real-estate/seattles-re...
  - mcv 9y ago
    Does that count as near-Dubai speed? Amsterdam is building 50,000 appartments over the next 10 years, and that's considered not enough. But there's simply no space to grow here. These are the last few empty corners of the city being filled in.
    - mattmanser 9y ago
      But 50,000 / 10 = 5,000 per year, half the rate?
      - chronic940 9y ago
        Lol
      - mcv 9y ago
        Yeah, but still same order of magnitude. I would have expected near-Dubai speed to be more than that. Though admittedly Seattle is smaller than Amsterdam. I expected it to be bigger (because Amsterdam isn't all that big).

scythe 9y ago

In order to increase the housing supply "significantly", you need to increase zoning limits in >10% of the relevant population-weighted land area. However balkanization makes it impossible to do this through a single political entity. The solution IMO is a "trigger" law that will increase zoning heights in a suburb when the nearby suburbs pass similar laws. This prevents any one town from becoming gentrified if they raise their growth rate above the regional norm.

kevinburke 9y ago
The biggest impediment to building in CA isn't zoning laws; most areas are zoned for way more density than they are built to. As an example, Habitat for Humanity wants to build 6 stories of below-market-rate condos in Redwood City, which complies with zoning codes, but are being opposed by a lawyer who lives on the block, because it's "out of character" with the other buildings in the neighborhood. It's a byzantine approval process that includes City Councils who are 100% responsible for local housing decisions, and are elected and responsible only to current city residents. Zealous Planning Commission boards who consider things like shadows and wind when making decisions, EIR (environmental impact report) appeals, CEQA lawsuits, a constitutional housing amendment (Prop 13) that incentivizes existing homeowners to oppose new development, and more... (It help if more areas were upzoned, but it's not the reason by any stretch)
- literallycancer 9y ago
  >Zealous Planning Commission boards who consider things like shadows and wind when making decisions, EIR (environmental impact report) appeals, CEQA lawsuits, a constitutional housing amendment (Prop 13) that incentivizes existing homeowners to oppose new development, and more... On the other hand, you don't want to end up with this[1], so considering things like shadows and/or view obstruction has some merits. 1 - https://en.wikipedia.org/wiki/Vera_Coking#/media/File:View_of_house_between_two_casinos_-_Town_of_Atlantic_City,_North_end_of_Absecon_Island,_South_of_Absecon_Channel,_Atlantic_City,_Atlantic_County,_NJ_HABS_NJ,1-ATCI,19-3_(CT).tif https://en.wikipedia.org/wiki/Vera_Coking#/media/File:View_o...
jrapdx3 9y ago

Retric 9y ago

US population has continued to grow so individual new roads or housing will never be enough on their own. It's the rate of new roads and housing that's important. Consider the Big dig was extremely expensive and made significant long term impact, but another one would still help.

aaron695 9y ago

> What regularly happens is that additional roads or adding lanes to existing roads provides temporary respite from traffic jams. But before too long the roads are jam-packed again, the problem isn't solved, just have more cars clogging traffic. I've never seen proof of this, do you have any studies? I know it's blah blahs law which I can't remember but outside of academia I never see a real world case. If you just mean they fill again from growth well that makes sense. Without building them they would be even worse. I've never see a cited case where improving infrastructure makes everyone worse off.

ghaff 9y ago
There are some references in the Wikipedia article on Induced Demand. Most of the cited cases deal with heavily trafficked roads being removed and demand decreasing as a result. https://en.wikipedia.org/wiki/Induced_demand https://en.wikipedia.org/wiki/Induced_demand
- aaron695 9y ago
  That's it. I find the examples on wiki a little sketchy and some are flat out anecdotal. I do agree it will increase the total traffic as you improve the system but the concept it can ever make it worse or the same in the entire system doesn't make sense. Peoples need to travel by car is not totally fluid. Jobs stay the same and many people catch public transport for reasons other than convenience.
  - ghaff 9y ago
    I'm not sure I've heard the claim that adding capacity actually makes traffic worse other things being equal. It's more that, as you say, people will time-shift, take alternate transportation, take a different route, move, change jobs, etc. to keep a commute under a particular time. It's sort of another version of the "work expands to fill the time allotted to it" maxim. And if it's not commuting we're talking about, some people will just choose not to drive into a city for dinner, etc. because it's too much of a hassle.

pascalxus 9y ago

CA has been constricting the supply for the last 30 years, so it's not going to be fixed overnight! I guess it would take 10+ years of non-stop building to get housing anywhere close to the nationwide level, just a wild guess.

jeffbax 9y ago

Supply is the only way to get out of the problem facing US cities today, and it's entirely a regulatory problem: http://marginalrevolution.com/marginalrevolution/2016/08/laissez-faire-in-tokyo.html http://marginalrevolution.com/marginalrevolution/2016/08/lai... http://noahpinionblog.blogspot.com/2017/05/the-nimby-challenge.html http://noahpinionblog.blogspot.com/2017/05/the-nimby-challen...