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The high cost of housing and commercial real estate in SF, NYC, Boston, DC, LA, London, ....all have the same underlying cause which was fixed in Japan by the J
by davidf18 9y ago
The high cost of housing and commercial real estate in SF, NYC, Boston, DC, LA, London, ....all have the same underlying cause which was fixed in Japan by the Japanese federal government.
It is a market inefficiency caused by zoning density restrictions and overuse of historic landmark status which creates a politically induced artificial scarcity in housing (scarcity = rising prices). These "rent-seeking" restrictions are a regressive tax transferring income from renters to wealthy landlords including Donald Trump. It is wrong, and Japan has fixed the problem removing zoning density restrictions at the local level. The result, in 2014 there were 140,000 homes built in Tokyo compared with about 90,000 for all of California and 20,000 in NYC.
Economist David Ricardo wrote about this phenomenon of "rent-seeking" about 200 years ago related to the Corn Laws. Corn Laws taxed the import of all grains which benefited not farmers but landowners. Ricardo joined Parliament and managed to overturn the "rent-seeking" law.
The solution is a federal law in the US following the example of Japan.
- ademars94 9y agoCare to elaborate on this a little more? I’d like to learn about it.
- omot 9y agoIt's a simple math of demand and supply. Density restrictions keep supply in check it keeps it constant, but demand grows exponentially over time, due to immigration and population growth. Thus price grows astronomically high. If you remove restrictions and with the right technology you could create housing that keeps up with the demand growth. SF homelessness is really about incompetence of city politicians, bureaucracy, and the lack of good talent in public service. Why would I want to work for the city to make it a better place when companies inside my city or just further down to the south pays me 3x or 4x what they're offering.
- posguy 9y agoDezoning most American cities would be quite a good thing. We massively subsidize parking thanks to our zoning requiring parking minimums (such that buildings are only able to rent parking for low $0.xx/sqft a month, versus $x/sqft a month for housing in the same building), and we also block or kneecap larger buildings by restricting their size and the number of units within them. These restrictions (nearly all carried out as zoning) could easily be removed and allow a wave of development to occur, lowering housing costs and keeping many people from ending up homeless in the first place.
- davidf18 9y agoScarcity results in rising prices. In general wealth creation comes from productivity. There are many in society including special interests that are not interested in creating wealth but taking it for themselves while harming society as a whole. That includes not only wealthy landlords but many other groups of people don't want competition. Another example is limits on taxicab medallions (which we have in NYC) so that medallions in NYC were valued at $1.2 million each and higher fares for passengers but that scarcity was fixed by competition from Uber/Lyft so that now medallions are only worth $700,000 or less and fares are less expensive than they were. Another example is labor unions. Various forms of tariffs also create scarcity benefiting the special interests over the needs of the general population. Many jobs have extraordinary educational or licensing requirements to create scarcity and limit competition. When it comes to housing wealthy landlords want their land to appreciate so they lobby politicians to pass these regressive laws. Without spending a cent, simply reversing the artificial scarcity in housing means that renters pay less for rent and more for goods and services, the construction trades have jobs, etc.
- davidw 9y agoHere's a bunch of my YIMBY readings: https://bendyimby.com/2017/06/12/yimby-reading/ https://bendyimby.com/2017/06/12/yimby-reading/
- kafkaesq 9y agoHere's a good primer: http://www.truth-out.org/news/item/40509-yimbys-the-alt-right-darlings-of-the-real-estate-industry http://www.truth-out.org/news/item/40509-yimbys-the-alt-righ...
- MichaelSalib 9y agoI saw this up close in Boston (really Cambridge MA). In most American municipalities, neighborhood groups have enormous power to shape development. All development has to get approved by the city, and the city listens to neighborhood groups. Those groups can also petition a landmark commission to landmark a building making redevelopment much more difficult. And they can sue. Even when these tactics don't work, they're extremely time consuming. I've seen one court case drag on for years even though the people filing literally submitted briefs written in crayon. So it is often better to just settle with neighborhood groups, but like patent trolls, that only encourages them. One issue is that in the US, we treat housing as the primary source of wealth for middle class people. So everyone is expected to be a homeowner. A world where the price of your primary wealth asset is rising is good! And a world in which its value is flat or falling is disastrous. And so local laws get shaped so as to keep housing prices high; in practice that means choking the supply of new more dense housing. After all, any change might harm the value of your home!
- 0x27081990 9y ago>It is a market inefficiency caused by zoning density restrictions and overuse of historic landmark status which creates a politically induced artificial scarcity in housing (scarcity = rising prices). Then it is a government inefficiency, not a market inefficiency
- davidf18 9y agoIn microeconomics is is called market inefficiency or market failure caused by special interests who influence passing laws. The terms are market inefficiency or market failure.
- Quinner 9y agoNo, https://en.wikipedia.org/wiki/Government_failure https://en.wikipedia.org/wiki/Government_failure
- davidf18 9y agohttps://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking Pick up a microeconomics book and it will explain. In microeconomics market inefficiencies or market failures have 3 causes: 1) rent-seeking, 2) negative externalities, 3) information asymmetry. As I explained somewhere else in this post, Economist David Ricardo first discussed this problem of rent-seeking about 200 years ago. In this case, the wealthy landlords work to pass laws that give them wealth paid for by society or in this case renters. David Ricardo first discussed rent-seeking with the Corn Laws of Britain which had a tariff on all grains which increased the wealth of landowners at the cost of other members of society. https://en.wikipedia.org/wiki/David_Ricardo#Protectionism https://en.wikipedia.org/wiki/David_Ricardo#Protectionism
- pizza 9y agoI mean, this isn't by accident. Powerful people can advocate for their interests to change laws. It's the market ad extremum. It's only government inefficiency in the sense that lawmakers are vulnerable to influence, rather than bureaucrats imposing centrally planned government programs.
- liquidise 9y ago> It is wrong As with any political matter, binary assertions like this oversimplify issues. A counter argument in this case is that strict zoning laws serve to control an influx of citizens to a location. Those influxes can fundamentally change the culture for the present residents. Is that a bad thing? I think it's worthy of debate. But blanket statements risk dismissing reasonable arguments before they are even presented.
- Fauntleroy 9y agoReread their message, grok the context, and connect the dots to figure out why it is considered wrong.
- simplify 9y agoIt's the responsibility of the writer to connect the dots on why it's wrong, not the reader. Throwing out a blanket statement like "it's wrong" and expecting your audience to figure out why (or not and simply agree, since that would be more convenient) is poor communication at best, and intellectually lazy at worst.
- ChristianBundy 9y agoSo, basically, you're saying "my ignorance is as good as your knowledge"?
- simplify 9y agoI don't follow. What do you mean?
- dragonwriter 9y agoI think it's more that “if you wish to convince people of your point, you can't ask them to go find the supporting evidence and reasoning, you need to provide the reasoning and identify the evidence.”
- khuey 9y ago
- ricardobeat 9y agoNevermind that Tokyo has 20x the area and population of SF? That's not counting the metropolitan area which matches the population of California.
- khedoros1 9y agoI think the most striking comparison is Tokyo vs CA itself; similar populations, much more area in CA, and Tokyo still built 1.5x as many homes.
- deleted 9y ago[deleted]
- zumatic 9y agoMore like 3X the area and 15X the population (Tokyo metropolis vs SF city and county) or 1.5X the area and 8X the population (Tokyo metropolitan area versus SF metro) -- all figures gleaned from Wikipedia. https://en.wikipedia.org/wiki/San_Francisco https://en.wikipedia.org/wiki/San_Francisco https://en.wikipedia.org/wiki/Tokyo https://en.wikipedia.org/wiki/Tokyo
- muninn_ 9y agoI love 300sqft apartments. Maybe instead of Tiny House Hunters on HGTV we can get Tiny Gentrified Shoebox Apartments instead.
- prawn 9y agoI don't know if a 300sqft apartment is big or small because we use the metric system here, but if you're talking down small apartments, wouldn't the market partially sort that out? If an apartment is too small, people wouldn't buy or rent it. Or if they did, maybe it's all they could afford or a sacrifice they were willing to make? I've read stories on HN of start-ups living or operating out of literal closets because they can't find or afford an alternative. Surely there's some size which is safe and liveable, but smaller than what is available now? And can be designed in a way that isn't a charmless, stifling box?
- anateus 9y agoIf people would like to learn more about Japanese zoning (which isn't a lack of density zoning, but rather more of an "up to this" rather than "restrict to" zoning), there's this post on my favorite urban design blog: http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
- probe 9y agoThis was a fantastic read, thanks for sharing! Is there a piece you recommend that talks about the cons/rebuts "up to this" Japanese zoning laws just to see both sides?
- stretchwithme 9y agoExcellent point. Is there even ONE city in the US that does it this way? Can't we talk San Francisco into trying this approach? What are the objections?
- replicatorblog 9y agoHouston has a famously liberal, in the classic sense of the word, approach to zoning that results in an endless supply of cheap housing—and an ungodly amount of sprawl. Tradeoffs in everything.
- SamReidHughes 9y agoWhat is the problem with sprawl?
- closeparen 9y agoTraffic. Everyone else pays for your cheap housing in higher freeway travel times (to go the same distances) and air pollution.
- SamReidHughes 9y ago
- dlwdlw 9y agoIt's not that simple and it's not just about greed. The Asian cultures have centuries more experience dealing with high density people situations. Violence is not as legitimized as a method of boundary enforcement for example because people have learned to deal with each other without killing each other. Sure it creates super thick-skinned rudeness (China/NYC/India) or super thin-skinned rule following (Japan) but boundary enforcement based on things like status markers(Like LV bags and iPhones) or rules or much better than those based on violence. The U.S. is unique in its sheer mix of cultures but also because of the presence of its youngest culture (African American culture) that is today still reeling from the shock of being torn from its mother culture in Africa. Racism and the lack of a reliable justice system for them has forced their culture to rebuild from 0, going through stages where each person had to have the ability to dole out personal-justice/violence. What's normal in China becomes rude in the U.S. What's justice in one culture is violence in another. The locals who call a place home see this and want to preserve their own culture. Despite economic incentive allowing them to move anywhere else, their dollar is limited by their software in what it can do. It's like a project that has github dependencies forced to only use dependencies on some other place like gitlab. The project might as well die and start over. And though projects and start over, people can only die, and they will go down swinging. Younger and newer cultures learn to be more flexible and adaptable. The software/culture limitation that prevented their parents from living like kings in Thailand is removed because their dependencies aren't as rooted. Some are even completely standalone and super flexible at the cost of having no way of influencing things. (eternal vagabonds w/ no long relationships) Meanwhile new dense hardware developments can only be populated by software that can deal with the density and find it worthwhile. Thus you get H1B 'slave houses' filled with Indians/Chinese.
- RangerScience 9y agoI think your comment is pretty good, and I don't know what's up with the downvotes :welp: That said, as good as your point is about African American culture, it's far from our youngest; there's also the Chinese and Italian migration waves, the Armenian refugee wave... On the west coast, you would definitely also have to consider the effects of Japanese internment during WWII. That might be the most recent, but I wouldn't be surprised if there was another wave between now and then. This doesn't detract from your overall point, or the severity of the effect on specifically African American culture, but I don't think you can call that America's youngest culture.
- rsj_hn 9y agoI understand the desire to convert a discussion of homelessness to a discussion of high house prices, but homelessness is not caused by high house prices. 99% percent of the population cannot afford to buy a house in Manhattan. That doesn't mean that they are living on the streets there. They move to where they can afford to live, and the U.S. has many areas where housing is quite cheap. If you are able to maintain a steady income, then you can also maintain housing. But if you are not able to maintain a steady income, then there is no price at which you can afford to buy a house. Even if free, you would not be able to pay property taxes, maintenance, or utilities. San Francisco has a high homelessness problem because of the mild climate, large amounts of city services, and the liberal attitude. The homeless people here expect and receive a steady income from people on the street as well city services. I remember the first time I was in San Francisco and someone came up to me and demanded money for food. He said "I don't eat meat!". I was stunned, both at a stranger coming up to me and asking for money and also about why they can be so picky about their diet. I gave him $1. He looked at me like I insulted him and said "Salads cost more than meat". The homeless in San Francisco are really quite aggressive in comparison to other cities, and just like the rest of my fellow San Franciscans, there is a strong feeling of entitlement. There is just no price at which the number of homeless will decrease -- only when we start paying the homeless to live in houses will that happen. The only thing I can think of is fully funded group homes that are mandatory to live in -- basically prisons with nice amenities and educational programs that you can graduate out of based on demonstrating a track record of being able to provide for yourself. Because as long as we give people the option of living on the street, there is a certain small subset of the population that will prefer to do that over the other options available to them, and San Francisco will be home to an outsized share of that population.
- deleted 9y ago[deleted]
- misterhtmlcss 9y agoBingo! Some one with big enough balls to say the actually and undesirable reality of homelessness on the streets. The richer the city the greater the homelessness, because the homeless like every animal in the world (us included) goes where life is the easiest. And rich cities, have richer populations that then donate more money to homeless people. In my hometown there are people that quite there jobs to panhandle, because they make more money doing it. It's not common, but it happens and it shows that it's not a simple issue. FYI mental illness is also common in the homeless population and for them I'm very much in favor of looking at any solution that'll help them have the success they desire in their lives. *Just saying.
- Stanleyc23 9y agoI've lived in the Bay Area for a little bit and another issue is the "not in my backyard" problem. What I understand of this issue is that the richer communities want to use rent-prices as a wall to keep low income and homeless away from those areas and out their school systems. None of them want to be the first to take a risk on the "value" of their neighborhoods at the expense of everyone else. Would the federal law you mention address an issue like this?
- someguydave 9y agoWell one answer would be for the government to give up its stranglehold on running schools and leave them to the private sector.
- Stanleyc23 9y agoI'm a layperson on these issues, but how would privatizing k-12 specifically solve the NIMBY issue? Also how do you align the long term goals of educating those kids with often short term profit motivated KPIs.
- someguydave 9y ago>I'm a layperson on these issues, but how would privatizing k-12 specifically solve the NIMBY issue? If schools were voluntary and private then it wouldn't matter which school district your house is in. The quality of local government schools (and therefore the good school's district) often is a large factor in house prices. >Also how do you align the long term goals of educating those kids with often short term profit motivated KPIs. I'm not sure that the government management of schools aligns the school's interests with long term goals.
- Stanleyc23 9y ago> The quality of local government schools (and therefore the good school's district) often is a large factor in house prices. anecdotally i went through almost all of my k-12 in public school and it seems like the opposite: that areas with more expensive houses pay more in local taxes which fund nicer schools and governments. meaning the "quality" of the local government is a function of the wealth held by its residents. this is all to say that be it the local government or a privatized system, the education system seems very much beholden to their patrons, the rich families. i don't see why privatization would be a better alternative. > I'm not sure that the government management of schools aligns the school's interests with long term goals. saying that the current system isn't good enough doesn't automatically mean that some other system is better. the question remains.
- kafkaesq 9y agoIt is wrong, and Japan has fixed the problem removing zoning density restrictions at the local level. The result, in 2014 there were 140,000 homes built in Tokyo compared with about 90,000 for all of California and 20,000 in NYC. Well, there's also the fact that, unlike NYC and SF much of that city was destroyed during what Wikipedia calls "the single most destructive bombing raid in human history". So it's not like they had all that much historic architecture to protect, anyway. Apples and oranges, in other words. These "rent-seeking" restrictions are a regressive tax transferring income from renters to wealthy landlords including Donald Trump. Oh please. The Trumps made their money through, first, being notorious slumlords; then through mob connections and tax loopholes; and finally, as money launderers for the post-Soviet elite. Not through the "overuse of historic landmark status", by even the most fantastic stretch of the imagination. (As an illustration, look into the history of the building that preceded Trump Tower at the same location).
- jfoutz 9y agoWasn't SF pretty much wiped out about 40 years before Tokyo?
- kafkaesq 9y agoRight, but it was rebuilt in era when humans still knew how to design solid-standing, aesthetically-pleasing buildings for just about any purpose (unlike virtually all of the crap built in the past 60 years). That's why much of its architecture counts as "historic", and preservation-worthy.
- DrScump 9y ago"solid-standing"? Much of the post-fire development used unreinforced masonry and was built on poor-quality fill. We saw the effects of this during the 1989 quake in areas like the Marina district. The preponderance of fill (and depth to bedrock) in the densest areas of SF is well-illustrated by the Millennium Tower fiasco[0]. The MT's pilings do not even reach bedrock! [0] https://en.wikipedia.org/wiki/Millennium_Tower_(San_Francisco)#Sinking_and_tilting_problem https://en.wikipedia.org/wiki/Millennium_Tower_(San_Francisc...
- imjustsaying 9y ago> These "rent-seeking" restrictions are a regressive tax transferring income from renters to wealthy landlords including Donald Trump. Out of the millions of property owners in the US who benefit from artificially propped-up real estate prices, you chose to single out this individual why?
- davidf18 9y agoHe Is perhaps the most famous real estate developer worth billions with a lot of holdings in Manhattan. While a lot of Democrats claim to hate him, they are usually the ones on city council that pass these rent-seeking laws that are a regressive tax that gives Trump huge sums of money at the expense of working people.