5 ms·

Does Adding Expensive Housing Help the Little Guy?

54 points by DINKDINK 9y ago

irq11 9y ago
This just in: woman who has staked her career on a pro-housing political platform announces that market-rate redevelopment is good for everyone. The question is not “will adding N market-rate units help?” because that’s trivial. Of course it will. The question is: “what if you have to knock down N affordable units to build M market-rate units?” This “simulation” doesn’t even come close to addressing that question. Like it or not, that’s the situation in San Francisco.
- deleted 9y ago
  [deleted]
- apsec112 9y ago
  "because that’s trivial. Of course it will." Many in San Francisco (and other cities) argue against this. It's certainly not universally accepted. "The question is: “what if you have to knock down N affordable units to build M market-rate units?” This “simulation” doesn’t even come close to addressing that question." That's because housing units are virtually never knocked down in San Francisco, so this question basically never comes up. Almost all new housing is built on warehouses, parking lots, gas stations, and so on. See my analysis of all recent housing built in the Mission District: https://rationalconspiracy.com/2015/05/25/new-york-times-makes-up-facts-about-sf-housing/ https://rationalconspiracy.com/2015/05/25/new-york-times-mak...
  - irq11 9y ago
    “Almost all new housing is built on warehouses, parking lots, gas stations, and so on.” That may have been true, but the city’s own analysis shows it isn’t true anymore, and it certainly won’t be true by the time we’ve built enough to lower market rents (yet another reason why this “simulation” is nonsense). San Francisco simply doesn’t have that many vacant parcels of land.
    - lostdog 9y ago
      Would you link to this analysis please? I hope you will support your claim that new housing is replacing old housing.
    - awalton 9y ago
      > That may have been true, but the city’s own analysis shows it isn’t true anymore Alright, this is three times you've said and been called out on the same exact lie. You're going to need to provide some sources, or at the very least some references to sources, to back up your extremely bold and most likely false claims. What specific housing is being targeted for being knocked down for which projects?
      - irq11 9y ago
        Nobody “calling me out” has provided any evidence, so I’m not sure what you’ve been reading, but OK: https://my.paragon-re.com/Docs/General/SixtyFortyImages/Housing-Units_Lost.jpg https://my.paragon-re.com/Docs/General/SixtyFortyImages/Hous... By my math, that’s 769 legal units removed or merged between 2012 and 2015. AKA, it happens all the time. So let’s talk about your definition of “lies”...
- xenadu02 9y ago
  > The question is: “what if you have to knock down N affordable units to build M market-rate units?” No it isn't. No one is seriously proposing knocking down N affordable units unless they're also including N+X affordable units + M luxury units in the new structure. Any such plan would be a massive waste of time because it has zero chance of being approved. This article is addressing protesters against "The monster in the mission!!!!1" who marched against replacing an empty warehouse and a Burger King with 16 stories of housing. It is also addressing people like Dwyer who thought they were untouchable and important enough to work against building more housing without suffering any consequences. I've noticed some attitudes starting to shift out in Sunset as lifetime SF residents find their kids coming home from college or getting married, yet being forced to live hours away. Suddenly the anti-development stance is less attractive when it means never seeing your grandkids. Ultimately I don't think the Bay Area can muster the political will to solve the housing problem. Too many people benefit from eternally-rising housing costs or have a "screw you, I got mine" attitude. The state government will have to step in and remove local zoning control.
  - irq11 9y ago
    There are essentially no development projects in SF that don’t involve demolishing existing housing. While I grant you that some such projects have (ridiculous) community resistance, these still aren’t the norm. In most places in SF, the resistance comes when housing is being replaced and/or the developer doesn’t want to build low-income units (instead preferring to donate to the low-income housing fund). It’s not a clean story.
    - Kalium 9y ago
      In both Oakland and SF, there's been significant resistance to projects that propose to replace things that are not housing at all with things that are. If memory serves, the "Monster in the Mission" was proposed for an empty lot. I saw significant resistance to putting a tower in a literal hole in the ground at MacArthut BART. In SF, the resistance often seems centered on the idea that however much subsidized housing the developer proposes isn't enough for the interest groups fighting it. Often the push is for 100% subsidized, plus assorted "community benefit" donations to non-profits.
- fourth_party 9y ago
  In SF M >> N, to the extent you can assume N =~ 0. The results hold.
- kristianp 9y ago
  You can extrapolate from her result, that if M is significantly greater than N then it helps.
  - irq11 9y ago
    No, you can’t. You displace people, who then have to look for housing. Moreover, there are hard floors on new construction rent. It’s not linear, and the “simulation” isn’t even remotely accurate. If you replaced every low income unit in SF with twice as many market-rate apartments tomorrow, you would raise those individuals’ rent to some value near market rate.
    - troupe 9y ago
      > If you replaced every low-income unit in SF with twice as many market-rate apartments tomorrow, you would raise those individuals’ rent to some value near market rate. Assume there are 100,000 rental units in SF and 50,000 of them are low-income units. If overnight you replaced those with 100,000 units that will float to market rates, you are correct that the displaced individuals would now have no units available that are significantly below market rate. However, the market rate will not be the same as what it was previously. It will go down based on a 50% increase in supply. From an economic standpoint, the same thing should happen regardless of what percentage of low-income housing is being replaced. Whether or not this goes down to the artificial price they have in low-income housing depends on how much more supply is being introduced into the market. > there are hard floors on new construction rent. If you are saying that the price set for "affordable" housing is so low that new construction couldn't even break even at that price, then there is a whole different set of problems involved in addition to supply and demand.
- averagewall 9y ago
  They're removing subsidized houses to build market-rate ones? How does that work? Is it the same owner demolishing their own house and replacing it - surely a violation of the conditions they had to agree to to get the subsidy. Why would the government pay a subsidy, then allow the very thing the subsidy was supposed to prevent? Does that money get refunded to the government - maybe allowing them to spend it on another subsidized house somewhere else?
  - irq11 9y ago
    Not “subsidized”...affordable. A landlord has 3 older units that rent for $x. She wishes to redevelop the property to create 6 new units that rent for $3x. Net result is that 3 units have been created, but 3 people have been displaced. Likely permanently. This is the heart of the redevelopment debate in SF.
    - Kalium 9y ago
      Subsidized is an accurate description of the financial arrangement surrounding the unit in a way that "affordable" is not. Why not use it? I know, I know. Politics, right?
    - averagewall 9y ago
      $x is a rent controlled price? By rebuilding, she loses the requirement to keep the rent low? You're right, that's not a subsidy since it's the landlord that pays for it.
      - Mz 9y ago
        In most cases, when you improve a property, you then charge more because it is improved. It isn't unreasonable on an individual basis, but the end result is that affordable units disappear and do not get replaced. Rinse and repeat and pretty soon there simply aren't any affordable units.
    - empath75 9y ago
      Yeah but people are moving out of less desirable and housing to move there, opening up new housing down market.
- DINKDINK 9y ago
  Please list which housing developments have destroyed existing housing stock. Here's the catch, you can't because all of it in the past 5 years has been on existing commercial property (gas stations, commercial businesses), so your central argument that market rate housing is taking land from income-controlled subsidized housing doesn't hold. Side note: >woman who has staked her career on a pro-housing political platform announces that market-rate redevelopment is good for everyone. What's the point of this statement? Do you equally scoff at groups that delay housing construction to increase subsidized housing units and ludicrous when they advocate that slowing down housing construction benefits certain groups?
  - irq11 9y ago
    https://my.paragon-re.com/Docs/General/SixtyFortyImages/Housing-Units_Lost.jpg https://my.paragon-re.com/Docs/General/SixtyFortyImages/Hous... Lots of legal housing has been demolished or merged over the past five years. It happens all the time, you just don’t hear about it on pro-development blogs. I have no particular problem with development, but Sonja Trauss is not an objective commentator, and this “simulation” is little more than opinion dressed up as data.
    - akanet 9y ago
      You've just linked a chart that you claim shows "lots" of housing demolished or merged over the last five years, but these numbers are tiny, representing far less than a single percent of the city's housing stock. The vast majority of new housing construction happens without the removal of any previous housing unit.
      - irq11 9y ago
        You can’t evaluate it as a percentage of all housing. By that standard, even new construction is a “tiny” percentage of the whole. SF doesn’t have much infill development left. That’s the point. Arguing about what people did in the past isn’t relevant today.
    - InternetGerbil 9y ago
- ChuckMcM 9y ago
  You can run the simulation yourself, but the bottom line is if the total number of houses grows, more people get housed in all income groups. That is a tremendously powerful message for city supervisors. They only have to look at one thing "After this change will there be more or fewer houses?" if the answer is 'more' then the change will be positive for people trying to find housing, if it is 'less' then the change will be negative. A very simple and objective proposition. Say someone proposes to demolish a 100 unit SRO hotel in the Mission and replace with with a high rise luxury condo building with 250 market rate units. There will be a big protest about how gentrification is pushing the people out of their own neighborhood and where will the people in those 100 SRO units move to? etc etc etc. What this tells you is that after adding an additional 150 houses all income groups will have more housing opportunities period. That might seem non-intuitive but the model works.
  - Kalium 9y ago
    The politics in some parts of SF favor people whose response to the simulations will tend to be "That's nice, but what if all of those units were permanently subsidized?"
  - irq11 9y ago
    The “simulation” is garbage. I’ve pointed out one limitation, but there are many others. For example: rental markets are not auctions. Landlords set prices, and renters pay them, or do not. What happens when you replace 150 SROs with market rate condos? You make 150 of the poorest people in the city homeless, and you remove a tiny bit of competition (maybe) at the higher end of the market. (You’ll note that this post doesn’t discuss who is evicted.) At a minimum, it is the responsibility of the simulator to show that their simulation reconstitutes reality before it is to be trusted for any form of prediction. The only “powerful message” here is that Sonja Trauss is running for office on a pro-development agenda.
    - ChuckMcM 9y ago
      It is a model, not a simulation, and it is traditional to argue the flaws in the methodology or assumptions of the model if you seek to invalidate. What I heard you to say was: “what if you have to knock down N affordable units to build M market-rate units?” And the model exactly models this, showing that as long is M > N, everyone will will get more housing. If you run the simulation you can see how it does this, market rate housing captures people who can afford it, they move out of mid-tier housing, which captures the folks who want mid-tier, which frees up affordable units that were being occupied by people who could move up.
- InternetGerbil 9y ago
  There is no reason to assume that building new housing requires tearing down affordable units. That's the point of using the word "adding".
jseliger 9y ago
If you're interested in this topic, you might also like the recent Econtalk episode, "Philip Auerswald on the Rise of Populism," http://www.econtalk.org/archives/2017/09/philip_auerswal.html http://www.econtalk.org/archives/2017/09/philip_auerswal.htm.... The spread of housing restrictions via zoning has had much larger impacts than is commonly appreciated. I find it interesting especially that Piketty's famous results are really a result of capital accumulation to landlords: https://www.brookings.edu/wp-content/uploads/2016/07/2015a_rognlie.pdf https://www.brookings.edu/wp-content/uploads/2016/07/2015a_r... who benefit from supply restrictions. I've been writing about (and to some extent working in) these issues for a while and come at them from another angle here: https://jakeseliger.com/2015/09/24/do-millennials-have-a-future-in-seattle-do-millennials-have-a-future-in-any-superstar-cities https://jakeseliger.com/2015/09/24/do-millennials-have-a-fut...
- refurb 9y ago
  Just adding another plug for Econtalk. They cover a lot of different topics and invite people that really know how things work. I remember listening to a podcast on the housing crisis and walked away with a great understanding of how it all fit together. The Hoover Institute and Russ Roberts have a neoliberal/libertarian slant, but he does a great job in inviting people to his program that he doesn't agree with, but he asks great questions and gives them an open forum.
- dmix 9y ago
  Thomas Sowell is brilliant at highlighting the unexpected nature of many parts of economics as well as the countless government policies initiated in the name of helping the poor or lower class that end up either doing little to help or, more often, ultimately helping the upper-middle class and above the most. He helped me grow beyond a cliche idealistic libertarian worldview into something much more practical and based in real world policy. I highly recommend his 'Wealth, Poverty and Politics': https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell/dp/046509676X/ref=sr_1_4/ https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell... Or for something more lightweight see his book 'Basic Economics': https://www.amazon.com/Basic-Economics-Thomas-Sowell/dp/0465060730/ https://www.amazon.com/Basic-Economics-Thomas-Sowell/dp/0465... --- Despite it's name it's not an economics 101 guide, it basically a teaching-through-example guide by listing policy after policy that were implemented in the realworld, for ex: - rent control in NYC/Toronto in the 1970s which severely reduced access to affordable housing, disincentivized building maintenance, incentivized arson, and gave countless upper/middle class residents cheap rent for beautiful properties - various industry licensing pushed by market incumbents not protecting consumers, such as interior designers requiring 4yr bachelors degree to choose the colorscheme of an apartment - etc, etc He digs into their good intentions but unintentional self-defeating side-effects. Many of which have countless analogies to today (see Uber vs Black cabs in London). After reading it I'm hardly surprised Japan's economy has stagnated, to the point where it's almost so obvious it saddens me. They are one of the worst proponents of the type of heavy handed economic-intervention he critiques.
scythe 9y ago
From the linked "Residential Nexus Analysis": http://sf-planning.org/sites/default/files/FileCenter/Documents/8380-FINAL%20Resid%20Nexus_04-4-07.pdf http://sf-planning.org/sites/default/files/FileCenter/Docume... >The prototype rental unit, also drawn from the Sensitivity Analysis work program is also 800 square feet and rents for $2,500 per month or a little under $3.20 per square foot per month. New rental units are not feasible in today’s market; however, the inclusionary program will be in place beyond the current market cycle and must anticipate development of rental units in the future. The assumed rental rate is higher than is achievable in the current market except under extraordinary circumstances (luxury projects in premier locations, etc.). The rental rate has been estimated as the required minimum level for a project to be feasible, given total development costs, conventional financing terms, and typical operating expenses. The household living in this unit is likely to be paying approximately 30% of income on rent (not including utilities). This translates to a household with a gross income of $102,000 per year. This is a rather interesting claim that I haven't heard come up in this debate before. I'm not sure if it's just because it made more sense to sell condos in 2007 (before November) or because construction costs are actually so high you can't build apartments that cost less than $2500/month and/or $3.20/sf. It seems that research into cheaper building types, and regulatory initiatives to permit those, ought to be part of a solution. Although since the majority of the value of a property in SF is often the land, a land tax might be called for as well.
llimllib 9y ago
Doesn't assuming that demand is exogenous ensure that their model will return the result that they want? It seems that how exogenous demand is is the central question in the housing debate; if SF is so desirable that building more luxury apartments just brings in new rich people, then this model is useless. (I think, and hope, that it's not. But I think the author danced around the central question by building this model.)
- akanet 9y ago
  I think Sonja's study does more than "prove a point" - it also illustrates exactly _how_ "luxury" housing helps everyone, which is a huge sore point in local politics. Understanding of the nature of how flexible preferences and different levels of wealth interact is still a useful exercise. It would be very difficult to devise a study to prove whether exogenous demand is real, but a casual examination of San Francisco suggests that it is not - SF has built very little housing and still consistently out-attracts many other metro areas.
- InternetGerbil 9y ago
  Yes, exogenous demand is the central question in the housing debate. That's one of the uses of a model, to think about one aspect of a process at a time.

54 points by DINKDINK 9y ago

This just in: woman who has staked her career on a pro-housing political platform announces that market-rate redevelopment is good for everyone. The question is not “will adding N market-rate units help?” because that’s trivial. Of course it will. The question is: “what if you have to knock down N affordable units to build M market-rate units?” This “simulation” doesn’t even come close to addressing that question. Like it or not, that’s the situation in San Francisco.

deleted 9y ago
[deleted]
apsec112 9y ago
"because that’s trivial. Of course it will." Many in San Francisco (and other cities) argue against this. It's certainly not universally accepted. "The question is: “what if you have to knock down N affordable units to build M market-rate units?” This “simulation” doesn’t even come close to addressing that question." That's because housing units are virtually never knocked down in San Francisco, so this question basically never comes up. Almost all new housing is built on warehouses, parking lots, gas stations, and so on. See my analysis of all recent housing built in the Mission District: https://rationalconspiracy.com/2015/05/25/new-york-times-makes-up-facts-about-sf-housing/ https://rationalconspiracy.com/2015/05/25/new-york-times-mak...
- irq11 9y ago
  “Almost all new housing is built on warehouses, parking lots, gas stations, and so on.” That may have been true, but the city’s own analysis shows it isn’t true anymore, and it certainly won’t be true by the time we’ve built enough to lower market rents (yet another reason why this “simulation” is nonsense). San Francisco simply doesn’t have that many vacant parcels of land.
  - lostdog 9y ago
    Would you link to this analysis please? I hope you will support your claim that new housing is replacing old housing.
  - awalton 9y ago
    > That may have been true, but the city’s own analysis shows it isn’t true anymore Alright, this is three times you've said and been called out on the same exact lie. You're going to need to provide some sources, or at the very least some references to sources, to back up your extremely bold and most likely false claims. What specific housing is being targeted for being knocked down for which projects?
    - irq11 9y ago
      Nobody “calling me out” has provided any evidence, so I’m not sure what you’ve been reading, but OK: https://my.paragon-re.com/Docs/General/SixtyFortyImages/Housing-Units_Lost.jpg https://my.paragon-re.com/Docs/General/SixtyFortyImages/Hous... By my math, that’s 769 legal units removed or merged between 2012 and 2015. AKA, it happens all the time. So let’s talk about your definition of “lies”...
xenadu02 9y ago
> The question is: “what if you have to knock down N affordable units to build M market-rate units?” No it isn't. No one is seriously proposing knocking down N affordable units unless they're also including N+X affordable units + M luxury units in the new structure. Any such plan would be a massive waste of time because it has zero chance of being approved. This article is addressing protesters against "The monster in the mission!!!!1" who marched against replacing an empty warehouse and a Burger King with 16 stories of housing. It is also addressing people like Dwyer who thought they were untouchable and important enough to work against building more housing without suffering any consequences. I've noticed some attitudes starting to shift out in Sunset as lifetime SF residents find their kids coming home from college or getting married, yet being forced to live hours away. Suddenly the anti-development stance is less attractive when it means never seeing your grandkids. Ultimately I don't think the Bay Area can muster the political will to solve the housing problem. Too many people benefit from eternally-rising housing costs or have a "screw you, I got mine" attitude. The state government will have to step in and remove local zoning control.
- irq11 9y ago
  There are essentially no development projects in SF that don’t involve demolishing existing housing. While I grant you that some such projects have (ridiculous) community resistance, these still aren’t the norm. In most places in SF, the resistance comes when housing is being replaced and/or the developer doesn’t want to build low-income units (instead preferring to donate to the low-income housing fund). It’s not a clean story.
  - Kalium 9y ago
    In both Oakland and SF, there's been significant resistance to projects that propose to replace things that are not housing at all with things that are. If memory serves, the "Monster in the Mission" was proposed for an empty lot. I saw significant resistance to putting a tower in a literal hole in the ground at MacArthut BART. In SF, the resistance often seems centered on the idea that however much subsidized housing the developer proposes isn't enough for the interest groups fighting it. Often the push is for 100% subsidized, plus assorted "community benefit" donations to non-profits.
fourth_party 9y ago
In SF M >> N, to the extent you can assume N =~ 0. The results hold.
kristianp 9y ago
You can extrapolate from her result, that if M is significantly greater than N then it helps.
- irq11 9y ago
  No, you can’t. You displace people, who then have to look for housing. Moreover, there are hard floors on new construction rent. It’s not linear, and the “simulation” isn’t even remotely accurate. If you replaced every low income unit in SF with twice as many market-rate apartments tomorrow, you would raise those individuals’ rent to some value near market rate.
  - troupe 9y ago
    > If you replaced every low-income unit in SF with twice as many market-rate apartments tomorrow, you would raise those individuals’ rent to some value near market rate. Assume there are 100,000 rental units in SF and 50,000 of them are low-income units. If overnight you replaced those with 100,000 units that will float to market rates, you are correct that the displaced individuals would now have no units available that are significantly below market rate. However, the market rate will not be the same as what it was previously. It will go down based on a 50% increase in supply. From an economic standpoint, the same thing should happen regardless of what percentage of low-income housing is being replaced. Whether or not this goes down to the artificial price they have in low-income housing depends on how much more supply is being introduced into the market. > there are hard floors on new construction rent. If you are saying that the price set for "affordable" housing is so low that new construction couldn't even break even at that price, then there is a whole different set of problems involved in addition to supply and demand.
averagewall 9y ago
They're removing subsidized houses to build market-rate ones? How does that work? Is it the same owner demolishing their own house and replacing it - surely a violation of the conditions they had to agree to to get the subsidy. Why would the government pay a subsidy, then allow the very thing the subsidy was supposed to prevent? Does that money get refunded to the government - maybe allowing them to spend it on another subsidized house somewhere else?
- irq11 9y ago
  Not “subsidized”...affordable. A landlord has 3 older units that rent for $x. She wishes to redevelop the property to create 6 new units that rent for $3x. Net result is that 3 units have been created, but 3 people have been displaced. Likely permanently. This is the heart of the redevelopment debate in SF.
  - Kalium 9y ago
    Subsidized is an accurate description of the financial arrangement surrounding the unit in a way that "affordable" is not. Why not use it? I know, I know. Politics, right?
  - averagewall 9y ago
    $x is a rent controlled price? By rebuilding, she loses the requirement to keep the rent low? You're right, that's not a subsidy since it's the landlord that pays for it.
    - Mz 9y ago
      In most cases, when you improve a property, you then charge more because it is improved. It isn't unreasonable on an individual basis, but the end result is that affordable units disappear and do not get replaced. Rinse and repeat and pretty soon there simply aren't any affordable units.
  - empath75 9y ago
    Yeah but people are moving out of less desirable and housing to move there, opening up new housing down market.
DINKDINK 9y ago
Please list which housing developments have destroyed existing housing stock. Here's the catch, you can't because all of it in the past 5 years has been on existing commercial property (gas stations, commercial businesses), so your central argument that market rate housing is taking land from income-controlled subsidized housing doesn't hold. Side note: >woman who has staked her career on a pro-housing political platform announces that market-rate redevelopment is good for everyone. What's the point of this statement? Do you equally scoff at groups that delay housing construction to increase subsidized housing units and ludicrous when they advocate that slowing down housing construction benefits certain groups?
- irq11 9y ago
  https://my.paragon-re.com/Docs/General/SixtyFortyImages/Housing-Units_Lost.jpg https://my.paragon-re.com/Docs/General/SixtyFortyImages/Hous... Lots of legal housing has been demolished or merged over the past five years. It happens all the time, you just don’t hear about it on pro-development blogs. I have no particular problem with development, but Sonja Trauss is not an objective commentator, and this “simulation” is little more than opinion dressed up as data.
  - akanet 9y ago
    You've just linked a chart that you claim shows "lots" of housing demolished or merged over the last five years, but these numbers are tiny, representing far less than a single percent of the city's housing stock. The vast majority of new housing construction happens without the removal of any previous housing unit.
    - irq11 9y ago
      You can’t evaluate it as a percentage of all housing. By that standard, even new construction is a “tiny” percentage of the whole. SF doesn’t have much infill development left. That’s the point. Arguing about what people did in the past isn’t relevant today.
  - InternetGerbil 9y ago
ChuckMcM 9y ago
You can run the simulation yourself, but the bottom line is if the total number of houses grows, more people get housed in all income groups. That is a tremendously powerful message for city supervisors. They only have to look at one thing "After this change will there be more or fewer houses?" if the answer is 'more' then the change will be positive for people trying to find housing, if it is 'less' then the change will be negative. A very simple and objective proposition. Say someone proposes to demolish a 100 unit SRO hotel in the Mission and replace with with a high rise luxury condo building with 250 market rate units. There will be a big protest about how gentrification is pushing the people out of their own neighborhood and where will the people in those 100 SRO units move to? etc etc etc. What this tells you is that after adding an additional 150 houses all income groups will have more housing opportunities period. That might seem non-intuitive but the model works.
- Kalium 9y ago
  The politics in some parts of SF favor people whose response to the simulations will tend to be "That's nice, but what if all of those units were permanently subsidized?"
- irq11 9y ago
  The “simulation” is garbage. I’ve pointed out one limitation, but there are many others. For example: rental markets are not auctions. Landlords set prices, and renters pay them, or do not. What happens when you replace 150 SROs with market rate condos? You make 150 of the poorest people in the city homeless, and you remove a tiny bit of competition (maybe) at the higher end of the market. (You’ll note that this post doesn’t discuss who is evicted.) At a minimum, it is the responsibility of the simulator to show that their simulation reconstitutes reality before it is to be trusted for any form of prediction. The only “powerful message” here is that Sonja Trauss is running for office on a pro-development agenda.
  - ChuckMcM 9y ago
    It is a model, not a simulation, and it is traditional to argue the flaws in the methodology or assumptions of the model if you seek to invalidate. What I heard you to say was: “what if you have to knock down N affordable units to build M market-rate units?” And the model exactly models this, showing that as long is M > N, everyone will will get more housing. If you run the simulation you can see how it does this, market rate housing captures people who can afford it, they move out of mid-tier housing, which captures the folks who want mid-tier, which frees up affordable units that were being occupied by people who could move up.
InternetGerbil 9y ago
There is no reason to assume that building new housing requires tearing down affordable units. That's the point of using the word "adding".

jseliger 9y ago

If you're interested in this topic, you might also like the recent Econtalk episode, "Philip Auerswald on the Rise of Populism," http://www.econtalk.org/archives/2017/09/philip_auerswal.html http://www.econtalk.org/archives/2017/09/philip_auerswal.htm.... The spread of housing restrictions via zoning has had much larger impacts than is commonly appreciated. I find it interesting especially that Piketty's famous results are really a result of capital accumulation to landlords: https://www.brookings.edu/wp-content/uploads/2016/07/2015a_rognlie.pdf https://www.brookings.edu/wp-content/uploads/2016/07/2015a_r... who benefit from supply restrictions. I've been writing about (and to some extent working in) these issues for a while and come at them from another angle here: https://jakeseliger.com/2015/09/24/do-millennials-have-a-future-in-seattle-do-millennials-have-a-future-in-any-superstar-cities https://jakeseliger.com/2015/09/24/do-millennials-have-a-fut...

refurb 9y ago
Just adding another plug for Econtalk. They cover a lot of different topics and invite people that really know how things work. I remember listening to a podcast on the housing crisis and walked away with a great understanding of how it all fit together. The Hoover Institute and Russ Roberts have a neoliberal/libertarian slant, but he does a great job in inviting people to his program that he doesn't agree with, but he asks great questions and gives them an open forum.
dmix 9y ago
Thomas Sowell is brilliant at highlighting the unexpected nature of many parts of economics as well as the countless government policies initiated in the name of helping the poor or lower class that end up either doing little to help or, more often, ultimately helping the upper-middle class and above the most. He helped me grow beyond a cliche idealistic libertarian worldview into something much more practical and based in real world policy. I highly recommend his 'Wealth, Poverty and Politics': https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell/dp/046509676X/ref=sr_1_4/ https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell... Or for something more lightweight see his book 'Basic Economics': https://www.amazon.com/Basic-Economics-Thomas-Sowell/dp/0465060730/ https://www.amazon.com/Basic-Economics-Thomas-Sowell/dp/0465... --- Despite it's name it's not an economics 101 guide, it basically a teaching-through-example guide by listing policy after policy that were implemented in the realworld, for ex: - rent control in NYC/Toronto in the 1970s which severely reduced access to affordable housing, disincentivized building maintenance, incentivized arson, and gave countless upper/middle class residents cheap rent for beautiful properties - various industry licensing pushed by market incumbents not protecting consumers, such as interior designers requiring 4yr bachelors degree to choose the colorscheme of an apartment - etc, etc He digs into their good intentions but unintentional self-defeating side-effects. Many of which have countless analogies to today (see Uber vs Black cabs in London). After reading it I'm hardly surprised Japan's economy has stagnated, to the point where it's almost so obvious it saddens me. They are one of the worst proponents of the type of heavy handed economic-intervention he critiques.

scythe 9y ago

From the linked "Residential Nexus Analysis": http://sf-planning.org/sites/default/files/FileCenter/Documents/8380-FINAL%20Resid%20Nexus_04-4-07.pdf http://sf-planning.org/sites/default/files/FileCenter/Docume... >The prototype rental unit, also drawn from the Sensitivity Analysis work program is also 800 square feet and rents for $2,500 per month or a little under $3.20 per square foot per month. New rental units are not feasible in today’s market; however, the inclusionary program will be in place beyond the current market cycle and must anticipate development of rental units in the future. The assumed rental rate is higher than is achievable in the current market except under extraordinary circumstances (luxury projects in premier locations, etc.). The rental rate has been estimated as the required minimum level for a project to be feasible, given total development costs, conventional financing terms, and typical operating expenses. The household living in this unit is likely to be paying approximately 30% of income on rent (not including utilities). This translates to a household with a gross income of $102,000 per year. This is a rather interesting claim that I haven't heard come up in this debate before. I'm not sure if it's just because it made more sense to sell condos in 2007 (before November) or because construction costs are actually so high you can't build apartments that cost less than $2500/month and/or $3.20/sf. It seems that research into cheaper building types, and regulatory initiatives to permit those, ought to be part of a solution. Although since the majority of the value of a property in SF is often the land, a land tax might be called for as well.

llimllib 9y ago

Doesn't assuming that demand is exogenous ensure that their model will return the result that they want? It seems that how exogenous demand is is the central question in the housing debate; if SF is so desirable that building more luxury apartments just brings in new rich people, then this model is useless. (I think, and hope, that it's not. But I think the author danced around the central question by building this model.)

akanet 9y ago
I think Sonja's study does more than "prove a point" - it also illustrates exactly _how_ "luxury" housing helps everyone, which is a huge sore point in local politics. Understanding of the nature of how flexible preferences and different levels of wealth interact is still a useful exercise. It would be very difficult to devise a study to prove whether exogenous demand is real, but a casual examination of San Francisco suggests that it is not - SF has built very little housing and still consistently out-attracts many other metro areas.
InternetGerbil 9y ago
Yes, exogenous demand is the central question in the housing debate. That's one of the uses of a model, to think about one aspect of a process at a time.