3 ms·

In my experience with local politics, "affordable housing" can mean any of three things: - Subsidized housing - Public housing - Increasing density to lower

by rspeer 9y ago

In my experience with local politics, "affordable housing" can mean any of three things: - Subsidized housing - Public housing - Increasing density to lower the actual price of housing But homeowners (overrepresented among voters) generally only support the first, as the other two could make their property value go down (y'know, in the affordable direction). You can end up with three groups that are all at odds with each other and all campaigning for "affordable housing". Deft politicians can spin this confusion to make housing scarcity sound like altruism.

ThrustVectoring 9y ago
What's even better is that subsidized housing is generally subsidized by passing on the costs of the subsidy to the unsubsidized units in the development. That is, if it costs the developer $500k per unit, and they're required to sell 200 of their 1000 units for $100k each, the $80M subsidy gets added onto the cost of the remaining unsubsidized units at $80k each. This effectively removes supply through removing development projects that cannot make an open-market profit while handing out the mandated "affordable housing" subsidy. It's truly Orwellian that regulations that make housing less affordable get called "affordable housing".
- random023987 9y ago
  > It's truly Orwellian that regulations that make housing less affordable get called "affordable housing". To be fair, developers sell units at what the market will bear, rather than on a "cost-plus" basis. Raising developer costs doesn't impact the final sale price. Now one could argue that reducing developer profits means that fewer developers will try to build... but it's properly zoned land, not developers that is in short supply. Or maybe you mean that the requirement that some of the housing be "affordable", means only projects that the remainder of the units are "unaffordable" will be built... but that's the case anyway; given the scarcity of land it doesn't make sense to build affordable housing unless forced. Not that I'm in favor of housing subsidies. It turns a few well-connected or lucky people into lottery winners, and doesn't reduce the overall cost of housing.
  - ThrustVectoring 9y ago
    >To be fair, developers sell units at what the market will bear, rather than on a "cost-plus" basis. Raising developer costs doesn't impact the final sale price. Raising developer costs kill off unprofitable developments until the marginal unit created has a cost equal to what the market will bear. It depends on the relative elasticity of supply and demand - we'll hit an equilibrium of fewer units at a higher price, with both less developer profits and less consumer surplus. Whether the loss is mostly borne by purchasers or sellers depends on details of the market. >but it's properly zoned land, not developers that is in short supply. Developers in the Bay Area spend lots of money to figure out whether or not land is properly zoned, due to the community review system and other things that'd be fixed with a by-right zoning policy. Things aren't built to the maximum of the zones - they're built to what's affordable by developers attempting to get permission to build. >given the scarcity of land it doesn't make sense to build affordable housing unless forced It doesn't matter whether housing is affordable at market rates because we build things that are affordable, or through building so much luxury houses that there's so little demand for existing buildings that they now become affordable. If the lot next door added a three-bedroom luxury apartment that cost less than your studio, you'd move out of your current place and into that in a heartbeat. Then your studio now goes on the market and gets whatever it can - likely, a much more affordable price. Adding dense housing makes housing more affordable. It's only obvious if it's cheap and dense - if it's expensive, the affordable units are those that the new residents move out of.
    - random023987 9y ago
      > we'll hit an equilibrium of fewer units at a higher price, with both less developer profits and less consumer surplus. No we won't, because the limit of zoning and land doesn't allow us to get anywhere near that equilibrium. Your statement would only be correct in a world with infinite land in the Bay Area. But the equilibrium for "fewer" units in San Francisco might be (for example) 50,000 new housing units per year, but you're lucky to get permits and land for couple thousand. > Things aren't built to the maximum of the zones - they're built to what's affordable by developers attempting to get permission to build. This is missing the point. 100% of the land that can pass the community review process is profitable to build on. Even with "affordable housing" requirements. Even with reduced developer profits. If you can build on it, you're gonna make money. Therefore, the limiting factor is land; the effect of affordable housing requirements is to lower the windfall profits of any developer lucky enough to get by community review. > It doesn't matter whether housing is affordable at market rates because we build things that are affordable, or through building so much luxury houses that there's so little demand for existing buildings that they now become affordable. Right, everyone who understands math understands this. The issue is that if you don't have land you can build on, you can't build. And if you do have land you can build on, you're gonna make money. Affordable housing requirements do not decrease the amount of net construction, they just move windfall profits from the developer to a few lucky random people.

by rspeer 9y ago

ThrustVectoring 9y ago

What's even better is that subsidized housing is generally subsidized by passing on the costs of the subsidy to the unsubsidized units in the development. That is, if it costs the developer $500k per unit, and they're required to sell 200 of their 1000 units for $100k each, the $80M subsidy gets added onto the cost of the remaining unsubsidized units at $80k each. This effectively removes supply through removing development projects that cannot make an open-market profit while handing out the mandated "affordable housing" subsidy. It's truly Orwellian that regulations that make housing less affordable get called "affordable housing".

random023987 9y ago
> It's truly Orwellian that regulations that make housing less affordable get called "affordable housing". To be fair, developers sell units at what the market will bear, rather than on a "cost-plus" basis. Raising developer costs doesn't impact the final sale price. Now one could argue that reducing developer profits means that fewer developers will try to build... but it's properly zoned land, not developers that is in short supply. Or maybe you mean that the requirement that some of the housing be "affordable", means only projects that the remainder of the units are "unaffordable" will be built... but that's the case anyway; given the scarcity of land it doesn't make sense to build affordable housing unless forced. Not that I'm in favor of housing subsidies. It turns a few well-connected or lucky people into lottery winners, and doesn't reduce the overall cost of housing.
- ThrustVectoring 9y ago
  >To be fair, developers sell units at what the market will bear, rather than on a "cost-plus" basis. Raising developer costs doesn't impact the final sale price. Raising developer costs kill off unprofitable developments until the marginal unit created has a cost equal to what the market will bear. It depends on the relative elasticity of supply and demand - we'll hit an equilibrium of fewer units at a higher price, with both less developer profits and less consumer surplus. Whether the loss is mostly borne by purchasers or sellers depends on details of the market. >but it's properly zoned land, not developers that is in short supply. Developers in the Bay Area spend lots of money to figure out whether or not land is properly zoned, due to the community review system and other things that'd be fixed with a by-right zoning policy. Things aren't built to the maximum of the zones - they're built to what's affordable by developers attempting to get permission to build. >given the scarcity of land it doesn't make sense to build affordable housing unless forced It doesn't matter whether housing is affordable at market rates because we build things that are affordable, or through building so much luxury houses that there's so little demand for existing buildings that they now become affordable. If the lot next door added a three-bedroom luxury apartment that cost less than your studio, you'd move out of your current place and into that in a heartbeat. Then your studio now goes on the market and gets whatever it can - likely, a much more affordable price. Adding dense housing makes housing more affordable. It's only obvious if it's cheap and dense - if it's expensive, the affordable units are those that the new residents move out of.
  - random023987 9y ago
    > we'll hit an equilibrium of fewer units at a higher price, with both less developer profits and less consumer surplus. No we won't, because the limit of zoning and land doesn't allow us to get anywhere near that equilibrium. Your statement would only be correct in a world with infinite land in the Bay Area. But the equilibrium for "fewer" units in San Francisco might be (for example) 50,000 new housing units per year, but you're lucky to get permits and land for couple thousand. > Things aren't built to the maximum of the zones - they're built to what's affordable by developers attempting to get permission to build. This is missing the point. 100% of the land that can pass the community review process is profitable to build on. Even with "affordable housing" requirements. Even with reduced developer profits. If you can build on it, you're gonna make money. Therefore, the limiting factor is land; the effect of affordable housing requirements is to lower the windfall profits of any developer lucky enough to get by community review. > It doesn't matter whether housing is affordable at market rates because we build things that are affordable, or through building so much luxury houses that there's so little demand for existing buildings that they now become affordable. Right, everyone who understands math understands this. The issue is that if you don't have land you can build on, you can't build. And if you do have land you can build on, you're gonna make money. Affordable housing requirements do not decrease the amount of net construction, they just move windfall profits from the developer to a few lucky random people.