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I was expecting something else... Let's be frank, affordable housing typically isn't expensive. Construction costs around the country and indeed the developed

I was expecting something else... Let's be frank, affordable housing typically isn't expensive. Construction costs around the country and indeed the developed world aren't too far apart. In the US it's about $100-200 per square foot, in Western-Europe it's €1000-1500 per square metre. The problem isn't really in construction, typically. Of course, there's always room for improvement everywhere, in construction too. But the big culprit are land prices. Take the Mission, they quote units costing $600k each, not affordable housing. But you're talking about a place where you need to pay $1.5m to just buy the piece of land on which you then build three small $100k units, for an average of $600k each. Completely different story from the $100k unit in 'Portland', which was actually Gresham, east of Portland, where the average square foot price to buy land+home is <$200. Oh and the units were 375 square foot... $100k is expensive, if anything. The author completely ignores the market realities, again, mostly of expensive land prices. And this creates the debate as to whether we should subsidise such housing. After all, if you put the same quality house in another city with cheaper land, you could build 4x as many homes, or twice as many that are twice as big or twice as luxurious. Why should we subsidise a fraction of our poor people to live in the most expensive place on the planet with public money that could go towards helping a larger fraction of people? That's a though question to answer, I find... and I struggle with it, especially because I'm one of those guys who's in favour of these subsidies. Economic segregation is damaging in many ways, plenty of sociological studies have shown. It's important to keep our cities accessible to everyone and create a healthy mix of people from all socioeconomic backgrounds, as opposed to rich enclaves and poor ghettos. But, finding the balance is hard. I don't live in the US but we have similar problems here in Western-Europe with subsidised housing, at the end of the day it's an issue of land prices skyrocketing, it doesn't have as much to do with construction costs as we tend to think. And it's really hard to find the right balance of using public money to buy expensive land for a small group of people.

maybe-not-in-ux 9y ago
Depends entirely on where you live. In the East Bay, it's $345-375 per square foot, not including land costs.
nitwit005 9y ago
I think we've just hit the "give up" point in some areas. Even if you can find the money, you have to question who is benefiting, as you end up helping out these employers who offer low pay and benefits. The SF bay area seems to have finally hit that point where the restaurants and so on are being forced to raise their wages because they can't hire people, and that generally seems like a good thing. It's better if the wages reflect the costs.
naravara 9y ago
I’ve made the argument before that it’s not a lack of housing we have, it’s a lack of livable communities. We have a housing glut in this country, most of it is just in places that are far from jobs, services, transit, and community amenities. If we created more moderately sized, walkable, transit friendly cities this problem wouldn’t be so bad. Everyone wants to cram into SF, NY, and a handful of other places because of the access to economic opportunity and urbanist lifestyle. If they could get some measure of that elsewhere, even a not as good but okay enough version, many would gladly move and alleviate the pressure. But because of how we do our built environments these dense cities are islands of urbanism in an ocean of sprawl.
- IkmoIkmo 9y ago
  Agreed. I'd almost be inclined to say that SF shouldn't spend its money on SF, but on other smaller places in California. Creating SF-outposts, hubs. At the end of the day, population distribution is the issue, and the only way you can meaningfully distribute populations is by creating reasons for them to do so voluntarily. That means investing not all in one spot. You're only making these spikes bigger: http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-content/uploads/2015/11/us-gdp-by-city-3d.jpg http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-c... Municipalities should lead the charge, but together with companies. Proximity to jobs is incredibly important. If anything, it could be good for companies too. You don't need to compensate a software engineer to the extent that he can afford >$1k per square foot prices. What we don't really bluntly talk about is this: tech companies are spending more on real estate via their HR budgets than on actual talent. After all, we compensate similar talent very differently depending on the local cost of living which is a variable mostly dominated by housing costs. That means HR budgets are in large part dominated by housing costs. Obviously this is not uncontroversial. Many in the 'receiving' community will hate to see cost of living rise when SF Jr. and its Tech Jr. companies move in, particularly those who aren't the owner class but the labourer class. It reeks of gentrification. But there has to be a way to make that work better than it does now, which is investing everything in a small radius, attracting all companies and all people, and making it wholly unaffordable while the rest of the country is drained of talent, jobs, economic activity and becomes extremely affordable in terms of land but unable to support any population. There has to be a middle-ground between the two positions.
conanbatt 9y ago
Affordable housing is a red herring. Even the SF government economist has concluded that "luxury" units also reduce the price of affordable units, with a marginally slower elasticity. i.e. 100 affordable units are better than 100 lux units, but 110 lux units are still better than 100 affordable units. The affordable units is a clever scheme to block construction.
saagarjha 9y ago
This is particularly true in the many parts of the Bay Area, where a major portion of a "house price" is the price of the land it's built on rather than the actual house's (construction) price.
notatoad 9y ago
>In the US it's about $100-200 per square foot, in Western-Europe it's €1000-1500 per square metre. quick conversion, because i had to google it: there's ~10.5sqft in a square metre, so those costs are roughly equal.
- bmelton 9y ago
  Worth noting that there's a ~20% differential between the dollar and the Euro though.
  - richardknop 9y ago
    The exchange rate oscillates, it used to be 1 euro bought you 1.5 dollars years ago but it has been on a downwards trajectory since the Euro crisis. According to some analyses I read eventually euro should reach parity with dollar if you give it enough time (so another decade later it might be 1:1).
gm-conspiracy 9y ago
I guess everything is relative. So, a 500 sq. ft home at $50k to $100k is considered affordable? If I was raising a family, 500 sq. ft. gets cramped real quick. As long as we are housing gainfully employed single people, no problem.
jahewson 9y ago
More like $300/sqft in coastal California.
Retric 9y ago
The obvious solution to this is to build taller and thus more expensive housing in major city's. Unfortunately simply building large buildings like this directly results in 'slums'. I suspect the way around this is to require the first X floors to be affordable housing without subsidy, and then let people build as many expensive floors above this as they want. This attacks the problem from both ends by reducing the impact of land prices, avoiding blighted areas, etc. But, avoids directly handing money to developers which is a clear avenue for corruption.
- joncrane 9y ago
  Interesting approach, and I've seen similar. Don't you have to figure out the overall proportion of affordable housing to regular housing?
- racer-v 9y ago
  The obvious solution to this is to build taller Why is this the obvious solution? Why not spread people out instead of trying to cram as many as you can into the same place?
  - antris 9y ago
    When you spread people out, you don't have a city anymore. It's just an endless suburb. And people want to live in cities, because things happen there. There are jobs, services, public transport etc.
    - racer-v 9y ago
      Not just suburbs but ex-urbs and Podunks. I'm more interested in a solution where we don't all have to live in cities to get access to jobs, services, and transport.
- Bombthecat 9y ago
  That was tried before. In Germany they mix / mixed apartments paid by the state with normal apartments. At the end? Normal people fled. Because more often than not. People living from state are... not really nice neighbours... I lived in such a "planned" Village. It started as an expensive nice village. With swimming bath. Saune, bowling etc. Now it a Ghetto, because everyone with money fled.
sgc 9y ago
From your comment, it is clear you can see the risk. Creating entire ghetto cities full of poor people who have no way of lifting their community out of poverty? Maybe we could find some menial work for them and pay them a pitance. It would be a great source of human assets for the wealthy. And absolutely self-perpetuating through the generations. Also forced displacement is considered a crime against humanity. Which is what that amounts to (Aristotle's famous problem of whether the man who tosses his belongings off a sinking ship is making a free choice). So until there are systems in place that are stronger and longer lasting than the economic, educational, and cultural problems which that would create, I think it remains an immoral choice. True equal access to top tier education (and not watered down education for all), a true living wage and/or guaranteed income, and some way to break through the cultural issues, including prevalent violence and drug use* that such a solution would perpetuate need to come first to all cities. Only then would that become a practical solution. So yes, in theory. But it is at best decades away as a solution, and realistically probably closer to a century away. * since among the poor, there would be a higher concentration of drug addicts than elsewhere, and they would then have a greater influence on others.
- IkmoIkmo 9y ago
  Agreed. I probably miscommunicated a little bit, it's not so much that I don't see the reasons for the subsidies. I do, they're terribly important to keep our cities sane, diverse, equitable and full of opportunities for social mobility, and I agree with much of what you've said. (dating a sociologist for half a decade helped me understand :p) But rather, that it's hard to find the balance. Particularly because you've got genuine concerns from the hundred thousand poor people who weren't able to get in on those sweet but few 100 subsidised units in the mission who have their minds blown that their municipality spent $600k a unit for them with public money that should go to their quality of life, too. What do you say to them...
  - sgc 9y ago
    I probably miscommunicated as well. I could see you got it, and my main (attempted) contribution was to point out the things required prior to increased housing (when there are large numbers of empty units) which would make the problem easier to deal with.
jdavis703 9y ago
No, I think the problem must be corruption, either legalized where a variety of non profits add administrative overhead, or downright illegal. For example about a mile from the first project mentioned in this article are luxury town homes for sale, that come with features such as granite counter tops, garages and solar panels. The developer is selling these luxury homes for about the same price as the affordable housing costs. I imagine the developer is also making some kind of profit. If the price was just land, you’d expect that a luxury unit would cost more than affordable unit, not the same.
- ewjordan 9y ago
  Not following you. Sounds to me like if land, not construction, is the dominant factor in cost, luxury and affordable units should cost about the same amount. Unless the affordable units were higher density.
  - jdavis703 9y ago
    Sorry poor choice of words on my part. I'd expect a luxury unit to sell for more than the affordable unit costs to build. Instead what I see is a luxury unit selling for around just the construction and land costs of an affordable unit.
- closeparen 9y ago
  Interior finishings are what permit a developer’s marketing team to use the word “luxury,” not an interestingly sized component of construction costs or market value.
taurath 9y ago
Why do people need to be in so close? Because that’s where jobs and culture are. Imagine a train system that could get you from the center of any city to the center in another in the same time it takes someone from Richmond to get to SOMA in sf. People could live wherever they wanted, and still be able to participate in the economy. Yes there’s a cost to those systems but it’s how every major city deals with density. We have shit tons of land.
- 35bge57dtjku 9y ago
  Logitech makes those magic trains.
- Johnny555 9y ago
  Where in SF do we have shit tons of land? Building high volume transit would take a lot of land -- the entire BART system is constrained by how fast people can load/unload at Embarcadero station. The signaling system could push more trains through the tunnel, but the station can't handle more. The solution to that is to build more platforms. It'd be easy to do that with a ground level station or a shallow cut-and-cover station, but now it'd take digging out a huge cavern 50 feet underground while avoiding existing building basements and support pilings. BART plans a billion dollar bandaid by digging out the other side of the station to allow boarding from both sides of the tunnel. But that billion dollars doesn't buy any additional tracks, just an extra exit from the sides of the trains. Even the new 6+ billion dollar transit center is only going to have 3 platforms and 6 tracks for Caltrain and HSR. In comparison, Penn Station has 11 platforms & 21 tracks.
  - taurath 9y ago
    I’m not saying we have a lot of space in cities, I’m saying we have a lot of space between them. Milpitas should be a suburbs. China is spending trillions on infrastructure and trains and we whine about 6b for a huge train station in the center of a hundred year old city, while we give $1.5 trillion tax cuts to corporations
  - vadym909 9y ago
    take the caltrain from south bay to SF and you'll see plenty of land that can be developed from warehouses to housing.
rhino369 9y ago
In America, the poor need to be spread into the surburbs, where costs are lower. It makes it harder for them to get assistance, but economic segregation is impossible to avoid in rich cities. The city people are too rich to have to associate with the poor. They'll send their kids to private schools, etc. They eat at different restaurants, shop at different stores.
oppositelock 9y ago
Where I live, in Mountain View, the housing crunch is epic. Developers are pitching many large developments, and the cost per unit is ludicrous. Part of it is that they're building high end stuff, part is land costs, part is high labor cost since we're in a real estate boom, but each new unit of housing in Mountain View also incurs something approaching six figures in permit costs, and the city often milks the developers for things like local park improvements, which passes the costs onto the new construction as well. Sorry cities, you can't have it both ways - can't demand more of developers and lower prices.
- Tempest1981 9y ago
  > six figures in permit costs This is exactly what cities should be doing to grow in a smart way: collect those fees to improve city infrastructure, to accommodate the new housing (and business). Improve transportation! Widen roads, add bike lanes. Add schools and parks and libraries. Add water/sewer/electrical/internet that connect to the developments -- that isn't free. How else are these paid for?
- beager 9y ago
  Isn't that just disguised NIMBYism though? Extreme permit costs, favors/bribes that make the threshold to action on building new housing higher?
- seanmcdirmid 9y ago
  > Sorry cities, you can't have it both ways - can't demand more of developers and lower prices. They (the people in charge of cities like Mountain View) mostly don't want it both ways, they'd rather have the status quo go on, which is why they throw up these requirements in the first place.
  - throwawaybbqed 9y ago
    MV real estate is so messed up that people from Google can barely afford it. Why the hell don't companies move to a more affordable place?
dmitrygr 9y ago
I am curious if you could point to some of these studies that show harm of economic segregation. I'd like to read a few. (not /s)
- IkmoIkmo 9y ago
  I've got a ton of literature review to do in January so I don't have much time to do another one. It's not too difficult to find though. One interesting starting point is a study called 'are ghettos good or bad?'. It's a little dated, 20 years old now, especially with economic segregation on the rise since then and a sharp increase of academic interest in the topic. But it sets the tone and introduces a little bit of theoretical history, provides empirical evidence for the notion that economic segregation is damaging, as well as its causal direction (ghettos create bad outcomes, rather than vice versa), although it lacks in explanatory power. The NBER is typically well-respected. You can find it here: http://www.nber.org/papers/w5163.pdf http://www.nber.org/papers/w5163.pdf For something more recent, this report is another good place to start. The Urban Institute is quite liberal though, so its research is a bit more partisan than a typical academic piece, but it's still good stuff. This research, and others, suggests that it's not just low-income groups who suffer from economic segregation, but that it affects all residents negatively as well, on average. (mostly for two reasons: one is that when low-income groups are worse off, their issues e.g. with crime or drugs spill over to non low-income communities, and two that, simply said, a Google engineer is more productive if he doesn't have to spend his day preparing food and doing laundry, so you need a healthy mix of people and proximity matters). https://www.urban.org/research/publication/cost-segregation https://www.urban.org/research/publication/cost-segregation Hope to be of more help next month.
anonymous5133 9y ago
Agree. I think a better solution is to simply get employers to relocate to locations where land is cheap. People are going to go to where they can get work. If the employers relocate then it has the added benefit of people being able to find work in areas where land is cheap. This also puts pressure off of the dense metropolitan cities.
- Pxtl 9y ago
  Places where land is cheap have bad transit and low population density. That's both bad for network effects and bad for the environment.
  - dboreham 9y ago
    Like Detroit?
- cameldrv 9y ago
  People have been gravitating to bigger cities, and one factor that's driving it is two earner households. It used to be that if the husband had to move for a new job, he'd pick up the family and go. This is much less possible than before, since the wife needs to find a job too. If both of them work in specialized occupations, only big cities are likely to have appropriate jobs for both. This makes land in larger cities at an increasingly large premium.
  - taysic 9y ago
    Most of the people who move to cities seem to be single and young when they do. It doesn't seem so much about couples per say - but just individuals in general who want better job mobility.
    - cameldrv 9y ago
      As I said, it's one factor, and as harmegido said, it creates a movement towards big cities, but probably equally importantly, prevents movement to small cities, since if either partner gets a hot offer in a small town, it's much harder to accept if it means that the other partner's career opportunities are diminished.
beebmam 9y ago
Big cities across the world have seen a massive spike in price in the last few decades. Much of this is due to tax reasons and speculation (both foreign and domestic). End tax breaks for real estate owners and end the ability to speculate on home prices on a large scale, and housing will become much more affordable. Or institute a Land Tax, which incentivizes high levels of housing density and housing availability. A land tax is also the most efficient type of tax that exists, and acts as an moderate wealth equalizer.
peterwwillis 9y ago
Your argument is for the equivalent of new Indian reservations. The poor people moving into these houses will tend to be ethnic or racial minorities. There will be no jobs in that area, and no access to transportation, and definitely food deserts, and no education, etc etc etc etc [include an 'etc' for every service needed for a population of humans in a modern western society]. It will be harder for people to live, and the neighborhoods therein would crumble from a lack of access to important resources. The other thing the argument does is assume we have an "expensive land" problem. We don't. In most cases it's construction costs that are unacceptably high, not land costs. In Philly and Baltimore, the situation is the same as described in the article. The estimates for building new low cost housing are up to 10 times the cost for private development, so it does not get built - and the land goes back to private developers, and sold to the wealthy. This has been a constant issue for as long as I have lived in these cities.
- dhzjxnbzn 9y ago
  The rents in Baltimore seem downright affordable, maybe they had the right idea with letting developers build if they want to build. The rents in Philly are higher, but nowhere near those of the Bay Area. Here is an article about the local market: https://www.google.com/amp/s/cdn.relaymedia.com/amp/billypenn.com/2016/09/20/phillys-rent-problem-were-not-building-anything-you-can-afford/ https://www.google.com/amp/s/cdn.relaymedia.com/amp/billypen... People are angry that although they can afford a perfectly standard apartment, they can't afford new construction. Apartment developments being abandoned before completion due to low demand. Market distortions caused by development restrictions during the 90s.
  - dhzjxnbzn 9y ago
    There is actually a cost-efficient way to create affordable housing: create luxury housing. After rich people move in, less rich people will get to inhabit those older homes left behind. Restricting housing construction creates a backlog that must be worked through for the market to adjust fully. Some of the benefits of removing those restrictions are immediate, others take over time.
mc32 9y ago
You're right. One would imagine a site called City-Lab would put some effort into answering the question they open. But the most we get is "Perhaps the central problem of housing affordability is one of scale" If this is what we get as an answer to such an important question, I can't really trust them to really be forthright when it comes to understanding the issues of cities. When people complain about the media, this is the kind of sloppy thing people complaint about.
saosebastiao 9y ago
The problem is absolutely land prices, but there is something we can do about it: get rid of our draconian anti-density zoning. The commonly perceived idea that land prices invariably increase when upzonings occur is only true in the context of how they occur today: very slowly, in extremely limited numbers, after years of lobbying the government for changes. Land prices are determined by their highest best use, and right now, with extremely scarce housing supply, that highest and best use will always be the most dense possible development imaginable. But that isn't guaranteed to be true. What would happen if all of the land was developable at density? It certainly wouldn't be scarce, and with heavily increased competition it likely wouldn't be very profitable to build either. Seattle's 83 sq miles of land, at the midrise levels of central Paris, would accommodate 4.6M people, 25% more than the entire 8000 sq mile metro region currently houses. It would take an inward migration of several millions of people before the highest and best use of most land parcels would be to build extremely densely everywhere. There just would not be enough demand to justify midrises everywhere. So while most centrally located land (like the handful of neighborhoods directly adjacent to downtown) might result in land price increases (because dense developments can actually attract enough demand to fill them), it would likely end up with lower land prices in neighborhoods further out like Beacon Hill or Ballard. So if you want to lower the costs of affordable or transitional housing development, you gotta do the same exact thing that you would do to lower the prices of market rate housing.
- dionidium 9y ago
  "Seattle's 83 sq miles of land, at the midrise levels of central Paris, would accommodate 4.6M people, 25% more than the entire 8000 sq mile metro region currently houses." Exactly, which is why there is zero mystery here. This is an entirely artificial, legal challenge. We already know what happens if we let cities develop organically, because we've already built places like Brooklyn and Queens.
  - seanmcdirmid 9y ago
    > because we've already built places like Brooklyn and Queens. But then with NYC densities would NYC prices follow? Put it this way, do we have examples where higher densities didn't lead to unexpected higher prices due to critical population mass being achieved?
muninn_ 9y ago
We need to reduce the population of countries to drive prices down. It’s simply a matter of too many people. Period.
- IkmoIkmo 9y ago
  I doubt that... there's actually ample land for everyone, we've got entire cities, hell, provinces or states, that are virtually empty. North Dakota for example has 10% of the people of Massachusetts, but 7x the land. That's a roughly 70x difference, we're talking about having say 1000 square feet vs 70.000 square feet of space. There are obvious reasons why one state is more easily suited for living (weather, distance from ports or rivers are lacking in ND), but in the 21st century it's certainly also easily possible to house an order of magnitude more people in ND. And it isn't even just a discussion about low density states vs high density states. Take one of the highest density states, Massachusetts. Its density is about 800 people per square mile. That's nothing... A square mile is almost 28 million square foot. You're talking about having about 35 thousand square foot, per person, of space. In fact, here are some images of population density of 100.000 people per square mile, more than 100x more dense than one of the highest density US state averages: https://ggwash.org/view/42469/what-do-80000-people-in-a-square-mile-look-like-depends-on-where-you-put-them https://ggwash.org/view/42469/what-do-80000-people-in-a-squa... And here's an interesting article about the amount of space needed to give all 7 billion people on the planet a standard vancouver house+yard lot. https://vreaa.wordpress.com/2011/12/09/land-not-making-any-more-dont-need-to/ https://vreaa.wordpress.com/2011/12/09/land-not-making-any-m... Which also cites another calculation on how the entire world population could fit into Texas if it were built as dense as NYC. The issue isn't really sheer population, it's population distribution. Proximity to other people means proximity to jobs, culture, networks etc. And that means we see small plots of land become extremely scarce and in high-demand, and large plots of land become extremely abundant and in low-demand. You can see this if you look up economic heatmaps of the US, it's pretty insane. Most countries are basically a collection of a few cities where all the money is made and everyone lives. I wouldn't be surprised if cities became the dominant political unit rather than nation states. (not legally, but in practice). I can't find a great image at the moment but this gives an idea: https://cdn.howmuch.net/content/images/1600/where-the-money-is-us-by-gdp-3a75.jpeg https://cdn.howmuch.net/content/images/1600/where-the-money-...

maybe-not-in-ux 9y ago

Depends entirely on where you live. In the East Bay, it's $345-375 per square foot, not including land costs.

nitwit005 9y ago

I think we've just hit the "give up" point in some areas. Even if you can find the money, you have to question who is benefiting, as you end up helping out these employers who offer low pay and benefits. The SF bay area seems to have finally hit that point where the restaurants and so on are being forced to raise their wages because they can't hire people, and that generally seems like a good thing. It's better if the wages reflect the costs.

naravara 9y ago

I’ve made the argument before that it’s not a lack of housing we have, it’s a lack of livable communities. We have a housing glut in this country, most of it is just in places that are far from jobs, services, transit, and community amenities. If we created more moderately sized, walkable, transit friendly cities this problem wouldn’t be so bad. Everyone wants to cram into SF, NY, and a handful of other places because of the access to economic opportunity and urbanist lifestyle. If they could get some measure of that elsewhere, even a not as good but okay enough version, many would gladly move and alleviate the pressure. But because of how we do our built environments these dense cities are islands of urbanism in an ocean of sprawl.

IkmoIkmo 9y ago
Agreed. I'd almost be inclined to say that SF shouldn't spend its money on SF, but on other smaller places in California. Creating SF-outposts, hubs. At the end of the day, population distribution is the issue, and the only way you can meaningfully distribute populations is by creating reasons for them to do so voluntarily. That means investing not all in one spot. You're only making these spikes bigger: http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-content/uploads/2015/11/us-gdp-by-city-3d.jpg http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-c... Municipalities should lead the charge, but together with companies. Proximity to jobs is incredibly important. If anything, it could be good for companies too. You don't need to compensate a software engineer to the extent that he can afford >$1k per square foot prices. What we don't really bluntly talk about is this: tech companies are spending more on real estate via their HR budgets than on actual talent. After all, we compensate similar talent very differently depending on the local cost of living which is a variable mostly dominated by housing costs. That means HR budgets are in large part dominated by housing costs. Obviously this is not uncontroversial. Many in the 'receiving' community will hate to see cost of living rise when SF Jr. and its Tech Jr. companies move in, particularly those who aren't the owner class but the labourer class. It reeks of gentrification. But there has to be a way to make that work better than it does now, which is investing everything in a small radius, attracting all companies and all people, and making it wholly unaffordable while the rest of the country is drained of talent, jobs, economic activity and becomes extremely affordable in terms of land but unable to support any population. There has to be a middle-ground between the two positions.

conanbatt 9y ago

Affordable housing is a red herring. Even the SF government economist has concluded that "luxury" units also reduce the price of affordable units, with a marginally slower elasticity. i.e. 100 affordable units are better than 100 lux units, but 110 lux units are still better than 100 affordable units. The affordable units is a clever scheme to block construction.

saagarjha 9y ago

This is particularly true in the many parts of the Bay Area, where a major portion of a "house price" is the price of the land it's built on rather than the actual house's (construction) price.

notatoad 9y ago

>In the US it's about $100-200 per square foot, in Western-Europe it's €1000-1500 per square metre. quick conversion, because i had to google it: there's ~10.5sqft in a square metre, so those costs are roughly equal.

bmelton 9y ago
Worth noting that there's a ~20% differential between the dollar and the Euro though.
- richardknop 9y ago
  The exchange rate oscillates, it used to be 1 euro bought you 1.5 dollars years ago but it has been on a downwards trajectory since the Euro crisis. According to some analyses I read eventually euro should reach parity with dollar if you give it enough time (so another decade later it might be 1:1).

gm-conspiracy 9y ago

I guess everything is relative. So, a 500 sq. ft home at $50k to $100k is considered affordable? If I was raising a family, 500 sq. ft. gets cramped real quick. As long as we are housing gainfully employed single people, no problem.

jahewson 9y ago

More like $300/sqft in coastal California.

Retric 9y ago

The obvious solution to this is to build taller and thus more expensive housing in major city's. Unfortunately simply building large buildings like this directly results in 'slums'. I suspect the way around this is to require the first X floors to be affordable housing without subsidy, and then let people build as many expensive floors above this as they want. This attacks the problem from both ends by reducing the impact of land prices, avoiding blighted areas, etc. But, avoids directly handing money to developers which is a clear avenue for corruption.

joncrane 9y ago
Interesting approach, and I've seen similar. Don't you have to figure out the overall proportion of affordable housing to regular housing?
racer-v 9y ago
The obvious solution to this is to build taller Why is this the obvious solution? Why not spread people out instead of trying to cram as many as you can into the same place?
- antris 9y ago
  When you spread people out, you don't have a city anymore. It's just an endless suburb. And people want to live in cities, because things happen there. There are jobs, services, public transport etc.
  - racer-v 9y ago
    Not just suburbs but ex-urbs and Podunks. I'm more interested in a solution where we don't all have to live in cities to get access to jobs, services, and transport.
Bombthecat 9y ago
That was tried before. In Germany they mix / mixed apartments paid by the state with normal apartments. At the end? Normal people fled. Because more often than not. People living from state are... not really nice neighbours... I lived in such a "planned" Village. It started as an expensive nice village. With swimming bath. Saune, bowling etc. Now it a Ghetto, because everyone with money fled.

sgc 9y ago

From your comment, it is clear you can see the risk. Creating entire ghetto cities full of poor people who have no way of lifting their community out of poverty? Maybe we could find some menial work for them and pay them a pitance. It would be a great source of human assets for the wealthy. And absolutely self-perpetuating through the generations. Also forced displacement is considered a crime against humanity. Which is what that amounts to (Aristotle's famous problem of whether the man who tosses his belongings off a sinking ship is making a free choice). So until there are systems in place that are stronger and longer lasting than the economic, educational, and cultural problems which that would create, I think it remains an immoral choice. True equal access to top tier education (and not watered down education for all), a true living wage and/or guaranteed income, and some way to break through the cultural issues, including prevalent violence and drug use* that such a solution would perpetuate need to come first to all cities. Only then would that become a practical solution. So yes, in theory. But it is at best decades away as a solution, and realistically probably closer to a century away. * since among the poor, there would be a higher concentration of drug addicts than elsewhere, and they would then have a greater influence on others.

IkmoIkmo 9y ago
Agreed. I probably miscommunicated a little bit, it's not so much that I don't see the reasons for the subsidies. I do, they're terribly important to keep our cities sane, diverse, equitable and full of opportunities for social mobility, and I agree with much of what you've said. (dating a sociologist for half a decade helped me understand :p) But rather, that it's hard to find the balance. Particularly because you've got genuine concerns from the hundred thousand poor people who weren't able to get in on those sweet but few 100 subsidised units in the mission who have their minds blown that their municipality spent $600k a unit for them with public money that should go to their quality of life, too. What do you say to them...
- sgc 9y ago
  I probably miscommunicated as well. I could see you got it, and my main (attempted) contribution was to point out the things required prior to increased housing (when there are large numbers of empty units) which would make the problem easier to deal with.

jdavis703 9y ago

No, I think the problem must be corruption, either legalized where a variety of non profits add administrative overhead, or downright illegal. For example about a mile from the first project mentioned in this article are luxury town homes for sale, that come with features such as granite counter tops, garages and solar panels. The developer is selling these luxury homes for about the same price as the affordable housing costs. I imagine the developer is also making some kind of profit. If the price was just land, you’d expect that a luxury unit would cost more than affordable unit, not the same.

ewjordan 9y ago
Not following you. Sounds to me like if land, not construction, is the dominant factor in cost, luxury and affordable units should cost about the same amount. Unless the affordable units were higher density.
- jdavis703 9y ago
  Sorry poor choice of words on my part. I'd expect a luxury unit to sell for more than the affordable unit costs to build. Instead what I see is a luxury unit selling for around just the construction and land costs of an affordable unit.
closeparen 9y ago
Interior finishings are what permit a developer’s marketing team to use the word “luxury,” not an interestingly sized component of construction costs or market value.

taurath 9y ago

Why do people need to be in so close? Because that’s where jobs and culture are. Imagine a train system that could get you from the center of any city to the center in another in the same time it takes someone from Richmond to get to SOMA in sf. People could live wherever they wanted, and still be able to participate in the economy. Yes there’s a cost to those systems but it’s how every major city deals with density. We have shit tons of land.

35bge57dtjku 9y ago
Logitech makes those magic trains.
Johnny555 9y ago
Where in SF do we have shit tons of land? Building high volume transit would take a lot of land -- the entire BART system is constrained by how fast people can load/unload at Embarcadero station. The signaling system could push more trains through the tunnel, but the station can't handle more. The solution to that is to build more platforms. It'd be easy to do that with a ground level station or a shallow cut-and-cover station, but now it'd take digging out a huge cavern 50 feet underground while avoiding existing building basements and support pilings. BART plans a billion dollar bandaid by digging out the other side of the station to allow boarding from both sides of the tunnel. But that billion dollars doesn't buy any additional tracks, just an extra exit from the sides of the trains. Even the new 6+ billion dollar transit center is only going to have 3 platforms and 6 tracks for Caltrain and HSR. In comparison, Penn Station has 11 platforms & 21 tracks.
- taurath 9y ago
  I’m not saying we have a lot of space in cities, I’m saying we have a lot of space between them. Milpitas should be a suburbs. China is spending trillions on infrastructure and trains and we whine about 6b for a huge train station in the center of a hundred year old city, while we give $1.5 trillion tax cuts to corporations
- vadym909 9y ago
  take the caltrain from south bay to SF and you'll see plenty of land that can be developed from warehouses to housing.

rhino369 9y ago

In America, the poor need to be spread into the surburbs, where costs are lower. It makes it harder for them to get assistance, but economic segregation is impossible to avoid in rich cities. The city people are too rich to have to associate with the poor. They'll send their kids to private schools, etc. They eat at different restaurants, shop at different stores.

oppositelock 9y ago

Where I live, in Mountain View, the housing crunch is epic. Developers are pitching many large developments, and the cost per unit is ludicrous. Part of it is that they're building high end stuff, part is land costs, part is high labor cost since we're in a real estate boom, but each new unit of housing in Mountain View also incurs something approaching six figures in permit costs, and the city often milks the developers for things like local park improvements, which passes the costs onto the new construction as well. Sorry cities, you can't have it both ways - can't demand more of developers and lower prices.

Tempest1981 9y ago
> six figures in permit costs This is exactly what cities should be doing to grow in a smart way: collect those fees to improve city infrastructure, to accommodate the new housing (and business). Improve transportation! Widen roads, add bike lanes. Add schools and parks and libraries. Add water/sewer/electrical/internet that connect to the developments -- that isn't free. How else are these paid for?
beager 9y ago
Isn't that just disguised NIMBYism though? Extreme permit costs, favors/bribes that make the threshold to action on building new housing higher?
seanmcdirmid 9y ago
> Sorry cities, you can't have it both ways - can't demand more of developers and lower prices. They (the people in charge of cities like Mountain View) mostly don't want it both ways, they'd rather have the status quo go on, which is why they throw up these requirements in the first place.
- throwawaybbqed 9y ago
  MV real estate is so messed up that people from Google can barely afford it. Why the hell don't companies move to a more affordable place?

dmitrygr 9y ago

I am curious if you could point to some of these studies that show harm of economic segregation. I'd like to read a few. (not /s)

IkmoIkmo 9y ago
I've got a ton of literature review to do in January so I don't have much time to do another one. It's not too difficult to find though. One interesting starting point is a study called 'are ghettos good or bad?'. It's a little dated, 20 years old now, especially with economic segregation on the rise since then and a sharp increase of academic interest in the topic. But it sets the tone and introduces a little bit of theoretical history, provides empirical evidence for the notion that economic segregation is damaging, as well as its causal direction (ghettos create bad outcomes, rather than vice versa), although it lacks in explanatory power. The NBER is typically well-respected. You can find it here: http://www.nber.org/papers/w5163.pdf http://www.nber.org/papers/w5163.pdf For something more recent, this report is another good place to start. The Urban Institute is quite liberal though, so its research is a bit more partisan than a typical academic piece, but it's still good stuff. This research, and others, suggests that it's not just low-income groups who suffer from economic segregation, but that it affects all residents negatively as well, on average. (mostly for two reasons: one is that when low-income groups are worse off, their issues e.g. with crime or drugs spill over to non low-income communities, and two that, simply said, a Google engineer is more productive if he doesn't have to spend his day preparing food and doing laundry, so you need a healthy mix of people and proximity matters). https://www.urban.org/research/publication/cost-segregation https://www.urban.org/research/publication/cost-segregation Hope to be of more help next month.

anonymous5133 9y ago

Agree. I think a better solution is to simply get employers to relocate to locations where land is cheap. People are going to go to where they can get work. If the employers relocate then it has the added benefit of people being able to find work in areas where land is cheap. This also puts pressure off of the dense metropolitan cities.

Pxtl 9y ago
Places where land is cheap have bad transit and low population density. That's both bad for network effects and bad for the environment.
- dboreham 9y ago
  Like Detroit?
cameldrv 9y ago
People have been gravitating to bigger cities, and one factor that's driving it is two earner households. It used to be that if the husband had to move for a new job, he'd pick up the family and go. This is much less possible than before, since the wife needs to find a job too. If both of them work in specialized occupations, only big cities are likely to have appropriate jobs for both. This makes land in larger cities at an increasingly large premium.
- taysic 9y ago
  Most of the people who move to cities seem to be single and young when they do. It doesn't seem so much about couples per say - but just individuals in general who want better job mobility.
  - cameldrv 9y ago
    As I said, it's one factor, and as harmegido said, it creates a movement towards big cities, but probably equally importantly, prevents movement to small cities, since if either partner gets a hot offer in a small town, it's much harder to accept if it means that the other partner's career opportunities are diminished.

beebmam 9y ago

Big cities across the world have seen a massive spike in price in the last few decades. Much of this is due to tax reasons and speculation (both foreign and domestic). End tax breaks for real estate owners and end the ability to speculate on home prices on a large scale, and housing will become much more affordable. Or institute a Land Tax, which incentivizes high levels of housing density and housing availability. A land tax is also the most efficient type of tax that exists, and acts as an moderate wealth equalizer.

peterwwillis 9y ago

Your argument is for the equivalent of new Indian reservations. The poor people moving into these houses will tend to be ethnic or racial minorities. There will be no jobs in that area, and no access to transportation, and definitely food deserts, and no education, etc etc etc etc [include an 'etc' for every service needed for a population of humans in a modern western society]. It will be harder for people to live, and the neighborhoods therein would crumble from a lack of access to important resources. The other thing the argument does is assume we have an "expensive land" problem. We don't. In most cases it's construction costs that are unacceptably high, not land costs. In Philly and Baltimore, the situation is the same as described in the article. The estimates for building new low cost housing are up to 10 times the cost for private development, so it does not get built - and the land goes back to private developers, and sold to the wealthy. This has been a constant issue for as long as I have lived in these cities.

dhzjxnbzn 9y ago
The rents in Baltimore seem downright affordable, maybe they had the right idea with letting developers build if they want to build. The rents in Philly are higher, but nowhere near those of the Bay Area. Here is an article about the local market: https://www.google.com/amp/s/cdn.relaymedia.com/amp/billypenn.com/2016/09/20/phillys-rent-problem-were-not-building-anything-you-can-afford/ https://www.google.com/amp/s/cdn.relaymedia.com/amp/billypen... People are angry that although they can afford a perfectly standard apartment, they can't afford new construction. Apartment developments being abandoned before completion due to low demand. Market distortions caused by development restrictions during the 90s.
- dhzjxnbzn 9y ago
  There is actually a cost-efficient way to create affordable housing: create luxury housing. After rich people move in, less rich people will get to inhabit those older homes left behind. Restricting housing construction creates a backlog that must be worked through for the market to adjust fully. Some of the benefits of removing those restrictions are immediate, others take over time.

mc32 9y ago

You're right. One would imagine a site called City-Lab would put some effort into answering the question they open. But the most we get is "Perhaps the central problem of housing affordability is one of scale" If this is what we get as an answer to such an important question, I can't really trust them to really be forthright when it comes to understanding the issues of cities. When people complain about the media, this is the kind of sloppy thing people complaint about.

saosebastiao 9y ago

The problem is absolutely land prices, but there is something we can do about it: get rid of our draconian anti-density zoning. The commonly perceived idea that land prices invariably increase when upzonings occur is only true in the context of how they occur today: very slowly, in extremely limited numbers, after years of lobbying the government for changes. Land prices are determined by their highest best use, and right now, with extremely scarce housing supply, that highest and best use will always be the most dense possible development imaginable. But that isn't guaranteed to be true. What would happen if all of the land was developable at density? It certainly wouldn't be scarce, and with heavily increased competition it likely wouldn't be very profitable to build either. Seattle's 83 sq miles of land, at the midrise levels of central Paris, would accommodate 4.6M people, 25% more than the entire 8000 sq mile metro region currently houses. It would take an inward migration of several millions of people before the highest and best use of most land parcels would be to build extremely densely everywhere. There just would not be enough demand to justify midrises everywhere. So while most centrally located land (like the handful of neighborhoods directly adjacent to downtown) might result in land price increases (because dense developments can actually attract enough demand to fill them), it would likely end up with lower land prices in neighborhoods further out like Beacon Hill or Ballard. So if you want to lower the costs of affordable or transitional housing development, you gotta do the same exact thing that you would do to lower the prices of market rate housing.

dionidium 9y ago
"Seattle's 83 sq miles of land, at the midrise levels of central Paris, would accommodate 4.6M people, 25% more than the entire 8000 sq mile metro region currently houses." Exactly, which is why there is zero mystery here. This is an entirely artificial, legal challenge. We already know what happens if we let cities develop organically, because we've already built places like Brooklyn and Queens.
- seanmcdirmid 9y ago
  > because we've already built places like Brooklyn and Queens. But then with NYC densities would NYC prices follow? Put it this way, do we have examples where higher densities didn't lead to unexpected higher prices due to critical population mass being achieved?

muninn_ 9y ago

We need to reduce the population of countries to drive prices down. It’s simply a matter of too many people. Period.

IkmoIkmo 9y ago
I doubt that... there's actually ample land for everyone, we've got entire cities, hell, provinces or states, that are virtually empty. North Dakota for example has 10% of the people of Massachusetts, but 7x the land. That's a roughly 70x difference, we're talking about having say 1000 square feet vs 70.000 square feet of space. There are obvious reasons why one state is more easily suited for living (weather, distance from ports or rivers are lacking in ND), but in the 21st century it's certainly also easily possible to house an order of magnitude more people in ND. And it isn't even just a discussion about low density states vs high density states. Take one of the highest density states, Massachusetts. Its density is about 800 people per square mile. That's nothing... A square mile is almost 28 million square foot. You're talking about having about 35 thousand square foot, per person, of space. In fact, here are some images of population density of 100.000 people per square mile, more than 100x more dense than one of the highest density US state averages: https://ggwash.org/view/42469/what-do-80000-people-in-a-square-mile-look-like-depends-on-where-you-put-them https://ggwash.org/view/42469/what-do-80000-people-in-a-squa... And here's an interesting article about the amount of space needed to give all 7 billion people on the planet a standard vancouver house+yard lot. https://vreaa.wordpress.com/2011/12/09/land-not-making-any-more-dont-need-to/ https://vreaa.wordpress.com/2011/12/09/land-not-making-any-m... Which also cites another calculation on how the entire world population could fit into Texas if it were built as dense as NYC. The issue isn't really sheer population, it's population distribution. Proximity to other people means proximity to jobs, culture, networks etc. And that means we see small plots of land become extremely scarce and in high-demand, and large plots of land become extremely abundant and in low-demand. You can see this if you look up economic heatmaps of the US, it's pretty insane. Most countries are basically a collection of a few cities where all the money is made and everyone lives. I wouldn't be surprised if cities became the dominant political unit rather than nation states. (not legally, but in practice). I can't find a great image at the moment but this gives an idea: https://cdn.howmuch.net/content/images/1600/where-the-money-is-us-by-gdp-3a75.jpeg https://cdn.howmuch.net/content/images/1600/where-the-money-...