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I live in Oakland and am a member of a few groups that give me a look outside my usual wealthy tech bubble to the sentiments of the lower income folks here. The

by sxates 9y ago

I live in Oakland and am a member of a few groups that give me a look outside my usual wealthy tech bubble to the sentiments of the lower income folks here. There is HUGE resistance to new development in Oakland among the very people who are being priced out. But unlike property owners who tend to resist new development because they worry about supply pushing prices down, many of these people seem to see an opposite correlation: that new development means higher rents, which displace them and their communities. I think this is simply a misunderstanding of how development works. They see rents going up, and new buildings going up, and assume that the new buildings are the cause of the increase, not a response to the increase. They think we need to build more below-market rate units, because the luxury ones raise average rental prices. But really, the shortages which create high prices are what create the business case for building expensive luxury condos. If rents weren't already high, these buildings wouldn't be built. If the demand is there but not the supply, everyone at the wealthy end of the spectrum will take all of the supply, leaving the poorer ends out of a home. So the more market rate units we have, the more lower end units that are available. Seems simple to me, but a lot of people seem to get this wrong. They have this idea that there are a bunch of wealthy and greedy developers out to get them and their precious neighborhoods. The buildings these developers start have a shockingly high rate of spontaneous combustion in Oakland, right when framing is complete. I wonder if the property owner interests only encourage these mis-perceptions since they serve their interests.

riahi 9y ago
Is there a net increase in housing stock, or are cheaper units being replaced by higher priced luxury units?
- aardvark291 9y ago
  I think there must be a net increase. In Oakland, parking lots are being replaced with mid-rise apartment complexes. There is an impressive amount of construction under way at the moment.
Spooky23 9y ago
The crowd tends to speak the truth. People aren’t dumb. The type of construction common today isn’t in the interest of people who own single or <4 unit property or people who rent. Developers are absolutely greedy and generally have no interest in the impacts surrounding their work. For most, their job is to gather capital, do a deal and gtfo.
- cycrutchfield 9y ago
  Building high-density housing is certainly in the interest of people who rent, since more rental supply equals lower prices for rent. But you're right that it isn't in the interest of people who own a property. Congratulations, you've identified the cause of NIMBYism!
  - Spooky23 9y ago
    It does not. Only one thing leads to lower rent in these cities -- real estate busts. There are probably two dozen residential or mixed use skyscrapers alone being erected in Manhattan. The annual rents of 80%+ of these units probably exceed the median household income in Manhattan, unless they are directly subsidized. The rents will come down when rates go up and overleveraged developers go bankrupt.
    - cycrutchfield 9y ago
      I don’t think you completely understand supply and demand. If Mercedes makes more cars, that does not raise the price of a Toyota.
      - Spooky23 9y ago
        Unlike cars, there is a finite supply of real property, most of which is enjoyed by its owners for whatever purpose they choose. To borrow your car analogy, there will never be a "Toyota" housing unit built in Atherton, CA or a few blocks from Rockeffler Center in NYC. The current issues have more to do with a glut of cash than a shortage of housing.
atwebb 9y ago
Preface: I understand what you're saying and am no expert. Is there not also a gap before the new production? I live in a city that's been through some serious gentrification and gone from an afforable southern city to something...else. What I've, anecdotally, noticed is that the prices start before the rents. 1) Area is priced well below an adjacent or similarly positioned area but missing the amenities 2) A handful of developers build/renovate and put in something that's way above (50%?) current rate in the area 3) Marketing and salesmanship move the houses. 4) More developers/flippers enter the market, this time their marging shrinks a little or the price goes up. 5) Repeat until profits are less than moving to somewhere else in step 1 What I'm getting at is the gap in prices where the developers are looking to make several fold what they would in more established areas. That being possible shows it's still more affordable. Additionally, if it's not already more affordable, where are the people worried about getting pushed out living?
- Spooky23 9y ago
  There is a price floor on housing, defined by the prevailing rent that Section 8 subsidy uses. People getting pushed out get pushed into minimally suitable housing in out of the way areas. Those unqualified for subsidy live in unsafe conditions, live in SRO units or are in various states of homelessness.
natrius 9y ago
> They have this idea that there are a bunch of wealthy and greedy developers out to get them and their precious neighborhoods. This narrative is so persistent because it's 100 years old. But for most of that time, developers were called greedy because they made money by introducing cheaper housing into the neighborhood, thereby "ruining" it. Here's a Supreme Court Justice shitting on apartments in 1926: > With particular reference to apartment houses, it is pointed out that the development of detached house sections is greatly retarded by the coming of apartment houses, which has sometimes resulted in destroying the entire section for private house purposes; that, in such sections, very often the apartment house is a mere parasite, constructed in order to take advantage of the open spaces and attractive surroundings created by the residential character of the district. That's from Euclid v. Ambler, the case that established the constitutionality of zoning. Our cities are expensive on purpose.
arenaninja 9y ago
Let me toss my anecdote in on this one. I used to live in Koreatown in Los Angeles, my rent was $1000/month including one parking spot for a 1BR1BA. A few blocks from me a brand new building opened with micro-apartments going for ~$2600/month for a studio, around the same time a non-luxury building opened two blocks in the opposite direction but that was all subsidized housing so I never found out how much they even charged (I didn't qualify). Within a few months of this our landlord, who owns other properties and businesses in the area, stopped accepting new tenants or actively marketing the available apartments, it's rumored they are trying to tear that building down and make a bigger one. It's only about 30 units, but it's down to the last 3 tenants, rent has consistently gone up each year by the maximum allowed amount, maintenance is nonexistent, the parking lot sits empty and they still somehow enforce the max 1 vehicle per tenant rule. The rent for it is now $1200, trying to move in to a similar-sized apartment in the same block would cost you $1450 and an extra $100 for a parking spot. It's a crummy situation all around
frgtpsswrdlame 9y ago
Think of it in terms of a bifurcated market - high rent and low rent - and their argument makes sense. Developers who come in want to build high rent units, for the people who use low rent apartments this is not helpful. Low rent supply hasn't increased so their rents won't be effected. In the case that low rent units are razed to build new high rent units or in the case where low rent units are remodeled and converted to high rent units, low rent supply decreases even further, raising prices on the low end and pricing people out. Hence why they want you to build more low rent units, it would actually help them. >So the more market rate units we have, the more lower end units that are available. Seems simple to me, but a lot of people seem to get this wrong. Probably because what you're saying doesn't follow at all. The more market rate units you have, the more market rate units you have, that doesn't say anything about lower end units. >They have this idea that there are a bunch of wealthy and greedy developers out to get them and their precious neighborhoods. Because there are? Developers would love to take poor areas in the city and convert them all into high rent yuppie districts, it would be great for business. >I wonder if the property owner interests only encourage these mis-perceptions since they serve their interests. If you think everyone around you is misperceiving the world, sometimes it's important to check your own perceptions.
- closeparen 9y ago
  If it were bifurcated, pressure in the luxury segment would not affect the working-class segment. But it does. Formerly very-low-income apartments get slapdash kitchen renovations (if even) and rent to professionals for $2500. The Bay Area is rife with luxury cars parked at the seediest-looking apartment complexes. I learned early in my apartment search that essentially any apartment with a sligtly-below-luxury price and good interior photos but no exterior photos is one of these front-line gentrification units. Un-renovated crappy apartments in good locations are often listed for more than luxury glass and steel skyscrapers in merely decent ones. Everyone is spilling over into the housing that previously served a socioeconomic level (or two) below, except those at the bottom who have nowhere to go but tents. In an ideal world, new housing would most directly target those in need, but in the world we live in, the money for luxury towers is chomping at the bit to get started while the money for signficant subsidized construction is pending a literal revolution. A greater proportion of tech migrants living in new luxury housing is a smaller proportion bidding up formerly affordable housing.
closeparen 9y ago
Developer-initiated gentrification pushing demand around is a real and well-documented phenomenon, and YIMBYs do ourselves a disservice by denying it. The problem is that it’s taken out of context. It may be true that, in a static or declining city, thwarting development tends to preserve the status quo both physically and economically. But developer scheming isn’t responsible for the massive regional demand growth in coastal megacities today. Economic and population growth are. In that context, classical anti-gentrification strategies backfire because the demand surge is so large, it fills in every crack and can’t be deflected to other neighborhoods by undesirability (only by high prices).

by sxates 9y ago

riahi 9y ago

Is there a net increase in housing stock, or are cheaper units being replaced by higher priced luxury units?

aardvark291 9y ago
I think there must be a net increase. In Oakland, parking lots are being replaced with mid-rise apartment complexes. There is an impressive amount of construction under way at the moment.

Spooky23 9y ago

The crowd tends to speak the truth. People aren’t dumb. The type of construction common today isn’t in the interest of people who own single or <4 unit property or people who rent. Developers are absolutely greedy and generally have no interest in the impacts surrounding their work. For most, their job is to gather capital, do a deal and gtfo.

cycrutchfield 9y ago
Building high-density housing is certainly in the interest of people who rent, since more rental supply equals lower prices for rent. But you're right that it isn't in the interest of people who own a property. Congratulations, you've identified the cause of NIMBYism!
- Spooky23 9y ago
  It does not. Only one thing leads to lower rent in these cities -- real estate busts. There are probably two dozen residential or mixed use skyscrapers alone being erected in Manhattan. The annual rents of 80%+ of these units probably exceed the median household income in Manhattan, unless they are directly subsidized. The rents will come down when rates go up and overleveraged developers go bankrupt.
  - cycrutchfield 9y ago
    I don’t think you completely understand supply and demand. If Mercedes makes more cars, that does not raise the price of a Toyota.
    - Spooky23 9y ago
      Unlike cars, there is a finite supply of real property, most of which is enjoyed by its owners for whatever purpose they choose. To borrow your car analogy, there will never be a "Toyota" housing unit built in Atherton, CA or a few blocks from Rockeffler Center in NYC. The current issues have more to do with a glut of cash than a shortage of housing.

atwebb 9y ago

Preface: I understand what you're saying and am no expert. Is there not also a gap before the new production? I live in a city that's been through some serious gentrification and gone from an afforable southern city to something...else. What I've, anecdotally, noticed is that the prices start before the rents. 1) Area is priced well below an adjacent or similarly positioned area but missing the amenities 2) A handful of developers build/renovate and put in something that's way above (50%?) current rate in the area 3) Marketing and salesmanship move the houses. 4) More developers/flippers enter the market, this time their marging shrinks a little or the price goes up. 5) Repeat until profits are less than moving to somewhere else in step 1 What I'm getting at is the gap in prices where the developers are looking to make several fold what they would in more established areas. That being possible shows it's still more affordable. Additionally, if it's not already more affordable, where are the people worried about getting pushed out living?

Spooky23 9y ago
There is a price floor on housing, defined by the prevailing rent that Section 8 subsidy uses. People getting pushed out get pushed into minimally suitable housing in out of the way areas. Those unqualified for subsidy live in unsafe conditions, live in SRO units or are in various states of homelessness.

natrius 9y ago

> They have this idea that there are a bunch of wealthy and greedy developers out to get them and their precious neighborhoods. This narrative is so persistent because it's 100 years old. But for most of that time, developers were called greedy because they made money by introducing cheaper housing into the neighborhood, thereby "ruining" it. Here's a Supreme Court Justice shitting on apartments in 1926: > With particular reference to apartment houses, it is pointed out that the development of detached house sections is greatly retarded by the coming of apartment houses, which has sometimes resulted in destroying the entire section for private house purposes; that, in such sections, very often the apartment house is a mere parasite, constructed in order to take advantage of the open spaces and attractive surroundings created by the residential character of the district. That's from Euclid v. Ambler, the case that established the constitutionality of zoning. Our cities are expensive on purpose.

arenaninja 9y ago

Let me toss my anecdote in on this one. I used to live in Koreatown in Los Angeles, my rent was $1000/month including one parking spot for a 1BR1BA. A few blocks from me a brand new building opened with micro-apartments going for ~$2600/month for a studio, around the same time a non-luxury building opened two blocks in the opposite direction but that was all subsidized housing so I never found out how much they even charged (I didn't qualify). Within a few months of this our landlord, who owns other properties and businesses in the area, stopped accepting new tenants or actively marketing the available apartments, it's rumored they are trying to tear that building down and make a bigger one. It's only about 30 units, but it's down to the last 3 tenants, rent has consistently gone up each year by the maximum allowed amount, maintenance is nonexistent, the parking lot sits empty and they still somehow enforce the max 1 vehicle per tenant rule. The rent for it is now $1200, trying to move in to a similar-sized apartment in the same block would cost you $1450 and an extra $100 for a parking spot. It's a crummy situation all around

frgtpsswrdlame 9y ago

Think of it in terms of a bifurcated market - high rent and low rent - and their argument makes sense. Developers who come in want to build high rent units, for the people who use low rent apartments this is not helpful. Low rent supply hasn't increased so their rents won't be effected. In the case that low rent units are razed to build new high rent units or in the case where low rent units are remodeled and converted to high rent units, low rent supply decreases even further, raising prices on the low end and pricing people out. Hence why they want you to build more low rent units, it would actually help them. >So the more market rate units we have, the more lower end units that are available. Seems simple to me, but a lot of people seem to get this wrong. Probably because what you're saying doesn't follow at all. The more market rate units you have, the more market rate units you have, that doesn't say anything about lower end units. >They have this idea that there are a bunch of wealthy and greedy developers out to get them and their precious neighborhoods. Because there are? Developers would love to take poor areas in the city and convert them all into high rent yuppie districts, it would be great for business. >I wonder if the property owner interests only encourage these mis-perceptions since they serve their interests. If you think everyone around you is misperceiving the world, sometimes it's important to check your own perceptions.

closeparen 9y ago
If it were bifurcated, pressure in the luxury segment would not affect the working-class segment. But it does. Formerly very-low-income apartments get slapdash kitchen renovations (if even) and rent to professionals for $2500. The Bay Area is rife with luxury cars parked at the seediest-looking apartment complexes. I learned early in my apartment search that essentially any apartment with a sligtly-below-luxury price and good interior photos but no exterior photos is one of these front-line gentrification units. Un-renovated crappy apartments in good locations are often listed for more than luxury glass and steel skyscrapers in merely decent ones. Everyone is spilling over into the housing that previously served a socioeconomic level (or two) below, except those at the bottom who have nowhere to go but tents. In an ideal world, new housing would most directly target those in need, but in the world we live in, the money for luxury towers is chomping at the bit to get started while the money for signficant subsidized construction is pending a literal revolution. A greater proportion of tech migrants living in new luxury housing is a smaller proportion bidding up formerly affordable housing.

closeparen 9y ago

Developer-initiated gentrification pushing demand around is a real and well-documented phenomenon, and YIMBYs do ourselves a disservice by denying it. The problem is that it’s taken out of context. It may be true that, in a static or declining city, thwarting development tends to preserve the status quo both physically and economically. But developer scheming isn’t responsible for the massive regional demand growth in coastal megacities today. Economic and population growth are. In that context, classical anti-gentrification strategies backfire because the demand surge is so large, it fills in every crack and can’t be deflected to other neighborhoods by undesirability (only by high prices).