5 ms·

> In markets like NYC, where demand is ever-increasing and for various reasons supply cannot keep up with demand, maintaining rent-controlled apartments necessa

by sien 8y ago

> In markets like NYC, where demand is ever-increasing and for various reasons supply cannot keep up with demand, maintaining rent-controlled apartments necessarily drives prices higher overall. It's because of zoning. Allow more high rise to be built and allow more expansion and demand can be met. It's not some mystery. It's local laws that prevent people increasing height of buildings and prevent expanding the area. It's a problem that can be seen around the world due to similar planning laws in many places. See the Demographia report below: https://fcpp.org/wp-content/uploads/dhi2018-fcpp.pdf https://fcpp.org/wp-content/uploads/dhi2018-fcpp.pdf

sien 8y ago
Also look at how Houston has grown: http://www.harriscountytx.gov/CmpDocuments/74/Budget/FY18%20Population%20Report.pdf http://www.harriscountytx.gov/CmpDocuments/74/Budget/FY18%20... It's grown by 67% since 1990. Far greater than NYC or LA or SF in percentage terms. The other thing that should be mentioned is that Texas has fairly high property taxes. They also help.
- mobilefriendly 8y ago
  Texas also has no state income tax, which also drives migration to the state.
ex3ndr 8y ago
In our platform (Openland, W18) we have identified a LOT of buildings that can be built up in SF and current laws allows this. This is not high rises, but you can upgrade from 1 story to 3-4 stories easily. But why this buildings are still single story? I suppose there are other problems like lengthy process of permitting (basically at least 1 year for issuing building permit) and entitlement (unpredictable). This huge delays reduces margins of a projects and in some cases they became unprofitable.
- L_Rahman 8y ago
  You suppose there are other problems? That is the entire problem. The entire problem of building more dense housing - even 3-4 stories in SF is negotiating every single thing besides the literal physical feasibility of construction. If your startup doesn't think this is the key problem to solve, I'm not sure you have a complete grasp of what you're trying to do here.
  - ex3ndr 8y ago
    Entitlement and Public Hearings are exactly this and i mentioned it in my previous comment.
beisner 8y ago
Unfortunately I think this only goes so far. You are correct that adding supply via changing zoning would definitely mitigate the effect that high-demand has on prices in the aggregate, but there are a couple issues that aren't resolved. 1) There's a major time delay here. Most rent-controlled apartments have rent increases tied to inflation. Had zoning and land development policy over the last 50 years kept up, maybe in aggregate affordability within communities could have been preserved. As it stands, we are so far behind what would have been needed to keep things affordable that it's basically unworkable in the short to medium term (10-20 years) to expect changing zoning laws to solve our problems now. NYC would need an insane capital infusion, and any economic downturn would make the building market freeze up (as we saw in 2008). 2) New development in price-controlled neighborhoods doesn't solve the issue for people paying significantly under market. That's exactly what happens now, in fact: new development once a neighborhood is rezoned allows developers to buy up old properties and build luxury high rises. There is SO much demand for luxury (i.e. Manhattan yuppie) housing that, again, in the short-medium term, long-time residents are still necessarily displaced without protection. 3) To what degree should a community be able to resist change? Other than the fear of being displaced, renters also fear their communities being torn apart by gentrification, slowly dissolved by a changing demographic and rising prices. Now, I lean more on the side that communities don't necessarily have a right to exist (i.e. NIMBYism in CA), but there's definitely some leeway here, especially when those communities are classically disadvantaged (socioeconomically, racially, etc.). Rezoning a neighborhood that is fragile can have majorly negative impacts on the communities, and make things even more dire for the most vulnerable segments of the population. 4) It's unclear how much remaining demand is unsatisfied because of housing prices in NYC. Think of the surplus of people commuting in on major rail lines each day. Surely some fraction of them live in the suburbs for lifestyle reasons, but I'm sure a large fraction of them are simply priced out of the city. So demand for housing may increase if prices are lowered substantially. Depending on this unknown demand, rezoning could have little to no effect on the populations we're discussing here. Rezoning is an extremely important part of the solution here, and the city should DEFINITELY be making aggressive moves to rezone in various places. But it's not a silver bullet, and in the short-medium term doesn't solve most of the problems that rent control have attempted to solve.

by sien 8y ago

sien 8y ago

Also look at how Houston has grown: http://www.harriscountytx.gov/CmpDocuments/74/Budget/FY18%20Population%20Report.pdf http://www.harriscountytx.gov/CmpDocuments/74/Budget/FY18%20... It's grown by 67% since 1990. Far greater than NYC or LA or SF in percentage terms. The other thing that should be mentioned is that Texas has fairly high property taxes. They also help.

mobilefriendly 8y ago
Texas also has no state income tax, which also drives migration to the state.

ex3ndr 8y ago

In our platform (Openland, W18) we have identified a LOT of buildings that can be built up in SF and current laws allows this. This is not high rises, but you can upgrade from 1 story to 3-4 stories easily. But why this buildings are still single story? I suppose there are other problems like lengthy process of permitting (basically at least 1 year for issuing building permit) and entitlement (unpredictable). This huge delays reduces margins of a projects and in some cases they became unprofitable.

L_Rahman 8y ago
You suppose there are other problems? That is the entire problem. The entire problem of building more dense housing - even 3-4 stories in SF is negotiating every single thing besides the literal physical feasibility of construction. If your startup doesn't think this is the key problem to solve, I'm not sure you have a complete grasp of what you're trying to do here.
- ex3ndr 8y ago
  Entitlement and Public Hearings are exactly this and i mentioned it in my previous comment.

beisner 8y ago

Unfortunately I think this only goes so far. You are correct that adding supply via changing zoning would definitely mitigate the effect that high-demand has on prices in the aggregate, but there are a couple issues that aren't resolved. 1) There's a major time delay here. Most rent-controlled apartments have rent increases tied to inflation. Had zoning and land development policy over the last 50 years kept up, maybe in aggregate affordability within communities could have been preserved. As it stands, we are so far behind what would have been needed to keep things affordable that it's basically unworkable in the short to medium term (10-20 years) to expect changing zoning laws to solve our problems now. NYC would need an insane capital infusion, and any economic downturn would make the building market freeze up (as we saw in 2008). 2) New development in price-controlled neighborhoods doesn't solve the issue for people paying significantly under market. That's exactly what happens now, in fact: new development once a neighborhood is rezoned allows developers to buy up old properties and build luxury high rises. There is SO much demand for luxury (i.e. Manhattan yuppie) housing that, again, in the short-medium term, long-time residents are still necessarily displaced without protection. 3) To what degree should a community be able to resist change? Other than the fear of being displaced, renters also fear their communities being torn apart by gentrification, slowly dissolved by a changing demographic and rising prices. Now, I lean more on the side that communities don't necessarily have a right to exist (i.e. NIMBYism in CA), but there's definitely some leeway here, especially when those communities are classically disadvantaged (socioeconomically, racially, etc.). Rezoning a neighborhood that is fragile can have majorly negative impacts on the communities, and make things even more dire for the most vulnerable segments of the population. 4) It's unclear how much remaining demand is unsatisfied because of housing prices in NYC. Think of the surplus of people commuting in on major rail lines each day. Surely some fraction of them live in the suburbs for lifestyle reasons, but I'm sure a large fraction of them are simply priced out of the city. So demand for housing may increase if prices are lowered substantially. Depending on this unknown demand, rezoning could have little to no effect on the populations we're discussing here. Rezoning is an extremely important part of the solution here, and the city should DEFINITELY be making aggressive moves to rezone in various places. But it's not a silver bullet, and in the short-medium term doesn't solve most of the problems that rent control have attempted to solve.