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As with most things, engineering a blunt policy solution will lead to unintended consequences. If this proposal goes into effect, by clobbering local zoning co

As with most things, engineering a blunt policy solution will lead to unintended consequences. If this proposal goes into effect, by clobbering local zoning codes, anything with sufficient money behind it is going to get built. This typically means projects that optimize for the developer's ability to extract rent from residents: 3 or 4-story apartments with small unit sizes, basic finishes made to aesthetically look high-end, and bare minimum green space or community space. A common approach is to use high-end appliances, a one-time cost, to ask for higher rent. This is the sort of construction that pops up in American suburbia today, where there's sufficient demand, and gets adapted to a more "urban" form with flat roofs and minimal changes. Despite many of these projects being built, there's a price floor beyond which the rent will not drop, because the developer has to make payments on loans and maintain a profit. Therefore, while housing affordability is sure to improve in some places where it's absurdly high, it won't meaningfully be altered in places whose urban form is predominantly suburban. This is doubly so because the plentiful supply of single-family homes offers an a low-cost way to get started as a landlord. Developers also have a choice on where to build. If it's cheaper after expenses to assemble a large parcel in Morgan Hill or Tracy or Vacaville, build out the site, and charge those rents, than to do the same in West Portal, one of them isn't getting built.

joshe 8y ago
The right way to do this is to make sure that a small amount of money will be sufficient. You want to redevelop a one story Sunset place into three stories? Meet the building codes and you are good to go. This would open up development to small contractors and small design/build architects. You wouldn't hire a city fixer + a lawyer + a pr person, you'd just hire an architect and a contractor. Each unit could be built much more cheaply. Right now you could take a $1 million Sunset house and convert it into three $800,000 flats in a wood frame house. Developers would be DELIGHTED to do that. The current system adds 5 years and a million dollars to each redevelopment. Developers don't want to build stuff for rich people, they want return on investment. They are as happy making 10% on affordable housing as making 10% on luxury housing.
sjg007 8y ago
"the plentiful supply of single-family homes" ... huh? the issue is that there is not a plentiful supply of said homes.
pcwalton 8y ago
> Therefore, while housing affordability is sure to improve in some places where it's absurdly high, it won't meaningfully be altered in places whose urban form is predominantly suburban. That doesn't make any sense to me. Supply and demand exists in both the cities and the suburbs.
notJim 8y ago
This is right, and this is the problem with solely YIMBY/market urbanist approaches to housing. Developers will all chase tech workers who can pay significantly more money for housing, and the housing market is segmented enough that it doesn't really free up housing at the low end. See this article for more: https://www.washingtonpost.com/business/economy/in-expensive-cities-rents-fall-for-the-rich--but-rise-for-the-poor/2018/08/05/a16e5962-96a4-11e8-80e1-00e80e1fdf43_story.html?utm_term=.864b99668145 https://www.washingtonpost.com/business/economy/in-expensive... We do need to build housing, but it can't all be "luxury" housing. This should be familiar to people because it's happening in the commercial space, too. It's the same thing as when storefronts would rather sit empty and waiting for a Chase Bank to come along than accept the lower rents from some other shop. The Chase Bank will pay far more in rent.
- mixmastamyk 8y ago
  When housing supply is constrained and regulations prevent affordability, rich folks are able to outbid everyone else. That's a fact that won't change. An oversupply on the other hand, would lead to older units being forced to lower prices, but won't happen until NIMBYs get out of the way.
- nine_k 8y ago
  Make providing e.g. 10% of the apartment capacity of a block as affordable / municipal-controlled housing a part of the building contract. Or make redevelopment of a "luxury" block tied to redevelopment of a less luxury block providing affordable housing (still net-positive for the development company, just much less lucrative). That is, make affordable development a part of the price of luxury development if you must. Just don't stall the development completely. This works best with large development companies and projects, though.
  - maxsilver 8y ago
    We have that. It's called "inclusionary zoning", and it's another thing the YIMBYs are trying to kill.
nine_k 8y ago
I watched regulations lifted in Moscow since mid-1990s. It mostly resulted in building of large number of apartment high-rises, because a lot of people wanted to be closer to downtown where they work. The downside was (and in many places still is) an overloaded road network, as mass transit and road capacity did not keep up, despite equally frantic build-up.
quacked 8y ago
This is exactly what's happening everywhere I look for housing. Apartments that aren't actually nice to live in but look good in photographs.
Epenthesis 8y ago
> rent will not drop, because the developer has to make payments on loans and maintain a profit So, you're saying that if the developer has costs of X $/mo month, then in a oversupplied market, rather than take, say 0.8X $/mo in rent and have losses of -0.2X $/mo, they'll refuse to rent at all and take losses of -X $/mo? Why?
- bluGill 8y ago
  renting for a large landlord is complex. Often landlords do this today for zoning reasons. There are places that are in theory for rent, but the landlord built just because the zoning required it - they knew very well it would never be rented so they cut corners and pretend to have it for rent while in practice it will never be occupied. They make up for the loss with the other properties that went up at the same time. Assuming we eliminate that, landlords will still sometimes not rent at all. When you have a lot of properties you reach a point where raising rent and causing someone to leave because they cannot afford the rent nets more money than the smaller rent fully occupied. In addition the non-occupied property is available for rent should someone want it - since tenants move all the time you better always be in the process of getting more. Last, over the course of the year 10 months at full rent is worth more than 12 months at .8 rent. So landlords are always trying to figure out if it is better to lower the rent and long term make less, or hold out for another month.

joshe 8y ago

The right way to do this is to make sure that a small amount of money will be sufficient. You want to redevelop a one story Sunset place into three stories? Meet the building codes and you are good to go. This would open up development to small contractors and small design/build architects. You wouldn't hire a city fixer + a lawyer + a pr person, you'd just hire an architect and a contractor. Each unit could be built much more cheaply. Right now you could take a $1 million Sunset house and convert it into three $800,000 flats in a wood frame house. Developers would be DELIGHTED to do that. The current system adds 5 years and a million dollars to each redevelopment. Developers don't want to build stuff for rich people, they want return on investment. They are as happy making 10% on affordable housing as making 10% on luxury housing.

sjg007 8y ago

"the plentiful supply of single-family homes" ... huh? the issue is that there is not a plentiful supply of said homes.

pcwalton 8y ago

> Therefore, while housing affordability is sure to improve in some places where it's absurdly high, it won't meaningfully be altered in places whose urban form is predominantly suburban. That doesn't make any sense to me. Supply and demand exists in both the cities and the suburbs.

notJim 8y ago

This is right, and this is the problem with solely YIMBY/market urbanist approaches to housing. Developers will all chase tech workers who can pay significantly more money for housing, and the housing market is segmented enough that it doesn't really free up housing at the low end. See this article for more: https://www.washingtonpost.com/business/economy/in-expensive-cities-rents-fall-for-the-rich--but-rise-for-the-poor/2018/08/05/a16e5962-96a4-11e8-80e1-00e80e1fdf43_story.html?utm_term=.864b99668145 https://www.washingtonpost.com/business/economy/in-expensive... We do need to build housing, but it can't all be "luxury" housing. This should be familiar to people because it's happening in the commercial space, too. It's the same thing as when storefronts would rather sit empty and waiting for a Chase Bank to come along than accept the lower rents from some other shop. The Chase Bank will pay far more in rent.

mixmastamyk 8y ago
When housing supply is constrained and regulations prevent affordability, rich folks are able to outbid everyone else. That's a fact that won't change. An oversupply on the other hand, would lead to older units being forced to lower prices, but won't happen until NIMBYs get out of the way.
nine_k 8y ago
Make providing e.g. 10% of the apartment capacity of a block as affordable / municipal-controlled housing a part of the building contract. Or make redevelopment of a "luxury" block tied to redevelopment of a less luxury block providing affordable housing (still net-positive for the development company, just much less lucrative). That is, make affordable development a part of the price of luxury development if you must. Just don't stall the development completely. This works best with large development companies and projects, though.
- maxsilver 8y ago
  We have that. It's called "inclusionary zoning", and it's another thing the YIMBYs are trying to kill.

nine_k 8y ago

I watched regulations lifted in Moscow since mid-1990s. It mostly resulted in building of large number of apartment high-rises, because a lot of people wanted to be closer to downtown where they work. The downside was (and in many places still is) an overloaded road network, as mass transit and road capacity did not keep up, despite equally frantic build-up.

quacked 8y ago

This is exactly what's happening everywhere I look for housing. Apartments that aren't actually nice to live in but look good in photographs.

Epenthesis 8y ago

> rent will not drop, because the developer has to make payments on loans and maintain a profit So, you're saying that if the developer has costs of X $/mo month, then in a oversupplied market, rather than take, say 0.8X $/mo in rent and have losses of -0.2X $/mo, they'll refuse to rent at all and take losses of -X $/mo? Why?

bluGill 8y ago
renting for a large landlord is complex. Often landlords do this today for zoning reasons. There are places that are in theory for rent, but the landlord built just because the zoning required it - they knew very well it would never be rented so they cut corners and pretend to have it for rent while in practice it will never be occupied. They make up for the loss with the other properties that went up at the same time. Assuming we eliminate that, landlords will still sometimes not rent at all. When you have a lot of properties you reach a point where raising rent and causing someone to leave because they cannot afford the rent nets more money than the smaller rent fully occupied. In addition the non-occupied property is available for rent should someone want it - since tenants move all the time you better always be in the process of getting more. Last, over the course of the year 10 months at full rent is worth more than 12 months at .8 rent. So landlords are always trying to figure out if it is better to lower the rent and long term make less, or hold out for another month.