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To all those that say "build more housing" will solve all our problems, I don't think they've actually been looking at the housing markets. All of the new hous

To all those that say "build more housing" will solve all our problems, I don't think they've actually been looking at the housing markets. All of the new housing in the Bay Area is at a premium price. All of it. There are tens of thousands of condos slated to be built in SF. They are all top of the end condos. They haven't and they won't dent the prices. Building more homes will just let more rich people move to the Bay Area and it will sustain prices. Supply will increase at a much, much lower rate than demand when it comes to housing. Unless you literally create ghost cities like in China, you won't get the effect that you want. The only way to curb prices is to reduce demand. Force Facebook, Google and Amazon to build outside of the Bay Area. I guarantee that will be the quickest way to curb demand and to throttle house prices. Have Google build in Kansas City instead of San Jose. Have Facebook build in Detroit. There's enough money to sustain an entire ecosystem and it will help increase house prices in other areas and dampen demand here.

deleted 7y ago
[deleted]
riskable 7y ago
Last I checked, there's physical limits to that kind of growth. According to the textbooks (and history), if you build a zillion super expensive condos in a single area without building an equivalent (or more) amount of low to medium income housing the market will rather quickly self-regulate to reduce the value/price of those luxury condos. It's a bubble. Ask Miami how it works out. The vacancies in expensive condos are out of control. If it weren't for wealthy foreign investment trying to park their wealth in "safe" places the value of these properties would plummet. https://www.miaminewtimes.com/news/downtown-miami-has-six-year-luxury-condo-backlog-study-warns-10613118 https://www.miaminewtimes.com/news/downtown-miami-has-six-ye... The bubble will eventually burst and those properties will quickly go bankrupt. Resulting in massive loses to not only other property owners in the area but to the city from tax revenue. Revenue they desperately need to mitigate the effects of global warming.
ppseafield 7y ago
There's been a ton of expensive development all over Portland. Condos and apartments in desirable areas, none of it affordable except for rich folks. However, housing prices have stabilized here somewhat. Having more options for rich folks in highly desirable areas means less pressure on housing away from those areas. Something like 65% of San Fransisco is zoned for single family housing. Some rich people looking to move there will balk at the prices and then look further out, increasing demand in the surrounding areas. With more dense housing in SF, more rich folks who can afford it can live there. Currently the housing supply is so low (because of the zoning) that it forces most rich folks to look elsewhere.
- pcwalton 7y ago
  > There's been a ton of expensive development all over Portland. Condos and apartments in desirable areas, none of it affordable except for rich folks. However, housing prices have stabilized here somewhat. Having more options for rich folks in highly desirable areas means less pressure on housing away from those areas. Correct. This is the economic consensus view, and a lot of data has borne it out.
pcwalton 7y ago
> To all those that say "build more housing" will solve all our problems, I don't think they've actually been looking at the housing markets. Nobody thinks building more will solve all the problems. But it's a necessary part of the solution. Economists have in fact looked at housing markets and come to this conclusion. Here's an example recently: https://drive.google.com/file/d/1sHh6BJ8dPoN9VQj-PXTPK5ATa8mL8MP4/view https://drive.google.com/file/d/1sHh6BJ8dPoN9VQj-PXTPK5ATa8m... > Force Facebook, Google and Amazon to build outside of the Bay Area. I guarantee that will be the quickest way to curb demand and to throttle house prices. Have Google build in Kansas City instead of San Jose. Have Facebook build in Detroit. Nobody, and certainly not random suburban municipalities, can force large multinational companies to do that sort of thing. And, as I've explained before, it's a failed strategy in the first place. If the market was going to solve the problem that way, it would have by now. The problem is simply that the FAANG companies all think the best engineers live here in the Bay Area. The best engineers in SFBA have a choice of where they work. So if Google were to decide to leave the Bay Area, a lot of Google employees will go work for competitors instead. This dynamic is why so many tech companies locate, or have a significant presence, here. > it will help increase house prices in other areas In other words, it gentrifies those communities and drives residents out, all because wealthy Bay Area suburbs don't want to build housing. That's unfair.
tlb 7y ago
You're mixing up two things. When a lot of new premium housing is built, you might indeed see the reported "average sales price" go up, since there are lots of sales of new fancy new houses. But the price of older housing goes down. Because people who bought a new premium house, therefore did not buy an older house, which reduces demand for older houses. There are lots of nice older (1940-1990) houses in SV that are good to live in. Before the tech boom they were perfect for middle class families: pleasant and affordable. They could be affordable again (and they're still pleasant) if the supply of premium housing were increased enough.
- rtkwe 7y ago
  That depends on somehow not having the extra supply on the high luxury end being soaked up by foreign investment parking their money in real estate.
  - tlb 7y ago
    Supply and demand works there too. There's a finite amount of people with a finite amount of money they want to invest in US real estate. If you create enough (by $ value) real estate for them to buy, they can't buy any more. For a city to have its real estate bought as investments can be troublesome, but at least it doesn't increase road traffic. So you can have tall, dense skyscrapers with condos all owned by foreign trusts, without it creating parking or traffic problems. https://en.wikipedia.org/wiki/Hudson_Yards_(development) https://en.wikipedia.org/wiki/Hudson_Yards_(development) seems like an example of this. If you don't create investable condos, then the foreign money buys single family homes that some family could otherwise live happily in.
- docker_up 7y ago
  This is absolutely wrong. I live in an "old" neighborhood where the houses are about 60 years old or more. The house prices have doubled in the last 6 years, and they are almost 2M. Old houses go up much faster because they are in much much better locations.

deleted 7y ago

[deleted]

riskable 7y ago

Last I checked, there's physical limits to that kind of growth. According to the textbooks (and history), if you build a zillion super expensive condos in a single area without building an equivalent (or more) amount of low to medium income housing the market will rather quickly self-regulate to reduce the value/price of those luxury condos. It's a bubble. Ask Miami how it works out. The vacancies in expensive condos are out of control. If it weren't for wealthy foreign investment trying to park their wealth in "safe" places the value of these properties would plummet. https://www.miaminewtimes.com/news/downtown-miami-has-six-year-luxury-condo-backlog-study-warns-10613118 https://www.miaminewtimes.com/news/downtown-miami-has-six-ye... The bubble will eventually burst and those properties will quickly go bankrupt. Resulting in massive loses to not only other property owners in the area but to the city from tax revenue. Revenue they desperately need to mitigate the effects of global warming.

ppseafield 7y ago

There's been a ton of expensive development all over Portland. Condos and apartments in desirable areas, none of it affordable except for rich folks. However, housing prices have stabilized here somewhat. Having more options for rich folks in highly desirable areas means less pressure on housing away from those areas. Something like 65% of San Fransisco is zoned for single family housing. Some rich people looking to move there will balk at the prices and then look further out, increasing demand in the surrounding areas. With more dense housing in SF, more rich folks who can afford it can live there. Currently the housing supply is so low (because of the zoning) that it forces most rich folks to look elsewhere.

pcwalton 7y ago
> There's been a ton of expensive development all over Portland. Condos and apartments in desirable areas, none of it affordable except for rich folks. However, housing prices have stabilized here somewhat. Having more options for rich folks in highly desirable areas means less pressure on housing away from those areas. Correct. This is the economic consensus view, and a lot of data has borne it out.

pcwalton 7y ago

> To all those that say "build more housing" will solve all our problems, I don't think they've actually been looking at the housing markets. Nobody thinks building more will solve all the problems. But it's a necessary part of the solution. Economists have in fact looked at housing markets and come to this conclusion. Here's an example recently: https://drive.google.com/file/d/1sHh6BJ8dPoN9VQj-PXTPK5ATa8mL8MP4/view https://drive.google.com/file/d/1sHh6BJ8dPoN9VQj-PXTPK5ATa8m... > Force Facebook, Google and Amazon to build outside of the Bay Area. I guarantee that will be the quickest way to curb demand and to throttle house prices. Have Google build in Kansas City instead of San Jose. Have Facebook build in Detroit. Nobody, and certainly not random suburban municipalities, can force large multinational companies to do that sort of thing. And, as I've explained before, it's a failed strategy in the first place. If the market was going to solve the problem that way, it would have by now. The problem is simply that the FAANG companies all think the best engineers live here in the Bay Area. The best engineers in SFBA have a choice of where they work. So if Google were to decide to leave the Bay Area, a lot of Google employees will go work for competitors instead. This dynamic is why so many tech companies locate, or have a significant presence, here. > it will help increase house prices in other areas In other words, it gentrifies those communities and drives residents out, all because wealthy Bay Area suburbs don't want to build housing. That's unfair.

tlb 7y ago

You're mixing up two things. When a lot of new premium housing is built, you might indeed see the reported "average sales price" go up, since there are lots of sales of new fancy new houses. But the price of older housing goes down. Because people who bought a new premium house, therefore did not buy an older house, which reduces demand for older houses. There are lots of nice older (1940-1990) houses in SV that are good to live in. Before the tech boom they were perfect for middle class families: pleasant and affordable. They could be affordable again (and they're still pleasant) if the supply of premium housing were increased enough.

rtkwe 7y ago
That depends on somehow not having the extra supply on the high luxury end being soaked up by foreign investment parking their money in real estate.
- tlb 7y ago
  Supply and demand works there too. There's a finite amount of people with a finite amount of money they want to invest in US real estate. If you create enough (by $ value) real estate for them to buy, they can't buy any more. For a city to have its real estate bought as investments can be troublesome, but at least it doesn't increase road traffic. So you can have tall, dense skyscrapers with condos all owned by foreign trusts, without it creating parking or traffic problems. https://en.wikipedia.org/wiki/Hudson_Yards_(development) https://en.wikipedia.org/wiki/Hudson_Yards_(development) seems like an example of this. If you don't create investable condos, then the foreign money buys single family homes that some family could otherwise live happily in.
docker_up 7y ago
This is absolutely wrong. I live in an "old" neighborhood where the houses are about 60 years old or more. The house prices have doubled in the last 6 years, and they are almost 2M. Old houses go up much faster because they are in much much better locations.