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I'm from Texas, and I don't understand the stigma against developers building more housing. It drives down prices, and increases competition. Why would Californ

by aty268 7y ago

I'm from Texas, and I don't understand the stigma against developers building more housing. It drives down prices, and increases competition. Why would California citizens ever be against this? Edit: The reason is because homeowners are competing with developers, so their own asset depreciates when supply increases. I was just thinking from the perspective of renters.

revscat 7y ago
Because it doesn’t drive down prices.
- aty268 7y ago
  Simple economics tells me it does. Care to explain?
  - jophde 7y ago
    Best you are going to get on here is something like "increased supply doesn't lower prices in the housing market duhhh" without any actual reasons.
- JamesBarney 7y ago
  I don't think housing is one of the few (if any) goods where increased supply drives up cost, nor do I think there is any evidence this is the case.
  - aty268 7y ago
    Out of curiosity, what would be a good where increased supply drives up cost? I can't reason any off the top of my head.
    - caconym_ 7y ago
      Induced demand is a thing. Not sure to what extent it applies to housing in any particular market, but any destabilizing effects of rapidly adding more housing should be seen as artifacts of the fact that we've let this problem go unaddressed for decades. People need places to live, and if we don't serve that need then the problems are only going to get worse and the solutions more disruptive. There are also less visible efficiencies in having people living close to their work, like roads that aren't crammed with cars because people don't have to spend three hours behind the wheel every day getting to and from work, and the additional productivity that comes with all that extra time.
      - pjscott 7y ago
        Induced demand is where more of some good is supplied, which drives down its price, which increases the amount consumed, which means the price isn't driven down as much as it would have been if there had been no change in amount consumed. (A common example is widening a congested highway: more capacity reduces congestion somewhat, which means that the inconvenience of driving on that highway goes down, so more people drive, so the congestion doesn't go down as much as you'd naively predict.) What I'm not seeing here is a way for increased housing supply to make the prices go up, as opposed to down, but not as much. Network effects, maybe: increased density of a city could make being in that city more valuable, thus making more people want to live there at any given price, which means that prices would rise.
        caconym_ 7y ago
        Yes, that's what induced demand is. In a vacuum, no, I don't think simply adding housing can meaningfully drive up prices. But (as you say) obviously it feeds into organic urban growth, which does increase demand, so you have to keep building housing. It seems that the problem we have in our big tech hub cities is that we let that growth happen for a while and then decided that there would be no more housing. I can imagine an induced demand effect as whole new classes of people realize that they can actually now live close to where they work, and come flooding back into the city. But like I said, that's an artifact of artificially constrained supply.
      - 7y ago
    - wiremaus 7y ago
      That would be Giffen good, which may not exist at all. https://en.m.wikipedia.org/wiki/Giffen_good https://en.m.wikipedia.org/wiki/Giffen_good
      - ghaff 7y ago
        Not really. Probably closer to a Veblen good (which does exist) but, in any case, those are about increased price driving up demand, not increased supply driving up price. (I suppose increased supply could drive up price if providing that additional supply increased the overall costs but you'd presumably still be constrained by the overall supply/demand curves of the market.)
  - lthornberry 7y ago
    You are eliding two different kinds of goods here: units of housing, and land. The average price of the former would presumably decrease. The average price of the latter would presumably increase, since loosened restrictions on development would make it possible to build more units of housing on a given lot. For current owners of single family houses, it's likely that the land price effect would outweigh the unit effect, although there will be exceptions (the dynamics of exurbs will be different from those of central areas, for example).
- AtlasBarfed 7y ago
  The demand in city is probably inexhaustible practically speaking The burbs however....
twiceaday 7y ago
Because it drives down prices and increases competition. California gets exactly what it functionally wants, not what some people say they want.
- kelnos 7y ago
  Yup, and this is what saddens me the most. I'm closing next week in SF on my first ever home purchase (after renting for 10 years here, and 6 years prior elsewhere in the Bay Area). Sure, I would like for it to be worth more (outpacing inflation) in 10, 20, or 30 years. But I am not buying a lifestyle, or a guarantee of value increase, or a neighborhood frozen in time at this point forever. I'm buying some floors, walls, and ceilings. I'm buying into a community that I know needs to grow and change if it's to survive and flourish.
wedn3sday 7y ago
It drives down prices. When you bought a house back in 2008 for $300k and now its worth $2M you really dont want anything to touch your nest egg. Its NIMBYism at its finest. Everyone says, "just build affordable housing!" Just as long as its not in _my_ neighborhood.
- aty268 7y ago
  That makes sense, I didn't differentiate between renters and and home owners. I guess that's what this debate comes down to.
- goatinaboat 7y ago
  Its NIMBYism at its finest People whose wealth is in company stock say that people whose wealth is in other asset classes should give it up, for their benefit. How about we pay for all this new housing by a 90% tax on RSUs? No?
  - darkwizard42 7y ago
    This doesn’t make any sense because owning stock in one company doesn’t prevent another from also rising or prevent ones own company stock from rising.
    - goatinaboat 7y ago
      In theory perhaps but in practice a) it’s unreasonable to tell people for literally decades that homeownership is the path to security in retirement then move the goalposts and b) tech-driven wealth disparity is fully the root cause of this situation and if it were “corrected” through taxation we wouldn’t even have this problem
      - darkwizard42 7y ago
        It's not unreasonable... it's slowly becoming necessary. Someone will have to eat the bill and it's probably a distributed cost that we have to spread across everyone. It's not just tech-driven...housing is expensive across the nation and taxing RSUs may help in SF, but doesn't really get to the root of the problem which is zoning restriction, high development costs, increased homeowner rights enabling NIMBYism
compiler-guy 7y ago
If you own a house, you don't want the prices to be driven down. If you had an idyllic childhood in a sleepy town not unlike Mayberry, it is entirely reasonable to want the same things for your kids. None of that is realistic anymore--the world is a changed place. But these are not irrational preferences to have.
- toasterlovin 7y ago
  > None of that is realistic anymore It's not realistic when you have unrestricted immigration, as the US states have between each other.
- xamuel 7y ago
  Or you could have PTSD or just vanilla noise-sensitivity and just living in a quiet neighborhood could be extremely important to you. You might have made very significant personal sacrifices to afford to move to a suburb for exactly this reason. Should you just be forced to go live in the woods as a hermit, cast out by society?
  - bluGill 7y ago
    If the city up zones your suburb can empty out making things better for you. It is only those who like their level of busy not far from downtown that will get pushed out.
    - SlowRobotAhead 7y ago
      >making things better for you Ah, surely there is nothing open interpretation there.
  - driverdan 7y ago
    You can sound proof a home. It's very common in NYC. Not everyone can live where they want. That's life.
  - kelnos 7y ago
    Well, unfortunately, yes. I don't want to sound heartless, but sometimes the needs of the many do outweigh the needs of the few. This isn't "tyranny of the majority" here. It's incredibly selfish to use PTSD or noise-sensitivity as a justification for contributing to a situation where tens (hundreds?) of thousands of people have 3-hour commutes when they could otherwise live closer to work.
rossdavidh 7y ago
Speaking as someone who lived in Bay Area California for a few years, and Texas for several decades now, the first thing to know if that not all California has the same attitude on this, for much the same reason that Waco and Austin have different attitudes on a lot of things. In the Bay Area, there are geographical (water and hills) limits to expansion, whereas in Texas when you build more, it usually is out into the abundant open land at the edge of the city. Also, it is quite often the case that when you build, it is either: 1) made for high-income dwellers, thus not reducing prices, because the high-income and low-income housing markets are often effectively separate markets, like cars and semi-tractor trailors. ...or... 2) the people living nearby, do think it will drive down prices, including the price of their own house, which is their only effective form of savings. If their $400,000 house becomes a $300,000 house, yeah their property taxes may go down, but they lost $100,000 in savings they intended to sell and live on elsewhere after they retire.
- bryanlarsen 7y ago
  High end housing and low end housing are not separate markets. If there is an inadequate supply rich people bid up the price of lower end housing.
- Robotbeat 7y ago
  > 1) made for high-income dwellers, thus not reducing prices, because the high-income and low-income housing markets are often effectively separate markets, like cars and semi-tractor trailors. This is really a misnomer (and it is the linchpin of NIMBY arguments, especially in the Bay Area). If high income housing is not built, then high income people will inhabit and buy up the middle income housing, who in turn will inhabit and buy up low income housing, if they can find any at all. You can see this clearly in the Bay Area. You have tiny houses going for like a couple million dollars. In such an environment it's impossible to build stuff (at least, legally) that ISN'T high income housing as high income people are the only people who can afford any kind of housing in the area. "But it's only made for high income dwellers." Build a cheap (but code-compliant) 600sqft studio in the Bay Area? Around $900/ft^2 would be the market price. It's only affordable to high income folk. A studio. This 161sqft studio in San Fran is $2300/month: https://www.businessinsider.com/smallest-apartment-for-rent-in-san-francisco-price-photos-2019-9#beyond-that-the-studio-has-one-window-and-a-space-heater-according-to-the-listing-the-unit-comes-with-a-dishwasher-and-in-unit-laundry-but-we-couldnt-find-them-in-the-listing-photos-or-frankly-imagine-where-they-could-possibly-fit-6 https://www.businessinsider.com/smallest-apartment-for-rent-... How is it even possible to build housing that isn't for high earners in San Francisco? The only way to change is to build a LOT more and keep building. Or, I guess, destroy the entire local economy.
notJim 7y ago
It's not just prices, it's also "character." Basically it's about maintaining a small town-ish feel while living right next door to a major city. Frankly I think a lot of it is about parking and traffic.
majormajor 7y ago
> I'm from Texas, and I don't understand the stigma against developers building more housing. It drives down prices, and increases competition. Why would California citizens ever be against this? Also from Texas: In Texas, developers building households generally happens on empty land in the suburbs, or in unused non-residential land. In LA or the Bay Area, it would happen by replacing single family homes with multi-family housing. Something that would also be anathema in most well-off Texas communities. It's already sprawled about as far as geography permits. Lots of people don't want to live in those places and would rather keep their existing neighborhoods than invite a lot of new residents and a larger, denser population. Hence their creating those laws. It's not obvious to me why we should take the desires of the people who want to move there more seriously than the desires of people to keep what they have similarly. But in that case, we need to stop building a ton of office space in those "full" cities to import a bunch more jobs than we have housing for...
- kelnos 7y ago
  > It's not obvious to me why we should take the desires of the people who want to move there more seriously than the desires of people to keep what they have similarly. The way I look at it is that the incumbents are there due to mostly accidents (of birth time/place) or of luck. Why should newcomers be disadvantaged due to accidents and luck? Land is a finite resource, desirable land even more so. This is why we have things like property taxes, to reinforce the idea that property ownership is a privilege, and you have to pay for that privilege by contributing to the common good. We have zoning laws to attempt (though we often fail) to collectively make the best use of the limited land we have. And from the other side, I just see it as just incredibly selfish to oppose reasonable housing development because people don't like change or are afraid that their home's 400% appreciation in value might drop to only 300% or whatever.
  - majormajor 7y ago
    > The way I look at it is that the incumbents are there due to mostly accidents (of birth time/place) or of luck. Why should newcomers be disadvantaged due to accidents and luck? Most things are accidents of time/place/whatever. Including whatever resources those newcomers are bringing to a city. Is migration and density growth a strict good? A strict bad? Somewhere in between? Lots of ink have been written on that, I'm fairly personally neutral, but I'm very skeptical of the "this is a simple problem with a simple solution" crowd. I'd love to see a decentralization of high-end high-paying jobs. Right now if I wanted to live back near my family, I'd have to work on problems that are less interesting to me for quite a bit less money. There's nobody exactly being unselfish in this debate... People who want more density or to save their own money argue one way. People who want to live a (different) way argue another... it's basically all wants considering we have so many other cities in the country with plenty of space.
manfredo 7y ago
Remember that many renters (>70% in some cities like San Francisco) have price controls on their rents. If you're guaranteed that your rent will effectively never go up, then you're much more likely to block an apartment complex construction because it'll block your view or "change neighborhood character". Price controls on rents means many renters enjoy privileged status that insulates them from housing costs.
- skybrian 7y ago
  Rent control gives people an option to buy future housing at a fixed price, which works much like a property interest.

by aty268 7y ago

revscat 7y ago

Because it doesn’t drive down prices.

aty268 7y ago
Simple economics tells me it does. Care to explain?
- jophde 7y ago
  Best you are going to get on here is something like "increased supply doesn't lower prices in the housing market duhhh" without any actual reasons.
JamesBarney 7y ago
I don't think housing is one of the few (if any) goods where increased supply drives up cost, nor do I think there is any evidence this is the case.
- aty268 7y ago
  Out of curiosity, what would be a good where increased supply drives up cost? I can't reason any off the top of my head.
  - caconym_ 7y ago
    Induced demand is a thing. Not sure to what extent it applies to housing in any particular market, but any destabilizing effects of rapidly adding more housing should be seen as artifacts of the fact that we've let this problem go unaddressed for decades. People need places to live, and if we don't serve that need then the problems are only going to get worse and the solutions more disruptive. There are also less visible efficiencies in having people living close to their work, like roads that aren't crammed with cars because people don't have to spend three hours behind the wheel every day getting to and from work, and the additional productivity that comes with all that extra time.
    - pjscott 7y ago
      Induced demand is where more of some good is supplied, which drives down its price, which increases the amount consumed, which means the price isn't driven down as much as it would have been if there had been no change in amount consumed. (A common example is widening a congested highway: more capacity reduces congestion somewhat, which means that the inconvenience of driving on that highway goes down, so more people drive, so the congestion doesn't go down as much as you'd naively predict.) What I'm not seeing here is a way for increased housing supply to make the prices go up, as opposed to down, but not as much. Network effects, maybe: increased density of a city could make being in that city more valuable, thus making more people want to live there at any given price, which means that prices would rise.
      - caconym_ 7y ago
        Yes, that's what induced demand is. In a vacuum, no, I don't think simply adding housing can meaningfully drive up prices. But (as you say) obviously it feeds into organic urban growth, which does increase demand, so you have to keep building housing. It seems that the problem we have in our big tech hub cities is that we let that growth happen for a while and then decided that there would be no more housing. I can imagine an induced demand effect as whole new classes of people realize that they can actually now live close to where they work, and come flooding back into the city. But like I said, that's an artifact of artificially constrained supply.
    - 7y ago
  - wiremaus 7y ago
    That would be Giffen good, which may not exist at all. https://en.m.wikipedia.org/wiki/Giffen_good https://en.m.wikipedia.org/wiki/Giffen_good
    - ghaff 7y ago
      Not really. Probably closer to a Veblen good (which does exist) but, in any case, those are about increased price driving up demand, not increased supply driving up price. (I suppose increased supply could drive up price if providing that additional supply increased the overall costs but you'd presumably still be constrained by the overall supply/demand curves of the market.)
- lthornberry 7y ago
  You are eliding two different kinds of goods here: units of housing, and land. The average price of the former would presumably decrease. The average price of the latter would presumably increase, since loosened restrictions on development would make it possible to build more units of housing on a given lot. For current owners of single family houses, it's likely that the land price effect would outweigh the unit effect, although there will be exceptions (the dynamics of exurbs will be different from those of central areas, for example).
AtlasBarfed 7y ago
The demand in city is probably inexhaustible practically speaking The burbs however....

twiceaday 7y ago

Because it drives down prices and increases competition. California gets exactly what it functionally wants, not what some people say they want.

kelnos 7y ago
Yup, and this is what saddens me the most. I'm closing next week in SF on my first ever home purchase (after renting for 10 years here, and 6 years prior elsewhere in the Bay Area). Sure, I would like for it to be worth more (outpacing inflation) in 10, 20, or 30 years. But I am not buying a lifestyle, or a guarantee of value increase, or a neighborhood frozen in time at this point forever. I'm buying some floors, walls, and ceilings. I'm buying into a community that I know needs to grow and change if it's to survive and flourish.

wedn3sday 7y ago

It drives down prices. When you bought a house back in 2008 for $300k and now its worth $2M you really dont want anything to touch your nest egg. Its NIMBYism at its finest. Everyone says, "just build affordable housing!" Just as long as its not in _my_ neighborhood.

aty268 7y ago
That makes sense, I didn't differentiate between renters and and home owners. I guess that's what this debate comes down to.
goatinaboat 7y ago
Its NIMBYism at its finest People whose wealth is in company stock say that people whose wealth is in other asset classes should give it up, for their benefit. How about we pay for all this new housing by a 90% tax on RSUs? No?
- darkwizard42 7y ago
  This doesn’t make any sense because owning stock in one company doesn’t prevent another from also rising or prevent ones own company stock from rising.
  - goatinaboat 7y ago
    In theory perhaps but in practice a) it’s unreasonable to tell people for literally decades that homeownership is the path to security in retirement then move the goalposts and b) tech-driven wealth disparity is fully the root cause of this situation and if it were “corrected” through taxation we wouldn’t even have this problem
    - darkwizard42 7y ago
      It's not unreasonable... it's slowly becoming necessary. Someone will have to eat the bill and it's probably a distributed cost that we have to spread across everyone. It's not just tech-driven...housing is expensive across the nation and taxing RSUs may help in SF, but doesn't really get to the root of the problem which is zoning restriction, high development costs, increased homeowner rights enabling NIMBYism

compiler-guy 7y ago

If you own a house, you don't want the prices to be driven down. If you had an idyllic childhood in a sleepy town not unlike Mayberry, it is entirely reasonable to want the same things for your kids. None of that is realistic anymore--the world is a changed place. But these are not irrational preferences to have.

toasterlovin 7y ago
> None of that is realistic anymore It's not realistic when you have unrestricted immigration, as the US states have between each other.
xamuel 7y ago
Or you could have PTSD or just vanilla noise-sensitivity and just living in a quiet neighborhood could be extremely important to you. You might have made very significant personal sacrifices to afford to move to a suburb for exactly this reason. Should you just be forced to go live in the woods as a hermit, cast out by society?
- bluGill 7y ago
  If the city up zones your suburb can empty out making things better for you. It is only those who like their level of busy not far from downtown that will get pushed out.
  - SlowRobotAhead 7y ago
    >making things better for you Ah, surely there is nothing open interpretation there.
- driverdan 7y ago
  You can sound proof a home. It's very common in NYC. Not everyone can live where they want. That's life.
- kelnos 7y ago
  Well, unfortunately, yes. I don't want to sound heartless, but sometimes the needs of the many do outweigh the needs of the few. This isn't "tyranny of the majority" here. It's incredibly selfish to use PTSD or noise-sensitivity as a justification for contributing to a situation where tens (hundreds?) of thousands of people have 3-hour commutes when they could otherwise live closer to work.

rossdavidh 7y ago

Speaking as someone who lived in Bay Area California for a few years, and Texas for several decades now, the first thing to know if that not all California has the same attitude on this, for much the same reason that Waco and Austin have different attitudes on a lot of things. In the Bay Area, there are geographical (water and hills) limits to expansion, whereas in Texas when you build more, it usually is out into the abundant open land at the edge of the city. Also, it is quite often the case that when you build, it is either: 1) made for high-income dwellers, thus not reducing prices, because the high-income and low-income housing markets are often effectively separate markets, like cars and semi-tractor trailors. ...or... 2) the people living nearby, do think it will drive down prices, including the price of their own house, which is their only effective form of savings. If their $400,000 house becomes a $300,000 house, yeah their property taxes may go down, but they lost $100,000 in savings they intended to sell and live on elsewhere after they retire.

bryanlarsen 7y ago
High end housing and low end housing are not separate markets. If there is an inadequate supply rich people bid up the price of lower end housing.
Robotbeat 7y ago
> 1) made for high-income dwellers, thus not reducing prices, because the high-income and low-income housing markets are often effectively separate markets, like cars and semi-tractor trailors. This is really a misnomer (and it is the linchpin of NIMBY arguments, especially in the Bay Area). If high income housing is not built, then high income people will inhabit and buy up the middle income housing, who in turn will inhabit and buy up low income housing, if they can find any at all. You can see this clearly in the Bay Area. You have tiny houses going for like a couple million dollars. In such an environment it's impossible to build stuff (at least, legally) that ISN'T high income housing as high income people are the only people who can afford any kind of housing in the area. "But it's only made for high income dwellers." Build a cheap (but code-compliant) 600sqft studio in the Bay Area? Around $900/ft^2 would be the market price. It's only affordable to high income folk. A studio. This 161sqft studio in San Fran is $2300/month: https://www.businessinsider.com/smallest-apartment-for-rent-in-san-francisco-price-photos-2019-9#beyond-that-the-studio-has-one-window-and-a-space-heater-according-to-the-listing-the-unit-comes-with-a-dishwasher-and-in-unit-laundry-but-we-couldnt-find-them-in-the-listing-photos-or-frankly-imagine-where-they-could-possibly-fit-6 https://www.businessinsider.com/smallest-apartment-for-rent-... How is it even possible to build housing that isn't for high earners in San Francisco? The only way to change is to build a LOT more and keep building. Or, I guess, destroy the entire local economy.

notJim 7y ago

It's not just prices, it's also "character." Basically it's about maintaining a small town-ish feel while living right next door to a major city. Frankly I think a lot of it is about parking and traffic.

majormajor 7y ago

> I'm from Texas, and I don't understand the stigma against developers building more housing. It drives down prices, and increases competition. Why would California citizens ever be against this? Also from Texas: In Texas, developers building households generally happens on empty land in the suburbs, or in unused non-residential land. In LA or the Bay Area, it would happen by replacing single family homes with multi-family housing. Something that would also be anathema in most well-off Texas communities. It's already sprawled about as far as geography permits. Lots of people don't want to live in those places and would rather keep their existing neighborhoods than invite a lot of new residents and a larger, denser population. Hence their creating those laws. It's not obvious to me why we should take the desires of the people who want to move there more seriously than the desires of people to keep what they have similarly. But in that case, we need to stop building a ton of office space in those "full" cities to import a bunch more jobs than we have housing for...

kelnos 7y ago
> It's not obvious to me why we should take the desires of the people who want to move there more seriously than the desires of people to keep what they have similarly. The way I look at it is that the incumbents are there due to mostly accidents (of birth time/place) or of luck. Why should newcomers be disadvantaged due to accidents and luck? Land is a finite resource, desirable land even more so. This is why we have things like property taxes, to reinforce the idea that property ownership is a privilege, and you have to pay for that privilege by contributing to the common good. We have zoning laws to attempt (though we often fail) to collectively make the best use of the limited land we have. And from the other side, I just see it as just incredibly selfish to oppose reasonable housing development because people don't like change or are afraid that their home's 400% appreciation in value might drop to only 300% or whatever.
- majormajor 7y ago
  > The way I look at it is that the incumbents are there due to mostly accidents (of birth time/place) or of luck. Why should newcomers be disadvantaged due to accidents and luck? Most things are accidents of time/place/whatever. Including whatever resources those newcomers are bringing to a city. Is migration and density growth a strict good? A strict bad? Somewhere in between? Lots of ink have been written on that, I'm fairly personally neutral, but I'm very skeptical of the "this is a simple problem with a simple solution" crowd. I'd love to see a decentralization of high-end high-paying jobs. Right now if I wanted to live back near my family, I'd have to work on problems that are less interesting to me for quite a bit less money. There's nobody exactly being unselfish in this debate... People who want more density or to save their own money argue one way. People who want to live a (different) way argue another... it's basically all wants considering we have so many other cities in the country with plenty of space.

manfredo 7y ago

Remember that many renters (>70% in some cities like San Francisco) have price controls on their rents. If you're guaranteed that your rent will effectively never go up, then you're much more likely to block an apartment complex construction because it'll block your view or "change neighborhood character". Price controls on rents means many renters enjoy privileged status that insulates them from housing costs.

skybrian 7y ago
Rent control gives people an option to buy future housing at a fixed price, which works much like a property interest.