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If you don’t build luxury housing, affordable housing becomes luxury housing. San Francisco is a perfect example of NIMBY extremism and the damage it does to co

If you don’t build luxury housing, affordable housing becomes luxury housing. San Francisco is a perfect example of NIMBY extremism and the damage it does to communities.

woah 6y ago
It's worse than that: The entire concept of "luxury housing" is a lie. The words "luxury housing" are designed to make you think that it is taking up space that could be used by non luxury housing. Like the only reason a new apartment is so expensive is because it has a gold-plated toilet or something, and if only the developer had built an apartment without a gold plated toilet you could afford it. But in Minneapolis, for example, a 2 bedroom apartment in the nicest building in the city, with a built in pool, car wash, and cigar lounge, is $2000 per month. That barely gets you a spot in someone's living room in SF. This proves that it is not luxuries that make "luxury apartments" expensive in SF. The only luxury is having a roof over your head.
- Phobophobia 6y ago
  Mind posting a zillow link or similar? I'm evaluating moving to different metro areas, and my research for Minnesota yielded higher costs.
  - windexh8er 6y ago
    Minnesota isn't "cheap". I'd say - depending on where you want to live in the city can influence your results. Ultimately it's what you're after. I think, today, you can live there very reasonably. We have better than average access to health care, but taxes are also an impediment in Hennepin county (Minneapolis metro). The metro is very conveniently laid out - so if you're looking to move there you should broaden your search as commuting isn't horrible, public transport is decent and there's a lot of option for reasonably priced rentals - but definitely not "cheap" compared to other metro areas. The area does have a lot to offer, however.
  - no_wizard 6y ago
    I grew up in Minnesota, rural to cities. I liken it to the California of the Midwest. Its nots the cheapest, its more middle of the road (though, I think in absolute terms there are places around Chicago that outpace the cost of the highest cost parts of Minneapolis-St. Paul Metro last time I looked, granted that was a few years ago). Its culturally though, very liberal (from my own experience, tends to also be very much a democrat state). One thing I will say is Minnesota's public school system is great, and the collegiate system is both affordable and high quality, on average. It's still cheaper than California, New York, Seattle, Portland etc. paying 2000 a month for a place to live in Minnesota is still very much not the norm, even in nice parts of the Twin Cities. If you're willing to live up North a bit, Duluth is amazing, its mostly a college town now, and you can surf in the summers! The downside is always the snow, though if you live in the Twin Cities there are upscale parts of downtown that have miles of indoor walkable paths that take you all over the city. I really love the state. I've contemplated moving back several times. I just don't think my tech industry connections would carry over as well, so it would limit some of my job opportunities, even with this big push to work from home by a lot of companies. That will have to shake out for me personally first before I would consider moving back. Though, they've done a decent job netting progressive employers and have in large part been able to avoid the economic collapse that hit much of the Midwest (the rust belt, in places like Ohio). I know a lot of people out there employed in highly trained manufacturing jobs (highly skilled CNC work, maintain automated manufacturing facilities etc.) and those jobs are the only ones in that sector that aren't leaving the USA in droves yet, plus there are a lot of medical technology companies there. Also, a lot of enterprise software companies have HQ or large presence in the cities as well. It's not a startup scene like SF, but its changing. When I was a kid the state had these huge policy pushes to try and get people entering college to focus on technical degrees (be it 2-year technical school at a community college doing CNC machining and the like or 4-year degrees in engineering/cs). It's also one of the most educated populations in the country [0][1] Now I just feel like I'm selling it. Though I want to mention one quirk about the population that stands up to everyone I know who has visited. Minnesota Nice [2] is alive and well still. People tend to just be more friendly there than anywhere else I've lived or travelled, and I've been through more than a dozen states from coast to coast. It's just a general demeanor thing. Thats not to say that everyone is nice all the time though, of course. I'd say on average you're less likely to have small confrontations though, than anywhere else I've been. [0]: https://www.kare11.com/article/news/local/outreach/back-to-school/minnesota-among-top-states-for-public-education/89-62549d9e-aebd-4280-8754-9e9e8a875f4b https://www.kare11.com/article/news/local/outreach/back-to-s... [1]: http://www.ohe.state.mn.us/fc/2108/pg.cfm http://www.ohe.state.mn.us/fc/2108/pg.cfm [2]: https://en.wikipedia.org/wiki/Minnesota_nice#:~:text=Minnesota%20nice%20is%20a%20cultural,%2Dmannered%20and%20passive%2Daggressive https://en.wikipedia.org/wiki/Minnesota_nice#:~:text=Minneso....
- windexh8er 6y ago
  Minneapolis has had it's waves of pricing over the years. The hay day of build happened starting in 2005 and ran for the last 15 years leading up to where it is now. I lived in the Northloop on the front of the trendiness (pre-Target Stadium) and Uptown was still the land of said "hipsters" (such an unfortunate moniker). I can tell you that in 2010 I was paying more than $2000/month for a 2 bedroom there because supply was much more constrained. Now there's easily 20x availability of options. The downside is it's become much more crowded, the upside is it draws a lot of new food/entertainment options. Ultimately I'm glad I don't live downtown anymore. I think prices in Minneapolis will drop again as people spread back out if large organizations continue to dry up in the city. Don't get me wrong, I love Minneapolis and very much my time living in the city. But - things have definitely changed a lot in the last few years and I wouldn't say for much, if any, gain.
  - CydeWeys 6y ago
    The gain is that a lot more people get to live there now, which benefits all of those people. It no longer being for you is more than made up for by the fact that it is now for so many more other people.
    - windexh8er 6y ago
      In my opinion it's a stretch to say that an oversubscription on housing "benefits all of those people". I enjoy Minneapolis, but it's in a very odd state right now.
      - CydeWeys 6y ago
        Huh? If all the housing is occupied then how is it possibly an oversubscription? If anything it sounds like an undersubscription -- even more people would live there if there were more housing, but there isn't, so they can't.
- swiley 6y ago
  Yeah, I live in a "luxury apartment" in an east coast city and pay less than that for rent.
- lwansbrough 6y ago
  If you consistently get the choice between paying $2000 for that or $2000 for a dingy basement suite with no windows, then yes it is luxury and will stop the price of those less desirable homes from rising. The key is to ensure supply outpaces demand. Meaning: let developers build luxury developments. The more the merrier.
  - bdowling 6y ago
    This, a thousand times. Housing advocates often call for building “affordable housing” but the problem of high prices is solved by building any housing. As you suggested, if new luxury housing comes on the market, then some older apartments can’t charge luxury prices anymore. The same effect works all the way down to the lowest priced units. Also people don’t increase their consumption when prices go down (housing is an inelastic market). So, new supply at the top of the market pushes down the prices of everything.
    - wwweston 6y ago
      That's the theory. In practice, "pushes down the prices" is an overstatement, and what actually happens is that once demand pressure reaches a certain point new luxury supply only opens up higher pricing tiers. It potentially stabilizes older construction, which is not bad, but doesn't seem to provide downward pressure. The only thing that seems to do that is non-marginal demand dropping out of the market. And if you follow it through that's how the incentives seem to be aligned. Capital examining opportunity in construction will want to chase the highest return it can and if you have capital the marginal cost on luxury construction over non-luxury at the same unit scale is usually less than the return. On top of that, at certain scales of operation vacancy is apparently less of a drag on nominal property values involved in the accounting and financing, which means prices tend to float down when the fall rather than plummet. Though of course, any potential developer doing the math is going to look at vacancy rate and will make their decision about whether/what to build targeting points short of outright surplus. There are some types markets where I think you can drive down pricing market-wide by coming in from the top (consumer tech sure seems to work that way) and that's my guess why so many seem think the same must apply to housing. Perhaps housing could indeed work the same way if the actual manufacturing techniques and costs were being iterated with the same speed and scale. But that's why there are specific drives for affordable housing: building at the top slows/stops price increases but only lets people on the verge of being priced out tread water. Personally I think there needs to be vacancy taxes proportional to the market segment being operated (probably also correlated to tightness of supply) so that prices clear on the falling side more easily, but who knows how that would change people's construction calculations.
thih9 6y ago
In case others are unfamiliar, NIMBY = "Not In My Back Yard", https://en.wikipedia.org/wiki/NIMBY https://en.wikipedia.org/wiki/NIMBY .
jariel 6y ago
Just the opposite, every community has a right to decide their future. If a community says 'we'd rather be homes and don't want to turn everything in to high-rises' then that's entirely their discretion. It's definitely not any individual townships moral or civic responsibility to change their community to accommodate either state/national strategic planning, especially for the benefit of people who do not even live there. There's plenty of physical space in Cali, if anything, the opportunity might be in Sacramento and in-between. If the FAANGs having trouble with salaries and bringing in people want, they can be part of this strategy. I bet there are thousands of G staffers who'd live to live somewhere south of Morgan Hill, away from the city.
- SllX 6y ago
  Abusing police powers to curtail private property rights isn’t the high ground.
  - souprock 6y ago
    It is. The government is expected to prevent tragedy-of-the-commons troubles, spite houses, and other anti-social troubles. This is largely why we even have a government. Suppose a person buys a house to retire in, on a peaceful quiet little street with plenty of room to park. The neighbors then build: an 80-story apartment tower, a supervised injection place for IV drug users, an organometalic peroxide production plant, a hog farm, and a tire recycling plant. Maybe we overdo it, but yes, we're going to curtail private property rights.
    - paconbork 6y ago
      > an 80-story apartment tower If this is financially viable, that land must be worth a ton. Retiree should sell the property and stop monopolizing such valuable land. They'll have plenty of funds to use to move elsewhere > a supervised injection place for IV drug users Very few people want one of these built near them, which itself causes huge societal problems. We'd be better off in aggregate if more services for the poor could be built. >an organometalic peroxide production plant, a hog farm, and a tire recycling plant Unlikely to be built on expensive residential land, but if they were it would help fight climate change by reducing commute times, since employees can now live nearby. The existence of actual property rights allows ample housing to be built in this high-demand area

If you don’t build luxury housing, affordable housing becomes luxury housing. San Francisco is a perfect example of NIMBY extremism and the damage it does to communities.

woah 6y ago

It's worse than that: The entire concept of "luxury housing" is a lie. The words "luxury housing" are designed to make you think that it is taking up space that could be used by non luxury housing. Like the only reason a new apartment is so expensive is because it has a gold-plated toilet or something, and if only the developer had built an apartment without a gold plated toilet you could afford it. But in Minneapolis, for example, a 2 bedroom apartment in the nicest building in the city, with a built in pool, car wash, and cigar lounge, is $2000 per month. That barely gets you a spot in someone's living room in SF. This proves that it is not luxuries that make "luxury apartments" expensive in SF. The only luxury is having a roof over your head.

Phobophobia 6y ago
Mind posting a zillow link or similar? I'm evaluating moving to different metro areas, and my research for Minnesota yielded higher costs.
- windexh8er 6y ago
  Minnesota isn't "cheap". I'd say - depending on where you want to live in the city can influence your results. Ultimately it's what you're after. I think, today, you can live there very reasonably. We have better than average access to health care, but taxes are also an impediment in Hennepin county (Minneapolis metro). The metro is very conveniently laid out - so if you're looking to move there you should broaden your search as commuting isn't horrible, public transport is decent and there's a lot of option for reasonably priced rentals - but definitely not "cheap" compared to other metro areas. The area does have a lot to offer, however.
- no_wizard 6y ago
  I grew up in Minnesota, rural to cities. I liken it to the California of the Midwest. Its nots the cheapest, its more middle of the road (though, I think in absolute terms there are places around Chicago that outpace the cost of the highest cost parts of Minneapolis-St. Paul Metro last time I looked, granted that was a few years ago). Its culturally though, very liberal (from my own experience, tends to also be very much a democrat state). One thing I will say is Minnesota's public school system is great, and the collegiate system is both affordable and high quality, on average. It's still cheaper than California, New York, Seattle, Portland etc. paying 2000 a month for a place to live in Minnesota is still very much not the norm, even in nice parts of the Twin Cities. If you're willing to live up North a bit, Duluth is amazing, its mostly a college town now, and you can surf in the summers! The downside is always the snow, though if you live in the Twin Cities there are upscale parts of downtown that have miles of indoor walkable paths that take you all over the city. I really love the state. I've contemplated moving back several times. I just don't think my tech industry connections would carry over as well, so it would limit some of my job opportunities, even with this big push to work from home by a lot of companies. That will have to shake out for me personally first before I would consider moving back. Though, they've done a decent job netting progressive employers and have in large part been able to avoid the economic collapse that hit much of the Midwest (the rust belt, in places like Ohio). I know a lot of people out there employed in highly trained manufacturing jobs (highly skilled CNC work, maintain automated manufacturing facilities etc.) and those jobs are the only ones in that sector that aren't leaving the USA in droves yet, plus there are a lot of medical technology companies there. Also, a lot of enterprise software companies have HQ or large presence in the cities as well. It's not a startup scene like SF, but its changing. When I was a kid the state had these huge policy pushes to try and get people entering college to focus on technical degrees (be it 2-year technical school at a community college doing CNC machining and the like or 4-year degrees in engineering/cs). It's also one of the most educated populations in the country [0][1] Now I just feel like I'm selling it. Though I want to mention one quirk about the population that stands up to everyone I know who has visited. Minnesota Nice [2] is alive and well still. People tend to just be more friendly there than anywhere else I've lived or travelled, and I've been through more than a dozen states from coast to coast. It's just a general demeanor thing. Thats not to say that everyone is nice all the time though, of course. I'd say on average you're less likely to have small confrontations though, than anywhere else I've been. [0]: https://www.kare11.com/article/news/local/outreach/back-to-school/minnesota-among-top-states-for-public-education/89-62549d9e-aebd-4280-8754-9e9e8a875f4b https://www.kare11.com/article/news/local/outreach/back-to-s... [1]: http://www.ohe.state.mn.us/fc/2108/pg.cfm http://www.ohe.state.mn.us/fc/2108/pg.cfm [2]: https://en.wikipedia.org/wiki/Minnesota_nice#:~:text=Minnesota%20nice%20is%20a%20cultural,%2Dmannered%20and%20passive%2Daggressive https://en.wikipedia.org/wiki/Minnesota_nice#:~:text=Minneso....
windexh8er 6y ago
Minneapolis has had it's waves of pricing over the years. The hay day of build happened starting in 2005 and ran for the last 15 years leading up to where it is now. I lived in the Northloop on the front of the trendiness (pre-Target Stadium) and Uptown was still the land of said "hipsters" (such an unfortunate moniker). I can tell you that in 2010 I was paying more than $2000/month for a 2 bedroom there because supply was much more constrained. Now there's easily 20x availability of options. The downside is it's become much more crowded, the upside is it draws a lot of new food/entertainment options. Ultimately I'm glad I don't live downtown anymore. I think prices in Minneapolis will drop again as people spread back out if large organizations continue to dry up in the city. Don't get me wrong, I love Minneapolis and very much my time living in the city. But - things have definitely changed a lot in the last few years and I wouldn't say for much, if any, gain.
- CydeWeys 6y ago
  The gain is that a lot more people get to live there now, which benefits all of those people. It no longer being for you is more than made up for by the fact that it is now for so many more other people.
  - windexh8er 6y ago
    In my opinion it's a stretch to say that an oversubscription on housing "benefits all of those people". I enjoy Minneapolis, but it's in a very odd state right now.
    - CydeWeys 6y ago
      Huh? If all the housing is occupied then how is it possibly an oversubscription? If anything it sounds like an undersubscription -- even more people would live there if there were more housing, but there isn't, so they can't.
swiley 6y ago
Yeah, I live in a "luxury apartment" in an east coast city and pay less than that for rent.
lwansbrough 6y ago
If you consistently get the choice between paying $2000 for that or $2000 for a dingy basement suite with no windows, then yes it is luxury and will stop the price of those less desirable homes from rising. The key is to ensure supply outpaces demand. Meaning: let developers build luxury developments. The more the merrier.
- bdowling 6y ago
  This, a thousand times. Housing advocates often call for building “affordable housing” but the problem of high prices is solved by building any housing. As you suggested, if new luxury housing comes on the market, then some older apartments can’t charge luxury prices anymore. The same effect works all the way down to the lowest priced units. Also people don’t increase their consumption when prices go down (housing is an inelastic market). So, new supply at the top of the market pushes down the prices of everything.
  - wwweston 6y ago
    That's the theory. In practice, "pushes down the prices" is an overstatement, and what actually happens is that once demand pressure reaches a certain point new luxury supply only opens up higher pricing tiers. It potentially stabilizes older construction, which is not bad, but doesn't seem to provide downward pressure. The only thing that seems to do that is non-marginal demand dropping out of the market. And if you follow it through that's how the incentives seem to be aligned. Capital examining opportunity in construction will want to chase the highest return it can and if you have capital the marginal cost on luxury construction over non-luxury at the same unit scale is usually less than the return. On top of that, at certain scales of operation vacancy is apparently less of a drag on nominal property values involved in the accounting and financing, which means prices tend to float down when the fall rather than plummet. Though of course, any potential developer doing the math is going to look at vacancy rate and will make their decision about whether/what to build targeting points short of outright surplus. There are some types markets where I think you can drive down pricing market-wide by coming in from the top (consumer tech sure seems to work that way) and that's my guess why so many seem think the same must apply to housing. Perhaps housing could indeed work the same way if the actual manufacturing techniques and costs were being iterated with the same speed and scale. But that's why there are specific drives for affordable housing: building at the top slows/stops price increases but only lets people on the verge of being priced out tread water. Personally I think there needs to be vacancy taxes proportional to the market segment being operated (probably also correlated to tightness of supply) so that prices clear on the falling side more easily, but who knows how that would change people's construction calculations.

thih9 6y ago

In case others are unfamiliar, NIMBY = "Not In My Back Yard", https://en.wikipedia.org/wiki/NIMBY https://en.wikipedia.org/wiki/NIMBY .

jariel 6y ago

Just the opposite, every community has a right to decide their future. If a community says 'we'd rather be homes and don't want to turn everything in to high-rises' then that's entirely their discretion. It's definitely not any individual townships moral or civic responsibility to change their community to accommodate either state/national strategic planning, especially for the benefit of people who do not even live there. There's plenty of physical space in Cali, if anything, the opportunity might be in Sacramento and in-between. If the FAANGs having trouble with salaries and bringing in people want, they can be part of this strategy. I bet there are thousands of G staffers who'd live to live somewhere south of Morgan Hill, away from the city.

SllX 6y ago
Abusing police powers to curtail private property rights isn’t the high ground.
- souprock 6y ago
  It is. The government is expected to prevent tragedy-of-the-commons troubles, spite houses, and other anti-social troubles. This is largely why we even have a government. Suppose a person buys a house to retire in, on a peaceful quiet little street with plenty of room to park. The neighbors then build: an 80-story apartment tower, a supervised injection place for IV drug users, an organometalic peroxide production plant, a hog farm, and a tire recycling plant. Maybe we overdo it, but yes, we're going to curtail private property rights.
  - paconbork 6y ago
    > an 80-story apartment tower If this is financially viable, that land must be worth a ton. Retiree should sell the property and stop monopolizing such valuable land. They'll have plenty of funds to use to move elsewhere > a supervised injection place for IV drug users Very few people want one of these built near them, which itself causes huge societal problems. We'd be better off in aggregate if more services for the poor could be built. >an organometalic peroxide production plant, a hog farm, and a tire recycling plant Unlikely to be built on expensive residential land, but if they were it would help fight climate change by reducing commute times, since employees can now live nearby. The existence of actual property rights allows ample housing to be built in this high-demand area