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> NIMBYs oppose new construction because it keeps their property values high No, they just don’t want their neighborhoods to change (read: poor people, more tr

by zamfi 6y ago

> NIMBYs oppose new construction because it keeps their property values high No, they just don’t want their neighborhoods to change (read: poor people, more traffic). I don’t think most of them are frankly thinking about their property values because it’s just not super relevant, thanks to prop 13. > For another example, there is no incentive to renovate/tear down/rebuild bigger because now you will pay significantly higher property taxes. Single family homes don't get turned into denser properties. There is a ton of incentive to build more units: for one, you could sell them for a ton more in aggregate! But there is also a huge disincentive that is not prop 13: zoning laws that prevent basically any increase in density in some absurd fraction of California, especially absurd in central areas and inner ring suburbs. Prop 13 is definitely an issue, but it’s not the dominant one for the effects you describe.

klipt 6y ago
Well Prop 13 contributes to zoning. Cities get almost no money from residents, so they zone for denser commercial but sparser residential. The ratio of jobs to housing goes wack and you have a shortage of housing for the people who move here for jobs.
- zamfi 6y ago
  This is a common refrain, but cities would absolutely collect substantial property taxes from new residents because new residents are much more likely to be paying substantially higher property taxes (having bought now-expensive properties). Commercial properties bring in tons of sales taxes, but not quite as much in property taxes. (See Figure 6 in [0].) The history of exclusionary zoning is a history of replacing restrictive racial covenants (binding agreements on property titles that prevent sales to certain groups) and redlining (which rendered unavailable mortgage loans to anyone for properties in neighborhoods that were not majority-white), both of which were invalidated by the Fair Housing Act in 1968, triggering the wave of exclusionary zoning intended to keep out the same people. The history is clear that this type of zoning is explicitly designed to keep properties expensive, to keep them out of the hands of "undesirables". Prop 13 then insulates longtime residents from that same increase in cost. They go hand in hand, but I'm not sure it's fair to say that Prop 13 contributes to zoning. [0]: https://lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx https://lao.ca.gov/reports/2012/tax/property-tax-primer-1129...
pb7 6y ago
I don't think it's that simple. Prop 13 shields NIMBYs from negative externalities of their desire for their neighborhoods not to change. Housing is in short supply which inflates property values, but they don't have to worry about that because they don't want to sell and property taxes continue to remain low due to Prop 13. They can either pass down their property to their children (taxes remain unchanged) or they sell and cash out on their uber expensive property and move out of state sometime later in life. As I alluded in other comments, I suspect it is more often the former rather than the latter since it doesn't make sense to sell. The incentive to build is low because most existing property owners want to continue living somewhere in the Bay Area and if they move, their taxes reset. Building more units on the same property is a non-starter for that reason. Yes, zoning is also a factor, and goes hand-in-hand with the same agenda that Prop 13 came out of. It's multiple cuts from the same cloth.
- zamfi 6y ago
  > Prop 13 shields NIMBYs from negative externalities of their desire for their neighborhoods not to change. Housing is in short supply which inflates property values, but they don't have to worry about that because they don't want to sell and property taxes continue to remain low due to Prop 13. This is a really good point, and this framing helps me understand your argument much better, thanks! > The incentive to build is low because most existing property owners want to continue living somewhere in the Bay Area and if they move, their taxes reset. I don't think this is right, though -- the incentive to move is low, but the incentive to build is high. Since people do move, even though there is a strong counterincentive, we find that properties do come on the market, and overwhelmingly the reason they are not bought by developers to build larger structures with more units is zoning. If developers could buy a SFH for $2m and build a 4-plex, selling each unit for $1m (numbers that are pretty common in wealthy Bay Area neighborhoods), then they absolutely would and we'd see this all over the place. In my neighborhood this happens every time edge cases in zoning allow it. (Large enough lot that it can be split? Developer buys it, builds two units. Weird commercial conversion with higher floor limits? Developer buys it, builds three units.) I agree that prop 13 has an impact here, but zoning in most neighborhoods literally prohibits new construction -- so I don't think a prop 13 repeal would have nearly as much of an impact on new housing construction as upzoning or other zoning mitigation. Of course, from an economic perspective both are highly problematic distortions of pricing (along with rent control!), and both need to be reevaluated -- but if I had to pick one, I'd pick zoning!

by zamfi 6y ago

klipt 6y ago

Well Prop 13 contributes to zoning. Cities get almost no money from residents, so they zone for denser commercial but sparser residential. The ratio of jobs to housing goes wack and you have a shortage of housing for the people who move here for jobs.

zamfi 6y ago
This is a common refrain, but cities would absolutely collect substantial property taxes from new residents because new residents are much more likely to be paying substantially higher property taxes (having bought now-expensive properties). Commercial properties bring in tons of sales taxes, but not quite as much in property taxes. (See Figure 6 in [0].) The history of exclusionary zoning is a history of replacing restrictive racial covenants (binding agreements on property titles that prevent sales to certain groups) and redlining (which rendered unavailable mortgage loans to anyone for properties in neighborhoods that were not majority-white), both of which were invalidated by the Fair Housing Act in 1968, triggering the wave of exclusionary zoning intended to keep out the same people. The history is clear that this type of zoning is explicitly designed to keep properties expensive, to keep them out of the hands of "undesirables". Prop 13 then insulates longtime residents from that same increase in cost. They go hand in hand, but I'm not sure it's fair to say that Prop 13 contributes to zoning. [0]: https://lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx https://lao.ca.gov/reports/2012/tax/property-tax-primer-1129...

pb7 6y ago

I don't think it's that simple. Prop 13 shields NIMBYs from negative externalities of their desire for their neighborhoods not to change. Housing is in short supply which inflates property values, but they don't have to worry about that because they don't want to sell and property taxes continue to remain low due to Prop 13. They can either pass down their property to their children (taxes remain unchanged) or they sell and cash out on their uber expensive property and move out of state sometime later in life. As I alluded in other comments, I suspect it is more often the former rather than the latter since it doesn't make sense to sell. The incentive to build is low because most existing property owners want to continue living somewhere in the Bay Area and if they move, their taxes reset. Building more units on the same property is a non-starter for that reason. Yes, zoning is also a factor, and goes hand-in-hand with the same agenda that Prop 13 came out of. It's multiple cuts from the same cloth.

zamfi 6y ago
> Prop 13 shields NIMBYs from negative externalities of their desire for their neighborhoods not to change. Housing is in short supply which inflates property values, but they don't have to worry about that because they don't want to sell and property taxes continue to remain low due to Prop 13. This is a really good point, and this framing helps me understand your argument much better, thanks! > The incentive to build is low because most existing property owners want to continue living somewhere in the Bay Area and if they move, their taxes reset. I don't think this is right, though -- the incentive to move is low, but the incentive to build is high. Since people do move, even though there is a strong counterincentive, we find that properties do come on the market, and overwhelmingly the reason they are not bought by developers to build larger structures with more units is zoning. If developers could buy a SFH for $2m and build a 4-plex, selling each unit for $1m (numbers that are pretty common in wealthy Bay Area neighborhoods), then they absolutely would and we'd see this all over the place. In my neighborhood this happens every time edge cases in zoning allow it. (Large enough lot that it can be split? Developer buys it, builds two units. Weird commercial conversion with higher floor limits? Developer buys it, builds three units.) I agree that prop 13 has an impact here, but zoning in most neighborhoods literally prohibits new construction -- so I don't think a prop 13 repeal would have nearly as much of an impact on new housing construction as upzoning or other zoning mitigation. Of course, from an economic perspective both are highly problematic distortions of pricing (along with rent control!), and both need to be reevaluated -- but if I had to pick one, I'd pick zoning!