9 ms·

People are stupid if they think this will fix things. I went to the peninsula looking at houses and the new trend is to add ADUs as part of the house or in the

People are stupid if they think this will fix things. I went to the peninsula looking at houses and the new trend is to add ADUs as part of the house or in the back. You know why? To help the owners pay off their $3M houses they used to be $1M 8 years ago. This then figures into the calculus of how much you can afford to buy a house for. What is an unaffordable $8000/month mortgage now becomes $6000/month. So people keep bidding higher and higher. People in the Bay Area don’t realize that every little thing that keeps costs low gets funneled back into house prices. Interest on mortgage is tax deductible? Oh that means I can afford more house. The public schools are good? That saves me $3000/month so I can funnel that into the mortgage. Commute is shorter by 20 mins? That means $200/month extra I can spend on the house. There is no answer except for rich employers like Google and Facebook to spread out their headquarters across the world. Too many rich engineers with their stock going up 10-20x is what is fueling the housing crunch. Or create entire new cities along 280 where there is plenty of space. Invest in new cities, not try to cram more people in the same small area.

rytor718 5y ago
This problem really does require competent city planning and a willing cohort of politicians to step up and make some dramatic, timely changes (good luck with that tho). The market cannot and will not figure this out, unless we define solution as "whatever the wealthy want to do is fine, homelessness and rents higher than a mortgage be damned".
lotsofpulp 5y ago
> People in the Bay Area don’t realize that every little thing that keeps costs low gets funneled back into house prices. Because the root cause is the demand for housing in Bay Area is far outstripping supply. You must tweak either or both of those to move the price. Addressing supply certainly does, but it might not be sufficient supply to overcome the demand. But it does help the situation.
- nosianu 5y ago
  My suspicion is that this might end up like more/wider streets and highways: You built it => it will be filled to capacity asap and there is no difference in the end, only more of the same (literally). Of course, this won't happen to infinity but far enough. In the end the area is just too attractive, combined with the industries there generate a lot of money.
  - throwaway0a5e 5y ago
    > it will be filled to capacity asap and there is no difference in the end The difference is VOLUME House prices or commute times may only fall by the slimmest of margins but the number of people who have access to whatever the resource is at the same price point will be increased.
  - lotsofpulp 5y ago
    Yes, if SF/Bay Area is just that unique and that much more attractive to people than elsewhere, then the only solution would be to make another SF/Bay Area.
    - selectodude 5y ago
      Didn’t you know the demand to live in the Bay Area is literally infinite and they could build 7 billion apartment units and the prices would continue to rise? It’s truly a special place.
  - seoaeu 5y ago
    This is called induced demand. Evidence suggests that for housing increasing supply doesn't cause demand to rise as quickly[0][1][2]. [0]: https://www.planetizen.com/news/2019/06/104783-doubt-cast-induced-demand-housing https://www.planetizen.com/news/2019/06/104783-doubt-cast-in... [1]: https://cityobservatory.org/another-housing-myth-debunked-neighborhood-price-effects-of-new-apartments/ https://cityobservatory.org/another-housing-myth-debunked-ne... [2]: https://www.slowboring.com/p/induced-demand https://www.slowboring.com/p/induced-demand
  - closeparen 5y ago
    1) A neighborhood with a lot more people in it has important qualitative differences compared to a sprawl suburb. It can be safe, pleasant, and interesting to walk around. It can support local retail and entertainment which do not require driving to access. It can support fast and frequent transit connections to the broader metro. It can support more variation in the age, life situation, and wealth of the households who live there. This is a far cry from “more of the same.” 2) The problem we’re trying to solve here is that the people who would fill those new units to capacity are instead locked (or pushed) out. Of course if that problem is solved they will instead be here. That’s the whole point of making anything cheaper or more abundant. So that more people can enjoy it.
jeffbee 5y ago
Google is not the cause of the housing crisis. It’s purely demographic. Count up all the people that graduated high school in your town and subtract the number of people who died, and that’s how many houses you need to build that year. Simple demographics and this figure has been ignored in most Bay Area cities for fifty years.
- xienze 5y ago
  Ehh I think it’s a little more complicated than that, and I’ve argued this for years, that Google et al certainly plays a part. Consider their infamous busses, that allow employees who simply can’t fathom the idea of living in Mountain View to easily live in SF and commute. Without those I think employees wouldn’t be shielded from the consequences of the whole “live in the city, commute into the suburbs” thing.
  - jeffbee 5y ago
    What is "infamous" about a bus? It's a workaround for the Bay Area's awful/nonexistent transportation system. Why aren't you carping about VMWare's "infamous cars" or the millions of cars driven every day to other companies without buses? Anyway the buses only explain partially how Googlers and other tech employees can survive the housing crisis, not what caused it. The cause is extremely simple. Births - Deaths = Growth. Don't overthink it.
    - seoaeu 5y ago
      > What is "infamous" about a bus? They're considered a symbol of the class divide. Not a cause, but just a visible display of the income inequality present in the city. Poor people don't get a "workaround" for the the Bay Area's awful/nonexistent transportation system, they have to either rely on private cars or take public transit anyways.
      - rcpt 5y ago
        Which is kind of nuts considering that most people on those busses can't afford the South Bay houses they're commuting past. Otherwise there'd be no bus. disclaimer: the windows were shot out when I was riding the Google bus a couple years back
skybrian 5y ago
It won't move prices much by itself, but it's still more people living on the same amount of land, which counts for something.
Ericson2314 5y ago
You are looking at this wrong. The point here is making it easier to build larger buildings and smaller units. Density and more building will increase land values, yes. We shouldn't strive for land values going down. But build enough, and floor value go down. This is the efficiency of land use increasing ahead of of demand, decreasing prices. Public housing is needed because it is quite the private sector cannot be relied upon building enough to decrease precises. Even without all he zoning bullshit, housing is still quite an inelastic marke.
jahewson 5y ago
You’re quite right that every saving ends up getting funnelled into mortgage payments. > Too many rich engineers with their stock going up 10-20x is what is fueling the housing crunch. But you’ve missed the mark here. We haven’t seen rich engineers push up the price of Teslas or iPhones or Xfinity because these things are all in plentiful supply. If there were only 1000 iPhones in the world, they would cost a fortune and all be owned by rich people or speculators. And that’s the situation with housing, not just in the Bay Area but across much of America and Western Europe. The majority of the housing stock is owned by the baby boomers who neglected the need to build new housing for their children. And where does all this tech wealth end up? In that generation’s bank accounts when they sell or rent. The people with means are not the problem. The people ripping them off are. They might even be your own parents.
rcpt 5y ago
The actual answer is to tax land at it's current market value instead of based on it's purchase price. Then it wouldn't be so attractive to park all the money in housing. Jobs aren't a problem. Bay Area housing has been a mess since we'll before the internet and other parts of California, where jobs are nowhere near as good, have the same problem.

rytor718 5y ago

This problem really does require competent city planning and a willing cohort of politicians to step up and make some dramatic, timely changes (good luck with that tho). The market cannot and will not figure this out, unless we define solution as "whatever the wealthy want to do is fine, homelessness and rents higher than a mortgage be damned".

lotsofpulp 5y ago

> People in the Bay Area don’t realize that every little thing that keeps costs low gets funneled back into house prices. Because the root cause is the demand for housing in Bay Area is far outstripping supply. You must tweak either or both of those to move the price. Addressing supply certainly does, but it might not be sufficient supply to overcome the demand. But it does help the situation.

nosianu 5y ago
My suspicion is that this might end up like more/wider streets and highways: You built it => it will be filled to capacity asap and there is no difference in the end, only more of the same (literally). Of course, this won't happen to infinity but far enough. In the end the area is just too attractive, combined with the industries there generate a lot of money.
- throwaway0a5e 5y ago
  > it will be filled to capacity asap and there is no difference in the end The difference is VOLUME House prices or commute times may only fall by the slimmest of margins but the number of people who have access to whatever the resource is at the same price point will be increased.
- lotsofpulp 5y ago
  Yes, if SF/Bay Area is just that unique and that much more attractive to people than elsewhere, then the only solution would be to make another SF/Bay Area.
  - selectodude 5y ago
    Didn’t you know the demand to live in the Bay Area is literally infinite and they could build 7 billion apartment units and the prices would continue to rise? It’s truly a special place.
- seoaeu 5y ago
  This is called induced demand. Evidence suggests that for housing increasing supply doesn't cause demand to rise as quickly[0][1][2]. [0]: https://www.planetizen.com/news/2019/06/104783-doubt-cast-induced-demand-housing https://www.planetizen.com/news/2019/06/104783-doubt-cast-in... [1]: https://cityobservatory.org/another-housing-myth-debunked-neighborhood-price-effects-of-new-apartments/ https://cityobservatory.org/another-housing-myth-debunked-ne... [2]: https://www.slowboring.com/p/induced-demand https://www.slowboring.com/p/induced-demand
- closeparen 5y ago
  1) A neighborhood with a lot more people in it has important qualitative differences compared to a sprawl suburb. It can be safe, pleasant, and interesting to walk around. It can support local retail and entertainment which do not require driving to access. It can support fast and frequent transit connections to the broader metro. It can support more variation in the age, life situation, and wealth of the households who live there. This is a far cry from “more of the same.” 2) The problem we’re trying to solve here is that the people who would fill those new units to capacity are instead locked (or pushed) out. Of course if that problem is solved they will instead be here. That’s the whole point of making anything cheaper or more abundant. So that more people can enjoy it.

jeffbee 5y ago

Google is not the cause of the housing crisis. It’s purely demographic. Count up all the people that graduated high school in your town and subtract the number of people who died, and that’s how many houses you need to build that year. Simple demographics and this figure has been ignored in most Bay Area cities for fifty years.

xienze 5y ago
Ehh I think it’s a little more complicated than that, and I’ve argued this for years, that Google et al certainly plays a part. Consider their infamous busses, that allow employees who simply can’t fathom the idea of living in Mountain View to easily live in SF and commute. Without those I think employees wouldn’t be shielded from the consequences of the whole “live in the city, commute into the suburbs” thing.
- jeffbee 5y ago
  What is "infamous" about a bus? It's a workaround for the Bay Area's awful/nonexistent transportation system. Why aren't you carping about VMWare's "infamous cars" or the millions of cars driven every day to other companies without buses? Anyway the buses only explain partially how Googlers and other tech employees can survive the housing crisis, not what caused it. The cause is extremely simple. Births - Deaths = Growth. Don't overthink it.
  - seoaeu 5y ago
    > What is "infamous" about a bus? They're considered a symbol of the class divide. Not a cause, but just a visible display of the income inequality present in the city. Poor people don't get a "workaround" for the the Bay Area's awful/nonexistent transportation system, they have to either rely on private cars or take public transit anyways.
    - rcpt 5y ago
      Which is kind of nuts considering that most people on those busses can't afford the South Bay houses they're commuting past. Otherwise there'd be no bus. disclaimer: the windows were shot out when I was riding the Google bus a couple years back

skybrian 5y ago

It won't move prices much by itself, but it's still more people living on the same amount of land, which counts for something.

Ericson2314 5y ago

You are looking at this wrong. The point here is making it easier to build larger buildings and smaller units. Density and more building will increase land values, yes. We shouldn't strive for land values going down. But build enough, and floor value go down. This is the efficiency of land use increasing ahead of of demand, decreasing prices. Public housing is needed because it is quite the private sector cannot be relied upon building enough to decrease precises. Even without all he zoning bullshit, housing is still quite an inelastic marke.

jahewson 5y ago

You’re quite right that every saving ends up getting funnelled into mortgage payments. > Too many rich engineers with their stock going up 10-20x is what is fueling the housing crunch. But you’ve missed the mark here. We haven’t seen rich engineers push up the price of Teslas or iPhones or Xfinity because these things are all in plentiful supply. If there were only 1000 iPhones in the world, they would cost a fortune and all be owned by rich people or speculators. And that’s the situation with housing, not just in the Bay Area but across much of America and Western Europe. The majority of the housing stock is owned by the baby boomers who neglected the need to build new housing for their children. And where does all this tech wealth end up? In that generation’s bank accounts when they sell or rent. The people with means are not the problem. The people ripping them off are. They might even be your own parents.

rcpt 5y ago

The actual answer is to tax land at it's current market value instead of based on it's purchase price. Then it wouldn't be so attractive to park all the money in housing. Jobs aren't a problem. Bay Area housing has been a mess since we'll before the internet and other parts of California, where jobs are nowhere near as good, have the same problem.