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It's received wisdom on HN that the Bay Area housing crisis is caused by NIMBYs and restrictive zoning laws. On the other hand my sense, based on anecdata, is

It's received wisdom on HN that the Bay Area housing crisis is caused by NIMBYs and restrictive zoning laws. On the other hand my sense, based on anecdata, is that a large proportion of the condos constructed in the past 15-ish years in eastern SF (Embarcadero, Rincon, etc.) and SOMA/Dogpatch are owned by absentee landlords as investment property. Since these folk are mostly rich SV types (or wealthy overseas investors), they can afford the eye-watering prices. Their renters are also well-paid techies, so they can pay the hyper-inflated rents. So I believe the housing crisis is instead a result of society deciding that no one actually has a right to a home of their own. Instead, it is in fact a good thing to engage in literally rent-seeking behavior[0] and we should all be in a race to accumulate the most wealth we can to pass down to our offspring, so that they can continue this cycle. If my analysis is correct, then more construction will just result in more of the same. Rich people buying 2 and 3rd homes that they rent out to people who are here for the short term and can afford inflated rents. It seems to me a good first step would instead be to slap a Vancouver-style 15% property tax on any home that is not occupied by the owner (not just foreigners). Of course, there is no way in hell Californians will actually do something that requires actual self-sacrifice, so that's never going to happen. ( I have more anecdata about SV residents buying 2 or 3 houses in the Austin area in order to capitalize on the real estate boom caused by other SV ex-residents moving there, further driving up costs in the area. But let's restrict the discussion to SF Bay Area for now). This theory is obviously based on feels rather than data, since I don't know of any way to actually get ownership/residence data broken down this way. That would probably violate all kinds of privacy laws. I would love to be disabused of my notions with data. Not motivated-reasoning "studies" by think-tanks who have vested interests, but actual data. [0] https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking (the rent seekers in this case being all the homeowners who resist any property tax reform which would affect their bottom line)

burlesona 5y ago
The number of people who want to move in to live and work in the Bay Area so vastly exceeds the supply of new housing that it is like a Sotheby’s auction where only the richest can win. This is reinforced by the fact that it takes so long to get permission to build anything that you can only make money by developing super luxury property. In a well-functioning city you can make money building anything from mid-market up. Affordable housing is the stuff that was mid market 10-20 years ago, or luxury 20-40 years ago. If you want to see this in the real world, just look at the market for cars. More here: https://www.sightline.org/2017/09/21/yes-you-can-build-your-way-to-affordable-housing/ https://www.sightline.org/2017/09/21/yes-you-can-build-your-...
- deleted 5y ago
  [deleted]
wesleyy 5y ago
Rent seeking refers to economic rent, which is not the same thing as "housing rent". It has a very specific definition when used in the context of economic rent seeking. Renting out houses for people to live in is not rent seeking.
- dragonwriter 5y ago
  Economic rent takes its name from and is a generalization of land rent; land rent isn't just an example of economic rent, it is the paradigmatic example.
- larsiusprime 5y ago
  According to certain economic philosophies, all rent on land (but not buildings) is economic rent.
  - imtringued 5y ago
    Exactly, you can even rent seek by buying a plot of land and intentionally keeping the number of units below what demand would suggest. E.g. you have a plot with enough demand to house 20 people but you only build a single family house for 4 people (2 parents 2 children) denying 16 people the possibility to live there. The land is still priced as if it could support 20 people and you make your money off of the sale of the land. This is what people buy into when they buy their house as an "investment". They bank on population growth and increasing demand. If upzoning is impossible then you gain nothing from selling because you have to pay taxes and then buy another property that costs the same amount (which you cant afford because of the taxes), turning the real estate wealth into paper wealth that has to be paid (your mortgage) for but is difficult to draw from except via reverse mortgages.
Tiktaalik 5y ago
Since you bring up the notion of Vancouver's empty homes and speculation taxes I'll follow up with the impacts of that: * These taxes added 8000+ 'empty' homes to the rental pool overnight. * Many "luxury" condos in development changed into purpose built rental for locals. * The vacancy rate barely budged and remained stubbornly low. So while it was definitely worth while to bring in these taxes in order to instantly create more housing, and change the nature of what sort of housing was being created, effectively nothing has really changed in the grand scheme of things. Vancouver still has a housing scarcity problem, and near zero vacancy, and still needs to build much more housing. I encourage SF to do the same sort of things that Vancouver has done, but they will also need to increase apartment development massively.
larsiusprime 5y ago
You're basically half way through re-deriving Georgism from first principles. Here's a good (but long) primer on the subject: https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr...
- rcpt 5y ago
  Shorter: https://www.landvaluetax.org/history/winston-churchill-said-it-all-better-then-we-can https://www.landvaluetax.org/history/winston-churchill-said-...
closeparen 5y ago
Rich SV types don’t seek housing because landlords appear to rent it to us. We seek housing because we get jobs. Each SV type who rents a new home is one who’s not competing for an existing home. If you want to put a stop to the kind of development that is actually causing SV types to materialize, that would be offices. Offices are are generally popular and unobjectionable.
- imtringued 5y ago
  Prop 13 killed tax revenue so local governments must obtain it through commercial property. It's pretty obvious what the problem is. A pro job bias that makes sure there are more jobs than housing.
  - closeparen 5y ago
    I don’t think the populist spirit is making an inference as complex as “we need to get the tax revenue somewhere, better not object to offices even though they also create traffic.” The bureaucrats might, but the bureaucrats don’t have that much power; even when they support a housing development they get overridden by the community.
tedunangst 5y ago
So keep building more and more homes for rich people to buy until inflated rents collapse and everyone has affordable housing.
carom 5y ago
>society deciding that no one actually has a right to a home of their own I feel this argument is a nice way to phrase that neighborhoods should never change. There is a limited amount of land. For everyone to have long term housing we need to build. We need to build until there are more units than what rich people can afford to monopolize. Rent control, historical preservation, they're just ways to restrict growth and I hate it. I am not sure people should have a right to a home if that prevents growth. It just creates a new set of haves.

burlesona 5y ago

The number of people who want to move in to live and work in the Bay Area so vastly exceeds the supply of new housing that it is like a Sotheby’s auction where only the richest can win. This is reinforced by the fact that it takes so long to get permission to build anything that you can only make money by developing super luxury property. In a well-functioning city you can make money building anything from mid-market up. Affordable housing is the stuff that was mid market 10-20 years ago, or luxury 20-40 years ago. If you want to see this in the real world, just look at the market for cars. More here: https://www.sightline.org/2017/09/21/yes-you-can-build-your-way-to-affordable-housing/ https://www.sightline.org/2017/09/21/yes-you-can-build-your-...

deleted 5y ago
[deleted]

wesleyy 5y ago

Rent seeking refers to economic rent, which is not the same thing as "housing rent". It has a very specific definition when used in the context of economic rent seeking. Renting out houses for people to live in is not rent seeking.

dragonwriter 5y ago
Economic rent takes its name from and is a generalization of land rent; land rent isn't just an example of economic rent, it is the paradigmatic example.
larsiusprime 5y ago
According to certain economic philosophies, all rent on land (but not buildings) is economic rent.
- imtringued 5y ago
  Exactly, you can even rent seek by buying a plot of land and intentionally keeping the number of units below what demand would suggest. E.g. you have a plot with enough demand to house 20 people but you only build a single family house for 4 people (2 parents 2 children) denying 16 people the possibility to live there. The land is still priced as if it could support 20 people and you make your money off of the sale of the land. This is what people buy into when they buy their house as an "investment". They bank on population growth and increasing demand. If upzoning is impossible then you gain nothing from selling because you have to pay taxes and then buy another property that costs the same amount (which you cant afford because of the taxes), turning the real estate wealth into paper wealth that has to be paid (your mortgage) for but is difficult to draw from except via reverse mortgages.

Tiktaalik 5y ago

Since you bring up the notion of Vancouver's empty homes and speculation taxes I'll follow up with the impacts of that: * These taxes added 8000+ 'empty' homes to the rental pool overnight. * Many "luxury" condos in development changed into purpose built rental for locals. * The vacancy rate barely budged and remained stubbornly low. So while it was definitely worth while to bring in these taxes in order to instantly create more housing, and change the nature of what sort of housing was being created, effectively nothing has really changed in the grand scheme of things. Vancouver still has a housing scarcity problem, and near zero vacancy, and still needs to build much more housing. I encourage SF to do the same sort of things that Vancouver has done, but they will also need to increase apartment development massively.

larsiusprime 5y ago

You're basically half way through re-deriving Georgism from first principles. Here's a good (but long) primer on the subject: https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr...

rcpt 5y ago
Shorter: https://www.landvaluetax.org/history/winston-churchill-said-it-all-better-then-we-can https://www.landvaluetax.org/history/winston-churchill-said-...

closeparen 5y ago

Rich SV types don’t seek housing because landlords appear to rent it to us. We seek housing because we get jobs. Each SV type who rents a new home is one who’s not competing for an existing home. If you want to put a stop to the kind of development that is actually causing SV types to materialize, that would be offices. Offices are are generally popular and unobjectionable.

imtringued 5y ago
Prop 13 killed tax revenue so local governments must obtain it through commercial property. It's pretty obvious what the problem is. A pro job bias that makes sure there are more jobs than housing.
- closeparen 5y ago
  I don’t think the populist spirit is making an inference as complex as “we need to get the tax revenue somewhere, better not object to offices even though they also create traffic.” The bureaucrats might, but the bureaucrats don’t have that much power; even when they support a housing development they get overridden by the community.

tedunangst 5y ago

So keep building more and more homes for rich people to buy until inflated rents collapse and everyone has affordable housing.

carom 5y ago

>society deciding that no one actually has a right to a home of their own I feel this argument is a nice way to phrase that neighborhoods should never change. There is a limited amount of land. For everyone to have long term housing we need to build. We need to build until there are more units than what rich people can afford to monopolize. Rent control, historical preservation, they're just ways to restrict growth and I hate it. I am not sure people should have a right to a home if that prevents growth. It just creates a new set of haves.