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> I don't know what you would call this system but LA's problem is that the folks that have the power to fix housing have zero interest in doing because it woul

> I don't know what you would call this system but LA's problem is that the folks that have the power to fix housing have zero interest in doing because it would hurt their self interest. If they upzone my single family home lot I will make out like a bandit. Developers will be all over this neighborhood, building townhouses galore. The last townhouse to sell in my neighborhood went for 2.1MM+. Upzoning does not magically make housing affordable. Housing pricing is more complicated than a simple supply and demand curve, although that tells a story at the macro level. And truly affordable housing can only be created by mandating that units sell below market value. This shotgun approach to upzoning will alleviate issues in some neighborhoods—in others it will make developers and homeowners a lot of money. These oversimplified narratives on HN are so tiring. Local conditions are much more complex and multifaceted than these "upzone everything" posts would have you believe.

mlindner 5y ago
> And truly affordable housing can only be created by mandating that units sell below market value. That will only happen if the state guarantees to pay those "greedy developers" that they've been lambasting all over the media a bunch of money to build those units. A developer will simply refuse to build any housing at all if they're forced to sell the units at below rate when they can instead make more money building housing in some other market. > These oversimplified narratives on HN are so tiring. I agree and you're making another one of them.
chizhik-pyzhik 5y ago
> Upzoning does not magically make housing affordable. Housing pricing is more complicated than a simple supply and demand curve, although that tells a story at the macro level. And truly affordable housing can only be created by mandating that units sell below market value. Can you elaborate? "Affordable" housing only works as a hack within an artificially constrained market, how is building more housing not the ultimate fix?
- ordinaryradical 5y ago
  Of course it's building more. But the question is what kind of more. Is artificially changing the density of every Single Family Home neighborhood going to create a more that depresses pricing? No. Because the housing will not all be built magically overnight. Units will come onto the market after: 1) The developer buys. 2) Tears down the SFH. 3) Builds a new multiplex. The capex in each of these steps guarantees that this will happen gradually (also as people are willing to sell) and since everything will be truly new construction (if you want to double density, say) it will come out on the highest end of the market. This can make housing more dense and it can gradually lead to more units on the market. Potentially you could eventually reach competition dynamics that depress pricing. But in reality pricing is also dictated by: location, style, build quality, schools, and a hundred other factors. This is why trumpeting upzoning as though it will somehow depress pricing is dishonest or foolish. Since you can't double the density of LA overnight (even if you can double its theoretical denisty), it's naïve to pretend that this is a silver bullet. My greater point was that the conversation around "housing affordability" has less to do with zoning than developer incentives. Developers need to be given the mandate (and the incentives) to build sub-market rate housing as part of much larger developments if you want affordability and a middle class in California cities.
  - deleted 5y ago
    [deleted]
  - lalaland1125 5y ago
    > But in reality pricing is also dictated by: location, style, build quality, schools, and a hundred other factors. All of those factors though are considered with respect to supply. If there are 11 homes and 10 buyers, then by necessity the prices for those homes must come down despite how good those homes are. > This can make housing more dense and it can gradually lead to more units on the market. Potentially you could eventually reach competition dynamics that depress pricing. You vastly overestimate the number of units that would need to be built to depress prices. Prices are set on the margin and a relatively small increase in supply (say 20% over 20 years which is quite feasible) can have a huge influence. Going from 10 buyers chasing 9 homes to 10 buyers chasing 11 homes changes the dynamics an incredible amount.
joefigura 5y ago
The development you're describing is the whole goal of upzoning, and the intended effect. Where you once had a single family home, you now have multiple units. The brand-new townhouses sell for many millions because they're brand new. But adding new units relieves price pressure on the rest of the market - every person that moves into a brand new townhouse is therefore not moving in to older houses in other neighborhoods. You're making out like a bandit because you're creating new wealth. Where there was only one housing unit, there are now many. This is a win for everyone involved, it's net positive. > Housing pricing is more complicated than a simple supply and demand curve People say this, but it's not true. The U.S, particularly in growing areas, has not built enough homes per capita since the real estate bubble, and so prices go up[1]. It's as simple as that. [1] https://www.businessinsider.com/us-underbuilding-housing-over-the-past-decade-2020-9 https://www.businessinsider.com/us-underbuilding-housing-ove...
AnthonyMouse 5y ago
> If they upzone my single family home lot I will make out like a bandit. Only if they only upzone your neighborhood, because if they upzone all of them then developers can buy any of them at existing prices instead of having to all bid on an artificially scarce subset. And in the first case the money comes at the cost of housing prices for all the other neighborhoods they didn't upzone, who all fight against upzoning your neighborhood. > And truly affordable housing can only be created by mandating that units sell below market value. This is balderdash. Not only false, but inverted. Where does the money to sell "below market value" come from? The rest of the housing market, increasing prices for everyone else, but especially for the people who make three cents too much money to be eligible for "affordable housing." Because then you separate housing into subsidized projects with concentrated poverty and luxury housing that lower middle class people can't afford.
- ordinaryradical 5y ago
  > Only if they only upzone your neighborhood, because if they upzone all of them then developers can buy any of them at existing prices instead of having to all bid on an artificially scarce subset. And yet some neighborhoods are more desirable than others. Is this not already obvious from the state of the market today? Developers go where the most money can be made—the neighborhoods which are already valuable. > Where does the money to sell "below market value" come from? Tax breaks, duh. You put money back in developers pockets. By the way, you don't need to separate the projects. You combine them. You make luxury units possible with a mandate that a percentage of the building be affordable. New York already does this. Why is this so hard to understand?
  - mypalmike 5y ago
    You're condescension isn't helping your case.
  - AnthonyMouse 5y ago
    > And yet some neighborhoods are more desirable than others. Is this not already obvious from the state of the market today? Developers go where the most money can be made—the neighborhoods which are already valuable. This is just a non-sequitur. Of course some neighborhoods are more valuable than others. But if you have twelve similarly-valuable neighborhoods within reasonable distance of each other, and you only upzone some of them, those will increase in value at the expense of the others. Also, developers frequently choose the least valuable neighborhoods, because development makes the neighborhood more valuable, so they go where they can buy low and sell high. > Tax breaks, duh. So now the middle class gets to pay taxes to subsidize housing they're not eligible to live in, while not being able to afford the housing they are eligible to live in. > You combine them. You make luxury units possible with a mandate that a percentage of the building be affordable. Which dramatically increases the cost of the program because the opportunity cost of having more high value housing is so much larger than the cost of building lower cost housing in lower cost areas. You also end up with the bizarre result and perverse incentive that people not eligible for affordable housing have to live somewhere worse than people who are, so making more money makes your life worse. This also increases housing costs for the middle class because you under-produce luxury housing so the people who would have bought the luxury housing are now bidding against the middle class for ordinary housing.

mlindner 5y ago

> And truly affordable housing can only be created by mandating that units sell below market value. That will only happen if the state guarantees to pay those "greedy developers" that they've been lambasting all over the media a bunch of money to build those units. A developer will simply refuse to build any housing at all if they're forced to sell the units at below rate when they can instead make more money building housing in some other market. > These oversimplified narratives on HN are so tiring. I agree and you're making another one of them.

chizhik-pyzhik 5y ago

> Upzoning does not magically make housing affordable. Housing pricing is more complicated than a simple supply and demand curve, although that tells a story at the macro level. And truly affordable housing can only be created by mandating that units sell below market value. Can you elaborate? "Affordable" housing only works as a hack within an artificially constrained market, how is building more housing not the ultimate fix?

ordinaryradical 5y ago
Of course it's building more. But the question is what kind of more. Is artificially changing the density of every Single Family Home neighborhood going to create a more that depresses pricing? No. Because the housing will not all be built magically overnight. Units will come onto the market after: 1) The developer buys. 2) Tears down the SFH. 3) Builds a new multiplex. The capex in each of these steps guarantees that this will happen gradually (also as people are willing to sell) and since everything will be truly new construction (if you want to double density, say) it will come out on the highest end of the market. This can make housing more dense and it can gradually lead to more units on the market. Potentially you could eventually reach competition dynamics that depress pricing. But in reality pricing is also dictated by: location, style, build quality, schools, and a hundred other factors. This is why trumpeting upzoning as though it will somehow depress pricing is dishonest or foolish. Since you can't double the density of LA overnight (even if you can double its theoretical denisty), it's naïve to pretend that this is a silver bullet. My greater point was that the conversation around "housing affordability" has less to do with zoning than developer incentives. Developers need to be given the mandate (and the incentives) to build sub-market rate housing as part of much larger developments if you want affordability and a middle class in California cities.
- deleted 5y ago
  [deleted]
- lalaland1125 5y ago
  > But in reality pricing is also dictated by: location, style, build quality, schools, and a hundred other factors. All of those factors though are considered with respect to supply. If there are 11 homes and 10 buyers, then by necessity the prices for those homes must come down despite how good those homes are. > This can make housing more dense and it can gradually lead to more units on the market. Potentially you could eventually reach competition dynamics that depress pricing. You vastly overestimate the number of units that would need to be built to depress prices. Prices are set on the margin and a relatively small increase in supply (say 20% over 20 years which is quite feasible) can have a huge influence. Going from 10 buyers chasing 9 homes to 10 buyers chasing 11 homes changes the dynamics an incredible amount.

joefigura 5y ago

The development you're describing is the whole goal of upzoning, and the intended effect. Where you once had a single family home, you now have multiple units. The brand-new townhouses sell for many millions because they're brand new. But adding new units relieves price pressure on the rest of the market - every person that moves into a brand new townhouse is therefore not moving in to older houses in other neighborhoods. You're making out like a bandit because you're creating new wealth. Where there was only one housing unit, there are now many. This is a win for everyone involved, it's net positive. > Housing pricing is more complicated than a simple supply and demand curve People say this, but it's not true. The U.S, particularly in growing areas, has not built enough homes per capita since the real estate bubble, and so prices go up[1]. It's as simple as that. [1] https://www.businessinsider.com/us-underbuilding-housing-over-the-past-decade-2020-9 https://www.businessinsider.com/us-underbuilding-housing-ove...

AnthonyMouse 5y ago

> If they upzone my single family home lot I will make out like a bandit. Only if they only upzone your neighborhood, because if they upzone all of them then developers can buy any of them at existing prices instead of having to all bid on an artificially scarce subset. And in the first case the money comes at the cost of housing prices for all the other neighborhoods they didn't upzone, who all fight against upzoning your neighborhood. > And truly affordable housing can only be created by mandating that units sell below market value. This is balderdash. Not only false, but inverted. Where does the money to sell "below market value" come from? The rest of the housing market, increasing prices for everyone else, but especially for the people who make three cents too much money to be eligible for "affordable housing." Because then you separate housing into subsidized projects with concentrated poverty and luxury housing that lower middle class people can't afford.

ordinaryradical 5y ago
> Only if they only upzone your neighborhood, because if they upzone all of them then developers can buy any of them at existing prices instead of having to all bid on an artificially scarce subset. And yet some neighborhoods are more desirable than others. Is this not already obvious from the state of the market today? Developers go where the most money can be made—the neighborhoods which are already valuable. > Where does the money to sell "below market value" come from? Tax breaks, duh. You put money back in developers pockets. By the way, you don't need to separate the projects. You combine them. You make luxury units possible with a mandate that a percentage of the building be affordable. New York already does this. Why is this so hard to understand?
- mypalmike 5y ago
  You're condescension isn't helping your case.
- AnthonyMouse 5y ago
  > And yet some neighborhoods are more desirable than others. Is this not already obvious from the state of the market today? Developers go where the most money can be made—the neighborhoods which are already valuable. This is just a non-sequitur. Of course some neighborhoods are more valuable than others. But if you have twelve similarly-valuable neighborhoods within reasonable distance of each other, and you only upzone some of them, those will increase in value at the expense of the others. Also, developers frequently choose the least valuable neighborhoods, because development makes the neighborhood more valuable, so they go where they can buy low and sell high. > Tax breaks, duh. So now the middle class gets to pay taxes to subsidize housing they're not eligible to live in, while not being able to afford the housing they are eligible to live in. > You combine them. You make luxury units possible with a mandate that a percentage of the building be affordable. Which dramatically increases the cost of the program because the opportunity cost of having more high value housing is so much larger than the cost of building lower cost housing in lower cost areas. You also end up with the bizarre result and perverse incentive that people not eligible for affordable housing have to live somewhere worse than people who are, so making more money makes your life worse. This also increases housing costs for the middle class because you under-produce luxury housing so the people who would have bought the luxury housing are now bidding against the middle class for ordinary housing.