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It's a simple problem, we turned housing into an investment. Now everyone who owns a home is incentivized to ensure their investment is maximized and that resu

It's a simple problem, we turned housing into an investment. Now everyone who owns a home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism. The simple solution is we need more housing in cities and suburbs. How we get there is an exercise that's taken on by local housing authorities and they are not incentivized to solve the problem. That's because they work for voters who are currently living in the area opposed to future people who aren't contributing to the vote. States are going to have to step in and override cities that aren't being effective, this cannot be solved from the federal level. They are going to have to say, these permitting processes are too restrictive, homeowners can add backyard units or convert their homes to duplexes/etc, and make it easy for apartment builders to buy a few homes to make small apartment complexes even if the neighborhood hates it or the city has been stalling on that kind of development.

sudosysgen 4y ago
This can probably be solved at the federal level using smart taxation and incentives for mixed zoning.
- throwaway0a5e 4y ago
  The hubris is astounding. You know how we got into this problem? Decades ago we used taxation and law to try and incentivize the development we wanted and disincentivize or prohibit what we didn't. And today the efficacy of that endeavor is obvious to even the most casual observer. There is no compelling reason doing the exact same thing will work better for different values of "development we want" and "development we don't". Have you seen what gets developed when you incentivize mixed development? It's lifeless crap compared to the places that were built up prior to the advent of widespread usage restrictions on land where development happened organically without the input or prior approval of local government (i.e. people were basically free to do whatever within the permissive limits of the time). How about we just get the government out of the business of telling people what and where they can and can't build. Let people develop what they think there is demand for. A few inappropriate industrial sites is a small price to pay for allowing pent up demand for residential and commercial construction to be satiated.
  - sudosysgen 4y ago
    I think I wasn't clear. When I say incentivize mixed zoning, I meant that the federal government would incentivize local governments choosing to zone land as mixed use. Then people can build whatever they want. It's not possible to remove zoning completely. That's severe hubris, thinking that we introduced zoning to begin with for no legitimate reason. That's not true - it's necessary to plan city infrastructure and that requires zoning. Removing zoning altogether would be an unmitigated disaster. There is no easy clean solution like "remove all the rules". You can't get government out of the business of city planning and basic infrastructure, and that's in more words what you mean. There is a difference between good policy and bad policy. We need good policy. The only solution is that local governments somehow make better choices.
axg11 4y ago
When was housing not an investment? Throughout history, people have always wanted to drive up the value of their land and properties. There are still plenty of places in the US/Canada/UK where housing is cheap. The problem is that nobody wants to live in those areas.
- Cederfjard 4y ago
  So do you have a solution in mind?
  - davidf18 4y ago
- deleted 4y ago
  [deleted]
- datacruncher01 4y ago
  It's true but the reason people are moving to cities are jobs. Rural locations do not have the job market to support the costs to live there. It's a lower cost, but a much, much lower income outlook as well. If you have the money to outright buy a rural property and build a house there, it's not a bad place to live. But you don't want to have to depend on the limited job market with an expensive mortgage and limited buyer pool.
  - ch4s3 4y ago
    > If you have the money to outright buy a rural property and build a house there That's if there are available builders. It took my mother the better part of a year to get her roof replaced, because there was no one available to do the job. I'd also argue that the place she lives in rural VA is pretty awful in most respects other than having space and she's not all that far from a town.
  - axg11 4y ago
    Remote work is commonplace now. Perhaps in the next few years we’ll test the theory that jobs and house prices are linked. It’s now possible (for tech workers at least) to work from almost anywhere for decent wages. My hunch is that the housing crisis is simple supply and demand. People want to live in cities because of the better access to entertainment, amenities, and services. There aren’t enough houses to fill that demand. There’s no great city on earth that has a glut of housing. If there were, people would flock to that city to fill the housing. I think that’s the very nature of a city. In some sense, the more people that want to live in a city, the higher the quality of the city. That’s also directly correlated with housing cost, sadly.
mistrial9 4y ago
> States are going to have to step in and override cities that aren't being effective surprise - this has already been signed in California; and amended, and further amended.. https://www.capradio.org/articles/2017/09/29/brown-brings-housing-bills-home/ https://www.capradio.org/articles/2017/09/29/brown-brings-ho...
- colinmhayes 4y ago
  And SF has already tried bending over backwards to defang it. Luckily mayor Breed rejected the attempt, but it's far from over.
fezfight 4y ago
So I think folks overlook just how wealthy certain investors are when they propose the fix is to just build new properties. Those will also get snapped up by investors. To fix the problem, investing in housing needs to be either banned or made very unattractive. You only need one house to live in.
- datacruncher01 4y ago
  I agree with you, that's a whole other problem. But housing like many goods is still subject to supply and demand. The investors buy the properties because they are actually good investments in situations where housing is in demand, and that's true in all the major cities where we're not building enough housing and appropriately sized housing. If we increase the supply, if we make smaller housing units so there are also affordable units for poorer renters. The investors will move on to more lucrative investments. They can only extract so much wealth from housing before people move for alternatives.
  - pessimizer 4y ago
    Everybody has a place to live. Housing isn't scarce. When housing is scarce, people are homeless or living in extremely tiny spaces. They are not. The problem is that people wouldn't be able to afford to own the places where they live. Housing is only "scarce" in desirable places, and that's simply tautological. The sum of unfulfilled desires is the contrapositive of scarcity. Housing is a market in which a very tiny percentage of goods are up for sale at any particular time, and the projected prices of those goods are heavily shared among a huge network of people who profit when the prices are high. The owners of those goods are often heavily leveraged, and can't afford to lower the price significantly, and the transaction and mortgage costs push them to raise the price to cover those costs at the next place they buy. > They can only extract so much wealth from housing before people move for alternatives. No such alternative, which is why the market is as lucrative to exploit as health care. Finding an "alternative" to health care is just to find another type of health care, and if you find an alternative to being housed, you've just found a new kind of house.
    - 4y ago
aluminussoma 4y ago
I wonder if persistently low interest rates is the real culprit that led to housing as investment. I have been recently intrigued by FinTwit arguments that an excess of demand spurred by too low interest rates is the real reason for many shortages. As a saver, that argument naturally appeals to me.
- DubiousPusher 4y ago
  > I have been recently intrigued by FinTwit arguments that an excess of demand spurred by too low interest rates is the real reason for many shortages I don't believe this is the case as since 2008 the U.S. construction industry has not even built enough units to keep up with population growth. I believe this is a supply problem which is two-fold. 1) Restrictive zoning and permitting which really took off around the 70s 2) A boom and bust construction cycle which has convinced many to not risk it any longer and find other work (this which has been going on for decades but truly inflected after 2008).
  - aluminussoma 4y ago
    > I don't believe this is the case as since 2008 the U.S. construction industry has not even built enough units to keep up with population growth. I believe this is a supply problem which is two-fold. A counterargument to this is that population growth has not been very high in the past few decades: https://fred.stlouisfed.org/graph/?g=SUL3 https://fred.stlouisfed.org/graph/?g=SUL3 You certainly have valid points, especially in San Francisco. Nevertheless, looking at the broader market, outside of California, the market appears to be working: builders find a way to build what will sell and maximize their profits. Last week, I drove around a planned community in a middle-America state. Developers started building houses around ~2010 and are still building out the area. These developers had no problem building thousands of homes that were selling well until very recently.
    - DubiousPusher 4y ago
      Population growth has been lower but construction levels have been lower still. This is not speculation. It is fact. https://www.cnbc.com/2021/09/14/america-is-short-more-than-5-million-homes-study-says.html https://www.cnbc.com/2021/09/14/america-is-short-more-than-5... The only parts which are speculative are why. There is consistently lower workforce participation in construction though, that is also a fact. https://finance.yahoo.com/news/construction-industry-after-recession-140430175.html https://finance.yahoo.com/news/construction-industry-after-r... I'm glad the builders in your area have been able to work consistently. I would guess that they are likely riding a trend of a decreasing number of builders who are increasingly professionalized and technologized their operations. Regardless, that is an anecdote and the statistics paint a pretty clear picture.
pessimizer 4y ago
> Now everyone who owns a home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism. This motivation is backwards. Getting zoning restrictions around your house removed multiplies the value of that house. NIMBYism comes from places where people live. YIMBYism maximizes property values, although there's an element of blockbusting because overbuilding and a change in neighborhood character can make a neighborhood so unpleasant to live in that holdouts will end up selling cheap.
- quatrevingts 4y ago
  YIMBYism simultaneously raises prices (presumably for the greedy developers and sellouts) and lowers them (for the noble neighborhood defenders who are forced to sell). Got it.
  - pessimizer 4y ago
    I'm going to ignore your presumptions (your "greedy developers and sellouts) and things I did not say (like "YIMBYism lowers prices for noble neighborhood defenders who are forced to sell"), so basically every word and try to find the spirit of your comment. It's pretty difficult to fit a massive apartment building on a house sized plot between two massive apartment buildings. The prices you will be offered are not what your neighbors were offered. There will also be pressure on you to sell because your neighborhood is now shit. Your house prices may still, all that being considered, have massively risen since you bought the house. The property taxes also rose proportionally, sucking away your equity. Any reply to this other than vague sarcasm?
    - quatrevingts 4y ago
      I think the contradictions are pretty clear: it raises prices, but holdouts sell cheap; it's a shit neighborhood that no one wants to live in because it's too crowded... And the hypothetical boxed-in holdout scenario is simply not representative of what's happening in high demand areas in the US. We're preserving laundromats and parking lots in San Francisco and Manhattan. No one is trying to build towers in the middle of suburbia.
dcolkitt 4y ago
> this cannot be solved from the federal level. I disagree. The federal government invests enormous resources into subsidizing home ownership. Everything from Fannie Mae guaranteeing mortgages to not taxing home owners on the imputed value of rent. And I think that's all well and good, home ownership has many positive externalities. But there's zero point subsidizing demand for something when supply in inelastic. In those cases subsidies don't result in expanded supply, only increased prices. For example even if diamonds are good, it wouldn't make sense for the government to match first time diamond buyers payment, because the supply of diamonds is inherently limited. All it would do is drive up prices. Modest proposal: the federal government should revoke all of its housing subsidies in any municipality that restricts the supply of housing. San Francisco would be more than free to continue to block development. But if it chooses to do so, then San Francisco home owners should no longer be eligible for Fannie/Freddie mortgages, no longer be able to tax deduct mortgage interest, and should have to pay income tax on the imputed rental value of their home.
- snarf21 4y ago
  This is interesting. I wonder if it would work to make all FHA loans be required to be NEW properties/units. So the only way to get access to the money is to expand the housing. I'm sure there are consequences but I need to think them through a bit more.
  - celtain 4y ago
    I don't know about policy consequences, but one political hurdle is that this would be attacked as "welfare for the rich" or something along those lines, since new construction is generally more expensive than existing units.
    - snarf21 4y ago
      Yeah, I haven't thought everything through yet. However, the hope that this would force more of the new housing to be more affordable. A poor person isn't going to be buying a luxury condo so I was trying to think of a way to incentivize builders to increase stock and create more affordable housing. There are definitely some second order effects.
dionidium 4y ago
> It's a simple problem, we turned housing into an investment. People are not natural economists and will basically dig in to support the status quo until that status quo changes, at which point they'll support the new one. Americans, for example, buy new cars at an average new price of $40k and for most of my life accepted uncritically that the value of those cars would plummet the second they were driven off the lot. They did not lobby for supply restrictions that would prevent it. They didn't ask their politicians to prop up "car values." They didn't try to avoid it, at all. They just accepted it. They would do the same with housing, if they weren't already conditioned not to.
- Jiro 4y ago
  https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons There's a legitimate reason why a car immediately loses its value. People are more likely to sell cars that have something wrong with them. The market price for a car that you just drove off the lot is not the market price for an average car of that age, it's the market price for the subset of cars of that age that people want to sell. Because a car in that subset is more likely to have something wrong with it, its value is lower. Even if you personally are not selling the car because there's something wrong with it, it's hard for the buyer to know this. If people had magic X-ray eyes that could tell that the car you just drove off the lot doesn't have more problems than an average new car, then its sale price would be similar to a new car. But they don't.
  - dionidium 4y ago
    That sounds reasonable to me, but it didn't stop the cost of used cars from skyrocketing during the pandemic, due to the supply-chain-induced shortage of new cars. When the car market started looking a lot more like the housing market, so did its prices.
    - Jiro 4y ago
      In that situation, the value of all cars went up, both new and used. The value of a used car was still much less than the value of a new car, you just didn't notice this because new cars didn't have their prices raised to correspond to the increased value.
ROTMetro 4y ago
The government made me an explicate promise with zoning laws that my neighborhood was a safe investment, just as they make people comfortable that bank accounts are safe via banking laws, or that stocks are somewhat safe. Taking that away is breaking a MAJOR social contract made to the 65% of American's that own their home.
- namlem 4y ago
  Yes, it's a social contract that must be destroyed. Otherwise we will experience economic ruin. Look at what happened in Japan in the 1980s, or is happening in New Zealand in Canada. The fact of the matter is that this social contract is pure rent-seeking, and never should have been allowed in the first place. It is theft from future generations by present day homeowners. Also it certainly is not true for all homeowners btw, lots of municipalities have fairly minimal zoning laws.
Tiktaalik 4y ago
> home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism I'm not sure a lot of NIMBYism comes from the notion of protecting home values. If a home were to be upzoned for apartments the underlying land value would rise significantly, and this would be a significant financial windfall for the home owner. They should want to see their land be upzoned for apts but that's not what we see. I think NIMBYism derives from the desire for exclusivity. When ones home and surrounding homes are ultra low density you are guaranteed to have few neighbours. This is what is eliminated when homes are rezoned for apartments.
- andrewmutz 4y ago
  Everyone benefits from their own property being upzoned, but loses when their neighbors build upzoned properties. Hence the NIMBYs block other people's development
  - Tiktaalik 4y ago
    This would only be in the case where their neighbour receives beneficial upzoning and they don't. This would be an unlikely edge case. Generally when we see upzoning advocacy it's neighbourhood wide if not city wide.
nonameiguess 4y ago
> It's a simple problem, we turned housing into an investment. Now everyone who owns a home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism. I don't know how this came to be such an obviously true common wisdom answer here at Hacker news. It's an extremely incomplete account of what causes NIMBYism. I'm sure at least some of it is purely a desire to maintain land value appreciation, but as others have already pointed out, in plenty of cases, conversion from single-family to multi-family zoning increases land value and the land owners still don't want that. The basic cause of NIMBYism is these are people's homes you're talking about. They live there. They may have lived there for decades, possibly even for generations. They chose the place for the character and culture it had at the time of choosing, and they don't want that to change. If they enjoy a relatively quiet life with space, they don't want to see their home changed into a traffic jam with nowhere to park. They don't want to be perpetually surrounded by nonstop construction. I'm not trying to say anyone who feels this way is inherently right. At some point, change is inevitable. I'm sure the original inhabitants didn't like it when European colonists spread strange diseases across the land and then wiped out the stragglers with superior firepower. I'm sure the ranchers of the west didn't like seeing their ranches turned into suburbs. And the suburbanites don't want to see multi-family housing in their once-quiet and relatively secluded homesteads. Without making value judgments either way, though, I think you have to acknowledge there are far more basic instincts at play here than simple financial incentives. It's fair to say we at some point have no choice, and if the result is we can solve housing unavailability and especially homelessness, and the cost is a few or even a large number of people are left with the neighborhoods they grew up in changed drastically into places they no longer want to live, that may be worth it. But you should understand the full range of motivations for people who want stability in their homes and communities and not act like it's purely about financial gain and greed. Remember also that a fair number of communities in which concerns about gentrification are the greatest and people really oppose redevelopment are neighborhoods that these people were historically forced to live in because they were ostracized if not killed when they tried to live anywhere else. That community in its specific current form is what they see themselves as being a part of, far more than the larger city, state, or country that never wanted them in the first place. This is far more complex than you're making it sound.
- 4y ago

sudosysgen 4y ago

This can probably be solved at the federal level using smart taxation and incentives for mixed zoning.

throwaway0a5e 4y ago
The hubris is astounding. You know how we got into this problem? Decades ago we used taxation and law to try and incentivize the development we wanted and disincentivize or prohibit what we didn't. And today the efficacy of that endeavor is obvious to even the most casual observer. There is no compelling reason doing the exact same thing will work better for different values of "development we want" and "development we don't". Have you seen what gets developed when you incentivize mixed development? It's lifeless crap compared to the places that were built up prior to the advent of widespread usage restrictions on land where development happened organically without the input or prior approval of local government (i.e. people were basically free to do whatever within the permissive limits of the time). How about we just get the government out of the business of telling people what and where they can and can't build. Let people develop what they think there is demand for. A few inappropriate industrial sites is a small price to pay for allowing pent up demand for residential and commercial construction to be satiated.
- sudosysgen 4y ago
  I think I wasn't clear. When I say incentivize mixed zoning, I meant that the federal government would incentivize local governments choosing to zone land as mixed use. Then people can build whatever they want. It's not possible to remove zoning completely. That's severe hubris, thinking that we introduced zoning to begin with for no legitimate reason. That's not true - it's necessary to plan city infrastructure and that requires zoning. Removing zoning altogether would be an unmitigated disaster. There is no easy clean solution like "remove all the rules". You can't get government out of the business of city planning and basic infrastructure, and that's in more words what you mean. There is a difference between good policy and bad policy. We need good policy. The only solution is that local governments somehow make better choices.

axg11 4y ago

When was housing not an investment? Throughout history, people have always wanted to drive up the value of their land and properties. There are still plenty of places in the US/Canada/UK where housing is cheap. The problem is that nobody wants to live in those areas.

Cederfjard 4y ago
So do you have a solution in mind?
- davidf18 4y ago
deleted 4y ago
[deleted]
datacruncher01 4y ago
It's true but the reason people are moving to cities are jobs. Rural locations do not have the job market to support the costs to live there. It's a lower cost, but a much, much lower income outlook as well. If you have the money to outright buy a rural property and build a house there, it's not a bad place to live. But you don't want to have to depend on the limited job market with an expensive mortgage and limited buyer pool.
- ch4s3 4y ago
  > If you have the money to outright buy a rural property and build a house there That's if there are available builders. It took my mother the better part of a year to get her roof replaced, because there was no one available to do the job. I'd also argue that the place she lives in rural VA is pretty awful in most respects other than having space and she's not all that far from a town.
- axg11 4y ago
  Remote work is commonplace now. Perhaps in the next few years we’ll test the theory that jobs and house prices are linked. It’s now possible (for tech workers at least) to work from almost anywhere for decent wages. My hunch is that the housing crisis is simple supply and demand. People want to live in cities because of the better access to entertainment, amenities, and services. There aren’t enough houses to fill that demand. There’s no great city on earth that has a glut of housing. If there were, people would flock to that city to fill the housing. I think that’s the very nature of a city. In some sense, the more people that want to live in a city, the higher the quality of the city. That’s also directly correlated with housing cost, sadly.

mistrial9 4y ago

> States are going to have to step in and override cities that aren't being effective surprise - this has already been signed in California; and amended, and further amended.. https://www.capradio.org/articles/2017/09/29/brown-brings-housing-bills-home/ https://www.capradio.org/articles/2017/09/29/brown-brings-ho...

colinmhayes 4y ago
And SF has already tried bending over backwards to defang it. Luckily mayor Breed rejected the attempt, but it's far from over.

fezfight 4y ago

So I think folks overlook just how wealthy certain investors are when they propose the fix is to just build new properties. Those will also get snapped up by investors. To fix the problem, investing in housing needs to be either banned or made very unattractive. You only need one house to live in.

datacruncher01 4y ago
I agree with you, that's a whole other problem. But housing like many goods is still subject to supply and demand. The investors buy the properties because they are actually good investments in situations where housing is in demand, and that's true in all the major cities where we're not building enough housing and appropriately sized housing. If we increase the supply, if we make smaller housing units so there are also affordable units for poorer renters. The investors will move on to more lucrative investments. They can only extract so much wealth from housing before people move for alternatives.
- pessimizer 4y ago
  Everybody has a place to live. Housing isn't scarce. When housing is scarce, people are homeless or living in extremely tiny spaces. They are not. The problem is that people wouldn't be able to afford to own the places where they live. Housing is only "scarce" in desirable places, and that's simply tautological. The sum of unfulfilled desires is the contrapositive of scarcity. Housing is a market in which a very tiny percentage of goods are up for sale at any particular time, and the projected prices of those goods are heavily shared among a huge network of people who profit when the prices are high. The owners of those goods are often heavily leveraged, and can't afford to lower the price significantly, and the transaction and mortgage costs push them to raise the price to cover those costs at the next place they buy. > They can only extract so much wealth from housing before people move for alternatives. No such alternative, which is why the market is as lucrative to exploit as health care. Finding an "alternative" to health care is just to find another type of health care, and if you find an alternative to being housed, you've just found a new kind of house.
  - 4y ago

aluminussoma 4y ago

I wonder if persistently low interest rates is the real culprit that led to housing as investment. I have been recently intrigued by FinTwit arguments that an excess of demand spurred by too low interest rates is the real reason for many shortages. As a saver, that argument naturally appeals to me.

DubiousPusher 4y ago
> I have been recently intrigued by FinTwit arguments that an excess of demand spurred by too low interest rates is the real reason for many shortages I don't believe this is the case as since 2008 the U.S. construction industry has not even built enough units to keep up with population growth. I believe this is a supply problem which is two-fold. 1) Restrictive zoning and permitting which really took off around the 70s 2) A boom and bust construction cycle which has convinced many to not risk it any longer and find other work (this which has been going on for decades but truly inflected after 2008).
- aluminussoma 4y ago
  > I don't believe this is the case as since 2008 the U.S. construction industry has not even built enough units to keep up with population growth. I believe this is a supply problem which is two-fold. A counterargument to this is that population growth has not been very high in the past few decades: https://fred.stlouisfed.org/graph/?g=SUL3 https://fred.stlouisfed.org/graph/?g=SUL3 You certainly have valid points, especially in San Francisco. Nevertheless, looking at the broader market, outside of California, the market appears to be working: builders find a way to build what will sell and maximize their profits. Last week, I drove around a planned community in a middle-America state. Developers started building houses around ~2010 and are still building out the area. These developers had no problem building thousands of homes that were selling well until very recently.
  - DubiousPusher 4y ago
    Population growth has been lower but construction levels have been lower still. This is not speculation. It is fact. https://www.cnbc.com/2021/09/14/america-is-short-more-than-5-million-homes-study-says.html https://www.cnbc.com/2021/09/14/america-is-short-more-than-5... The only parts which are speculative are why. There is consistently lower workforce participation in construction though, that is also a fact. https://finance.yahoo.com/news/construction-industry-after-recession-140430175.html https://finance.yahoo.com/news/construction-industry-after-r... I'm glad the builders in your area have been able to work consistently. I would guess that they are likely riding a trend of a decreasing number of builders who are increasingly professionalized and technologized their operations. Regardless, that is an anecdote and the statistics paint a pretty clear picture.

pessimizer 4y ago

> Now everyone who owns a home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism. This motivation is backwards. Getting zoning restrictions around your house removed multiplies the value of that house. NIMBYism comes from places where people live. YIMBYism maximizes property values, although there's an element of blockbusting because overbuilding and a change in neighborhood character can make a neighborhood so unpleasant to live in that holdouts will end up selling cheap.

quatrevingts 4y ago
YIMBYism simultaneously raises prices (presumably for the greedy developers and sellouts) and lowers them (for the noble neighborhood defenders who are forced to sell). Got it.
- pessimizer 4y ago
  I'm going to ignore your presumptions (your "greedy developers and sellouts) and things I did not say (like "YIMBYism lowers prices for noble neighborhood defenders who are forced to sell"), so basically every word and try to find the spirit of your comment. It's pretty difficult to fit a massive apartment building on a house sized plot between two massive apartment buildings. The prices you will be offered are not what your neighbors were offered. There will also be pressure on you to sell because your neighborhood is now shit. Your house prices may still, all that being considered, have massively risen since you bought the house. The property taxes also rose proportionally, sucking away your equity. Any reply to this other than vague sarcasm?
  - quatrevingts 4y ago
    I think the contradictions are pretty clear: it raises prices, but holdouts sell cheap; it's a shit neighborhood that no one wants to live in because it's too crowded... And the hypothetical boxed-in holdout scenario is simply not representative of what's happening in high demand areas in the US. We're preserving laundromats and parking lots in San Francisco and Manhattan. No one is trying to build towers in the middle of suburbia.

dcolkitt 4y ago

> this cannot be solved from the federal level. I disagree. The federal government invests enormous resources into subsidizing home ownership. Everything from Fannie Mae guaranteeing mortgages to not taxing home owners on the imputed value of rent. And I think that's all well and good, home ownership has many positive externalities. But there's zero point subsidizing demand for something when supply in inelastic. In those cases subsidies don't result in expanded supply, only increased prices. For example even if diamonds are good, it wouldn't make sense for the government to match first time diamond buyers payment, because the supply of diamonds is inherently limited. All it would do is drive up prices. Modest proposal: the federal government should revoke all of its housing subsidies in any municipality that restricts the supply of housing. San Francisco would be more than free to continue to block development. But if it chooses to do so, then San Francisco home owners should no longer be eligible for Fannie/Freddie mortgages, no longer be able to tax deduct mortgage interest, and should have to pay income tax on the imputed rental value of their home.

snarf21 4y ago
This is interesting. I wonder if it would work to make all FHA loans be required to be NEW properties/units. So the only way to get access to the money is to expand the housing. I'm sure there are consequences but I need to think them through a bit more.
- celtain 4y ago
  I don't know about policy consequences, but one political hurdle is that this would be attacked as "welfare for the rich" or something along those lines, since new construction is generally more expensive than existing units.
  - snarf21 4y ago
    Yeah, I haven't thought everything through yet. However, the hope that this would force more of the new housing to be more affordable. A poor person isn't going to be buying a luxury condo so I was trying to think of a way to incentivize builders to increase stock and create more affordable housing. There are definitely some second order effects.

dionidium 4y ago

> It's a simple problem, we turned housing into an investment. People are not natural economists and will basically dig in to support the status quo until that status quo changes, at which point they'll support the new one. Americans, for example, buy new cars at an average new price of $40k and for most of my life accepted uncritically that the value of those cars would plummet the second they were driven off the lot. They did not lobby for supply restrictions that would prevent it. They didn't ask their politicians to prop up "car values." They didn't try to avoid it, at all. They just accepted it. They would do the same with housing, if they weren't already conditioned not to.

Jiro 4y ago
https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons There's a legitimate reason why a car immediately loses its value. People are more likely to sell cars that have something wrong with them. The market price for a car that you just drove off the lot is not the market price for an average car of that age, it's the market price for the subset of cars of that age that people want to sell. Because a car in that subset is more likely to have something wrong with it, its value is lower. Even if you personally are not selling the car because there's something wrong with it, it's hard for the buyer to know this. If people had magic X-ray eyes that could tell that the car you just drove off the lot doesn't have more problems than an average new car, then its sale price would be similar to a new car. But they don't.
- dionidium 4y ago
  That sounds reasonable to me, but it didn't stop the cost of used cars from skyrocketing during the pandemic, due to the supply-chain-induced shortage of new cars. When the car market started looking a lot more like the housing market, so did its prices.
  - Jiro 4y ago
    In that situation, the value of all cars went up, both new and used. The value of a used car was still much less than the value of a new car, you just didn't notice this because new cars didn't have their prices raised to correspond to the increased value.

ROTMetro 4y ago

The government made me an explicate promise with zoning laws that my neighborhood was a safe investment, just as they make people comfortable that bank accounts are safe via banking laws, or that stocks are somewhat safe. Taking that away is breaking a MAJOR social contract made to the 65% of American's that own their home.

namlem 4y ago
Yes, it's a social contract that must be destroyed. Otherwise we will experience economic ruin. Look at what happened in Japan in the 1980s, or is happening in New Zealand in Canada. The fact of the matter is that this social contract is pure rent-seeking, and never should have been allowed in the first place. It is theft from future generations by present day homeowners. Also it certainly is not true for all homeowners btw, lots of municipalities have fairly minimal zoning laws.

Tiktaalik 4y ago

> home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism I'm not sure a lot of NIMBYism comes from the notion of protecting home values. If a home were to be upzoned for apartments the underlying land value would rise significantly, and this would be a significant financial windfall for the home owner. They should want to see their land be upzoned for apts but that's not what we see. I think NIMBYism derives from the desire for exclusivity. When ones home and surrounding homes are ultra low density you are guaranteed to have few neighbours. This is what is eliminated when homes are rezoned for apartments.

andrewmutz 4y ago
Everyone benefits from their own property being upzoned, but loses when their neighbors build upzoned properties. Hence the NIMBYs block other people's development
- Tiktaalik 4y ago
  This would only be in the case where their neighbour receives beneficial upzoning and they don't. This would be an unlikely edge case. Generally when we see upzoning advocacy it's neighbourhood wide if not city wide.

nonameiguess 4y ago

> It's a simple problem, we turned housing into an investment. Now everyone who owns a home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism. I don't know how this came to be such an obviously true common wisdom answer here at Hacker news. It's an extremely incomplete account of what causes NIMBYism. I'm sure at least some of it is purely a desire to maintain land value appreciation, but as others have already pointed out, in plenty of cases, conversion from single-family to multi-family zoning increases land value and the land owners still don't want that. The basic cause of NIMBYism is these are people's homes you're talking about. They live there. They may have lived there for decades, possibly even for generations. They chose the place for the character and culture it had at the time of choosing, and they don't want that to change. If they enjoy a relatively quiet life with space, they don't want to see their home changed into a traffic jam with nowhere to park. They don't want to be perpetually surrounded by nonstop construction. I'm not trying to say anyone who feels this way is inherently right. At some point, change is inevitable. I'm sure the original inhabitants didn't like it when European colonists spread strange diseases across the land and then wiped out the stragglers with superior firepower. I'm sure the ranchers of the west didn't like seeing their ranches turned into suburbs. And the suburbanites don't want to see multi-family housing in their once-quiet and relatively secluded homesteads. Without making value judgments either way, though, I think you have to acknowledge there are far more basic instincts at play here than simple financial incentives. It's fair to say we at some point have no choice, and if the result is we can solve housing unavailability and especially homelessness, and the cost is a few or even a large number of people are left with the neighborhoods they grew up in changed drastically into places they no longer want to live, that may be worth it. But you should understand the full range of motivations for people who want stability in their homes and communities and not act like it's purely about financial gain and greed. Remember also that a fair number of communities in which concerns about gentrification are the greatest and people really oppose redevelopment are neighborhoods that these people were historically forced to live in because they were ostracized if not killed when they tried to live anywhere else. That community in its specific current form is what they see themselves as being a part of, far more than the larger city, state, or country that never wanted them in the first place. This is far more complex than you're making it sound.

4y ago