5 ms·

Sure. The long and short of it comes down to how appraisals work, especially in the context of supply-constrained housing markets. Buyers with means in supply-

by nrr 3y ago

Sure. The long and short of it comes down to how appraisals work, especially in the context of supply-constrained housing markets. Buyers with means in supply-constrained markets don't really care about a seller's asking price (read: their acquisition price as a buyer) beyond having a lower bound, and a pattern of buyers just throwing money at sellers has the knock-on effect of increasing property values. Acquisition prices drive values.

gen220 3y ago
If you see my other comments in this thread, does that help contextualize my position? Basically, my thesis is we probably don't need to increase physical supply, we can probably get away with increasing market supply, and that the physical supply is actually probably sufficient to satisfy the physical residential demand. If that isn't the case, obviously you have to build. But I don't see high prices as evidence that the problem is the lack homes for residents. It could very much be that the problem is that physical supply is over-consumed. I think we tend to reach for high-density supply as a solution, without thinking about whether that's actually the best solution. It's definitely the simplest, but we don't even explore the other issues that cause distortion in the market. Like prop 13, the retiring generation treating their homes as retirement vehicles, etc. It doesn't seem implausible to me that if we solve those distortions in favor of resident homeowners, that the "affordable housing crisis" goes away without requiring high-density housing in downtown Santa Cruz.
- nrr 3y ago
  I don't necessarily disagree, but the proposed mechanisms for controlling that market supply seem hard to enforce with the current millage regime. Any hushed talk of expropriation also risks eliciting thoughts of eminent domain. It's a really hard sell. Additionally, the biggest piece of evidence for physical supply being the constraint is overcrowding: how many unrelated people are living in a single housing unit? Especially in college towns like Santa Cruz (and especially as we've not stood up new schools elsewhere), this seems particularly acute.

by nrr 3y ago

gen220 3y ago

If you see my other comments in this thread, does that help contextualize my position? Basically, my thesis is we probably don't need to increase physical supply, we can probably get away with increasing market supply, and that the physical supply is actually probably sufficient to satisfy the physical residential demand. If that isn't the case, obviously you have to build. But I don't see high prices as evidence that the problem is the lack homes for residents. It could very much be that the problem is that physical supply is over-consumed. I think we tend to reach for high-density supply as a solution, without thinking about whether that's actually the best solution. It's definitely the simplest, but we don't even explore the other issues that cause distortion in the market. Like prop 13, the retiring generation treating their homes as retirement vehicles, etc. It doesn't seem implausible to me that if we solve those distortions in favor of resident homeowners, that the "affordable housing crisis" goes away without requiring high-density housing in downtown Santa Cruz.

nrr 3y ago
I don't necessarily disagree, but the proposed mechanisms for controlling that market supply seem hard to enforce with the current millage regime. Any hushed talk of expropriation also risks eliciting thoughts of eminent domain. It's a really hard sell. Additionally, the biggest piece of evidence for physical supply being the constraint is overcrowding: how many unrelated people are living in a single housing unit? Especially in college towns like Santa Cruz (and especially as we've not stood up new schools elsewhere), this seems particularly acute.