5 ms·

Americans Voted Their Way into a Housing Crisis

14 points by zealtrace 2y ago

arcticbull 2y ago
America's housing situation continues to be zoning-driven. Cities where the jobs are located constrain housing supply via capricious zoning policies designed specifically to make housing more expensive. It is done to the benefit of existing landowners who vote for them, naturally, as landowners tend to be older, wealthier and voracious voters. Sure there's plenty of houses in Detroit but you can't commute from Detroit to NYC or the Bay Area. Single-family zoning was pioneered in Berkeley in 1916 specifically to prevent minorities from moving to white neighborhoods in Berkeley by pricing them out. After the Fair Housing Act passed outlawing restrictive covenants it became one of the most powerful lawful weapons to enforce class and race segregation in cities. [0] Now 96% of all residential land in California, over half of the Bay Area and 2/3 of SF is single-family exclusive zoning. The Bay Area, the single most economically productive place in the entire US has a population density of 600 people per square mile, in line with an average European agrarian hamlet. Housing is not the only market in the history of the world that is immune to supply and demand. When supply is constrained to below demand, pricing rises to the highest level the market can bear. When supply exceeds demand, prices fall towards the cost of construction. The premium capricious zoning policy in SF creates is estimated at $400,000 per unit. [1] I don't understand how progressives took up the mantle of "no more housing thanks we're good, let's just apply rent control" as if rent control actually helps. In the face of an expanding population this is outright regressive policy. Studies in SF show that it reduced supply and increased prices. [2] If you have enough supply, prices don't increase, so you don't need rent control. [edit] I once again remind readers that the housing market is interstate commerce and the federal government has the power to overturn all these silly zoning shenanigans. Japanese-style federalized zoning is a great way out of this. The Fair Housing Act itself was passed under the justification that housing is interstate commerce via the Dormant Commerce Clause. [3, 4] [0] https://en.wikipedia.org/wiki/Single-family_zoning https://en.wikipedia.org/wiki/Single-family_zoning [1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage [2] https://www.gsb.stanford.edu/faculty-research/publications/effects-rent-control-expansion-tenants-landlords-inequality-evidence https://www.gsb.stanford.edu/faculty-research/publications/e... [3] https://nysba.org/how-the-dormant-commerce-clause-can-fight-zoning-discrimination/ https://nysba.org/how-the-dormant-commerce-clause-can-fight-... [4] https://www.justice.gov/crt/housing-and-civil-enforcement-cases-documents-192 https://www.justice.gov/crt/housing-and-civil-enforcement-ca...
- zamfi 2y ago
  Zoning also creates this "positive" (in the technical, not social sense) feedback loop, where housing is so expensive that it drives up the cost of any kind of local production, including housing, because labor is (now) the primary driver of construction costs in California. That said, building codes also drive up housing construction costs: originally intended for safety, building codes now also enforce energy efficiency (including window size, insulation, etc.), accessibility, sound transmission, material selection (for reasons other than safety), beyond the usual structural design, electrical/HVAC safety, and fire concerns. This is before we even get to planning codes (i.e., zoning) which has restrictions on lot coverage, etc. that end up causing stronger correlations between land prices and unit costs.
- hypeatei 2y ago
  > via capricious zoning policies designed specifically to make housing more expensive This coincides with treating housing as an investment. Older generations (even Gen X) will flaunt how great it is that their house went up by X% in the last 5 years. It completely ignores that housing is meant to keep a roof over your head and not be treated as a spreadsheet line item in your portfolio.
  - arcticbull 2y ago
    Ah yes, I left that out but it's amazing how people continue to want housing to be both "affordable" and "a good investment" when those are fundamentally antithetical goals. A good investment gets less affordable over time.
    - zamfi 2y ago
      Maybe, but these are primarily antithetical when density doesn't increase. It's totally possible to have housing be "affordable" (i.e., condos, apartments in multi-unit complexes) and "a good investment" -- buildable land close to amenities/jobs/etc. rises in value, and so selling to a developer who will add more units on that land can net the owner a solid profit. The contradiction appears when you want the same units (i.e., SFHs in perpetuity) to be both affordable and appreciate in value.
krinchan 2y ago
Having RTFA: I think it's an interesting take to centralize zoning at the state level. Houston (which has no zoning ordinances) is a terrible place to live, but it's definitely an affordable place to live. The incentives at a state level around housing might actually balance differently because at that level economic activity, jobs, etc. matter more than property taxes. Something that isn't often mentioned, because the focus is always on California or the US, is that property values are directly tied to the overwhelming majority of municipal budgets via property taxes incurred as a percentage of that value. Not only do constituents vote for more expensive residential property, local governments want expensive residential property even if their voters didn't. This is exactly why California has been trying to move some of this power to the state level: local governments are fighting tooth and nail to hold on to their tax revenue. ETA: The property tax thing is more complex, but still applies. States like Florida and California cap how much tax assessments can increase for property you own that is your primary residence. This still encourages these states to drive up property values because it tempts you into cashing out via selling. Every state with this sort of cap also immediately reassesses real estate to the price it sells at the following year. A high property value versus the tax assessment is just a deferred revenue stream, so it's a driver to encourage consistent turnover in the market. The only real way to do that is to constantly drive prices up, which drives the cost of living up, which turns over the residents faster. So capping tax assessments like that, just makes the cycle even more viscous, in my experience living in Florida for a time.
- danaris 2y ago
  I mean, this also suggests that part of the way out of this is to change that perverse incentive structure. Fund municipalities more from the state level, through progressive income taxes (and/or potentially other funding sources). Property taxes don't have to go away, but if they're no longer the sole or primary source of funding for the municipality where they're being levied, that removes a very obvious source of problems. Just as obviously, it will introduce other problems, but in my experience, when you come to recognize that a particular structure in finance/government/rules/etc is causing problems, it is easier to get in a mindset of identifying similar problems in the structures you set up to replace them. This does require a certain minimum degree of competency and a certain maximum degree of willingness to upset everyone else's applecart for one's own benefit among the powers that would be making the decisions, of course, which cannot always be a given.
josefritzishere 2y ago
This reads like a propadanda peice focusing on zoning (which is relevant) but disregards the recent supply-side affects of private equity companies moving hard into real estate. They will point to the fact that they only own 2% of homes overall, but they purchased 24% of sold inventory in 2022 and 40% in 2023. That is huge. https://www.washingtontimes.com/news/2024/mar/15/in-shift-44-of-all-single-family-home-purchases-we/ https://www.washingtontimes.com/news/2024/mar/15/in-shift-44...
- zealtrace 2y ago
  The article you reference paints a distorted picture. The survey it’s reporting on is specifically limited to properties purchased to be flipped, not the entire market. It also lumps BlackRock with family owned LLCs. Quoting the original article: “When combining closings between both larger, private equity and smaller, independent operations, investors accounted for 44% of the purchases of flips during the third quarter, the data reveals.” https://www.businessinsider.com/big-investors-purchasing-more-single-family-homes-from-home-flippers-2022-11 https://www.businessinsider.com/big-investors-purchasing-mor... The impact of investors on the larger market is much less clear: https://www.minneapolisfed.org/article/2024/rise-in-investor-owned-single-family-rentals-prompts-policy-responses https://www.minneapolisfed.org/article/2024/rise-in-investor... I found the original submission worthwhile because it moves beyond these sorts of discussions. I didn't view it as focusing on zoning, but on highlighting how our local democratic structures themselves contribute to these issues. It has implications that go beyond just housing.

14 points by zealtrace 2y ago

America's housing situation continues to be zoning-driven. Cities where the jobs are located constrain housing supply via capricious zoning policies designed specifically to make housing more expensive. It is done to the benefit of existing landowners who vote for them, naturally, as landowners tend to be older, wealthier and voracious voters. Sure there's plenty of houses in Detroit but you can't commute from Detroit to NYC or the Bay Area. Single-family zoning was pioneered in Berkeley in 1916 specifically to prevent minorities from moving to white neighborhoods in Berkeley by pricing them out. After the Fair Housing Act passed outlawing restrictive covenants it became one of the most powerful lawful weapons to enforce class and race segregation in cities. [0] Now 96% of all residential land in California, over half of the Bay Area and 2/3 of SF is single-family exclusive zoning. The Bay Area, the single most economically productive place in the entire US has a population density of 600 people per square mile, in line with an average European agrarian hamlet. Housing is not the only market in the history of the world that is immune to supply and demand. When supply is constrained to below demand, pricing rises to the highest level the market can bear. When supply exceeds demand, prices fall towards the cost of construction. The premium capricious zoning policy in SF creates is estimated at $400,000 per unit. [1] I don't understand how progressives took up the mantle of "no more housing thanks we're good, let's just apply rent control" as if rent control actually helps. In the face of an expanding population this is outright regressive policy. Studies in SF show that it reduced supply and increased prices. [2] If you have enough supply, prices don't increase, so you don't need rent control. [edit] I once again remind readers that the housing market is interstate commerce and the federal government has the power to overturn all these silly zoning shenanigans. Japanese-style federalized zoning is a great way out of this. The Fair Housing Act itself was passed under the justification that housing is interstate commerce via the Dormant Commerce Clause. [3, 4] [0] https://en.wikipedia.org/wiki/Single-family_zoning https://en.wikipedia.org/wiki/Single-family_zoning [1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage [2] https://www.gsb.stanford.edu/faculty-research/publications/effects-rent-control-expansion-tenants-landlords-inequality-evidence https://www.gsb.stanford.edu/faculty-research/publications/e... [3] https://nysba.org/how-the-dormant-commerce-clause-can-fight-zoning-discrimination/ https://nysba.org/how-the-dormant-commerce-clause-can-fight-... [4] https://www.justice.gov/crt/housing-and-civil-enforcement-cases-documents-192 https://www.justice.gov/crt/housing-and-civil-enforcement-ca...

zamfi 2y ago
Zoning also creates this "positive" (in the technical, not social sense) feedback loop, where housing is so expensive that it drives up the cost of any kind of local production, including housing, because labor is (now) the primary driver of construction costs in California. That said, building codes also drive up housing construction costs: originally intended for safety, building codes now also enforce energy efficiency (including window size, insulation, etc.), accessibility, sound transmission, material selection (for reasons other than safety), beyond the usual structural design, electrical/HVAC safety, and fire concerns. This is before we even get to planning codes (i.e., zoning) which has restrictions on lot coverage, etc. that end up causing stronger correlations between land prices and unit costs.
hypeatei 2y ago
> via capricious zoning policies designed specifically to make housing more expensive This coincides with treating housing as an investment. Older generations (even Gen X) will flaunt how great it is that their house went up by X% in the last 5 years. It completely ignores that housing is meant to keep a roof over your head and not be treated as a spreadsheet line item in your portfolio.
- arcticbull 2y ago
  Ah yes, I left that out but it's amazing how people continue to want housing to be both "affordable" and "a good investment" when those are fundamentally antithetical goals. A good investment gets less affordable over time.
  - zamfi 2y ago
    Maybe, but these are primarily antithetical when density doesn't increase. It's totally possible to have housing be "affordable" (i.e., condos, apartments in multi-unit complexes) and "a good investment" -- buildable land close to amenities/jobs/etc. rises in value, and so selling to a developer who will add more units on that land can net the owner a solid profit. The contradiction appears when you want the same units (i.e., SFHs in perpetuity) to be both affordable and appreciate in value.

krinchan 2y ago

Having RTFA: I think it's an interesting take to centralize zoning at the state level. Houston (which has no zoning ordinances) is a terrible place to live, but it's definitely an affordable place to live. The incentives at a state level around housing might actually balance differently because at that level economic activity, jobs, etc. matter more than property taxes. Something that isn't often mentioned, because the focus is always on California or the US, is that property values are directly tied to the overwhelming majority of municipal budgets via property taxes incurred as a percentage of that value. Not only do constituents vote for more expensive residential property, local governments want expensive residential property even if their voters didn't. This is exactly why California has been trying to move some of this power to the state level: local governments are fighting tooth and nail to hold on to their tax revenue. ETA: The property tax thing is more complex, but still applies. States like Florida and California cap how much tax assessments can increase for property you own that is your primary residence. This still encourages these states to drive up property values because it tempts you into cashing out via selling. Every state with this sort of cap also immediately reassesses real estate to the price it sells at the following year. A high property value versus the tax assessment is just a deferred revenue stream, so it's a driver to encourage consistent turnover in the market. The only real way to do that is to constantly drive prices up, which drives the cost of living up, which turns over the residents faster. So capping tax assessments like that, just makes the cycle even more viscous, in my experience living in Florida for a time.

danaris 2y ago
I mean, this also suggests that part of the way out of this is to change that perverse incentive structure. Fund municipalities more from the state level, through progressive income taxes (and/or potentially other funding sources). Property taxes don't have to go away, but if they're no longer the sole or primary source of funding for the municipality where they're being levied, that removes a very obvious source of problems. Just as obviously, it will introduce other problems, but in my experience, when you come to recognize that a particular structure in finance/government/rules/etc is causing problems, it is easier to get in a mindset of identifying similar problems in the structures you set up to replace them. This does require a certain minimum degree of competency and a certain maximum degree of willingness to upset everyone else's applecart for one's own benefit among the powers that would be making the decisions, of course, which cannot always be a given.

josefritzishere 2y ago

This reads like a propadanda peice focusing on zoning (which is relevant) but disregards the recent supply-side affects of private equity companies moving hard into real estate. They will point to the fact that they only own 2% of homes overall, but they purchased 24% of sold inventory in 2022 and 40% in 2023. That is huge. https://www.washingtontimes.com/news/2024/mar/15/in-shift-44-of-all-single-family-home-purchases-we/ https://www.washingtontimes.com/news/2024/mar/15/in-shift-44...

zealtrace 2y ago
The article you reference paints a distorted picture. The survey it’s reporting on is specifically limited to properties purchased to be flipped, not the entire market. It also lumps BlackRock with family owned LLCs. Quoting the original article: “When combining closings between both larger, private equity and smaller, independent operations, investors accounted for 44% of the purchases of flips during the third quarter, the data reveals.” https://www.businessinsider.com/big-investors-purchasing-more-single-family-homes-from-home-flippers-2022-11 https://www.businessinsider.com/big-investors-purchasing-mor... The impact of investors on the larger market is much less clear: https://www.minneapolisfed.org/article/2024/rise-in-investor-owned-single-family-rentals-prompts-policy-responses https://www.minneapolisfed.org/article/2024/rise-in-investor... I found the original submission worthwhile because it moves beyond these sorts of discussions. I didn't view it as focusing on zoning, but on highlighting how our local democratic structures themselves contribute to these issues. It has implications that go beyond just housing.