7 ms·

The spectre haunting San Francisco

76 points by mjohn 12y ago

smoyer 12y ago
"in a very good explainer" Apparently written by "W"? I'm a bit surprised to see grammar mistakes in the economist since it's not just someone's blog.
- leoc 12y ago
  It's an Economist blog entry, not an official Economist article, so it doesn't get subedited. The whole prose style of the piece would be notably different once the subs were finished with it. The initial-letter monikers are a compromise between the anonymity of Economist articles, (almost) all written in the editorial voice, and the personal voices of the blog.
- deleted 12y ago
  [deleted]
- wavefunction 12y ago
  "a very good explainer" is just a colloquial phrase, meaning "explanatory piece of expository writing." I think you're just noticing and reacting to an example of the rather casual writing style that appears to be replacing the expected traditional presentation of pieces in The Economist.
  - thaumasiotes 12y ago
    Where are you from? To me (US), as apparently to grandparent, "a very good explainer" is an error, not a colloquialism.
    - notacoward 12y ago
      I'm pretty sure s/he's from Earth, where use of language often changes not only according to geography but time, profession, or social milieu. Where is that not the case? Where is it traditional to go on so much about one phrase instead of addressing the ideas in an article? I don't think I'd want to live on Pedant Planet.
    - scatters 12y ago
      UK here. It's definitely been in use as journalistic jargon for a while, typically in the form of a headline "Explainer: <topic of article>", e.g. http://www.theguardian.com/commentisfree/libertycentral/2009/feb/24/freedomofinformation-civil-liberties http://www.theguardian.com/commentisfree/libertycentral/2009... (2009); here's a trend graph that shows that usage has picked up in the last decade: http://www.google.com/trends/explore#q=explainer http://www.google.com/trends/explore#q=explainer Earliest citation I've been able to find (1998): http://books.google.co.uk/books?id=kw9lAAAAMAAJ&q=%22an+explainer+on%22&dq=%22an+explainer+on%22&hl=en&sa=X&ei=uOBPU7D4H6fT7AbHl4HgDw&redir_esc=y http://books.google.co.uk/books?id=kw9lAAAAMAAJ&q=%22an+expl... - note that this is US, not UK. Article on "explainer" journalism; a little informal but demonstrates usage: http://www.theawl.com/2014/03/eleven-questions-about-explainer-journalism http://www.theawl.com/2014/03/eleven-questions-about-explain...
      - smoyer 12y ago
        Wow ... apparently I'm ignorant twice with this comment (at least the last one I made was well-received): a) Culturally ignorant - I had no idea that "explainer" was in common use in the UK. I would have called the rest of the article "an explanation". b) Literally ignorant - How did I miss that this wasn't an Economist article? Sorry!
    - wavefunction 12y ago
      I'm from the US, but "an explainer" is a UKism from what I know. I've seen it used elsewhere.
    - lotsofmangos 12y ago
      Here's a relatively recent example of it being used in US headline writing to mean an explanatory pamphlet - "Republicans to Distribute Shutdown Explainer" http://www.rollcall.com/news/republicans_to_distribute_shutdown_explainer-204600-1.html http://www.rollcall.com/news/republicans_to_distribute_shutd... And here's another from The Washington Post, to mean the text of the article - "Who is Daft Punk? A quick explainer for confused Grammy-watchers" http://www.washingtonpost.com/blogs/style-blog/wp/2014/01/27/who-is-daft-punk-a-quick-explainer-for-confused-grammy-watchers/ http://www.washingtonpost.com/blogs/style-blog/wp/2014/01/27...
  - josephlord 12y ago
    "explanatory piece of expository writing." Or "an explanation" in English. Although to be honest I would have read "a very good explainer" as being someone who is good at explaining rather than a thing. I don't believe "explainer" is a word in English.
praptak 12y ago
I find it strange that the protesters target tech workers. The real class war seems NIMBY-supported landlords vs everyone else, not crappy-paid vs well-paid workforce. But well, I'm not even in US so what do I know.
- michaelochurch 12y ago
  I agree with you. The First Estate (landlords, investors and executives, paid enough to own houses) has been dicking over the Second Estate (engineers, able to live in SF but not save or buy houses) through no-poach agreements, collusive arrangements (note-sharing among VCs) blocking them from starting new businesses, and increasingly mean-spirited HR policies (stack ranking). The Third Estate (everyone else) is being evicted and abused by the rent-seeking First Estate. Somehow, the First Estate managed to convince the Third Estate that it's the Second Estate's fault, hence the bus attacks. It's not. I'm not so out-of-touch that I'd call $120,000 per year, in any city, "poor" because it's not; but neither is it "rich" and these tech workers are not responsible for this NIMBY nonsense.
  - fidotron 12y ago
    A similar situation is behind the Economist existing, as about 200 years ago in the UK they had a strange setup with land owning aristocrats, free market industrialists, and proto-communist "Chartists". The aristocrats found unlikely allies in the Chartists, though it didn't help in the long run. The free market types were concerned about the Corn Laws, and formed the https://en.wikipedia.org/wiki/Anti-Corn_Law_League https://en.wikipedia.org/wiki/Anti-Corn_Law_League , and their journal ended up becoming the Economist. The Corn Laws effectively subsidised the aristocracy, and prevented free labour movement, first by keeping cost of living too high (through cost of food) secondly by keeping people working on otherwise unviable farms to produce corn. The Chartists were so preoccupied with the idea that the industrialists wanted to drive wages down they missed the bigger picture.
    - nostrademons 12y ago
      This seems to always be the case - people turn on neighboring socioeconomic classes, not the ones at the extreme top of the pyramid. During the Jim Crow era, the worst discrimination against blacks came not from the elite (many of whom had been abolitionists during slavery and equality-minded liberals afterwards), but from poor white sharecroppers who were one degree removed from slavery themselves. Nowadays, the conservative movement within the U.S. is composed of the ultra-wealthy plus the lower-middle-class and working-class Religious Right. The targets of the LA race riots were not rich white people, but Korean shopkeepers in minority neighborhoods. I suspect it's because it's generally impossible to "skip" social classes and jump directly from the bottom to the top. Even rags-to-riches stories usually involved a period of a few decades where the person enters and assimilates into the intervening classes. Jan Koum went from immigrant to middle-class tech worker to aspiring entrepreneur to multi-billionaire. Henry Ford went from farmer to machinist to engineer to captain of industry. Andrew Carnegie went from immigrant to bobbin boy to telegraph operator to bookkeeper & investor to steel magnate. As a result, each class views the class directly above them as their impediment to upwards mobility, and they're not wrong in that belief. In times of scarcity, resentment usually flows upwards to their immediate neighbors. The more distant causes of the socioeconomic structures that hold people down are effectively invisible to the rioting classes; all they see is people who are not very different from themselves doing better than them.
deleted 12y ago
[deleted]
al2o3cr 12y ago
I'm baffled as to how an article at the Economist somehow got through that many words without mentioning that land isn't entirely a "market" good - barring some pretty major civil engineering, increased demand for land in SF isn't going to make more land come on the market...
- thaumasiotes 12y ago
  If you want land to farm crops on, sure; for that purpose you really want the ground. If you want land to live on, of course increased demand will cause more to come on the market. We build up from the ground, layer by layer. I haven't lived at ground level in many years.
  - shubb 12y ago
    That is partly true, but planning and zoning restrictions prevent building up as well. If you think about it, increasing the amount of dwellings on a plot of land has a cost, that can be amortized over a number of years. If the market was free, the price / rent for a high rise dwelling would tend towards this cost. However, if you want to erect an apartment block, you have to apply for planning. Local objections generally prevent it from being built (hence the references to NIMBYs). So it isn't a free market, because supply is controlled by the city government. There is some acceptance that planning laws don't work - it is implicit in the overriding laws that kick in for major infrastructure projects like freeway builds (called compulsory purchase here). You could say maybe this needs to be extended to apartment building. But I think it shows the planning system's criteria are broken. Rather than balance cost and benefit, it only takes into account the reasons not to build.
    - thaumasiotes 12y ago
      You're correct, but I was responding to the claim that land was somehow a special commodity -- in the words of my parent, "land isn't entirely a 'market' good - barring some pretty major civil engineering, increased demand for land in SF isn't going to make more land come on the market". I reject that claim entirely, and your comment doesn't address my reasons. The supply of cocaine is controlled too, but I suspect that it's a fairly clear example of a 'market' good in the sense of my parent comment. Residential area is not limited any more than cocaine is.
michaelochurch 12y ago
Here's another factor: extreme price inelasticity. We saw inelasticity in the 1970s oil shocks. Supply was only reduced by about 5%, but that caused 4x price surges, putting elasticity (E) at: -ln(0.95) / ln(4) = 0.037 If E < 1, then reducing the quantity supplied by X% will increase prices by more than X%, with no other change to the innate desirability (demand curve) of it. With housing, E << 1. It's probably in the same range as oil: 0.02 to 0.04. This means that things can simultaneously destroy value, but drive up prices enough to increase the value of the total stock. Let's say that an earthquake hits Manhattan or San Francisco, destroying 5% of all housing. Ignore the (highly unpredictable) short-term effect on prices; there will probably be deals in the immediate aftermath due to panic selling. Assume zero effect on the local job market (that's not true, but it's actually close enough that it won't affect the conclusion). Six months out, rents (and, although not by as much, property prices) will be much higher because of the reduced supply. Let's say that prices double. Wealth was destroyed. It's unambiguously a bad, value-destroying, thing when 5% of the housing stock falls into ruin. However, the bulk price of the total housing stock has gone up by 90%. That's what 95% of these housing pundits don't get. They look at a spiking housing market and think, "Wow, people really want to live here, this place is doing well." They think that increasing desirability (local job market) is the primary cause of the housing price increase, and that the NIMBY corruption is just a supporting actor, and it's not so. At one time, Luanda was the most expensive city in terms of real estate. Angola is not a wealthy country (GDP per capita around $7,000) and it's consistently in the bottom fourth for the HDI. Moscow sometimes edges out New York and San Francisco for real estate prices, and neither weather nor the job market explain that. Half a century ago, NIMBYism was more explicitly racist than 2014-style classism and it did immense damage to American cities. Just ask Detroit, Baltimore, Newark, or even Pittsburgh. NIMBY policies benefit a small number of wealth-destroying rentiers, but inelasticity makes a system more brittle. It means that price impulses magnify (rather than dampening) and cause undesirable feedback effect. The term "shock" is accurate, and it can bring a city to its knees in a short amount of time.
cyphunk 12y ago
Unpaywalled: http://archive.today/RlaNR http://archive.today/RlaNR (or access with fresh cookies)
josephlord 12y ago
This article's position in this part strikes me as mostly rubbish: ... Housing affordability activists like to point out that most new construction is for luxury housing, meaning that supply of non-luxury units is not growing by very much. Others love to say that price declines have historically gone hand in hand with falling construction. These arguments are both nonsense. The latter point gets causation the wrong way around; given an unexpected decline in demand due to financial crisis or other shocks prices fall and interest in new construction dries up until existing inventories are cleared. The former point misses the fundamental fungibility of housing. When new construction of luxury units lags, the very rich buy up older housing stock at exorbitant prices and pay to have them redone. You see this in London, for instance, where literally every house in the city is now being rehabilitated, including those that were rehabilitated last year. Residents have to actively shoo away the builders trying to erect scaffolding, on the assumption that the owners will be wanting an extra floor or two on their house. It is a headache. There is a team of wildcat subcontractors digging us a new wine cellar as we speak. The point is that if demand for high-end housing is not satisfied with new construction, that demand will flow to existing supply, putting upward pressure on prices right across the housing stock. Yes the rich will buy older housing stock if they build new affordable housing rather than luxury housing but the affordable housing should be higher density producing more homes on the same land so there will still be affordable houses freed up even when the rich have displaced others into them.
- samstave 12y ago
  Im no economist, but ive observed two things in SF; there are a ton of new, high-end high-rise apartment buildings being built in SF right now. (See all the cranes) These will have high rents to pay for their high construction costs. All other rents will rise as well, because all owners will see what everything else costs and continue to charge ridiculous amounts for their spaces. The rents in SF right now are absolutely insane.
  - fennecfoxen 12y ago
    > All other rents will rise as well, because all owners will see what everything else costs and continue to charge ridiculous amounts for their spaces. Don't be absurd. Owners are already well aware of the fact that there are rich Google engineers beating a path to their door, and are glad to charge said engineers as much as they think they can get away with. Additional housing is competition, and if they affect prices they will cause them to fall, as various Google engineers will have an alternative to Mission-district Victorians and other existing housing stock.
michaelfeathers 12y ago
Reading the article, I just kept asking myself whether San Francisco really needs more people. Despite all of the talk of economics and regulation, it isn't so bad when people develop new hubs when a hub like San Francisco becomes saturated. Maybe its better to have more of them than a megapolis.
- rwallace 12y ago
  I disagree, but if that's how it's going to be, then let it be done by immigration quota. If something isn't actually going to be a free market, it is better to be honest about that. A pretend free market is the worst of both worlds.
  - michaelfeathers 12y ago
    As much as I believe in free markets, I think zoning is useful thing. I live in South Florida and we have a couple of areas with very little zoning. They are funky and great to live in now, but eventually they will gentrify. On the other hand, there are heavily zoned areas don't have the sort of quirk I love and never will. The sweet spot is hard to achieve with or without zoning. I think that if zoning was pulled completely from San Francisco it would turn into a glass and metal city within 20 years - something as (to me) monstrous as Canary Wharf in London. I'd hate to see that happen. For what it's worth, I used to be rather libertarian until I realized that ultimately there's a market in governance too: http://en.wikipedia.org/wiki/Schr%C3%B6dinger's_Cat_Trilogy#Tanstagi http://en.wikipedia.org/wiki/Schr%C3%B6dinger's_Cat_Trilogy#... It's nice when there's enough diversity for people to pick the sort of place they want to live in, zoned or not zoned.
- fennecfoxen 12y ago
  Bah. San Francisco is an inanimate geographical region. It has no needs, and inanimate objects hate it when you anthropomorphize them. Instead of asking "does san francisco need more people" let's put actual actors into these decisions. Would it be beneficial to the set of individuals currently residing in San Francisco to have more housing stock in San Francisco? Would it be beneficial to others in the Bay Area, or to humanity at large? The answers to these questions may be different. Indeed, that is sort of the premise of the article: existing residents benefit greatly from the various restrictions on building, to the detriment of all others. :P
deleted 12y ago
[deleted]

76 points by mjohn 12y ago

"in a very good explainer" Apparently written by "W"? I'm a bit surprised to see grammar mistakes in the economist since it's not just someone's blog.

leoc 12y ago
It's an Economist blog entry, not an official Economist article, so it doesn't get subedited. The whole prose style of the piece would be notably different once the subs were finished with it. The initial-letter monikers are a compromise between the anonymity of Economist articles, (almost) all written in the editorial voice, and the personal voices of the blog.
deleted 12y ago
[deleted]
wavefunction 12y ago
"a very good explainer" is just a colloquial phrase, meaning "explanatory piece of expository writing." I think you're just noticing and reacting to an example of the rather casual writing style that appears to be replacing the expected traditional presentation of pieces in The Economist.
- thaumasiotes 12y ago
  Where are you from? To me (US), as apparently to grandparent, "a very good explainer" is an error, not a colloquialism.
  - notacoward 12y ago
    I'm pretty sure s/he's from Earth, where use of language often changes not only according to geography but time, profession, or social milieu. Where is that not the case? Where is it traditional to go on so much about one phrase instead of addressing the ideas in an article? I don't think I'd want to live on Pedant Planet.
  - scatters 12y ago
    UK here. It's definitely been in use as journalistic jargon for a while, typically in the form of a headline "Explainer: <topic of article>", e.g. http://www.theguardian.com/commentisfree/libertycentral/2009/feb/24/freedomofinformation-civil-liberties http://www.theguardian.com/commentisfree/libertycentral/2009... (2009); here's a trend graph that shows that usage has picked up in the last decade: http://www.google.com/trends/explore#q=explainer http://www.google.com/trends/explore#q=explainer Earliest citation I've been able to find (1998): http://books.google.co.uk/books?id=kw9lAAAAMAAJ&q=%22an+explainer+on%22&dq=%22an+explainer+on%22&hl=en&sa=X&ei=uOBPU7D4H6fT7AbHl4HgDw&redir_esc=y http://books.google.co.uk/books?id=kw9lAAAAMAAJ&q=%22an+expl... - note that this is US, not UK. Article on "explainer" journalism; a little informal but demonstrates usage: http://www.theawl.com/2014/03/eleven-questions-about-explainer-journalism http://www.theawl.com/2014/03/eleven-questions-about-explain...
    - smoyer 12y ago
      Wow ... apparently I'm ignorant twice with this comment (at least the last one I made was well-received): a) Culturally ignorant - I had no idea that "explainer" was in common use in the UK. I would have called the rest of the article "an explanation". b) Literally ignorant - How did I miss that this wasn't an Economist article? Sorry!
  - wavefunction 12y ago
    I'm from the US, but "an explainer" is a UKism from what I know. I've seen it used elsewhere.
  - lotsofmangos 12y ago
    Here's a relatively recent example of it being used in US headline writing to mean an explanatory pamphlet - "Republicans to Distribute Shutdown Explainer" http://www.rollcall.com/news/republicans_to_distribute_shutdown_explainer-204600-1.html http://www.rollcall.com/news/republicans_to_distribute_shutd... And here's another from The Washington Post, to mean the text of the article - "Who is Daft Punk? A quick explainer for confused Grammy-watchers" http://www.washingtonpost.com/blogs/style-blog/wp/2014/01/27/who-is-daft-punk-a-quick-explainer-for-confused-grammy-watchers/ http://www.washingtonpost.com/blogs/style-blog/wp/2014/01/27...
- josephlord 12y ago
  "explanatory piece of expository writing." Or "an explanation" in English. Although to be honest I would have read "a very good explainer" as being someone who is good at explaining rather than a thing. I don't believe "explainer" is a word in English.

praptak 12y ago

I find it strange that the protesters target tech workers. The real class war seems NIMBY-supported landlords vs everyone else, not crappy-paid vs well-paid workforce. But well, I'm not even in US so what do I know.

michaelochurch 12y ago
I agree with you. The First Estate (landlords, investors and executives, paid enough to own houses) has been dicking over the Second Estate (engineers, able to live in SF but not save or buy houses) through no-poach agreements, collusive arrangements (note-sharing among VCs) blocking them from starting new businesses, and increasingly mean-spirited HR policies (stack ranking). The Third Estate (everyone else) is being evicted and abused by the rent-seeking First Estate. Somehow, the First Estate managed to convince the Third Estate that it's the Second Estate's fault, hence the bus attacks. It's not. I'm not so out-of-touch that I'd call $120,000 per year, in any city, "poor" because it's not; but neither is it "rich" and these tech workers are not responsible for this NIMBY nonsense.
- fidotron 12y ago
  A similar situation is behind the Economist existing, as about 200 years ago in the UK they had a strange setup with land owning aristocrats, free market industrialists, and proto-communist "Chartists". The aristocrats found unlikely allies in the Chartists, though it didn't help in the long run. The free market types were concerned about the Corn Laws, and formed the https://en.wikipedia.org/wiki/Anti-Corn_Law_League https://en.wikipedia.org/wiki/Anti-Corn_Law_League , and their journal ended up becoming the Economist. The Corn Laws effectively subsidised the aristocracy, and prevented free labour movement, first by keeping cost of living too high (through cost of food) secondly by keeping people working on otherwise unviable farms to produce corn. The Chartists were so preoccupied with the idea that the industrialists wanted to drive wages down they missed the bigger picture.
  - nostrademons 12y ago
    This seems to always be the case - people turn on neighboring socioeconomic classes, not the ones at the extreme top of the pyramid. During the Jim Crow era, the worst discrimination against blacks came not from the elite (many of whom had been abolitionists during slavery and equality-minded liberals afterwards), but from poor white sharecroppers who were one degree removed from slavery themselves. Nowadays, the conservative movement within the U.S. is composed of the ultra-wealthy plus the lower-middle-class and working-class Religious Right. The targets of the LA race riots were not rich white people, but Korean shopkeepers in minority neighborhoods. I suspect it's because it's generally impossible to "skip" social classes and jump directly from the bottom to the top. Even rags-to-riches stories usually involved a period of a few decades where the person enters and assimilates into the intervening classes. Jan Koum went from immigrant to middle-class tech worker to aspiring entrepreneur to multi-billionaire. Henry Ford went from farmer to machinist to engineer to captain of industry. Andrew Carnegie went from immigrant to bobbin boy to telegraph operator to bookkeeper & investor to steel magnate. As a result, each class views the class directly above them as their impediment to upwards mobility, and they're not wrong in that belief. In times of scarcity, resentment usually flows upwards to their immediate neighbors. The more distant causes of the socioeconomic structures that hold people down are effectively invisible to the rioting classes; all they see is people who are not very different from themselves doing better than them.

deleted 12y ago

[deleted]

al2o3cr 12y ago

I'm baffled as to how an article at the Economist somehow got through that many words without mentioning that land isn't entirely a "market" good - barring some pretty major civil engineering, increased demand for land in SF isn't going to make more land come on the market...

thaumasiotes 12y ago
If you want land to farm crops on, sure; for that purpose you really want the ground. If you want land to live on, of course increased demand will cause more to come on the market. We build up from the ground, layer by layer. I haven't lived at ground level in many years.
- shubb 12y ago
  That is partly true, but planning and zoning restrictions prevent building up as well. If you think about it, increasing the amount of dwellings on a plot of land has a cost, that can be amortized over a number of years. If the market was free, the price / rent for a high rise dwelling would tend towards this cost. However, if you want to erect an apartment block, you have to apply for planning. Local objections generally prevent it from being built (hence the references to NIMBYs). So it isn't a free market, because supply is controlled by the city government. There is some acceptance that planning laws don't work - it is implicit in the overriding laws that kick in for major infrastructure projects like freeway builds (called compulsory purchase here). You could say maybe this needs to be extended to apartment building. But I think it shows the planning system's criteria are broken. Rather than balance cost and benefit, it only takes into account the reasons not to build.
  - thaumasiotes 12y ago
    You're correct, but I was responding to the claim that land was somehow a special commodity -- in the words of my parent, "land isn't entirely a 'market' good - barring some pretty major civil engineering, increased demand for land in SF isn't going to make more land come on the market". I reject that claim entirely, and your comment doesn't address my reasons. The supply of cocaine is controlled too, but I suspect that it's a fairly clear example of a 'market' good in the sense of my parent comment. Residential area is not limited any more than cocaine is.

michaelochurch 12y ago

Here's another factor: extreme price inelasticity. We saw inelasticity in the 1970s oil shocks. Supply was only reduced by about 5%, but that caused 4x price surges, putting elasticity (E) at: -ln(0.95) / ln(4) = 0.037 If E < 1, then reducing the quantity supplied by X% will increase prices by more than X%, with no other change to the innate desirability (demand curve) of it. With housing, E << 1. It's probably in the same range as oil: 0.02 to 0.04. This means that things can simultaneously destroy value, but drive up prices enough to increase the value of the total stock. Let's say that an earthquake hits Manhattan or San Francisco, destroying 5% of all housing. Ignore the (highly unpredictable) short-term effect on prices; there will probably be deals in the immediate aftermath due to panic selling. Assume zero effect on the local job market (that's not true, but it's actually close enough that it won't affect the conclusion). Six months out, rents (and, although not by as much, property prices) will be much higher because of the reduced supply. Let's say that prices double. Wealth was destroyed. It's unambiguously a bad, value-destroying, thing when 5% of the housing stock falls into ruin. However, the bulk price of the total housing stock has gone up by 90%. That's what 95% of these housing pundits don't get. They look at a spiking housing market and think, "Wow, people really want to live here, this place is doing well." They think that increasing desirability (local job market) is the primary cause of the housing price increase, and that the NIMBY corruption is just a supporting actor, and it's not so. At one time, Luanda was the most expensive city in terms of real estate. Angola is not a wealthy country (GDP per capita around $7,000) and it's consistently in the bottom fourth for the HDI. Moscow sometimes edges out New York and San Francisco for real estate prices, and neither weather nor the job market explain that. Half a century ago, NIMBYism was more explicitly racist than 2014-style classism and it did immense damage to American cities. Just ask Detroit, Baltimore, Newark, or even Pittsburgh. NIMBY policies benefit a small number of wealth-destroying rentiers, but inelasticity makes a system more brittle. It means that price impulses magnify (rather than dampening) and cause undesirable feedback effect. The term "shock" is accurate, and it can bring a city to its knees in a short amount of time.

cyphunk 12y ago

Unpaywalled: http://archive.today/RlaNR http://archive.today/RlaNR (or access with fresh cookies)

josephlord 12y ago

This article's position in this part strikes me as mostly rubbish: ... Housing affordability activists like to point out that most new construction is for luxury housing, meaning that supply of non-luxury units is not growing by very much. Others love to say that price declines have historically gone hand in hand with falling construction. These arguments are both nonsense. The latter point gets causation the wrong way around; given an unexpected decline in demand due to financial crisis or other shocks prices fall and interest in new construction dries up until existing inventories are cleared. The former point misses the fundamental fungibility of housing. When new construction of luxury units lags, the very rich buy up older housing stock at exorbitant prices and pay to have them redone. You see this in London, for instance, where literally every house in the city is now being rehabilitated, including those that were rehabilitated last year. Residents have to actively shoo away the builders trying to erect scaffolding, on the assumption that the owners will be wanting an extra floor or two on their house. It is a headache. There is a team of wildcat subcontractors digging us a new wine cellar as we speak. The point is that if demand for high-end housing is not satisfied with new construction, that demand will flow to existing supply, putting upward pressure on prices right across the housing stock. Yes the rich will buy older housing stock if they build new affordable housing rather than luxury housing but the affordable housing should be higher density producing more homes on the same land so there will still be affordable houses freed up even when the rich have displaced others into them.

samstave 12y ago
Im no economist, but ive observed two things in SF; there are a ton of new, high-end high-rise apartment buildings being built in SF right now. (See all the cranes) These will have high rents to pay for their high construction costs. All other rents will rise as well, because all owners will see what everything else costs and continue to charge ridiculous amounts for their spaces. The rents in SF right now are absolutely insane.
- fennecfoxen 12y ago
  > All other rents will rise as well, because all owners will see what everything else costs and continue to charge ridiculous amounts for their spaces. Don't be absurd. Owners are already well aware of the fact that there are rich Google engineers beating a path to their door, and are glad to charge said engineers as much as they think they can get away with. Additional housing is competition, and if they affect prices they will cause them to fall, as various Google engineers will have an alternative to Mission-district Victorians and other existing housing stock.

michaelfeathers 12y ago

Reading the article, I just kept asking myself whether San Francisco really needs more people. Despite all of the talk of economics and regulation, it isn't so bad when people develop new hubs when a hub like San Francisco becomes saturated. Maybe its better to have more of them than a megapolis.

rwallace 12y ago
I disagree, but if that's how it's going to be, then let it be done by immigration quota. If something isn't actually going to be a free market, it is better to be honest about that. A pretend free market is the worst of both worlds.
- michaelfeathers 12y ago
  As much as I believe in free markets, I think zoning is useful thing. I live in South Florida and we have a couple of areas with very little zoning. They are funky and great to live in now, but eventually they will gentrify. On the other hand, there are heavily zoned areas don't have the sort of quirk I love and never will. The sweet spot is hard to achieve with or without zoning. I think that if zoning was pulled completely from San Francisco it would turn into a glass and metal city within 20 years - something as (to me) monstrous as Canary Wharf in London. I'd hate to see that happen. For what it's worth, I used to be rather libertarian until I realized that ultimately there's a market in governance too: http://en.wikipedia.org/wiki/Schr%C3%B6dinger's_Cat_Trilogy#Tanstagi http://en.wikipedia.org/wiki/Schr%C3%B6dinger's_Cat_Trilogy#... It's nice when there's enough diversity for people to pick the sort of place they want to live in, zoned or not zoned.
fennecfoxen 12y ago
Bah. San Francisco is an inanimate geographical region. It has no needs, and inanimate objects hate it when you anthropomorphize them. Instead of asking "does san francisco need more people" let's put actual actors into these decisions. Would it be beneficial to the set of individuals currently residing in San Francisco to have more housing stock in San Francisco? Would it be beneficial to others in the Bay Area, or to humanity at large? The answers to these questions may be different. Indeed, that is sort of the premise of the article: existing residents benefit greatly from the various restrictions on building, to the detriment of all others. :P

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