3 ms·
The very first chart in that SPUR publication shows you that the vast majority of development costs are in land and construction. If you do the math, the regul
by timr 12y ago
The very first chart in that SPUR publication shows you that the vast majority of development costs are in land and construction. If you do the math, the regulatory costs in that chart amount to 16% of the total. This is consistent with what I've read from architects and urban planners -- regulatory expense in SF is <= 20% of building costs. And most of that is a set-aside for low-income housing.
In other words, regulation is a red herring. Even if you eliminated all regulations, the cost of building a housing unit here would be beyond the reach of most people. Land and construction, in a tiny, dense city where everyone wants to live in the same three neighborhoods: it's expensive because it's expensive.
- kansface 12y agoRegulator expenses in building houses may only be 20-40% of the cost, but this isn't true of the price! In healthy markets, houses are priced close to the cost of construction. In SF (in the 90s), house prices were over 140% the cost of construction [1]. I'd expect the difference to be even larger today because regulations are more ridiculous. I agree, if we eliminated all regulations, the cost of building a house would decrease perhaps 40% at the most. I'd expect some of this savings to be passed on to tenants. If this were the only consideration, housing would still be unaffordable. But, without regulation, we'd also see at least 10x increase in new construction. Housing would be built until it were no longer profitable. IE, the price of apartments would approach the cost of building them (from astronomical to merely expensive). The Bay simultaneously welcomes any and all new jobs while it refuses to build housing concomitant to the demand. It will never be cheap to live here, but maybe we could drop the distinction as the most expensive city in the country. 1. http://www.researchgate.net/publication/228180251_Zoning%27s_Steep_Price http://www.researchgate.net/publication/228180251_Zoning%27s...
- muzz 12y ago> But, without regulation, we'd also see at least 10x increase in new construction This is theory. Reality would be very different.
- spikels 12y agoWhat like 9x increase? Clearly more housing would be built if were simply allowed. Developers are building to the maximum units/sqft permitted on every project.
- muzz 12y agoI would suspect more like 1.1-1.2x. Essentially, for most homeowners their home is their biggest investment and they should be expected to act in their economic self-interest to preserve and increase the value of that investment, and thus we can expect them to do what they can to prevent more homes from being built.