6 ms·

It is more complicated than rich people gaming the system to get richer, but that's definitely part of it, and the generations-long monopoly on land ("ownership

It is more complicated than rich people gaming the system to get richer, but that's definitely part of it, and the generations-long monopoly on land ("ownership", as much as any human can claim that a piece of the earth belongs to them and them alone) enables basically unlimited rent-seeking priced at whatever the market will bear. http://m.sfgate.com/homeandgarden/article/What-San-Francisco-didn-t-learn-from-the-06-quake-2520018.php http://m.sfgate.com/homeandgarden/article/What-San-Francisco... goes into what happens to building codes after e.g. an earthquake. TL;DR not much, and I'm sure SF will get absolutely wrecked in the next "big one", people will die because stuff is old and not up to code, there will be public outcry for safer buildings, developers will lobby against it and basically do anything they can to continue to slap apartments up as cheaply as possible while charging $3000/mo for a 500sqft studio, and they'll build even-more-expensive yet not much safer buildings in the ruins. Then repeat.

stolio 12y ago
There's definitely some legacy family land holdings, but I don't know how much that effects the market. I would like to know, but I suspect that as you touched on they're making money off rents, maybe lending. What I was getting at are the houses that are bought and the mortgage goes into a CMO[0] or a CDO[1] because the new owner really had no business buying a house in the first place but they're "getting into real-estate" and the bank found a way to get paid for writing really questionable loans. Why are people without money even in the real estate market? (See the 2008 financial collapse for more details.) And that's just the worst of it, there's still the more legitimate case where people move their wealth into real estate because it's a good medium-term investment. I can't fault anybody for that, but I do believe it raises prices for everybody. [0] - http://en.wikipedia.org/wiki/Collateralized_mortgage_obligation http://en.wikipedia.org/wiki/Collateralized_mortgage_obligat... [1] - http://en.wikipedia.org/wiki/Collateralized_debt_obligation http://en.wikipedia.org/wiki/Collateralized_debt_obligation
obstinate 12y ago
> developers will lobby against it Eh. I don't believe this is true. For example, in the Great San Francisco earthquake, something like 90% of the damage was caused by fires. Most of these fires were and are caused by unsecured water heaters, rigid gas connections, etc. There are now building codes that improve on these issues -- all water heaters are now strapped, gas connections are flexible, etc. Among other protections that I know of, shear walls are mandated in certain cases, engineering reviews are done, houses are bolted to foundations at more regular intervals, the proportion of various walls that are windows is more limited, etc. Yes, regulations were slackened in 1906, but 1. Earthquakes between 1906 and now show that regulations DO tighten over time. If developers are trying to lobby against these, they are failing. (More likely, the property owners paying the developers are the ones who would lobby. It benefits the contractor to charge for more work.) 2. Even if we didn't have historical evidence to discount your position, the resources available to the people of that time and the people of our current time are not remotely comparable. Our capabilities for manufacturing and building are dramatically more vast. More on the evolution of these codes, which further contradicts your view that developers have been able to prevent their strengthening: http://quake06.stanford.edu/centennial/tour/stop10.html http://quake06.stanford.edu/centennial/tour/stop10.html
- reality_czech 12y ago
  75% of all SF housing units are over 50 years old. Source: http://www.sf-planning.org/ftp/general_plan/Housing_Element_Part_I_Data_Needs_Assmt_CPC_Adopted.pdf http://www.sf-planning.org/ftp/general_plan/Housing_Element_... So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes. What ought to happen is proposition 13 ought to be repealed, along with the restrictive zoning laws. Then people who are sitting on lots of undeveloped property would have to sell it to developers, because the taxes would be unaffordable otherwise. And developers would put up new properties. Prices would then come back to earth and poor people would be able to live in houses again. But the prevailing mentality in the US is that houses are investments, not places to live, so don't expect this to happen any time soon. Instead, you can expect politicians to intervene if housing starts to become affordable again, like they did in 2007. ("Oh no! Housing prices DECLINED!") It's basically a giant transfer of wealth from the young to the old. But people are too ignorant of economics to understand how and why it's happening, so you can expect it to continue.
  - ericd 12y ago
    You're right, and Prop 13 doesn't get nearly enough hate in these discussions. It's not just that people are sitting on investments like domain campers, though - it makes it impossible for many people to move, because if they did move to an equivalently valued home, they'd be paying many times their current property tax. This restricts the liquidity of the housing market and encourages hoarding, which leads to skyrocketing prices among the few houses that do go on the market. If that was slowly phased out, prices would come down as more houses came on the market, and the houses that those people wouldn't represent such a huge jump in ongoing property taxes.
    - bagels 12y ago
      How does repealing Prop 13 change anything? Wouldn't everyone just end up paying the same or more taxes? Looking at property tax rates in other states (which presumably don't have such a law), we're about on par with them. The people who can't move because of increased taxes would be forced to flee the state maybe?
Domenic_S 12y ago
> ("ownership", as much as any human can claim that a piece of the earth belongs to them and them alone) They can claim it as long as they can defend it, and historically that defense has been by force. It should make you feel better that (by and large) we don't need to kill each other in order to reserve a spot to sleep.
- threatofrain 12y ago
  Someone might argue that your capacity to compete peacefully was hard-won by government or elites dominating the use of force. In other words, you don't have to fight because a bigger entity already won for you. But should that entity fall weak to an external force, I think we'll see that many rights are built on a foundation of power, rather than a peaceful morality.

stolio 12y ago

There's definitely some legacy family land holdings, but I don't know how much that effects the market. I would like to know, but I suspect that as you touched on they're making money off rents, maybe lending. What I was getting at are the houses that are bought and the mortgage goes into a CMO[0] or a CDO[1] because the new owner really had no business buying a house in the first place but they're "getting into real-estate" and the bank found a way to get paid for writing really questionable loans. Why are people without money even in the real estate market? (See the 2008 financial collapse for more details.) And that's just the worst of it, there's still the more legitimate case where people move their wealth into real estate because it's a good medium-term investment. I can't fault anybody for that, but I do believe it raises prices for everybody. [0] - http://en.wikipedia.org/wiki/Collateralized_mortgage_obligation http://en.wikipedia.org/wiki/Collateralized_mortgage_obligat... [1] - http://en.wikipedia.org/wiki/Collateralized_debt_obligation http://en.wikipedia.org/wiki/Collateralized_debt_obligation

obstinate 12y ago

> developers will lobby against it Eh. I don't believe this is true. For example, in the Great San Francisco earthquake, something like 90% of the damage was caused by fires. Most of these fires were and are caused by unsecured water heaters, rigid gas connections, etc. There are now building codes that improve on these issues -- all water heaters are now strapped, gas connections are flexible, etc. Among other protections that I know of, shear walls are mandated in certain cases, engineering reviews are done, houses are bolted to foundations at more regular intervals, the proportion of various walls that are windows is more limited, etc. Yes, regulations were slackened in 1906, but 1. Earthquakes between 1906 and now show that regulations DO tighten over time. If developers are trying to lobby against these, they are failing. (More likely, the property owners paying the developers are the ones who would lobby. It benefits the contractor to charge for more work.) 2. Even if we didn't have historical evidence to discount your position, the resources available to the people of that time and the people of our current time are not remotely comparable. Our capabilities for manufacturing and building are dramatically more vast. More on the evolution of these codes, which further contradicts your view that developers have been able to prevent their strengthening: http://quake06.stanford.edu/centennial/tour/stop10.html http://quake06.stanford.edu/centennial/tour/stop10.html

reality_czech 12y ago
75% of all SF housing units are over 50 years old. Source: http://www.sf-planning.org/ftp/general_plan/Housing_Element_Part_I_Data_Needs_Assmt_CPC_Adopted.pdf http://www.sf-planning.org/ftp/general_plan/Housing_Element_... So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes. What ought to happen is proposition 13 ought to be repealed, along with the restrictive zoning laws. Then people who are sitting on lots of undeveloped property would have to sell it to developers, because the taxes would be unaffordable otherwise. And developers would put up new properties. Prices would then come back to earth and poor people would be able to live in houses again. But the prevailing mentality in the US is that houses are investments, not places to live, so don't expect this to happen any time soon. Instead, you can expect politicians to intervene if housing starts to become affordable again, like they did in 2007. ("Oh no! Housing prices DECLINED!") It's basically a giant transfer of wealth from the young to the old. But people are too ignorant of economics to understand how and why it's happening, so you can expect it to continue.
- ericd 12y ago
  You're right, and Prop 13 doesn't get nearly enough hate in these discussions. It's not just that people are sitting on investments like domain campers, though - it makes it impossible for many people to move, because if they did move to an equivalently valued home, they'd be paying many times their current property tax. This restricts the liquidity of the housing market and encourages hoarding, which leads to skyrocketing prices among the few houses that do go on the market. If that was slowly phased out, prices would come down as more houses came on the market, and the houses that those people wouldn't represent such a huge jump in ongoing property taxes.
  - bagels 12y ago
    How does repealing Prop 13 change anything? Wouldn't everyone just end up paying the same or more taxes? Looking at property tax rates in other states (which presumably don't have such a law), we're about on par with them. The people who can't move because of increased taxes would be forced to flee the state maybe?

Domenic_S 12y ago

> ("ownership", as much as any human can claim that a piece of the earth belongs to them and them alone) They can claim it as long as they can defend it, and historically that defense has been by force. It should make you feel better that (by and large) we don't need to kill each other in order to reserve a spot to sleep.

threatofrain 12y ago
Someone might argue that your capacity to compete peacefully was hard-won by government or elites dominating the use of force. In other words, you don't have to fight because a bigger entity already won for you. But should that entity fall weak to an external force, I think we'll see that many rights are built on a foundation of power, rather than a peaceful morality.