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It's all about money -- if San Francisco suddenly started allowing a lot of new high-rise residential developments to go up, it would cause existing property va

by exelius 12y ago

It's all about money -- if San Francisco suddenly started allowing a lot of new high-rise residential developments to go up, it would cause existing property values to decline (because there would be more options). This would cause a lot of people who own property to lose money, so even the new, wealthy owners in gentrifying areas have an interest in preventing new development from happening. I'm not saying that this is the right thing to do -- only that there is a reason people resist new development when pricing is based on a limited supply of housing in desirable areas.

vasilipupkin 12y ago
It's a bit more complicated. If they allowed building more, property values wouldn't necessarily go down because more people would simply move to the city from other parts of the country, keeping both demand and property values high. One thing that would definitely happen is the character of SF would change a lot, more so than it already is. Perhaps, that's the right thing to do, but I can understand people who live there and are not looking forward to their city looking like Singapore/Chicago/Generic Skyscraper filled city
- _delirium 12y ago
  Yes, a big problem with predicting what effects large building projects will have on a specific area within a metropolitan area is that they impact both supply and demand, not only supply. At the level of a whole metro area, demand is impacted more by the general economy, but whether people choose to live in Manhattan vs. Brooklyn vs. New Jersey (or SF vs. Oakland vs. San Jose) is intertwined with type of housing available, perceived neighborhood features, etc. You can model the net effects of an intervention, but the models are somewhat sensitive to assumptions.
  - exelius 12y ago
    I don't think that SF has a problem attracting demand. Neither do Manhattan or Brooklyn for that matter -- both are prohibitively expensive at this point unless you're a millionaire. Manhattan demand is a bit different in that it's driven globally: a Manhattan apartment (and one in London, and one in Hong Kong) is seen as a must-have among the newly-wealthy Chinese upper class. You know how there are now more millionaires in China than in the US? They all have a Manhattan apartment that they rarely use. SF doesn't quite have that issue yet -- but IMO housing prices are a big reason why startups are looking outside the bay area more seriously these days.
    - deleted 12y ago
      [deleted]
    - dasil003 12y ago
      > I don't think that SF has a problem attracting demand. It's not a binary proposition though. There's always an equilibrium, and it's difficult to determine how any given change might affect it.
      - exelius 12y ago
        You're right, but given the prices in the SF market, there are only so many people able to buy a $1 million+ home. It wouldn't be hard to increase the supply to the point where prices start to decrease significantly, especially if you start to build a decent inventory of non-luxury units (not everyone needs or can afford a doorman).
- exelius 12y ago
  But that's the thing; the character of the city is going to change no matter what because people with money are going to come in and buy out existing residents anyway. So it's already going to be a bunch of rich yuppies and there's nothing anyone can do about that -- but what's happening is the lack of housing in SF causes prices to rise in surrounding areas as well, which prices lower-income folks out of the market and forces them to move further and further from the city. If you want to preserve the character of the neighborhoods, you need dense residential areas that allow high-rise condos - it prevents the rich techies from going out and buying a row home for $1.3 million because they can get a sweet, brand-new condo for the same price in a better area. This keeps long-time residents in their homes, thus helping to preserve the culture of the neighborhoods. The entire NIMBY movement can be boiled down to "Yes, we all agree these things need to be built. But I don't want them being built near me because they would cause my property value to decrease." It's a textbook case of the tragedy of the commons.
  - mtviewdave 12y ago
    >The entire NIMBY movement can be boiled down to "Yes, we all agree these things need to be built. But I don't want them being built near me because they would cause my property value to decrease." What evidence can you offer in support of this claim with respect to San Francisco specifically? Because I can certainly see situations in which citizen objections to building projects would be perfectly warranted even without regard to property values: if a builder wanted to raze a block at the corner of 19th and Dolores and build a 50-story residential tower in its place, for example.
    - YokoZar 12y ago
      As evidence I present the highest housing prices in the country, the relatively low population density of San Francisco, and the city's notorious reputation for particularly onerous approval requirements before construction can go forward.
- kansface 12y ago
  The city can keep its buildings and force its citizens to move, or it can keep its citizens and change the buildings. Both can not remain unchanged. I for one would choose the people.
BurningFrog 12y ago
Right. Which means the problem is that existing property owners ("voters") are allowed to veto competing properties to be built.
thwest 12y ago
Another piece of the formula is the state constitution forbidding increases in property taxes. If these real estate holding corporations faced profit pressure in the form of property tax, they would be more inclined to reinvest.
mtviewdave 12y ago
>if San Francisco suddenly started allowing a lot of new high-rise residential developments to go up San Francisco is allowing a lot of new high-rise residential developments to go up. Here's a list of 26 (albeit from 18 months ago): http://sf.curbed.com/archives/2013/10/24/26_highrise_projects_changing_san_franciscos_skyline.php http://sf.curbed.com/archives/2013/10/24/26_highrise_project...
- exelius 12y ago
  That's a start, but all of those buildings are in a largely commercial area that's pretty inconvenient to get to for anyone not working downtown. There's also not a lot of NIMBY resistance because few people live there right now - once you move into established residential neighborhoods, large projects are next to impossible.
  - mtviewdave 12y ago
    Increased supply is increased supply, and what are desirable and undesirable neighborhoods change. If property owners feel their investment is threatened by increased supply, they aren't going to be mollified just because the new supply is a couple of miles down the road rather than a couple of blocks.
    - exelius 12y ago
      I don't think that's the issue -- it's just people specifically not wanting those types of developments to "ruin their neighborhood". I bet if you asked them, they would say "Oh, yeah, those new towers are great for the city! But I don't want them here because this is a quiet, walkable area and I don't want that to change." Problem is, each area says that, so it's hard to find areas where the homeowners actually want this kind of development. Developments end up in commercial areas, but you can only convert so many commercial areas to residential and still have room for you economy to grow.
      - deleted 12y ago
        [deleted]
padmanabhan01 12y ago
I wonder how they are able to legally prevent new development just because it will decrease their land value.. Can such an argument hold up in courts? If it was because of safety or congestion issues, it makes sense. But how is maintaining existing land prices a valid reason for preventing new developments..
- jemfinch 12y ago
  No one argues "You can't build here because I would lose money." That would be dumb. Instead, they argue "You can't build here because reason $x", because they would lose money.

by exelius 12y ago

vasilipupkin 12y ago

It's a bit more complicated. If they allowed building more, property values wouldn't necessarily go down because more people would simply move to the city from other parts of the country, keeping both demand and property values high. One thing that would definitely happen is the character of SF would change a lot, more so than it already is. Perhaps, that's the right thing to do, but I can understand people who live there and are not looking forward to their city looking like Singapore/Chicago/Generic Skyscraper filled city

_delirium 12y ago
Yes, a big problem with predicting what effects large building projects will have on a specific area within a metropolitan area is that they impact both supply and demand, not only supply. At the level of a whole metro area, demand is impacted more by the general economy, but whether people choose to live in Manhattan vs. Brooklyn vs. New Jersey (or SF vs. Oakland vs. San Jose) is intertwined with type of housing available, perceived neighborhood features, etc. You can model the net effects of an intervention, but the models are somewhat sensitive to assumptions.
- exelius 12y ago
  I don't think that SF has a problem attracting demand. Neither do Manhattan or Brooklyn for that matter -- both are prohibitively expensive at this point unless you're a millionaire. Manhattan demand is a bit different in that it's driven globally: a Manhattan apartment (and one in London, and one in Hong Kong) is seen as a must-have among the newly-wealthy Chinese upper class. You know how there are now more millionaires in China than in the US? They all have a Manhattan apartment that they rarely use. SF doesn't quite have that issue yet -- but IMO housing prices are a big reason why startups are looking outside the bay area more seriously these days.
  - deleted 12y ago
    [deleted]
  - dasil003 12y ago
    > I don't think that SF has a problem attracting demand. It's not a binary proposition though. There's always an equilibrium, and it's difficult to determine how any given change might affect it.
    - exelius 12y ago
      You're right, but given the prices in the SF market, there are only so many people able to buy a $1 million+ home. It wouldn't be hard to increase the supply to the point where prices start to decrease significantly, especially if you start to build a decent inventory of non-luxury units (not everyone needs or can afford a doorman).
exelius 12y ago
But that's the thing; the character of the city is going to change no matter what because people with money are going to come in and buy out existing residents anyway. So it's already going to be a bunch of rich yuppies and there's nothing anyone can do about that -- but what's happening is the lack of housing in SF causes prices to rise in surrounding areas as well, which prices lower-income folks out of the market and forces them to move further and further from the city. If you want to preserve the character of the neighborhoods, you need dense residential areas that allow high-rise condos - it prevents the rich techies from going out and buying a row home for $1.3 million because they can get a sweet, brand-new condo for the same price in a better area. This keeps long-time residents in their homes, thus helping to preserve the culture of the neighborhoods. The entire NIMBY movement can be boiled down to "Yes, we all agree these things need to be built. But I don't want them being built near me because they would cause my property value to decrease." It's a textbook case of the tragedy of the commons.
- mtviewdave 12y ago
  >The entire NIMBY movement can be boiled down to "Yes, we all agree these things need to be built. But I don't want them being built near me because they would cause my property value to decrease." What evidence can you offer in support of this claim with respect to San Francisco specifically? Because I can certainly see situations in which citizen objections to building projects would be perfectly warranted even without regard to property values: if a builder wanted to raze a block at the corner of 19th and Dolores and build a 50-story residential tower in its place, for example.
  - YokoZar 12y ago
    As evidence I present the highest housing prices in the country, the relatively low population density of San Francisco, and the city's notorious reputation for particularly onerous approval requirements before construction can go forward.
kansface 12y ago
The city can keep its buildings and force its citizens to move, or it can keep its citizens and change the buildings. Both can not remain unchanged. I for one would choose the people.

BurningFrog 12y ago

Right. Which means the problem is that existing property owners ("voters") are allowed to veto competing properties to be built.

thwest 12y ago

Another piece of the formula is the state constitution forbidding increases in property taxes. If these real estate holding corporations faced profit pressure in the form of property tax, they would be more inclined to reinvest.

mtviewdave 12y ago

>if San Francisco suddenly started allowing a lot of new high-rise residential developments to go up San Francisco is allowing a lot of new high-rise residential developments to go up. Here's a list of 26 (albeit from 18 months ago): http://sf.curbed.com/archives/2013/10/24/26_highrise_projects_changing_san_franciscos_skyline.php http://sf.curbed.com/archives/2013/10/24/26_highrise_project...

exelius 12y ago
That's a start, but all of those buildings are in a largely commercial area that's pretty inconvenient to get to for anyone not working downtown. There's also not a lot of NIMBY resistance because few people live there right now - once you move into established residential neighborhoods, large projects are next to impossible.
- mtviewdave 12y ago
  Increased supply is increased supply, and what are desirable and undesirable neighborhoods change. If property owners feel their investment is threatened by increased supply, they aren't going to be mollified just because the new supply is a couple of miles down the road rather than a couple of blocks.
  - exelius 12y ago
    I don't think that's the issue -- it's just people specifically not wanting those types of developments to "ruin their neighborhood". I bet if you asked them, they would say "Oh, yeah, those new towers are great for the city! But I don't want them here because this is a quiet, walkable area and I don't want that to change." Problem is, each area says that, so it's hard to find areas where the homeowners actually want this kind of development. Developments end up in commercial areas, but you can only convert so many commercial areas to residential and still have room for you economy to grow.
    - deleted 12y ago
      [deleted]

padmanabhan01 12y ago

I wonder how they are able to legally prevent new development just because it will decrease their land value.. Can such an argument hold up in courts? If it was because of safety or congestion issues, it makes sense. But how is maintaining existing land prices a valid reason for preventing new developments..

jemfinch 12y ago
No one argues "You can't build here because I would lose money." That would be dumb. Instead, they argue "You can't build here because reason $x", because they would lose money.