Positive Steps to Encourage Housing(city-journal.org)
"In areas where land is cheap, lowering the cost of homebuilding is paramount"
I live in a rural area and the city and county put up huge road blocks to building legally while a tremendous number of trailers and shacks are spread about the landscape.
But, BUT!, if someone is looking at find a way OUT of America's horrible housing conundrum, more cheap housing on cheap land is terrible, horrible, a nightmare.
I mean, the reason that my county scams new builders for $30-50K just to start is that the county's infrastructure bill has become unsustainable, like America in general has become unsustainable.
The American love affair with low-density development is going to leave this country drowned in a pool of opioid induced vomit if things turn don't around in the next 10-20 years.
Effectively, the history of settlement of this country and government policy result in a freeway-subdivision-strip-mall model of development that is unsustainable on a practical, literal level. That is; outer-ring development involves investments fated to evaporate into nothing. The capital of America's once glorious middle class has become smoke from this effect.
The only path to things not imploding worse than they already have is to create high density urban development and the infrastructure needed to support it. A lot will have to change for that to happen. But as Margaret Thatcher said, "There is no alternative".
> An older Arizona law might offer a template for other states looking to balance private property rights with local public interests. Rather than chipping away at specific local restrictions, the state passed the Property Ownership Fairness Act in 2006, reframing the question of regulation in terms of eminent domain. If a local regulation diminishes the value of land by imposing new limitations on the use of the property— such as increasing the minimum lot size or changing the zoning to lower-value uses—the jurisdiction must compensate the property owner for his loss. Arizona’s approach helps achieve a middle ground, where neither the city government’s mandate nor the landowner’s property right is absolute.
I'm not so sure that's a good idea. On one hand, I like the general principle of fairness at work and that a person shouldn't have to absorb the loss of the value of a major asset simply because of an arbitrary rule change. On the other hand, I don't think governments should have to pay costs associated with fixing bad rules or addressing an injustice. Also, if government has to pay for rule changes that reduce the value of a property, should they also receive payments from property owners when a rule change increases the value of a property?
>should they also receive payments from property owners when a rule change increases the value of a property?
Yes, this is called "value capture." Bargaining with developers to extract concessions like affordable units (BMR), community spaces (POPOs), neighborhood maintenance (CBDs), and donations to anti-development activist groups is the bread and butter of development politics.
Since developers are universally and vigorously despised, this is a great source of funding. If a project still pencils out, the community gets some extra services without having to raise taxes. And if the project doesn't pencil out anymore, the community is usually happy about that too.
"...I don't think governments should have to pay costs associated with fixing bad rules or addressing an injustice."
AZ's POFA 2006 (and equiv in other states) sounds like Investor-State Dispute Settlement provision in NAFTA.
Fortunately, it appears most of those cases, like when Methanex sued the USA for $970m when California banned MTBE, were dismissed on the basis that democratic governments should be able to decide things.
> Also, if government has to pay for rule changes that reduce the value of a property, should they also receive payments from property owners when a rule change increases the value of a property?
Don't they already through increased property taxes? In fact, if some rule reduces the value of their property, perhaps the best compensation would be a property tax reduction or even rebate?
By that same logic don't they already pay for property value reduction via a reduction in property taxes?
I think the long term shift of revenue from property taxes alone have been observed to be insufficient to properly influence the market behavior - that makes a fair bit of sense since mayoral terms are almost never twice the mandatory reassessment window and sometimes don't even exceed the standard length between reassessments.
It probably depends on the jurisdiction, but many places (such as Vancouver) adjust tax rates to meet the budget requirements. So if property values double across the board, tax rates will halve, such that you're paying the same number of dollars as last year. If only your property value doubles, then yes, you'll pay more in property tax than you did last year, and your neighbours less.
But anyway, the city certainly doesn't get the value increase back in taxes, and you could presumably sell your property and capture the increase before paying more than a fraction back in tax.
Kind of true, but the city will make a grab for that value eventually. Property taxes in Seattle, for example, have been scaling with increase in property prices. California will re-adjust property tax valuations on sale of property (encouraging people not to sell...). Why not pay $500/month in property taxes on that $800k townhome?
And really, why would that be unexpected? As the value of the house rises, the services that can be provided increase, often on direct demand of those house owners themselves (they want good/better schools, for example).
I think this is just that terrible America effect, governments are constantly under attack for inefficient spending so they constantly fight to increase revenue sources even when that increase isn't immediately necessary just so they'll have some margin to safely jettison when they come under attack for not spending all the money they're collecting.
It's extremely weird, but seems to be accurate, that the US is the only place on earth where people become less trusted via the action of taking on public service responsibility.
It really isn't that though, governments never have enough money to provide for all the things that their residents are asking for. It isn't really like "oh, let's grab some more taxes now just in case we need it later", its more like "how do we upgrade from a B-level city to an A-level one?" or worse: "how do we fight off a downgrade from a B-level city to a C-level one?"
The American tax burden isn't really that bad compared to everywhere else in the developed world, especially for the facilities that we demand (huge houses, less density, lots of roads, nice schools with football stadiums, etc...).
We should be getting rid of the notion of housing as a commodity. Pricing/rewarding building housing based on how well it houses people, unifying the tax credits for housing (that disproportionately go to the wealthy), building and maintaining public housing (without requiring it to be revenue neutral), rent control, increased tenant protects, and right of first refusal for tenants/tenant coops when a property sells.
Rent control increases prices by limiting supply.
It's a lottery ticket. Sure, it's good for people grandfathered in. It's terrible for new people to the city. It's also terrible for landlords who have a building put in rent control.
I know everyone thinks landlords are evil, but you can't have rentals without a landlord. And no one is going to invest in rentals if they don't think it's a good investment.
And if you want to incentivize people to put down roots and stay in one place for a while, home ownership is almost always a better option over a 3+ year horizon.
Rent control also incentivizes landlords to neglect their properties. Again, something that doesn't seem good for the community.
You can't get something from nothing. Landlords aren't going to subsidize housing for people. The government already does that, probably at too high of a degree already.
Maybe landlords shouldn't be getting much, if any, returns on their investment. That we even consider housing an investment is a problem.
You've framed your response using a capitalist response - why would I spend money if it wasn't going to return more than I spent. I'm suggesting you look through other lenses - housing as a necessity or social good. Housing as a coop. Housing as a charity (e.g. Helping a refugee family by housing them.)
That's nice. Where's the money for that going to come from?
Because such groups already exist in small numbers - it's not like the existence of capitalist landlords prevents coops or charities from existing.
> Where's the money for that going to come from?
Us. If we think housing people is important. Increasing taxes, reducing spending on other areas, etc.
It's interesting to me that people seem to always ask, "How are we going to pay for this?" when HUD's entire budget is ~$60B/year. Compared to the $1,100B/year we spend on defense, it seems like we could make some pretty small adjustments there and have some pretty huge impacts.
The mortgage credit, for instance, disproportionately goes to wealthy people and is costing us ~$10B a year. Rework that to be less regressive and actually focus on developing housing and you've have made a huge impact on HUD's bottom line.
Oh, I didn't mean "how are we going to pay for this", I meant "who's going to be paying for this", and your answer is apparently "everyone with money, by way of government".
That's not exactly charity and coops anymore.
The only reason to favor government construction over private construction is that it'll be subsidized for the poor, unless you somehow think the government will be better at building apartments than a private developer. (Whether that be a coop, charity or for-profit, they all have incentives to make things actually work while not breaking the bank - the government generally doesn't)
People can and do and are willing to pay for their own housing. The same is not true for defense. I hate the defense budget as much as anyone, but we should not socialize housing. Every seen what the Soviets built? No one wants to live in that.
Public housing doesn't need to be brutalist or massive projects. In fact, projects and tenements come with much larger maintenance costs.
Read up on Red Vienna, social housing in Paris/Belgium, and some of the successful scattered site and suburban public housing efforts in the US.
Are the higher maintenance costs of projects offset by the lower costs of all other services -- additional roads, land, sewer pipes, telephone poles, electrical lines, etc?
My understanding is that projects are overall very efficient. I'm aware that they cost more per unit than a rural home in the middle of nowhere, both up-front and on-going. But a rural home in the middle of nowhere costs a fortune in services paid for with taxes, on-going.
Rural country home and urban project aren't the only options. Buying/building townhouses or duplexes, four story apartment buildings, etc.
You can build in denser areas and still not have to maintain a building like a tenement.
It is not an accident that locations with rent control have the worst housing crises. Rent control immediately discourages new construction and therefore the starting rents go up as fewer units are available with growing populations. New York and San Francisco are classic examples of the destructive force that rent control has on affordable rents.
SF rent control does not apply to new construction. The argument that rent control causes this is a little more convoluted: renters would support more development if they were not shielded from the impact of not building.
SF has its own way of discouraging development via long discretionary review processes.
Rent control can still limit development even though it does not apply to new construction. 2004 is an arbitrary date that will likely be bumped up in the future. This is a looming risk for anyone looking to purchase rental properly and therefore developers.
You're right though that the review process and other regulations such as the requirement for some percentage of affordable housing units is also quite significant.
As a R/E investor, one of the things I'm most cautious of is buying a building that might end up in rent control. It's the difference in making a good investment and losing a ton of money.
I like to consider myself a good person, but I have zero interest in renting housing to people at a loss.
I know people can use some help, but I'm not that rich and life is too short.
It does not need to be. The problem is that when a unit gets replaced, the tenants cannot get an equivalent unit in the new building at the same rent. So they are incentivized to try to stop new construction. By all means build more units in the same area, but guarantee that folks who will be displaced can move back in one of the units for their existing rent. Then everyone wins.
I encourage you to think beyond one or two examples where things have gone wrong and instead try to figure out how you could take the fundamental idea and improve it.
I think it's not correct to imply rent control is the cause. I see it as the symptom
Once a place gets rich enough to where they can justify micromanaging what goes where (poor places mostly have bigger fish to fry and are happy to have any tax paying development) it artificially constrains supply. Then they double down by tacking on rent control to slow the death spiral but it just makes it worse.
I'm all for getting rid silly regulations, like one mentioned in the article stating all houses must be faced in brick. But I hope attempts to rollback needless regulations don't additionally throw away things like building codes.
When I was slightly younger, I might have grumbled that things like the International Residential Code or the National Electric Code were a bunch of stupid rules getting in the way of the eminently reasonable thing I wanted to do, rules made by otherwise useless busybodies with nothing better to do with their time. That is not my attitude today.
As I've been pulled into various wiring or handyman projects by family & friends, had a chance to actually read some of the bits of the IRC or NEC, and even lost my home to an apartment fire, I understand now that a lot of what I might have previously decried as stupid rules actually make sense from an engineering or safety perspective. These rules are informed by experience. And while violating some of the rules or recommendations can result in only minor annoyances, other violations can be dangerous, costing lives in an emergency and even making emergencies more likely.
There's a saying that I've heard from pilots, "The FAR is written in blood". More generally that is, the rules are the way they are because not doing it that way resulted in people dying. And I think the same holds true for a not-insignificant portion of building code today.
I'm not saying we shouldn't be willing to question and criticize building code to make sure it isn't being needlessly restrictive, and that it's living up to its goal of making for safe, effective home design. But I think we should also be willing to concede that some of the rules in building codes are a Good Thing, even if it means that some of the ways we've achieved housing density in the past can't be done as cheaply anymore, or at all.
1. Federal Aviation Regulations
I have always felt that housing in Singapore is sensible Altho I don’t think it would work here
99 year leaseholds until recently..now Singapore citizens can purchase these public Housing flats. Everyone is housed according to their means. 78.7% of the population is housed in public housing at various home plans and sizes.
Odd that Oregon's HB 2001 is not mentioned, as it's a big step.
It's a symptom as much as a cure. Oregon has immense amounts of available land to build housing on, but it also has BA-like restrictions that remove most of that from possible housing expansion. This law won't do much if that isn't fixed.
(The law allows for duplexes to be built in single-family areas without rezoning.)
Oregon's UGB allows cities to grow, just in a controlled way.
Absent that, and maintaining subsidies for driving, you get Houston or Phoenix like sprawl.
HB 2001 allows up to 4-plexes in many cities.
You could actually get a lot of housing out of that kind of development, it turns out: https://www.seattletimes.com/opinion/add-housing-by-allowing...
Which makes sense, as most places in Europe are way more land-constrained than the US and manage to house people by growing up and in, rather than only out.
I'd argue that Phoenix compares quite favorably to the BA or Portland. It has an efficient transportation structure, and more importantly, interleaved levels of housing that make it relatively easy to live near (within walking distance even) to one's work, regardless of economic class. Except for the rich, that's essentially impossible in the BA, and pretty near for Portland.
This is not born out by commute statistics. 86% commute by car in Phoenix compared to 65% in Portland. If you're saying Phoenix can work well at an individual level, I might agree, but as far as urban planning goes, I'd say Portland is much better. Subjectively I've lived in both places, and Phoenix is far far more car-dependent than Portland. Walking along those 6-lane streets throughout the city, traversing massive parking lots through strip malls does not make for pedestrian-friendliness.
Well, neither does 120°F summers. I think there's an argument that Pheonix fundamentally can't be pedestrian friendly so optimizing for car-and-bus-friendliness is a justifiable strategy.
Just because summers are hot doesn't mean there aren't a whole lot of days the rest of the year when you couldn't get around quite happily by bike or on foot. People get around by bike in Montreal in the winter.
With the right architecture, even hot places, like, say, Seville, Spain, are pretty nice for pedestrians.
Transportation should be a "right tool for the job" thing, rather than "well since I can't go to Costco with my 4 kids on a bike, bikes are totally useless for everyone" thing.
If all the cars come out on the same day of the year, it doesn't matter if it's only once a year, the roads have to be ready for it.
Phoenix is not THAT hot most days of the summer -- and it's barely hot outside a few hours of the day outside of summer -- IFF you're in the shade.
Phoenix could've invested in trees and shade, and less in concrete to absorb the heat, and it could be much more bearable.
Doesn't work like that. Not at all.
It was de-fanged a bit by being paired with a rent-control bill. Still a great step.
The rent control thing is fairly loose in some ways.
Article doesn't mention Minneapolis' reforms vis a vis exclusionary zoning either. Seems like another big omission.
Last decade was terrible for housing construction: https://reason.com/2019/12/23/the-2010s-were-a-terrible-deca...
Wonder how/if this correlates with current trends of newer generations preferring to move from suburbs back to cities. Maybe it is becoming more advantageous to renovate an older home in the city than to build new in a suburb?
I think it's also because if you're a company that wants to make money doing real estate related activity, it's easier and more profitable to just buy existing buildings and sit on them than build new ones. This is a recent trend, and home building companies do still exist but...
"Between 2011 and 2017, some of the world’s largest private-equity groups and hedge funds ... spent a combined $36 billion on more than 200,000 homes in ailing markets across the country. In one Atlanta zip code, they bought almost 90 percent of the 7,500 homes sold between January 2011 and June 2012; today, institutional investors own at least one in five single-family rentals in some parts of the metro area"
Interesting graph. Some of it is that there was a big drop in any construction after about 2008. So any ramp in the 2010s was starting from a very low level. But the rate of the recovery, while ramping upwards, hasn't ramped up at a particularly fast pace.
There's plenty of affordable housing in America. It's all just in places people don't want to live, like Cleveland.
People don't want to live there because there isn't any economic opportunity. There isn't any economic opportunity because we shipped the jobs overseas.
Then, when the system finally imploded and people could no longer make their mortgage payments, the taxpayers bailed out the banks that were making money hand over fist.
There's plenty of affordable housing in America where people do want to live as well:
"According to Bureau of Labor Statistics data, lightly-regulated Houston has seen its civilian labor force grow by 20 percent in the last decade, compared to the San Francisco metro area's 16 percent. Some 21 Fortune 500 companies have their headquarters in Houston. What's more, for every job the Houston metro area has added, it's also permitted another unit of housing. As a result, the average rent for a one-bedroom apartment is $841, and home prices are below the national average."
From here :
It's not rocket science. If you want affordable housing make it easy for people to build and increase supply. It's remarkable how Silicon Valley is all about solving big problems for the world but demonstrates with Bay Area housing that some problems don't need technology, they just need reasonable government and if you don't have that, well, things don't work.
To be fair, this problem is global. Many places that are doing well that haven't allowed enough construction like London, Sydney, Stockholm, Melbourne, Paris and other places demonstrate the same failure to enable enough housing construction.
Paris is actually making some progress: https://www.sfchronicle.com/opinion/openforum/article/How-th...
I've always loved this article, which mentions Houston, and discusses that it's one of many ways to add enough supply: https://www.sightline.org/2017/09/21/yes-you-can-build-your-...
Paris's burbs are making process notably because they tend to override local towns opinion now.
My parents' hometown of 7000 in the (very lower middle class) exhurbs was slated for around 300 new housing next to the train station. As usual everyone was upset at the town halls because "it will add traffic" "they are too dense", "it will degrade our quality of life", they got overriden, the houses & apartments got built anyway, and good riddance.
I've been to the exact same town halls in the bay area with the same bullshit arguments, except people end up with the power to actually make those projects not happen.
Maybe the fact that Houston isn’t 49 square miles, surrounded by water on three sides, might have something to do with it.
When Houston wants another housing unit, they just sprawl out into the plains to make it happen. (Not incidentally, this is why the city was devastated by the last hurricane: huge portions of it sprawl into floodplains.)
Yes, and San Francisco is mostly zoned for no more than 4 stories in height. It would never be as cheap as Huston because it can't sprawl. But there is a ton of opportunity to build up.
The San Francisco height / bulk map is pretty enlightening. https://sfgov.org/sfplanningarchive/zoning-map-heightbulk-di...
All those light colored areas are max 40 feet.
Yes, that’s true. It’s also true that vertical construction is significantly more expensive than sprawling outward.
It’s why it’s cheaper to live in Brooklyn than Manhattan, even though Brooklyn is mostly low-rise construction.
I think you have that backwards. Brooklyn is cheap and low-rise because the land is not as desirable. Considering only first order effects, Manhattan would be even more expensive if it was low-rise.
However there are important second order effects to consider too. The density is a big part of the appeal of Manhattan. If it was lower then it might push economic activity away and make people not want to live there as much. Maybe finance sector might move to say Chicago. This would push prices down.
How is it “backwards”? Nothing you’ve said is inconsistent with what I wrote. I am certainly not trying to suggest that Manhattan is only expensive because skyscrapers.
Yes, Manhattan is more desirable than Brooklyn. It’s desirable for many different reasons; scarcity is a big reason.
Would Manhattan be even more expensive if it didn’t have skyscrapers? Sure. But it’s irrelevant to my point: skyscrapers are not a magical panacea to housing prices. Objectively, factually, a short subway commute lowers prices significantly in NYC, even if you’re commuting to a land of low-density construction. Thus, again we see that Land is the high-order bit on real estate prices. Aways was, always will be. Everything else is a detail.
If SF is to fix it’s housing crisis, there are exactly two ways: reduce demand, or increase accessible land area. The only way to effectively do the latter is good transit. All of the rest of this stuff is wishful thinking by people who don’t understand real estate.
>Maybe the fact that Houston isn’t 49 square miles, surrounded by water on three sides, might have something to do with it.
Neither is Silicon Valley.
And this has what to do with San Francisco?
The guy you were responding to was talking about Silicon Valley.
Maybe he edited it. When I replied, the comment was about SF.
The bay area (and california) housing issue isn't limited to the county of SF, and it isn't because of a lack of space to sprawl out with.
This is a tired argument that has been debunked many times before.
“debunked”, in the sense that nobody here wants to believe facts when they get in the way of a nice theory.
As soon as people view “San Francsico” and “the valley” as the same place, you might have an argument. Right now, the only people who believe this are people who haven’t spent any time there.
Building more housing in Palo Alto might help Palo Alto, but it won’t do much for prices in SF.
I've lived in the bay area for a decade, in the south bay, east bay and SF and have a partner who's lived here even longer. For a housing market, they are pretty much the same place since they are all within commuting distance of each other. Of course there are local variations, just like within SF itself, but it's all within a similar range.
And there is a lot of single family housing in SF alone that can be converted into 6 story apartment buildings. Plentttyyy of space available for the demand. By-right up zoning with a 30 day limit on permitting processes would do miracles for housing affordability here, but the Olds want to profit off the immigrants and cast their neighborhoods in amber.
Also the cheapest form of housing construction as far as sqft and price / unit is the fourplex. Housing cost is mostly land price & bureaucracy here, not the cost of construction, so many developers will find 6+ floor apartment buildings feasible.
I lived in SF for a decade. You’re simply not paying attention if you think they’re the same market.
Ask a 30-something FAANG employee living in SF if they’d take a nice Menlo Park apartment over their place in the Mission. Or Palo Alto. Or even South SF. It’s just bizarre to suggest that these are equivalent.
Being a 30-something BigTech employee who knows a lot of other 30-something BigTech employees, they would choose any of those places depending on what stage of life they are in, what their commute is like and what their preferences are. Some like the mission, some loathe it, same with menlo park. Some will live in SF and take long commutes to menlo park, some will live in sunnyvale and take long commutes to SF! I know all of these types personally.
But almost nobody will live in Reno, Salt Lake and commute daily via airplane to menlo park. You might find the 3 outliers on the news who do this, but I've never met or found anyone who actually does. The ones that have a life in a city that is a flight away will tend to rent a room in the work city and fly over once a week, thus participating in the local housing market.
This commute distance limitation creates the city labor and housing market, and thus people who work in Mountain View would consider living in Santa Cruz, Berkley or San Jose, but they won't actually live in New York and fly over daily to make a silly example.
Within any city itself, local variations exist. There are bad neighborhoods, nice neighborhoods. Party ones, not party ones. Big mansions and small studio apartments. Places close to lucrative jobs (mountain view) and ones that are far away but still commutable for the price a very long commute (Stockton). They will all be available in a housing market, but because they all participate in the same market, the supply / demand equation will still apply and thus set them all within a certain range of each other. An identical mansion in reno is a lot cheaper than the mansion in atherton for very good reasons.
Jobs are what determine the demand for housing in a city, and interaction of that demand with the supply of housing available is what sets the price of housing in a place.
Have you ever taken a economics class? I would suggest reading a book like order without design (twitter preview: https://twitter.com/devonzuegel/status/1079407914715103232 ) to understand how cities work and to take some sort of econmics 101 class with the many online resources out there.
> Then, when the system finally imploded and people could no longer make their mortgage payments, the taxpayers bailed out the banks that were making money hand over fist.
I'm not happy about what happened either, but what do you think would have happened if none of the banks had been bailed out?
Not OP, but at the time what I personally wanted to happen was the government to bail out the customers, but not the banks themselves. Basically let the institutions implode but not let depositors foot the bill. Clearly a pipedream, though.
In exchange for the bailout, the bankers should not have received bonuses and the equity stakes should have been wiped out. And stronger regulation put into place.
Property prices would have deflated back to affordability. People with lots of debt would have been crushed, people with little debt would have made a killing.
We finally could have clawed back the economy from the banking class with widespread bankruptcies. Could you imagine if 30% or more people had a bankruptcy recently? It would totally wreck the credit bureaus too.
Housing isn't exactly affordable if it doesn't come with a job to pay for it.
It's not just that manufacturing jobs have left. Every time we empty some mine of the last bit of ore, you get a town no one particularly wants to live in anymore. Every increase in agricultural efficiency results in fewer farmers, and thus less reason to live in rural farm towns.
> In areas where land is cheap, lowering the cost of homebuilding is paramount—as Georgians can attest. In Bryan County, for instance, new homes must include brick or “hardi-plank” siding, and facades must be limited to two materials. In Marietta, northwest of Atlanta, all walls must include brick, stone, stucco, or fiber-cement, while in Brookhaven, the walls must be brick-clad. These localities also ban cheaper materials, like vinyl siding. Such restrictive regulations drive up the cost of building and owning homes.
As a French person, what makes most of the US's subburbs ugly is the fact that home owners have too much choice in how they build they house, and towns end up being a mix match of stuff that's pretty ugly on average.
Do we want affordable, plentiful housing, or arbitrary beauty, though?
Those two are not mutually exclusive. See
The median home value in Riverside is $400,000. The US median home value is $250,000.
Unless Riverside, IL sprang into existence within the last few years, I don't think their contemporary real estate prices are relevant here. It's just as (if not more) likely that their home values are a result of the unified architecture.
You would have to look at land, material, and labor costs at the time the majority of the homes were built.
re: Housing in Georgia
Never been near the area but wouldn't those restrictions just be a termite thing?