
Should we build lots more housing in San Francisco? - Osiris30
https://juliagalef.com/2017/07/13/should-we-build-lots-more-housing-in-san-francisco-three-reasons-people-disagree/
======
jseliger
One important question too is, "When did the housing market in SF shut down
new development?" I address related questions here:
[https://jakeseliger.com/2015/09/24/do-millennials-have-a-
fut...](https://jakeseliger.com/2015/09/24/do-millennials-have-a-future-in-
seattle-do-millennials-have-a-future-in-any-superstar-cities/):

 _Oddly, cities began to freeze in earnest, via zoning laws, in the 1970s. One
can see this both from the link and from Google’s Ngram viewer, which sees
virtually no references to gentrification until the late 70s, and the term
really takes off later than that._

Moreover, the book _Zoning Rules!_ discusses how this actually happened:
[https://www.amazon.com/Zoning-Rules-Economics-Land-
Regulatio...](https://www.amazon.com/Zoning-Rules-Economics-Land-
Regulation/dp/155844288X?ie=UTF8&tag=thstsst-20&linkCode=as2&camp=1789&creative=390957).
The fact that it used to be relatively easy to build new housing as demand
increases means that we could make it easy again. This is fundamentally a
legal problem (we should not allow so many property rights to be violated by
non-owners) and a political problem (we are not addressing housing and issues
at the right level of government).

It's striking how few affordable housing discussions have a historical view of
the issue!

~~~
pmoriarty
Have the changes of the kind you advocate happened anywhere else in the United
States? How did they manage to do it?

~~~
0x4f3759df
Duany Platter-Zyberk made some nice things.

[http://www.dpz.com/Projects/All](http://www.dpz.com/Projects/All)

------
projectramo
This post could benefit greatly from a little more quantitative analysis.

The first, and main point, about whether the supply would appreciably drop the
price is a great example of where it is needed.

Has there been any study of the elasticity of house pricing? Give us the
range, and then we know roughly how much housing it would take to drop the
price by $10/sf.

Then let's see how much extra housing we could build, and what the bottlenecks
are.

Now we are having a conversation. Otherwise it is just intuition mongering
(which, by the way, is a useful and noble exercise as well, but it is not
complete).

Edit - I found some:
[http://urbanpolicy.berkeley.edu/pdf/HQ_REStat80.pdf](http://urbanpolicy.berkeley.edu/pdf/HQ_REStat80.pdf)
[http://budgeting.thenest.com/price-elasticity-affect-
housing...](http://budgeting.thenest.com/price-elasticity-affect-housing-
industry-23106.html)
[https://www.rand.org/content/dam/rand/pubs/reports/2009/R284...](https://www.rand.org/content/dam/rand/pubs/reports/2009/R2846.pdf)

Berkeley and Rand, so trying to cover different views.

~~~
jobu
> This post could benefit greatly from a little more quantitative analysis.

The article does actually mention quantitative analyses some, and why critics
dismiss it:

 _Critics think advocates put too much trust in quantitative analyses which
try to estimate the effect of supply on prices. (Like this one [1] which
estimates that adding 5,000 new units each year would be enough to stabilize
real prices.) Such studies inevitably make dubious simplifying assumptions,
and it’s all too easy to set up an analysis to get the conclusion you want._

[1] [http://experimental-
geography.blogspot.com/2016/05/employmen...](http://experimental-
geography.blogspot.com/2016/05/employment-construction-and-cost-of-san.html)

~~~
projectramo
I don't think the quant analysis eliminates debate (i.e. it will have
advocates and critics).

However, it does focus the debate on better issues.

The question of housing may hang on exactly how much new housing is introduced
by allowing people to kill more birds, for instance.

Without the quantification, you might still be arguing about how much green
space should be mandated.

(These examples are pulled out of thin air).

To put my point another way, the absence of criticism is not a benefit of
quant analysis.

------
0x4f3759df
I come to understand that its not legally/economically feasible to build
affordable housing largely from this post

"I'm an architect in LA specializing in multifamily residential. I'd like to
do my best to explain a little understood reason why all new large development
in LA seems to be luxury development"

[https://www.reddit.com/r/LosAngeles/comments/6lvwh4/im_an_ar...](https://www.reddit.com/r/LosAngeles/comments/6lvwh4/im_an_architect_in_la_specializing_in_multifamily/)

~~~
48snickers
The reasons outlined on that thread are very specific to the Los Angeles area.
Not that crazy regulations don't exist in SF, but the car-centric parking
space regulations in Los Angeles are a huge part of the outlined cost. I don't
think that applies broadly.

~~~
loeg
Car-centric parking space regulation is very common in American cities, not
just LA.

~~~
ryandrake
And thank goodness for that!

As much as everyone here hates cars, the unfortunate fact is we currently need
them. If I could snap my fingers and be able to afford a $1.2M "starter home"
within walking distance to work, trust me, I would do it in a heartbeat. If
there were any politicians serious about building useful public transit, I'd
vote for them. But, for now, at least in most metro areas (where the jobs
are), most people can only afford to live in places where you need a car to
get anywhere.

~~~
davidw
We should be free to choose how much parking we need, and pay for it:

[http://www.bendbulletin.com/opinion/5249862-151/guest-
column...](http://www.bendbulletin.com/opinion/5249862-151/guest-column-end-
bends-mininum-parking-requirements)

~~~
mantas
I live in a country where very little parking is required and whatever parking
is built is either free-for-all or come at a huge price. People cheap out, but
still expect to drive.

The end result is parking in grey-legal spots, parking in too narrow streets
making it dangerous, parking in ex-greenery-now-sandy-parking-lot and whatnot.
And lots of bad blood between neighbours who took whose spot :) Yes, there're
rules to fine such behaviour. But it'd be political suicide to enforce those
rules because everybody breaks them.

~~~
davidw
There was some of that where I lived in Italy, very little in Austria, and it
was all much better than having vast, empty parking lots sitting there while
house prices climb and climb.

[https://www.google.com/maps/@44.0492073,-121.3266077,3a,75y,...](https://www.google.com/maps/@44.0492073,-121.3266077,3a,75y,154.14h,90.15t/data=!3m6!1e1!3m4!1s7tal1gFwoa3gFpp9NJ617Q!2e0!7i13312!8i6656)

Is a pretty common sight in the US. What a colossal waste of land!

Here's the book everyone cites on the issue:

[https://www.amazon.com/High-Cost-Free-Parking-
Updated/dp/193...](https://www.amazon.com/High-Cost-Free-Parking-
Updated/dp/193236496X)

~~~
ckrailo
I don't think a parking lot in rural Bend (or any rural American town) is the
best example to use. People in Bend are going to rely on cars a lot more than
people in downtown Portland _and_ property is likely cheaper + regulated less.

Here's the first lot I found in Portland... nice, waterfront parking!

[https://www.google.com/maps/@45.5319709,-122.6711514,3a,60y,...](https://www.google.com/maps/@45.5319709,-122.6711514,3a,60y,194.5h,76.79t/data=!3m6!1e1!3m4!1sNSpfOva927f4MmEDV_jt_Q!2e0!7i13312!8i6656)

~~~
davidw
Average house prices are north of 400K in "rural" Bend (which is actually
closing in on 100K people - not big, but not tiny, either).

And of course people use cars a lot to get around here. That doesn't mean the
government has to require it: any business that depends on car-dependent
people is going to want to provide some parking. There's no reason for the
government to get involved in it.

Also: part of the reason people need cars to get around is because we fill
land up with useless BS like that, rather than housing or businesses or
commercial - empty space stretches everything else out so that more trips
require a car.

~~~
mantas
Government not requiring it encourages freeloading on neighbours. In my post-
soviet country, there's a lot of pressure on government to require ample
parking. Otherwise both residential and commercial buildings tend to freeride
on their neighbours and use their parking.

What is interesting, this evolved despite OK public transit and very little
cars in the early 90s.

~~~
davidw
I don't know how things work in your country, but in the US, Austria and
Italy, there are street parking spots that are public. They do not belong to
anyone. If it's a problem that they're always full all the time, you can adopt
strategies to create some turnover.

This is far superior to the government dictating X parking spots per house (2
in the city I live in), and Y per type of business.

~~~
nitrogen
"adopt strategies to create some turnover" is a very polite way of saying fine
people and tow their cars, ruining their days and sometimes their lives.

~~~
davidw
Uh, yeah, it's pretty normal in cities the world over, though. You don't just
get to park in front of the fire hydrant or not pay for parking in an area
where it's required, or any number of other regulations.

------
dredmorbius
How have housing prices changed relative to wages from 1965 to present in the
US? They've doubled.

[https://fred.stlouisfed.org/graph/fredgraph.png?g=ekXr](https://fred.stlouisfed.org/graph/fredgraph.png?g=ekXr)

[https://plus.google.com/104092656004159577193/posts/Akjfruv9...](https://plus.google.com/104092656004159577193/posts/Akjfruv9zbe)

San Francisco rents over 70 years, showing a 6.6% annual rate of increase.

[https://medium.com/newco/a-guy-just-transcribed-30-years-
of-...](https://medium.com/newco/a-guy-just-transcribed-30-years-of-for-rent-
ads-heres-what-it-taught-us-about-sf-housing-prices-bd61fd0e4ef9#.r7qldtd56)

 _6.6 percent is 2.5 percentage points faster than inflation, which doesn’t
seem like a lot but when you do it for 60 years in a row it means housing
prices quadruple compared to everything else you have to buy._

 _That’s bad. But that’s SF today, compared to 1956. So what caused prices to
go up? That’s the really exciting part of Fischer’s discovery. Armed with his
data, he more or less answered that question...._

 _It would take a 53% increase in the housing supply (200,000 new units), or a
44% drop in CPI-adjusted salaries, or a 51% drop in employment, to cut prices
by two thirds._

Why the increase? Asset price inflation of Maslovian goods.

[https://www.reddit.com/r/dredmorbius/comments/608w97/asset_p...](https://www.reddit.com/r/dredmorbius/comments/608w97/asset_price_inflation_of_maslovian_and_productive/)

~~~
mcguire
Thanks for that! The article you link to as "some pretty persuasive criticism
of Fischer’s initial model"[1] is also very good.

One highlight:

" _These kind of responses miss the simple fact that of the three variables in
Fischer’s model, only employment and wages really matter. (The demand-only
model achieves an R squared value of .924 and adding the supply variable,
housing units, gets us to .940)....Another found that the best model of San
Francisco rents needs just one variable: wages (although wages and housing
were a close second)._ "

I think that kind of confirms my gut feeling on first hearing about the
problem years ago: the issue is that there is too much money flowing into (a
particular sector of) San Francisco.

[1] [https://www.theurbanist.org/2016/05/27/rents-in-san-
francisc...](https://www.theurbanist.org/2016/05/27/rents-in-san-francisco-
are-determined-by-demand-new-data-show/)

~~~
wbl
How us that a problem? More tax money to spend on affordable housing is good.

~~~
dredmorbius
Not if rents dynamics (economic rent) extract all that wealth into the hands
of rentiers.

Unless you increase land taxes, that's what you end up with.

~~~
wbl
Or we could increase the supply of housing.

~~~
dredmorbius
Look up land tax. That's among its effects.

------
timothycrosley
You keep telling yourselves that while we in Seattle keep building and
funneling more people that would have lived in San Francisco here because
we're able to keep up with Demand ;)

~~~
delecti
The 10% rent increase I'm looking at this year leaves me skeptical of your
argument that Seattle is adequately keeping up with demand.

~~~
futhey
I'm actually pretty proud of Seattle's efforts to re-evaluate zoning
regulations in the late 2000's. Almost every neighborhood has been zoned to
build taller, and if we're speaking strictly about rents, it's been quite
effective. The city added just under 200,000 new residents (2005 - 2017), and
the increases in mean rent costs were comparatively modest when compared to
increasing demand ([https://goo.gl/zadHW6](https://goo.gl/zadHW6)).

There has still been a noticeable increase, but in part because the City of
Seattle underestimated the rate of future growth in demand
([https://goo.gl/QKpb36](https://goo.gl/QKpb36)). (The city is actually making
moves right now to increase housing supply over the next few years to prevent
accelerating increases in rents).

Demand, however, is not the only factor commonly cited as putting pressure on
housing prices. As tech workers flood the city and mean incomes outpace
inflation (which has a positive effect on the overall economy), their
purchasing power increases. New construction is of comparatively higher
quality, especially in neighborhoods like Capitol Hill, which was not nearly
as desirable before 2000.

This is another part of the “noticeable increase”. As neighborhoods become
more desirable (such as SLU, Ballard, and Capitol Hill), residents suddenly
find themselves paying a premium (which is not reflected in mean pricing). I
believe this is much of what has contributed to the idea that rents have risen
dramatically (even when the data says otherwise).

Things may not be optimal (there are certainly challenges with market mismatch
and misplaced incentives), but I don't think anyone in the industry is saying
the major challenges are regulatory.

------
Robotbeat
Of course we should build more housing. Unless we've decided we're against
growth on principle and want housing to remain expensive and growth to
stagnate.

(The ecological argument against growth in this case is backwards, though.
Urban development is less resource intensive than the alternative of suburban
or exurban development that uses up a lot more land and requires much longer
commutes. And urbanization also tends to suppress birth rates, if you're
concerned with very long-term ecological consequences.)

------
crb002
Deregulate. Let the market decide.

~~~
CPLX
The market on its own will ruin cities. Unless you're enamored with Houston.

Classic tragedy of the commons problem. In an actual literal sense in this
case, as we all have to share "the commons" in cities.

~~~
bcoates
What's wrong with Houston that growth restriction would solve? Assuming your
point isn't "I don't like Houston and wish there were less of it."

It's not like those last 2 million people are what prevented it from being a
1000 year old, bike-friendly northern european hamlet or something.

~~~
CPLX
Perhaps I've been misunderstood. I strongly believe in growth and density and
believe the SF approach is literally insane. I live in New York City where we
have our problems but appear to know how to actually build housing for people.

But with that said, a knee-jerk cry of "deregulate" isn't going to be much
better. The right answer is to figure out a more thoughtful system that
enables the market to be channeled properly.

Which basically all modern successful cities have figured out.

~~~
bcoates
But Houston is kind of a counterexample of that, no? It's the go-to thing city
planners complain about when you just let people build whatever they want
without regulation, but the result appears to be a decent second-tier city
with a healthy local economy and affordable housing, not Kowloon.

Pity about the climate though.

~~~
CPLX
Sure, there is an element of that. Though the fourth largest city in the U.S.
is probably not best described as second-tier.

Of course it does lack many of the things people consider essential for modern
urban living, and is highly bound to the automobile.

~~~
droidist2
True, Houston is the 4th largest city but it's kind of cheating - it's a very
large area with a population density similar to a Northeast suburb. If Houston
had Manhattan's population density it would have 43 million people.

------
RobLach
If the claim that higher supply doesn't lower prices is accurate, and if we
assume that higher density means a higher efficiency regarding city services
(which has been historically true), then increasing supply seems like an
obvious move since you increase tax revenue which could be directed towards
social services that help soften the harshness of the SF housing market.

------
mc32
My sentiment has always been we need a regional (ala ABAG) authority which has
oversight over regional growth so that it would be less haphazard and more
coordinated.

Yes, build in SF, but also build on the Penn, East Bay, South Bay, etc. and
coordinate transit development, zoning, etc., etc.

~~~
specialist
WA State has the Growth Management Act. Like everything else smelling of
civility or the public good, it's vehemently opposed by the local
"libertarians".

[https://en.wikipedia.org/wiki/Washington_State_Growth_Manage...](https://en.wikipedia.org/wiki/Washington_State_Growth_Management_Act)

------
ensiferum
Can't be done. Anything that would lower the cost of housing can't be done
because rich ppl (property owners) would lose money.

~~~
cjlars
There's probably a natural balancing mechanism -- prices go too high, renters
are outraged and are moved to action, prices go too low, owners are outraged
and are moved to action. Looks like we're in the first zone right now.

------
sogen
Isn't SF an earthquake area?

~~~
davidw
Every single time there is one of these posts about housing and SF, someone
mentions earthquakes.

* The skyscrapers in SF did not have problems during the last big one.

* Tokyo has earthquakes too, and manages to house a lot of people at 'reasonable' rates.

~~~
0x4f3759df
Japan has amazing zoning laws.

"How an Average Family in Tokyo Can Buy a New Home"
[https://www.youtube.com/watch?v=iGbC5j4pG9w](https://www.youtube.com/watch?v=iGbC5j4pG9w)

~~~
chrisseaton
I'm from Europe and I don't understand why 'brand new' would ever be a
desirable thing in buying a home. Both the video and you said it as if it was
- is that common in the US and Japan?

Where I live in England you want a house that's as old as possible in most
cases. Older houses are usually in more desirable locations, with better space
around them, and far more character.

~~~
0x4f3759df
New homes are generally more desirable in the US, unless you live somewhere
interesting like Boston, NYC, SF, then the old buildings might be much more
expensive, due to location and heritage.

I think Japan's zoning laws are great because in the US, generally you cannot
walk to anything interesting (bar, coffeeshop, restaurant), because nowhere
near your home is zoned for commercial, there are exceptions in the big cities
obviously, but much of the population lives in non-walkable suburban layouts.

I sometimes wonder if the Europeans know how good they have it... So many
beautiful walk-able cities and only a train ride away. I'm in Minnesota so
there's basically nothing interesting for 1000 miles.

------
musgrove
"We"who? If it was a financially good idea, developers would be or are doing
it. How about run some realistic rates of return and market analysis? You may
also find the biggest reason: it's unworkable because of current San Francisco
culture.

~~~
schoen
A lot of the political debate relates to the regulatory difficulties that
developers encounter, and reducing the ability of neighbors and/or politicians
to exercise discretion to prevent development projects or place conditions on
them.

------
pascalxus
It's absolutely shocking: the degree of lack of understanding of basic
economics, especially in a city with such a high percentage of bachelors
Degrees!! I'm deeply concerned for the future of our country - I don't want it
to end up like venezuela.

I believe, economics should be one of the primary subjects taught in school in
K-12, that and personal finance (learning how to manage your own money). In
this day and age, these are the 2 most important subjects you need to learn.
We need an informed citizenry, if we're not going to end up like venezuela.

------
paulpauper
I don't think building more will help. There will always be a finite number of
single-family homes in sought-after areas. Building on the outskirts of SF is
not a substitute for prime locations

~~~
tmh79
there will only be a legal number of single family homes because we legally
require the land to be used for single family homes. Change the land use
regulations to change the makeup of the land. If they upzoned the land from
RH-1 to RH-4 most of those SFHs would be subdivided into multiple units. Thats
the reason many apartments in SF are in divided victorians.

