
Developers don't build cheaper housing because we make it illegal (2014) - jseliger
https://letsgola.wordpress.com/2014/06/14/the-lamborghini-and-the-dingbat/
======
wrong_variable
This is one of the reasons why I have zero interest in wasting my hard earned
money propping up the insane housing bubble in western cities.

Building a simple house is a 5000 year old technology.

I know that since we brought a small piece of land outside the city - brought
the raw material and paid some local laborer to help us put our family home
together.

It cost us a grand total of 10,000 dollars. The only difference was - we did
it in india where there are no nonsense housing regulation.

Getting internet was supposed to be hard, but we were allowed to just use the
telephone pole to get copper internet ( instead of fibre ).

From a business perspective - no wonder it temping to offshore - when putting
a roof over your head eats so much into your income.

~~~
3pt14159
I used to be a structural engineer, and I can tell you _exactly_ what you're
giving up if you're interested. The cost difference isn't $10k vs $700k
because of building materials. The cost difference is $5k (land) + $5k
(construction) vs $600k (land) vs $100k (construction).

What I've seen is that most people in the West end up thinking that that $95k
difference is worth it.

Let me start with a true story of what happened to me the first time I
represented myself in court back around 2005. Someone had moved my motorbike
to make a bit more room to park their stupid oversized Hummer. My bike was now
just past the legal line so I got a $45 ticket. Outraged I vowed to bring this
to court. In the pre-meeting with the prosecutor the cop didn't even remember
the location of the motorcycle, let alone what was around, whereas I had
drawings and the license plate number of the Hummer owner.

The prosecutor said that if I plead guilty with an explanation that they would
drop the charges. So that is what we did. Right afterwards I got a $40
"courtroom fee" because I'd plead guilty. That's when I learned the adage "A
man who is his own lawyer has a fool for a client".

5000 years ago children died because they crawled between the banister
railings. Our building code stops that oversight. 5000 years ago houses
collapsed during hurricanes. Our building codes severely reduced that. I could
go on and on.

The main issue isn't the building code. The issue is that it is difficult in
modern cities to get the local population to agree to expanding the housing
stock with taller buildings. It ruins views, it's noisy, excess supply
collapses housing prices. It changes the city's charm and culture. So they
elect people that slow it down.

~~~
hacknat
Charming? Drive through any single family detached neighborhood in America
during the summer and count how many people are actually enjoying their yards.

Where you see charm some of us see waste. Grass is ugly and so are single
detached family homes. Row houses look nice, so do skyscrapers. Inventing a
simulacrum for the country estate and calling it a "dream" is a bad joke I'd
like everyone to start laughing at.

This is it. This is the mother of all bad policies in the USA! From keeping
African Americans out of our neighborhoods via red lining, to increased police
presence, to one generation's artificial chokehold on the housing stock.
Americans should feel nothing but disgust for most of our housing policy, and
single family homes should be derided as one of single worst allocation of
resources the American public makes. People defend these things as lifestyle
choices, and almost never live into the carrying capacity of the asset they
buy. It is one lifestyle choice I feel comfortable judging.

Just so no one thinks I don't have any skin in the game I do have a child.

~~~
mattmanser
You're a delusion fool if you think row houses are nice, especially as the
aesthetic of the house is the least important part of living in it.

I live in the UK where they are common, they're a nightmare to live in, you
can hear people arguing or babies screaming 4 houses down.

A lot of houses are detached but very close to each other or semi-detached
(linked to one other house). Both are far more pleasant to live in than row
houses or sky scrapers.

------
RangerScience
So, if the problem is that real estate in cities is too expensive to build
affordable housing... isn't the solution to build more cities?

There keep being more people and those people keep wanting to live in the same
places.

But, the people already in those places don't want them - charitably, because
it gets too crowded. Turns LA or SF into Manhattan, where you pay a lot for a
mediocre shoebox.

Better transportation gets us a ways - when you ask someone in LA how far away
something is, they tell it to you in time, because that's what matters - not
the physical distance, but the temporal one. Better transportation means more
physical space is accessible within the same "city".

But, it strikes me that this is nearly the same problem as corporatism and
monopolies - as power concentrates, power concentrates faster. I guess that
extends past money and politics to society and populations.

So if the government needs to redistribute power - wealth (universal basic
income), politics (democracy vs autocracy), access (mass transit,
education)... does it need to build more cities? Not build existing cities
larger, mind you - but cause more cities?

The west coast grew later than the east coast. We have, what, three major
cities / metropolitan areas? San Francisco, Los Angeles, Seattle? Five if you
move the bar to include Portland and San Diego? East coast has more than a
dozen MAJOR metropolitan areas, and how many more when you move the bar?

Maybe the answer isn't higher density housing in the cities we have where
everyone wants to live. Maybe the answer is getting more cities where everyone
wants to live.

Sure, it's not exactly like New York has a monopoly on metropolitan-ness, and
we need to go all anti-trust on it... But you get the idea, yeah?

Make me think of Dublin. What was Dublin two decades ago? What is it now?

Makes me think of - what was it called, where you make a city with different
laws, one part test bed, one part diversity? Happened in the Renaissance, and
it's what Hong Kong is.

~~~
frogpelt
More cities?

This sounds like a solution China would come up with.

~~~
RangerScience
That's a very good point, although I don't think I'm taking it the way you're
intending it. I'm taking it as "here are case studies".

I've been to a couple of planned cities (Astana and Pavlodar in Kazakhstan -
that was a trip!), and I've been to suburban developments, and there IS a
distinct difference, but neither has that... /something/ that established
cities have. Ironically, Pavlodar, I felt, had it more, and what I think it it
is, is...

...Space for the people to own what they bring. Planned cities don't let you
own it, and HOAs don't necessarily give the you the metaphorical space to
bring it.

If you don't own it - and not in the simple legal property sense, but the
sense of "if I invest myself in this thing, it's not going to be taken away
one day" \- you won't work on it. If there's no "space", only one vision (and
likely one that isn't even present) can exist. Need both.

I think you CAN make a city. )*( does it every year, after all, and while much
of that event can't persist year-round, some of the ideas about how to make a
city definitely could (I would expect).

------
EGreg
I have predicted this for a long time (not just me, but a lot of people).

The demand for human labor is going down on average, so wages are going down -
and have been on a decline since the 70s. Capitalism relies on employers to
value their employees for the money to trickle down and the system to work.
Our grandfathers used to work for the same employer for decades and got a
pension. Today, that loyalty is unheard of from either side. We have the rise
of temps and the contractor economy and unemployed living with parents.

Yes, the cost of mass produced consumer goods is going down. So the wage
repression is mitigated. With the explosion of consumer credit in the 80s and
90s, the unsustainability of consumer spending was also masked. Now it has
come to the fore, in exactly the areas where costs are not going down: rent
and real estate. In every major city including NYC and SF, the costs of rent
are sky high relative to wages. Wonder why? Look at the rest of the country
and it's true too -- the rents are slightly lower but the wages are lower too.

So the predictions are borne out... automation has reduced demand for human
labor, reduced wages for the average worker (or they got laid off / became
temps), reduced the prices of mass produced goods, but the cost of real estate
keeps rising.

~~~
jensen123
I guess there could be more than one single thing causing this problem. So,
overly restrictive zoning might contribute to the problem, but so might
reduced demand for human labor and the government/banks printing too much
money.

------
achen2345
Must be a weird California problem. I simply don't see this problem in Texas.
I have known several people who have fled California to Texas for exactly that
reason.

EDIT:

Look through the data and ask yourself why you would want to pay more for what
appears (according to the data) to be a less diverse, more expensive, and more
dense area. What the data doesn't reflect is home size. I paid $125k for a
3000sqft foreclosure a few years ago that is now worth $200k. I couldn't get
half a garage for this in the bay area.

[http://www.bestplaces.net/compare-
cities/san_francisco_ca/fo...](http://www.bestplaces.net/compare-
cities/san_francisco_ca/fort_worth_tx/people)

~~~
Moshe_Silnorin
It's more of an everywhere-but-Texas problem. Texas has a great tradition of
respecting property rights. Most states are not like this.

~~~
bluejekyll
But this comes at an expense to nature and or natural preserves for wildlife.
California has some of the greatest protected forests and areas like Yosemite.

So, yes we pay more and have more restrictions, but a better question is is it
worth it?

Following the articles car analogy, this is like requiring cars to have
airbags for the safety of the people in them, but that comes at a higher cost
on the purchase price of the car.

~~~
gwbas1c
I think you miss the point:

Two words: Eminent Domain. Silicon Valley (and other areas in CA) need to use
eminent domain to build high-rises.

The housing crisis can be solved without impacting nature preserves.

~~~
ghaff
Or tech companies could just move to the many areas of the country, such as
many areas of the Midwest, where housing isn't so constrained. There's plenty
of space in the US. Just not in the Bay area.

~~~
drivingmenuts
Sure, and then they'd be stuck with Billy Joe and Jim Bob, who once used a
computer back in the 90's, as a workforce.

Or they could offer the same California salaries to programmers, who would
live like kings in a small town but wouldn't have the same conveniences, and
still spend the same amount of money.

Moving to the countryside doesn't always make business sense. Sure, costs to
have a business in an urban area, but it's easier to find workforce at all
needed levels and the trappings of urban civilization keep your workforce
occupied and happier in their off hours.

Case-in-point: I work for a cash-strapped startup (for reasons) and sometimes
have to live off my savings, but I live in an urban area. I could move to my
hometown, where my costs would be about 25% of my current expenses, but then
I'd be living in a special kind of hell where there are few good restaurants
and the nearest bookstore is 60 miles away.

~~~
douche
Oh my god, the horror of not having five-star restaurants!

If Google or Apple moved from the Bay to anywhere else, their workers would
follow. Don't doubt that for a second.

Or we could just embrace technology and stop insisting that all your workers
have to breathe the same oxygen, and allow remote work. There are huge swathes
of the United States that are becoming depopulated because industry died and
all of the young people have had to leave to find work. I just got back from a
trip home to western Maine, and it's disturbing the number of houses that are
just abandoned up there.

~~~
drivingmenuts
> Oh my god, the horror of not having five-star restaurants!

It's not just the lack of 5-star restaurants, it's the lack of 2+ star
restaurants and everything else that goes with it. If your job relocated to
western Maine, how much of a wrench in your life would that be?

> If Google or Apple moved from the Bay to anywhere else, their workers would
> follow. Don't doubt that for a second.

Only if the pay incentive was great enough, I'm sure. Otherwise, it might be
easier to just get a new job in the same area. Google and Apple might be
exceptions, considering that they're pretty much both loaded, but any smaller
company would have to think long and hard about the expenditures required to
get the bulk of their employees moved. People get rooted in their communities,
especially if the standard of living is higher than where they're expected to
move.

> Or we could just embrace technology and stop insisting that all your workers
> have to breathe the same oxygen, and allow remote work.

And someday pigs might fly, but not this century.

~~~
douche
> If your job relocated to western Maine, how much of a wrench in your life
> would that be?

I'd be fucking stoked. Cheap land, low population density, mountains. But I'm
originally a redneck from that area to begin with, so my expectations of
amenities and services are very low.

------
bmay
Seems like a bit of a clickbaity title when this is the only part of the post
that mentions laws:

> In reality, housing construction is very limited; it’s being restricted by
> zoning and permitting laws.

~~~
cgrubb
Yep. In LA Large empty lots are hard to come by. A 6k square ft lot might be
100k for an undesirable location in an undesirable nbhd, but 400k is probably
typical. Not sure how much cost "zoning and permitting" really adds on top of
that.

~~~
nevdka
Zoning can affect how many residences you can build on that block. If the
zoning laws say you can only build one on that lot, then the land cost is
$400k per residence. But if you're allowed to build a 5 floor building with
two apartments per floor, then the land cost is $40k per residence.

~~~
irq11
No it isn't. The land cost goes up, because now it's possible to use it for a
much more lucrative purpose. This is called the zoning windfall problem.

At some point, in theory, the greater supply begins to bring down land costs
in aggregate, but since real estate pricing is a localized phenomenon, this
effect isn't universal.

~~~
VintageCool
The original owner gets some money from that windfall. The developers make
money by selling 10 units on a lot that used to have a single residence. The
new tenants get to live closer to jobs and nightlife and possibly pay less in
rent. The city makes more money from property taxes.

That seems like a win-win-win-win for everyone directly involved in this
growing city.

------
crdoconnor
>In reality, housing construction is very limited; it’s being restricted by
zoning and permitting laws. Because developers can only build a few new units,
they’re building luxury, since that’s the most profitable.

Having more space thanks to laxer regulations would just mean that they build
even more and even bigger luxury housing because it would _still_ be the most
profitable.

Besides, one of those permitting laws they absolutely _loathe_ are laws that
say that they must build a certain percentage of affordable housing (not
mentioned in this article because that would be inconvenient).

These articles are so disingenuous. They're telling you that the solution to
your housing woes, caused by and large by the ultra-wealthy, is to give into
the ultra-wealthy's demand that they shouldn't face laxer regulation. We know
how that story always ends.

The solution to housing shortage in high cost of living cities is and always
has been to build high quality government housing. Singapore provides a
stellar example of what that would look like. Literally the day a program like
that is announced prices and rents would tumble.

>The global elite argument really falls apart here.

No it really doesn't. The global elite will happily swallow up all available
prime real estate in their portfolios and A) tell you to fuck off to cities
with no jobs if you complain about the house prices and B) tell you that the
lack of jobs in nowheresville is your problem since you chose to move there.

THEY'RE the problem.

------
ild
If you want affordable, build dense, urban cities; not NY style rows after
rows of 2 story building, separated by roads, but USSR style large 4-6-9 story
blocks, build from concrete (longevity, privacy) with no eventually moldy
drywalls, closed for through traffic, with parking garages, public places,
playgrounds etc. American university campuses can be good models for
residential neighborhoods.

~~~
clock_tower
Buildings which are just residential (and, for that matter, ones which are
just commercial) still tend to produce dead zones, with little to no street
life; and it's street life (and walkability) that makes a city, at least if
you ask me.

I'd say that the best kind of city -- or district/neighborhood, more
accurately, since cities tend to be a patchwork -- is an area of multi-storey
buildings with businesses on the ground floor and apartments above them. My
understanding is that this is the usual pattern in the Old World; in the US,
the North End and Allston-Brighton in Boston, Seattle's Chinatown, and of
course Vancouver are among the examples. This isn't a common pattern in the
US; I know that parts of NYC fit it (although I don't know that city
particularly well), but I've heard that even Manhattan Island is all office
buildings, and becomes a wasteland after dark.

I certainly agree, though, that 4-9 storeys is a pretty good height. Smaller
than that and you don't get enough density to support interesting
streetscapes; larger, and you get wind tunnels and the need for more parking.
Of course, sometimes geography (San Francisco, Tehran, most of Japan) or
politics (Singapore) force a denser population, and require a more built-up
area...

~~~
ild
USSR has always had ground floor shopping on the street facing residential
buildings, also major bus stops have convenience stores attached.

~~~
clock_tower
It sounds like I should visit Russia, then! Whatever else can be said about
them, it sounds like the Soviets really knew how to build a city.

------
CalRobert
And this is why almost all US cities are incredibly hostile to anyone walking.
Also, while this is subjective, they're unattractive as well.

This is a helpful illustration of how parking minimums raise rents by several
hundred dollars a month and make the streetscape less appealing.

[http://www.portlandoregon.gov/bps/article/420062](http://www.portlandoregon.gov/bps/article/420062)

------
spo81rty
Software developers these days can move to many other major cities and find a
job instantly. They are in very high demand. They don't have to live in the
Silicon Valley area and pay 3x the price for rent.

If I was a property investor, I wouldn't want to build properties there
either. The risk would be extremely high that property values are going to
come crashing back down to reality at some point. There is a serious property
value bubble out there.

~~~
bdcravens
I lease a home in North Houston owned by an attorney in LA - all of his real
estate investments are here and Brownsville, Tx. (And I pay $1150 for 1600 sq
ft with a giant yard, stand-alone home, not an apartment)

------
maxsilver
> "In reality, housing construction is very limited; it’s being restricted by
> zoning and permitting laws."

So what about all the small cities where there are no enforced
zoning/permitting laws and developers get literally anything they ask for?

If zoning/permitting is the issue, why do all these areas without
zoning/permitting have the same problem?

~~~
marincounty
Are you talking about cities/towns in the middle of nowhere? Meaning cities,
and towns that business left years ago?

I've found small towns overly red tag heppy, and these small towns realized
they could make a lot of income by enforcing building codes--to the Teee.

In my small town, we have building inspectors who are literally looking for
errors in the permitting process. Why--the extra fees it brings in. Oh, they
will always claim it was Safety, and just following procedure, but these fees
are outragious. The average person has no idea how the permitting process
works, or just how difficult/expensive it has become to do any building.

Let's talk about small town zoning. In my little town, it's tight. Fine--we
have a way fight the rigid system. You fine a Variance! You pay $1000 fee.
That's if you can fill out the paperwork. In my small town, since the
invention of the internet, I don't believe they have ever passed a variance.
They look at it, and deny it, but keep the fee. A fee for what? Five minutes
of their time?

People don't realize how little towns keep bringing in money. A lot of it is
fees/fines--and is going up yearly? No inflation, but constantly going up?

Don't get me started on our little town Revenue Squad--also know as public
safety, or the people in blue. They are literally just collecting revenue now.
Crime has never been a big problem here, and they will always claim they are
the reason. The real reason is it's too expensive to live here, but you can't
argue. Just pay the ticket! It's not about the ticket, it's the financial
punishment you take.

(I got off topic on that last paragraph--sorry, this is an important topic. I
just see it getting worse. Every new law/regulation adds to the problem. I've
lost hope actually.)

~~~
maxsilver
I'm talking about small cities, like Toledo, Milwaukee, Rochester MN, South
Bend, Lansing, Kalamazoo, etc. They are in the middle of nowhere, but they
still have people and jobs.

I live in Grand Rapids. There's lots of zoning and permitting rules. None of
it is ever enforced. All a developer has to do is ask, and they get literally
every non-safety rule waived.

\- Don't want to build kitchen or bathrooms in your studio apartments? Just
say your "micro-unit focused" and the already-tiny minimum unit size no longer
applies to you. People are so desperate for housing, they'll pay luxury price
premiums, even to live in door rooms. Extra money, for free!

\- Annoyed about having to pay for your tenants parking? No worries! Just say
you are a "transit-oriented design" and all parking requirements are waived --
you can dump infinite cars on the street for free! (Despite the fact that,
like most mid-west cities, we only barely have transit at all)

\- Want to skip out on your make ready costs? Just claim your lot needs
"brownfield redevelopment" and the city will _reimburse the developer for all
of the make-ready expenses in cash_.

I get that in California, the zoning and local governments are the major
roadblock. But I have a hard time believing "zoning/permitting" is the root
cause for this issue.

Because there are places where developers have no rules and get literally
_anything_ they ask for, _anytime_ they ask. And yet even these places _still_
only get luxury apartments.

------
Animats
It's not illegal. It's not even expensive. Take a look at this catalog of
manufactured homes.[1]

[1] [http://www.claytonhomes.com/find-
homes.cfm?categoryID=1](http://www.claytonhomes.com/find-
homes.cfm?categoryID=1)

~~~
jonah
Then, take a look at the zoning restrictions on where you can(t) place those.

------
bluejekyll
This article is a little all over the place:

> at the expense of people living in Lagos or rural Appalachia or San Salvador

Which is at the end, but seems to have little to do with the points earlier
about restricted building laws in cities. I get the argument, it's been made
in many economics books, but I don't think it comes at the expense of the
people in Appalachia. It comes at the expense of people living in the
expensive areas. The people in Appalachia have other issues dealing with jobs
and investment in the local area.

Is the alternative that we allow people to build however and wherever they
want until there is not quiet nature within driving distance of anyone?

------
evv555
The problem isn't just building affordable houses but building affordable
houses in locations people want to live. But how essential would location be
if an autonomous vehicle could take your child to a quality charter school
beyond your district? How essential is location if long commutes can be turned
into productive time because you don't have to focus on driving? All those
construction regulations holding back affordable housing; they don't apply if
it's on top of a set of wheels. I have my doubts that the status quo is
sustainable for too much longer.

------
16bytes
> One of these vehicles offers the possibility of huge profits off rich
> d-bags. The other one, not so much.

I stopped reading when I reached this caption. Companies exist to make profit,
not act in the public interest.

Demonizing normal business behavior is counterproductive. There's a huge gap
between Goldman Sacks/Enron/etc and most companies.

------
petra
Aren't there cities close to silicon valley, with nicer zoning laws enabling
sane housing prices ? And if so, why don't they become the 2nd silicon valley
?

~~~
raincom
Because major employers of the valley don't open offices in Modesto, Stockton,
Tracy, Fairfield, Gilroy, etc.

------
JDDunn9
Another solution would be improvements to transportation. If we had something
like Hyperloop, ET3, skyTran, etc., we could increase the radius we could live
from work. It's traffic jams that drive up the value of land in the inner
city. If you can get to work in 20 minutes, you don't care how far you have to
live from the city.

