
Restaurant fable explains everything wrong with San Francisco housing right now - dbroockman
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/02/07/this-restaurant-fable-explains-everything-wrong-with-san-francisco-right-now/
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kunle
The food metaphor definitely overcomplicates this. Translation:

1\. The citizens of the Bay Area for years have limited new housing
development, complaining they could change the "character" of their
neighborhoods, for the worse.The limitation is baked into the democratic
process at the local level.

2\. There arent enough homes to accomodate the job growth and influx of people
(both renting and buying)

3\. Jobs are growing and workers are moving in, competing with longtime
citizens and each other for a limited amount of housing (and groceries, and
parking, and public transportation, and city services etc).

So it gets more expensive. We protest buses, but long after the buses are paid
for, homes will still be expensive.

Whatever we do, we need more homes.

~~~
wwweston
It's definitely true that more homes are needed no matter what, but as far as
I can tell, just allowing more development isn't going to solve the problem
for anybody who's already priced out of the market. For-profit developers who
invest now will be building the current unit prices into their model (and
starting with current/future building costs, which are higher than
past/amortized building costs).

I think this is basically why when I've looked, I can't seem to find any
examples where housing supply buildouts alone have dropped prices -- seems
there's always a drop in demand based on changes in regional fundamentals that
has to happen first.

~~~
riggins
_For-profit developers who invest now will be building the current unit prices
into their model_

I struggle to follow this. For profit developers will build if they can do so
for a profit. The only thing that will matter is whether the cost of
construction is less than the PV of the future cashflows of a constructed
building.

An apartment building that costs $50M to put up costs the same $50M whether a
1BR apartment rents for $1,000/month or $5,000/month (for the most part ... if
you get a lot of development in response to price increases, you can end up
with a shortage of labor and labor costs can increase the total build cost ...
but that will be on the margins).

Furthermore, the cost to put up a building may be coming down. Here's a story
about reducing construction costs by prefabricating buildings.

[http://www.wired.com/design/2012/09/broad-sustainable-
buildi...](http://www.wired.com/design/2012/09/broad-sustainable-building-
instant-skyscraper/all/)

I don't know what it costs to construct and apartment building in SF, but if
the rest of the world is a guide, there are plenty of projects that would have
a positive NPV even at lower rent levels. So development would contain prices
and could even bring prices down.

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iwasphone
I don't think the food metaphor makes any of the issues easier to understand.

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peter_l_downs
This is the most confusing thing I've read in a while.

~~~
vonklaus
This downright absurd metaphor confused the hell out of me. If you want to
craft an explanation of a problem, reason from 1st principles, not an analogy.
This analogy REALLY complicated understanding the situation for me, as I'm
without a huge body of knowledge about the problem. Fucking birdcage makers
and burgers. What the fuck did I just read.

------
MichaelGG
amurmann: You're apparently dead.

I agree with your comment. Granted I only visit SF now and then, but it seems
very strange that things don't just go vertical. That's the obvious solution,
isn't it? Build huge retail+office+residential towers like those proposed over
half a century (or more?) ago.

At first evaluation, it seems that people who own space must be extremely
opposed to this and that works its way into local politics. I can't imagine
people are voluntarily height-capping these little buildings I see going up.

~~~
calbear81
I too would like to see SF go the way of other world class cities like
Vancouver and build up. The challenge is the city is insanely proud of it's
"small" city character and anything that makes it feel more like New York
would be out of character. Even when developing in downtown, you run into
issues with people protesting the loss of sunlight and the shadows cast by
skyscrapers.

~~~
MichaelGG
Then get innovative with engineering. Build down. Silly that for an area
that's supposed to be the centre of high tech, the options are overpriced
city, or essentially suburbia.

~~~
malandrew
Are there any examples of cities that have ever built down? You'd get the
housing, but then there would be fighting over the scarcity of windows.

~~~
MichaelGG
Perhaps I'm too high on sci-fi. But I'd imagine office and retail would work
well enough. Put in artificial sunlight, channel some light from the roof
area, run large displays to simulate outdoors. If it really works well, then
residential might work, too.

And fighting over real window space is a far cry better than fighting over any
space. As-is, there are even parking garages taking up nice window space in
buildings here.

The geography looks a bit hilly in SF; it might be cheaper to dig under those
hills than just going straight down from a flat area.

Maybe I'm just completely naive, but anything seems better than the current
solution of doing nothing.

------
jbpadgett
These class warfare style pieces are tiresome. SF could be argued to be a
"foodie" destination which may attract outside visitors regardless.
Artificially caping supply will only serve to increase prices anyway if people
really want to eat somewhere. Conflating this with a housing argument is a
misdirection mishmash that is borderline linkbait by the post.

------
amurmann
To me the solution is clear: tear down the shitty Victorians and build
skyscrapers instead. It made me terribly upset to see that the new buildings
in Mission Bay are only 5-6 stories. Nothing that gets build in SF should be
under 30 stories. We need living space and lots of it, so that prices come
down.

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rlwolfcastle
With increasing population, it is incredibly simple.

Choose one:

    
    
      1. Live further away
      2. Increase number of people per living abode
      3. Increase number of living abodes per space
    

Numbers one and two are personal choice, number three is political.

------
timr
They forgot to include the part where there's a neighborhood that's 10 minutes
away by train with no meal restrictions, but the Junpero-ans don't want to eat
there, because it isn't a popular place to eat, and it's harder to eat with
their friends. They'd rather pay outrageous prices to eat in Junipero than get
on a dirty train.

Also, let's not forget all the tiny, artisinal birdcage companies that are
buying up a non-trivial percentage of the available meal credits on the black
market, so that they can feed their employees free lunches during the daytime.
Maybe as many as 40% of the meals being served in some neighborhoods are being
used for birdcage company cafeterias.

But really, this is a stupid metaphor, because in city that's _less than 50
square miles_ , lack of available real estate isn't a manufactured problem.

~~~
yummyfajitas
Lack of available _living space_ is a manufactured problem. All SF needs to do
to solve this problem is allow construction at the population density of
Hoboken, NJ (39k/mile^2). Hoboken is not exactly a dense megacity.

~~~
Domenic_S
It might be manufactured, but building high-density housing is not going to
bring any prices down.

I lived in downtown Sacramento for a few years. I moved into new high(er)
density apartments [0] the first year they were built. I paid $1000/month for
a 400 sq ft studio with parking. For price reference, later I rented a more
traditional apartment that was twice as big, several blocks away for only
$650.

The takeaway is that until everyone who _can_ pay ridiculous prices has
housing, prices are going nowhere but up in SF. Decent middle-class apartments
with a couple bedrooms in Mountain View are $3k+.

Prices are expensive because the SF bay area is awesome. It has a massive
number of high paying jobs, ridiculous natural beauty, a gorgeous climate,
tons of culture, diversity, and history.

Contrast to Stockton, a mere 90 miles away, where you can buy a 2,000 sq ft
4bd house for $276k [1]. But Stockton's got none of the appeal of the SF bay,
and it certainly doesn't have the jobs that SV does.

People will fight hand over fist to get into SF, nobody's sprinting to live in
Stockton.

(nothing personal against Stockton).

[0] [http://1801l.com/](http://1801l.com/)

[1] [http://www.redfin.com/CA/Stockton/9467-Ravenna-
Ln-95212/home...](http://www.redfin.com/CA/Stockton/9467-Ravenna-
Ln-95212/home/19720757)

~~~
SamReidHughes
> It might be manufactured, but building high-density housing is not going to
> bring any prices down.

Where's the part of your post that backs up this statement?

~~~
Domenic_S
Um. The entire post. Takeaway: density doesn't cause affordability.

Examples: Nob Hill and Telegraph Hill in SF, Wilshire Corridor in LA, and
downtown SD. All examples of expensive areas where housing densities are high.
Manhattan is quite dense and nobody asserts that it is affordable.

Affordability is a separate issue from density.

~~~
SamReidHughes
All you've done is tell a story about how upscale apartments cost more per
square foot than traditional apartments.

> The takeaway is that until everyone who can pay ridiculous prices has
> housing, prices are going nowhere but up in SF. Decent middle-class
> apartments with a couple bedrooms in Mountain View are $3k+.

So you're saying that adding more housing will make prices stop going up. So
why do you simultaneously claim that building more housing won't bring prices
down?

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pcurve
I took the word "fable" too loosely, and didn't realize I was reading a made-
up story until 5th paragraph.

