
Why Haven't Voters Been Buying the Case for Increasing Housing Supply? - jseliger
https://shelterforce.org/2019/02/19/why-voters-havent-been-buying-the-case-for-building/
======
burlesona
One reason this is less of a problem in Texas is the high property tax rates
(about 3% per year vs. 1% here in California). Combine that with no prop 13
and you have homeowners with mixed incentives — yes, equity appreciation is
nice, but ouch the tax bill! Thus you have a lot of home owners who support
keeping costs down via supply growth.

In Texas, taxes are heavily leavied against _wealth_ and _lifestyle_: high
property tax, high sales tax (but none on staple goods and tax holidays for
back to school etc.), and no income tax.

Conversely in CA, the tax structure makes it easy to shelter wealth (low
property taxes AND they never increase), with moderate sales tax and high,
almost flat income taxes (the brackets ramp quickly to 9.5% at $45k then are
flat to $1m/yr).

Not surprising so many people are moving to Texas in search of an easier
ladder to climb.

Having made the opposite move for a big tech job, the headwinds here against
upward mobility are really striking.

~~~
rayiner
Texas is in some ways the egalitarian sort of place California pretends to be.
I was talking to a cab driver in Austin who had immigrated from Morocco. He
and his friends bought houses in the suburbs with pools in good school
districts, which they were able to pay off in 15 years with a cab drivers’
salary. What really strikes me visiting there compared to the coastal cities
is relative prosperity among ordinary people, especially the kind of people
(immigrants, etc.) that people in the coastal cities like to talk a lot about.
Texas also does a better job educating students from disadvantaged groups than
California, despite spending less money on education:
[https://www.forbes.com/sites/chuckdevore/2015/06/30/which-
of...](https://www.forbes.com/sites/chuckdevore/2015/06/30/which-of-the-five-
most-populous-states-do-best-in-k-12-education/#44a5a4dd2021). For math and
science, Texas has some of the highest NAEP scores in the country for black
and Hispanic students, while California has some of the worst.

~~~
pcwalton
The Texas Public Policy Foundation is one of the worst organizations you could
cite. They're infamous for being just a front for Rick Perry's ambitions and
as such are one of the groups directly responsible for the decreasing quality
of Texas's _higher_ education system. (Higher education in Texas is much worse
than that of California.)

There's no denying that California has a problem with K-12 education due to
Prop 13. But I grew up and was educated in Texas, and I can say the government
of Texas has always been significantly more dysfunctional than the government
of California. The "Texas Miracle" thing during GWB's campaign was obviously
an attempt to take credit for the fact that the oil industry attracted the
kind of people who care about education, not because of anything related to
the government. In fact, attempting to recreate the "Texas Miracle" nationwide
led to the disastrous No Child Left Behind law.

I more-likely-than-not won't end up having kids, but if I did, I would want
them educated here, not in Texas. The government of Texas plays games with
education to score political points in a way that the government of California
does not. Besides, I question how sustainable Texas education is going to be
without an income tax, and income tax is the third rail of Texas politics.

~~~
rayiner
The data underlying the article is NAEP scores, which are widely respected as
an objective measure of student performance. And California does awful on
NAEP, and has for a long time.

As to where I’d want my kids educated—I’m thinking from the perspective of
having come to this country as an immigrant. We were solidly middle class and
moved to a pretty nice neighborhood in Virginia with decent schools, but there
is no way we could have afforded it today. If I were in my dad’s position, I’d
definitely head to Houston or Dallas rather than San Francisco or LA. Heck,
when I bought my house in the DC area, I was apalled at the school situation.
I didn’t want my kids to grow up in a place where a million dollar house is
the buy-in for a going to a good school district. We ended up moving to a
different city and just putting up with a long commute.

~~~
Latteland
My dad lives in the Highland Park area of Dallas. He says people move there
and pay their 20 or 30k a year in property taxes to go to a great school
district as it's cheaper than a private school tuition. It sounds like the
same thing. Of course that's just one example.

~~~
scarface74
How much are the houses to pay $30K-$40K in property taxes? The wealthiest
city in GA is Johns Creek with top rated schools and just looking at Zillow, a
home valued at $460K has property taxes around $5000.

~~~
Latteland
Seem to be a couple million and up.

------
arcticbull
Oh they get it, they’re just looking out for themselves. Property owners
account for 72% of the voting block and have strong roots in the community
where renters tend to be more transient [1]. In America, as a property owner,
your home is probably your largest investment. The perception here for better
or worse is that more housing means less demand for yours, so you lose money.

It’s like wondering why the foxes don’t vote for razor wire around the chicken
coops. Not in a malicious way, it’s just not in their interests.

For what it’s worth I own, and am fine with new development because I think
it’s not nearly as detrimental as it’s made out to be. I think the community
benefits both directly with diversity of people and indirectly as it supports
more jobs but I feel very much in the minority.

tl:dr; it’s because renters don’t vote and voters don’t rent.

[1] [https://www.apartmentlist.com/rentonomics/renters-and-
voting...](https://www.apartmentlist.com/rentonomics/renters-and-voting/)

~~~
rossdavidh
Hmmm...while there is definitely a difference between owners and renters, the
article is talking in large part about the attitudes of renters: "But, among
renters, attitudes toward affordable housing were quite different. While
renters were less likely to support market-rate housing the closer it was
located to their house, for affordable housing the result was reversed."

The question is why renters did not support more upscale housing being built,
and rejected the argument that any increase in housing would ultimately result
in an increase in housing supply and thus (theoretically) a reduction in rent.
The answer is, they don't believe that's the way it really happens, and
they're correct not to believe it.

~~~
arcticbull
Luxury housing by mine is going to raise the value of mine and hence rents no?
Sounds like what landlords would want.

------
eldavido
Great article that adds a lot to a nuanced and controversial topic.

I'm surprised they don't consider time as a dimension of market segmentation,
i.e. what is "luxury" today might become "standard" or even "basic" as time
progresses. Even things that you'd think would stay static over time don't --
houses are larger today than they used to be, and I could very much imagine
people standing around 100 years ago talking about only "the rich with their
luxury running water" can afford to live in a certain area.

I think long-term the solution really is just to build, and build, and build.
Over time, if builders consistently add supply to the top of the market, it
will gradually slide downmarket as it ages and its amenities become more
standard. I think the biggest problem is that in California, the normal
process of adding luxury units has been paused for 20 years due to anti-
developer sentiment, and they're trying to make up for it now, at all once.

I'm reminded of a saying: the best time to plant a tree is 20 years ago, but
the second-best time is today.

Another thing, and I wasn't even going to mention it, but any Bay Area real
estate developer will tell you [0], it's very difficult adding supply to the
middle of the market here because things are just so damn expensive.
Affordability is not and never was the priority. It's 500K to build a middle-
market affordable unit before the developer makes a cent of profit. For that,
thank buy-local regulations, environmental legislation like CEQA, organized
labor, huge "developer impact fees", extremely long wait times (years) for
permits to get approval, and now "inclusionary housing" requirements that
force developers to cross-subsidize below-market rate housing by jacking up
the prices of the market-rate units. It's madness.

[0] I'm married to an architect working in the Bay Area.

------
uberman
What is the incentive for a voter who currently owns a home in an expensive
market to be in favor of more housing?

~~~
nashashmi
Do voters never think about their own family members or their own kids one day
growing up and living next to them?

This is a problem when society is becoming less communal and more nimby like.

~~~
rayiner
No—see, eg, all baby boomer policies.

------
Animats
Because the US doesn't have a housing shortage nationally. The vacant houses
and the jobs are in different places. If you want a cheap foreclosed house in
San Bernardino, CA, here's a list.[1] That's in Southern California, not too
far from LA. It's not Cleveland or Detroit. Developers overbuilt in the last
boom.

[1] [https://www.zillow.com/san-bernardino-
ca/foreclosures/](https://www.zillow.com/san-bernardino-ca/foreclosures/)

~~~
pcwalton
There's a reason why those houses are cheap. Commuting from the Inland Empire
to Los Angeles is _miserable_. It's an hour if there's no traffic, which of
course is never the case in Southern California.

~~~
jimmaswell
We need some way to incentivize companies to spread out more instead of
overstuffing these same places more and more.

~~~
Ericson2314
No cities are far more efficient (engery, economically, culturally...).
Suburbs are massively subsized miserable alienation farms that only appear
cheaper.

~~~
jimmaswell
There are more cities out there than what you find around SV, and there are
middle grounds between super-dense and rural.

------
rjf72
I think supply + demand oversimplifies one major issue.

Wages are extremely inflated in certain hotkey areas with housing issues.
There was a story somebody shared a couple of months back on here about
somebody in the Bay Area working at a cafe unable to find affordable housing
on the $75k he was taking home. The point of the article was supposed to be
pointing out that even such high wages don't solve the problem, but I think
the more salient point is that high wages _cause_ the problem.

Cafe work is relatively low skill. When you can take home 250% the median
personal income for low skill work, you're never going to find affordable
housing. Such high wages are _already_ driving seemingly endless economic
migration with unaffordable housing. Add in reasonably affordable housing and
you just exponentially increase the demand.

The point of this is that I think it's questionable about whether or not you
can build your way out of this. There are two examples we can look at for
lessons: Hong Kong and Tokyo. The current situation is that both are extremely
densely populated areas. Hong Kong has 17,552 people per square mile, Tokyo's
at 16,121. Hong Kong is _extremely_ expensive whereas Tokyo has become a
somewhat reasonably affordable place to live. Many people have tried to
attribute this to various programs the Japanese government has carried out.

In reality, one factor plays a dominant role. In the 90s many expected Japan
to become the world's leading economy. They were actually far ahead of the US
in terms of GDP/capita. Since then they've gone through decades of something
between recession and stagnation. Their GDP was higher in 1995 than it is
today. Hong Kong, by contrast, is much more like all the other areas facing
housing pricing issues. Their GDP continues to exponentially accelerate - far
more than doubling since 1995 with a continuing exponential growth. Japan, in
general, became affordable because it became economically less desirable. And
ultimately I think that is the only solution - but it's one few would ever
lobby for!

On the other hand if your goal is not to actually create affordable housing,
but instead to simply maximize your GDP then things become much more
interesting - but that's an entirely different topic.

------
ineedasername
Might not significant improvements in mass transit might help this problem
quite a bit as well? If a commute from 20-30 miles away was trivial, more
people on the lower end of the economic scale could live further from urban
centers where housing prices are at their peak.

~~~
aetherson
But in California, major transit extensions take a decade or more to complete
and cost tens of billions of dollars. It would be hard to build enough housing
to make a serious effect on prices: it's probably five times harder to build
enough transit to have a serious effect on prices.

~~~
tomjakubowski
> in California, major transit extensions take a decade or more to complete
> and cost tens of billions of dollars

Recent data from LA Metro:

* In 2012, Expo Line phase one (Downtown to Culver City) opened, six years after construction broke.

* In 2016, Expo Line phase two (Culver City to Santa Monica) opened five years after construction broke.

* In total, the 15.1 mile Expo Line cost $2.5 billion.

* Also in 2016, the Gold Line Foothill Extension, Phase 2A (Pasadena to Azusa) opened after five years of construction at a cost of $735 million.

* Gold Line Foothill Extension, Phase 2B (Azusa to Montclair) is expected to cost ~$1.5 billion, involves some major additional work (relocating existing commuter rail and freight rail tracks), and is expected to open in 2028, about nine years after it broke ground.

~~~
aetherson
Fair enough, maybe I should've said "Bay Area" instead of California.

------
Camillo
A couple of observations:

1) In the segmented model, the cross-segment elasticity limits the impact of
high-end supply on lower-segment prices, but that applies just as much to the
impact of _high-end demand_. Yet the same people who reject high-end supply as
a solution are much more likely to believe in high-end demand as a cause
(those damn techies pushing housing prices up!).

2) There is a significant number of singles with high-paying jobs in San
Francisco who are living with roommates, in tiny studios, etc. These people
who would live in much larger and better housing in any other city. Thus there
is a good reason to believe that the cross-segment elasticity in San Francisco
is actually quite high.

3) In general, nobody believes in Economics 101 when it comes to policy,
unless it aligns with their other preferences.

------
squirrelicus
Because for the government to have an effect on the housing supply, they need
to find a way to lower the price. At best homeowners risk losing their equity,
at worse they become upside down and are subidizing the new construction with
their own martgage losses.

------
homerhomer
Chinese investment buyers can't be helping the situation.
[https://www.cnbc.com/2019/01/08/chinese-middle-class-
buying-...](https://www.cnbc.com/2019/01/08/chinese-middle-class-buying-up-
american-residential-real-estate.html)

Vancouver B.C. had it so bad that they had to tax foreign investment
purchasing.
[https://en.wikipedia.org/wiki/Bill_28_(British_Columbia)](https://en.wikipedia.org/wiki/Bill_28_\(British_Columbia\))

------
ineedasername
Author says that increased luxury housing will trickle down to lower level
housing. I'm not so sure. I wish I could find it, and maybe it's a bit
anecdotal, but I came across something recently that said decent sized chunks
of luxury housing in NYC is basically bought and left vacant by people using
it essentially as an investment vehicle. If this is the case, additional high
end housing will not trickle down to the same net effect on supply & demand as
additional low-end/affordable housing.

~~~
themagician
This is obvious to anyone who lives in the real world.

Add 10k $1MM apartments to San Francisco and it won’t do anything appreciable
for people making $55,000/yr. it will just attract more millionaires and
investors.

Trickle down anything is paper theory for your intro micro course. By the time
you learn about externalities and non-linear equations you quickly realize it
doesn’t play out in reality the way you want it to.

Maybe the term isn’t really that misleading though. The concept of trickle
down is kind of like a clogged rain gutter. Sure, a few drops trickle down,
but most of the water just piles up.

~~~
Gibbon1
I think the solution is the heresy that the central bank should put strings on
the money they lend out. So the central bank has to apportion a certain amount
of funds for high density housing in particular geographic areas. Directly
loan money to states to build mass transit.

And specifically not to purchase paper, stocks, bonds, etc. All that stuff
should be hard money loans.

~~~
Nasrudith
Why involve the central bank for those loans? I think the federal budget could
handle it well enough and there is even some justification for it being a loan
as a slight anti-graft measure to give encouragement to make it something
productive instead of squandering it.

------
jldugger
Here's just a sampling of the rhetoric I see on Nextdoor in Silicon Valley:

> See where the Wheels and Deals is going to be torn down and have another
> living complex built there? And the old nursery, a pre-school as well! It's
> never going to end until all of El Camino is a mess of roaming cars and
> people. Our whole area is going to be turned into an over populated dump.

And in case you weren't clear on who's doing the over population, the poster
later makes clear their opinion on the subject:

> These living places aren't being built at the alarming rate they are because
> there's a line of people waiting. NO sir.....there being built to ATTRACT
> them here. WHY.. would we want that? Politicians can shove all their forced
> urban developments. They're not living in them.

> And for the record, the state of California and it's past buffoon elected
> officials are the ones to blame. If they weren't so busy preaching sanctuary
> state they would have come up a population control plan. That's whats
> needed. Not trashing cities with every element that has little to offer.

------
narrator
Rents are super high in New York and Hong Kong and they are high density.

~~~
hn_throwaway_99
That's an interesting point. For example, whenever people talk about
increasing road building to alleviate traffic these days on places like
Reddit, they are immediately lectured to about how more roads just cause
induced demand and they don't actually cause traffic to go down.

For highly desirable cities I have to wonder if the same thing is true for
housing. I mean, it feels like even if you doubled the amount of housing in SF
that you would just cause more people to want to congregate in SF while 3rd
tier cities and rural areas would empty out even faster.

~~~
AnthonyMouse
> For example, whenever people talk about increasing road building to
> alleviate traffic these days on places like Reddit, they are immediately
> lectured to about how more roads just cause induced demand and they don't
> actually cause traffic to go down.

People misunderstand how that works.

If you have a road which is excessively congested, the congestion suppresses
demand. Nobody wants to sit in traffic for two hours, so people stay home or
make use of flexible hours to commute at what would otherwise be less
convenient times etc.

If you add capacity to the road then the congestion gets better, but not by as
much as you would have expected if you looked at the existing traffic, because
the fact that it got better caused some of the congestion-suppressed demand to
return, which made it less better. So the net result is that it got a little
better when you expected it to get a lot better.

But that doesn't mean you can't fix it by adding supply, it just means you
need enough supply to satisfy the whole demand, including the demand that was
suppressed by the high congestion (or in the housing case by the high prices).

Of course, in the road case there are also alternative ways to satisfy demand,
like building more housing so that people can live closer to where they work
and don't have to drive as many miles.

------
Ericson2314
A land value tax should never brought up as it has wide support among
economists for precisely the purpose of improving land use necessary to make
building more housing most productive.

Maybe it takes a huge amount of luxery housing before another type gets
"naturally" made, but with good land use at least the rest isn't stuck with
crippling commutes.

If we had good land use, we could probably get away with saturating the luxery
housing market and not sticking everyone else with terrible commutes.

------
purplezooey
Remember that middle-aged guy that lived next to that lake house that Tony
Soprano wanted to buy? All city councils are made up of that guy.

------
duxup
Outside of urban areas or even just urban centers....I don't think it really
is a big topic.

------
eecsninja
Remember when Tokyo was expensive?

[https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3...](https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3c60)

------
crb002
NIMBY voters. The issue is 100% local zoning to allow less parking spaces,
efficiency units, inlaw apartments in suburban houses, allow multi-family
housing, and allow zoning of nearby grocery stores.

------
whydoineedthis
To summarize: voters aren't dumb, they do do economics, and the economics
clearly spell out that building luxury housing isn't in the majority interest,
but building anything else isn't in the developers interest. Is this really
rocket science?

------
chrisbrandow
This is great work. It does a great job bridging the gap between the true but
l overly simple supply and demand arguments with the complex dynamics of
housing markets.

Bravo to the author!!

------
Cyclone_
If only luxury housing gets built eventually the amount of middle class
housing will become too scarce. This is quite apparent in Boulder, when I
lived there the citizens were quite good at banding together to prevent any
development that wasn't going to be upper middle class and above.

~~~
Lazare
On the face of that, this seems like a nonsensical objection.

In my view, obviously "middle class housing" is just "average quality
housing"; as more luxury homes are built, existing housing stock will start to
be considered as middle class or working class.

Further, this is how things have worked historically; in most cities I have
been in, the working class housing stock is invariably older, and was
originally built for other purposes, eg, a mansion now turned into apartments,
or a middle class house now turned into a duplex, or simply a bunch of
originally middle class tract housing now that the middle class can afford
better. We have not historically, nor are we now, building large amounts of
purpose-built working class housing.

> If only luxury housing gets built eventually the amount of middle class
> housing will become too scarce.

If housing of any type is built, then housing will not be scarce. If no
housing of any type is built, then housing will be scarce. Worrying about the
_type_ seems like misguided micromanaging.

~~~
Cyclone_
You're missing the point, people from middle class housing wont be able to
move into luxury housing, most people don't have the means to do so. I don't
see how you can believe that building luxury housing will help middle class
people. Building middle class housing will help middle class people. If you
don't believe that there's too few options for middle class people in Boulder
and that it hasn't become too scarce I would encourage you to do some basic
research using a simple tool like Zillow to look at prices. Building expensive
homes raises the prices of everything around them so now most homes in a place
like Boulder are out of reach.

~~~
AnthonyMouse
There are people who currently live in "middle class housing" even though they
have more than middle class money because all housing is scarce. If you build
more luxury housing then those people move out of the middle class housing
into the new housing and then middle class people can move into the middle
class housing.

Moreover, there is no structural difference between "luxury housing" and
"middle class housing". A building is a building. You take 10 units of "luxury
housing" and add some walls and appliances and now it's 20 units of "middle
class housing". The problem isn't what they're building, it's the zoning that
prevents it from being subdivided that way.

~~~
Cyclone_
That doesn't make any sense at all. No middle class person will be able to
move into Boulder where the average home price is over $1 million. If someone
moves out of there a middle class person wont be able to move in at that price
point.

~~~
AnthonyMouse
It costs over $1 million because the existing owners aren't selling, because
they don't have better properties to buy instead. Provide those and the
existing properties go on the market, and once there are more of them on the
market they can no longer command a million dollars.

------
charlie0
As someone who recently moved out of Los Angeles in search of more affordable
housing and a better traffic situation, I would vote against building more
housing in Los Angeles due to overcrowdedness. There's just simply too many
people living there and the traffic is insane. The city should work on fixing
other issues first, like public transportation and mixed zoning rather than
allowing more housing to be built.

~~~
burlesona
Serious question, why should they ban more housing and not ban more jobs
instead?

I’ve never heard anyone suggest restricting job growth when a place is
“overcrowded,” but why else do people move there?

~~~
BurningFrog
The way California works, housing is an economical loss for local governments
while jobs are a profit center.

This in itself fully explains the absurd California job/housing situation. If
we changed those laws, it would solve itself just through the greed/invisible
hand of local government.

------
remote_phone
Increased housing in high cost locations DOES NOT decrease prices. This is a
complete fallacy. The problem is that the supply is limited and it solidifies
comps and makes people more sure that high prices are legitimate.

Look at Bay Meadows in San Mateo. An entire community has been built in the
last few years. There are a ton of condos, townhouses and single family homes
built in quite frankly a well thought out community.

Townhouses are over $1.5M and SFH, which are yards away from the Caltrain are
over $2M.

This is entirely new supply and their prices are higher than existing houses.
The prices in the area didn’t go down, they went up because this legitimizes
the high prices and solidifies them.

The only way you get lower house prices is by killing demand like during the
housing bust, not by increasing supply because supply doesn’t happen at the
scale that is required to decrease prices.

~~~
cletus
You're talking about a community of 2000 residents [1] out of over 7 million
residents in the San Francisco Bay Area [2]. Do you really expect it to change
the housing cost equation at all?

In a largely unregulated market land use is largely dictated by how expensive
that land is. Developers don't otherwise just decide to build high rises, mid
rises, townhouses or SFHs. It's why the 3-6 story condo complexes you get in,
say, Santa Clara County you don't get in Manhattan.

Now obviously this is complicated by regulation, demand in different market
segments, what the infrastructure can support, etc but the prices you give
seem to suggest the land value is extremely high. Building low density housing
on that is going to lead to really high prices.

[1] [https://baymeadows.com/2017/12/22/2017-lets-do-the-
numbers/](https://baymeadows.com/2017/12/22/2017-lets-do-the-numbers/)

[2] [http://www.bayareacensus.ca.gov/](http://www.bayareacensus.ca.gov/)

