
Why the High Cost of Big-City Living Is Bad for Everyone - lafay
http://www.newyorker.com/business/currency/why-the-high-cost-of-big-city-living-is-bad-for-everyone
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andy_wrote
From the article: "One hardheaded answer is to build more housing. An
increasing supply of housing would theoretically put downward pressure on
prices. The reality, unfortunately, is that almost all urban construction
happens too late."

That last sentence does not sound like an argument against this approach, but
an additional argument for it. If there is a secular trend of urban rents
outpacing inflation, it sure seems like a "better late than never" situation.

~~~
nibs
I live in Toronto. It is mind-blowing the number of condos being built. More
are in progress now here than exist on Manhattan. But as far as world cities
go, the condos and rent are both very affordable. So I think to a certain
extent it does work to build more, but it is not 1:1, and lots of people come
here because of the (relative) affordability.

~~~
bufordsharkley
It's a reminder that we have a prisoner's dilemma on our hands: if one city
fixes things, they share an disproportionate burden of the load that will
follow. Real success will only happen if everybody coordinates on better land-
use policy.

The likely outcome is that they won't, and here we are.

~~~
Agustus
What kind of land-use policy are you proposing and how will it be kept out of
the hands of politicians who abuse it for their own personal gain?

~~~
bufordsharkley
My ideal reform would be the Land Value Tax[0], which admittedly has run into
problems in execution with poor implementations.

It depends upon assessments on land value that reflect current market value of
that land. In one notable case of the LVT in practice (Pittsburgh), assessors
made a real hash of it, with assessments well out of proportion to market
demand.

I would like to see a proof of concept to fix this, mainly an automated
algorithmic assessment map of land values, based off of public sales records.
It's a fun project to attempt; I should start up a repo some time.

[0]
[https://en.wikipedia.org/wiki/Land_value_tax](https://en.wikipedia.org/wiki/Land_value_tax)

~~~
dragonwriter
The problem with using sales records for LVT is the central concept of LVT is
that it's based on unimproved value, and actual sales of land usually include
improvements and separating out there unimproved value is non-trivial and hard
to validate.

~~~
bufordsharkley
Yes, that's the challenge. But with some assumptions (within an urban area,
neighboring plots have about the same land value; when a plot is sold at two
different times, the difference in the prices may reflect the rise in land
value), one could get some reasonable estimates.

~~~
amazon_not
Waiting for a plot to be sold may take too long. How about an auction based
pricing model?

Property owner declares land value and pays tax based on that value. Taxman
has checks and balances to make sure that the declared land value isn't
egregiously low balled.

The declared land value is made public and anybody can make an offer to buy
the land at that value plus a premium. If the offer is accepted, all is good
and we have a new declared land value.

If the offer is declined, a new declared land value is set at the offer price.
The owner pays an additional tax to reflect the new declared value and a
penalty if it is found that the old declared land value was (significantly)
below prevailing land values.

The trick is in setting the penalty in such a way that it becomes unappealing
to declare less than fair market value. The risk is that declared market value
is unduly inflated to protect against the penalty, but the property owners
self interest in paying the least amount of taxes should protect against that.
Also applying a (small) fudge factor to the acceptable fair market value when
the penalty does not apply should help. Markets do move and there is no need
to (harshly) penalize normal appreciation and market developments.

~~~
dragonwriter
> The declared land value is made public and anybody can make an offer to buy
> the land at that value plus a premium.

That works for _property tax_ , but it doesn't work for _land value tax_ ,
because the key difference between LVT and property tax is the former is based
on the _unimproved value_ of the property, while the latter is based on the
value of the property _as it is, with all improvements_.

A self-declared value that is legally tied to an offer to sell at a fixed
premium is clearly a self-assessment of the _improved_ value of the property,
not the _unimproved_ value that LVT is supposed to be based on.

~~~
amazon_not
Fair enough, but that just brings us back to the problem of separating the
improved and unimproved value. If we can do that, which we must be able to do
if LVT is ever to be implementable, we can still use the auction method
proposed.

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karma_vaccum123
I am concerned that we will kill the golden goose...neighborhoods will consist
of only the elderly (who remain by virtue of prop 13), and the wealthy. Seems
inevitable that neighborhoods of this composition can only support service
industries (hair salons, restaurants etc) and will eventually become economic
dead zones.

In this model, the Bay Area becomes a glorified version of Sand Hill
Road...cozy offices for a very few at the top...and every other facet of
industry pushed out to affordable areas.

~~~
1_2__3
This is exactly what is happening. The whole South Bay is slowly imploding.

~~~
home_boi
south bay isn't that expensive. It's just SF. South bay is cheap compared to
the average income of the Bay area

~~~
r00fus
Are you kidding me? Dunno, but $3k/mo for a 3bdrm apt is pretty unaffordable.
Add $500 for duplex, and $1k for a single-family.

That's literally double what it used to cost 10y ago.

~~~
pound
SF would be $3k for 1bdrm

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douche
Maybe we could actually let people work remotely, and not waste billions of
hours commuting. Then we could leave these fucking urban and suburban
hellscapes, and go live somewhere with green grass, and trees, and mountains,
and human-scale communities. Maybe people wouldn't be so neurotic.

~~~
m0llusk
That is only one of many factors involved. We are talking about communities.
When a big new software innovation comes out people have meetups and talk
things over. That doesn't work with a highly distributed workforce. No matter
what employers do the same forces will be at work concentrating high end
labor.

~~~
ghaff
I don't disagree that there's value to physical concentration and face to
face. But not every talented engineer (and associated financial/business/etc.
people) can live in Silicon Valley or wants to. It's a constraint. Yes, there
are concentrating forces but, as an industry, we need to live with the fact
that there are countervailing forces. Distribution, even if its not absolute,
is the reality.

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pnathan
> It would mean, more or less, an urban Marshall Plan for housing.

I would like to see this, at the national level: federally strip all
downzoning from urban cities, then increasingly tax single-occupancy houses,
focusing on subsidizing and activating high-density housing for all income
strata. There's no reason Seattle, San Francisco, LA, etc can't all be turned
into high-density high-efficiency Manhattan-esque locations. With the
increased density comes a more effective tax base and a better scale for urban
services.

~~~
pchristensen
Simply make it legal to build higher-density housing with smaller setbacks,
less required parking, smaller room and unit sizes, etc. The affordability
problem will take care of itself, no subsidies required.

For existing owners, they will get a huge payout because their land becomes
MUCH more valuable. The downside is that certain neighborhoods where supply is
most suppressed will change very much, very fast, and the people that don't
sell and leave will probably not like that.

Preferences aside, this cannot be done without hugely disrupting municipal
finance, primarily the provision of public schools. Residential property and
services are subsidized by commercial/industrial tax revenues, and there is no
linkage between assessed value of property and number of school-age children
(e.g. two empty-nesters in a mansion pay multiples of the property tax of a
family of 5 renting an apartment). And that's just operations! Building lots
of new school capacity, when land has just become very expensive, is not
something existing cities/school districts are equipped to do.

However, Americans are tough and smart and can figure stuff out. These are
just the current obstacles that exist.

~~~
SilasX
>For existing owners, they will get a huge payout because their land becomes
MUCH more valuable.

But these very same owners are the ones blocking such construction, even
despite being the same people that will receive a financial windfall; they
prefer to keep the neighborhoods as is even at this tremendous opportunity
cost.

So, it still requires some eminent domain or overriding local government.

~~~
pchristensen
Sure, owners prefer to sacrifice total windfall in favor of stability and
control. That is proven across all cities everywhere that land use controls
exist. I'm just saying it's not all bitter medicine for existing owners if
land use controls are loosened.

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bhewes
Cities are inherently places where wealth begets wealth. I can say after
living in LA I see the process of its Mahattanization. My guess is my kids
won't even understand a suburban LA other then as a historical artifact mostly
represented in old films and TV shows.

~~~
bufordsharkley
Affordable suburbs are, I've come to believe, a transient phenomenon. They
exist for a brief and beautiful moment when there's cheap land outside a city
center. Then their demand exceeds their supply... and you know the rest.

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cehrnrooth
SF specific anecdote - I had a radical idea while walking up Divisadero last
week. What if we removed Divisadero and Geary St. and built apartments where
the road is today. You'd have European style narrow streets for pedestrians
and could increase the density massively. Imagine taking out the multiple
lanes across Geary St and how much housing could be built. Would there even be
a NIMBY problem since the road is publicly owned?

~~~
pchristensen
Yes, huge NIMBY problem - people drive/bike/ride busses on those streets, and
business are on those streets. (not saying they wouldn't benefit from a
change, particularly businesses, but many people object to huge changes) You
don't need to own something to be a NIMBY.

More practically, the width of even wide streets like Geary is narrower than
the depth of a typical SF building - see
[https://goo.gl/maps/YbJmqxpgEW62](https://goo.gl/maps/YbJmqxpgEW62). Roads
overall take up a huge amount of space in a city, but no single road is all
that much area. For instance, it looks like the right of way on Geary is about
110'. If it went the full length of SF (~7 miles), then the whole road takes
up less than 100 acres. For reference, Park Merced is 150 acres.

It would be great if all the lightly trafficked side/residential streets could
be squished from 60' to 40', you're talking about 50 blocks -> 1000' width,
which is over 3 blocks wide and about a thousand acres, which is approaching
the size of the Richmond district (and that's just if you squish in one
direction). But you can't just pinch-to-zoom in real life :(

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pgoggijr
Article doesn't seem to assert that it's bad for everyone, just those who
aren't already at the top of the ladder. The author even goes so far to say
that city living is a "luxury good" for those who can afford it.

------
jackcosgrove
There are some inherent problems with making cities affordable.

Dense construction is more expensive per unit area. So even if you could
spread out the cost of expensive land among many units, a high density
building will cost more per unit to build. Shrinking living spaces can only be
taken so far before they hurt quality of life.

So city dwellers will always pay more per unit area because of building costs.

Second, traffic from density imposes costs on transportation. So movement is
more difficult in a dense environment.

Eventually, these costs overwhelm the networking benefits of cities, and
dispersion is the result. This has already happened with industry, which
requires more space than services to be profitable. We are now seeing the
service economy priced out of the Bay Area, leaving only the rentier economy.

Density is not a panacea.

~~~
Tiktaalik
>Second, traffic from density imposes costs on transportation. So movement is
more difficult in a dense environment.

haha what? no. Suburban sprawl and car oriented transportation systems are
dramatically more expensive than denser communities where you can viably walk,
bike and take public transit. There are all sorts of studies on this.

Consider how expensive it is to walk 15 minutes to work for example. (it's
free)

~~~
wott
Doing the same distance in a city, compared to the countryside or small towns,
always takes longer.

Driving is slower (traffic jams, traffic lights, crossings everywhere...).

Public transportation is slower (think train and long/middle distance busses
_vs_ local busses and subway and tramway with their stops every few hundred
meters).

Cycling is slower (same as for cars + the repeated effort of restarting after
every slow down or stop + damn paint and gutter plates everywhere that should
be avoided or ridden with care).

Heck! even walking is slower (pedestrian 'jams' slowing you down, avoiding
people, traffic lights, crossings every 50 or 100 meters, cars/trucks parked
on sidewalks...).

Basically, what's fast and efficient is a point to point transport with
'emptyness' between the nodes. It's not being bogged down on a dense axis or
area.

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ThomPete
Because of urbanization which will continue to go on for a long time it's
going to be next to impossible to drive prices down around the big cities.

People will simply just move as close to opportunties as possible and that
will drive prices further up.

This is why cost of living is going up not down. For all the great things
technology does it doesn't solve one of the most fundamental needs of humans.

------
hkmurakami
The best thing about a city is the forced contact with people who are
radically different with each other. Only with time spent together can you
begin to understand one another [1]. Given the vitrol and hatred being dished
out between disparate groups around the country and the world, making city
life affordable has an undeniable macro-level social good aspect to it.

[1] one reason why many of us are hopefuly that the Internet will increase our
contact with others around the world with radically different upbringings and
world views from our own, helping us understand and empathize with one another
better.

~~~
ihsw
Sorry but this feelgood empathy-saves-us-all stuff really irks me, frankly I'm
not convinced the world will suddenly get better if we all learn to
communicate our feelings more effectively.

There are plenty I wouldn't bother saving in a life-threatening scenario, and
they're perfectly normal people that I just happen to have fundamental
disagreements with.

That said, I think we are witnessing the effects of your ethno-emotional
proposal -- we are all forced to confront each-other's differences as we all
come online and the world is convulsing. The internet is amplifying hatred and
fear rather than dispelling it.

~~~
muninn_
That's because the Internet does not require human contact. We all act
differently in person than from behind a keyboard and a Wi-Fi connection.

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ghaff
One of the key point that the article makes is that change happens over
decades. That's not to say that _some_ change can't happen over shorter
periods but anything fundamentally altering is something that may produce
effects in thirty years--and probably in a way at least somewhat different
from what was intended.

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choward
It's 2016. Why is that picture blurry?

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unholythree
If you're using NoScript the image is blurry until you allow newyorker.com

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dpark
I'm on my phone in Chrome (so no extensions) and it's super blurry.

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smb06
I'm on Chrome (iOS) as well. It remains blurry for ~5 seconds and then gets up
to normal resolution.

