
Does Adding Expensive Housing Help the Little Guy? - DINKDINK
https://marketurbanismreport.com/does-adding-expensive-housing-help-the-little-guy/
======
jseliger
If you're interested in this topic, you might also like the recent Econtalk
episode, "Philip Auerswald on the Rise of Populism,"
[http://www.econtalk.org/archives/2017/09/philip_auerswal.htm...](http://www.econtalk.org/archives/2017/09/philip_auerswal.html).
The spread of housing restrictions via zoning has had much larger impacts than
is commonly appreciated. I find it interesting especially that Piketty's
famous results are really a result of capital accumulation to landlords:
[https://www.brookings.edu/wp-
content/uploads/2016/07/2015a_r...](https://www.brookings.edu/wp-
content/uploads/2016/07/2015a_rognlie.pdf) who benefit from supply
restrictions.

I've been writing about (and to some extent working in) these issues for a
while and come at them from another angle 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)

~~~
dmix
Thomas Sowell is brilliant at highlighting the unexpected nature of many parts
of economics as well as the countless government policies initiated in the
name of helping the poor or lower class that end up either doing little to
help or, more often, ultimately helping the upper-middle class and above the
most.

He helped me grow beyond a cliche idealistic libertarian worldview into
something much more practical and based in real world policy.

I highly recommend his 'Wealth, Poverty and Politics':
[https://www.amazon.com/Wealth-Poverty-Politics-Thomas-
Sowell...](https://www.amazon.com/Wealth-Poverty-Politics-Thomas-
Sowell/dp/046509676X/ref=sr_1_4/)

Or for something more lightweight see his book 'Basic Economics':
[https://www.amazon.com/Basic-Economics-Thomas-
Sowell/dp/0465...](https://www.amazon.com/Basic-Economics-Thomas-
Sowell/dp/0465060730/) \--- Despite it's name it's not an economics 101 guide,
it basically a teaching-through-example guide by listing policy after policy
that were implemented in the realworld, for ex:

\- rent control in NYC/Toronto in the 1970s which severely reduced access to
affordable housing, disincentivized building maintenance, incentivized arson,
and gave countless upper/middle class residents cheap rent for beautiful
properties

\- various industry licensing pushed by market incumbents not protecting
consumers, such as interior designers requiring 4yr bachelors degree to choose
the colorscheme of an apartment

\- etc, etc

He digs into their good intentions but unintentional self-defeating side-
effects. Many of which have countless analogies to today (see Uber vs Black
cabs in London).

After reading it I'm hardly surprised Japan's economy has stagnated, to the
point where it's almost so obvious it saddens me. They are one of the worst
proponents of the type of heavy handed economic-intervention he critiques.

------
irq11
This just in: woman who has staked her career on a pro-housing political
platform announces that market-rate redevelopment is good for everyone.

The question is not _“will adding N market-rate units help?”_ because that’s
trivial. Of course it will. The question is: _“what if you have to knock down
N affordable units to build M market-rate units?”_ This “simulation” doesn’t
even come close to addressing that question.

Like it or not, that’s the situation in San Francisco.

~~~
xenadu02
> The question is: “what if you have to knock down N affordable units to build
> M market-rate units?”

No it isn't. No one is seriously proposing knocking down N affordable units
unless they're also including N+X affordable units + M luxury units in the new
structure. Any such plan would be a massive waste of time because it has zero
chance of being approved.

This article is addressing protesters against "The monster in the
mission!!!!1" who marched against replacing an empty warehouse and a Burger
King with 16 stories of housing. It is also addressing people like Dwyer who
thought they were untouchable and important enough to work against building
more housing without suffering any consequences.

I've noticed some attitudes starting to shift out in Sunset as lifetime SF
residents find their kids coming home from college or getting married, yet
being forced to live hours away. Suddenly the anti-development stance is less
attractive when it means never seeing your grandkids.

Ultimately I don't think the Bay Area can muster the political will to solve
the housing problem. Too many people benefit from eternally-rising housing
costs or have a "screw you, I got mine" attitude. The state government will
have to step in and remove local zoning control.

~~~
irq11
There are essentially no development projects in SF that don’t involve
demolishing existing housing. While I grant you that some such projects have
(ridiculous) community resistance, these still aren’t the norm.

In most places in SF, the resistance comes when housing is being replaced
and/or the developer doesn’t want to build low-income units (instead
preferring to donate to the low-income housing fund). It’s not a clean story.

~~~
Kalium
In both Oakland and SF, there's been significant resistance to projects that
propose to replace things that are not housing at all with things that are. If
memory serves, the "Monster in the Mission" was proposed for an empty lot. I
saw significant resistance to putting a tower in a _literal_ hole in the
ground at MacArthut BART.

In SF, the resistance often seems centered on the idea that however much
subsidized housing the developer proposes isn't enough for the interest groups
fighting it. Often the push is for 100% subsidized, plus assorted "community
benefit" donations to non-profits.

~~~
who_is_firing
Even 100% affordable housing gets objected to:
[https://sf.curbed.com/2016/10/6/13189882/1296-shotwell-
affor...](https://sf.curbed.com/2016/10/6/13189882/1296-shotwell-affordable-
housing-opposition)

To be honest, people like to extol the virtues of Bay Area liberalism, but to
me the housing policy in the Bay is one of the most systematic (and regulated)
form of prejudice. Cities like SF are losing their minorities, their middle
class, all to fatten the paycheck of existing landowners. Almost the entire
black population has emptied out of SF. It's one of the most pervasive form of
class discrimination I've seen.

~~~
kqr2
It comes down to incentives. With the current policies in place, there isn't
much incentive for incumbents / existing residents to allow more housing.

If you are a home owner or landlord, reduced supply results in asset
appreciation.

If you are a renter with rent control, then building more housing in your
neighborhood may not seem like much of a benefit either.

Policy makers are always looking for piecemeal solutions, e.g. let's give
teachers a rental subsidy, tweak the % of affordable housing that must be
build, etc.

Lawmakers really need to create incentives so incumbents have a reason to want
more housing.

------
scythe
From the linked "Residential Nexus Analysis":

[http://sf-planning.org/sites/default/files/FileCenter/Docume...](http://sf-
planning.org/sites/default/files/FileCenter/Documents/8380-FINAL%20Resid%20Nexus_04-4-07.pdf)

>The prototype rental unit, also drawn from the Sensitivity Analysis work
program is also 800 square feet and rents for $2,500 per month or a little
under $3.20 per square foot per month. New rental units are not feasible in
today’s market; however, the inclusionary program will be in place beyond the
current market cycle and must anticipate development of rental units in the
future. The assumed rental rate is higher than is achievable in the current
market except under extraordinary circumstances (luxury projects in premier
locations, etc.). The rental rate has been estimated as the required minimum
level for a project to be feasible, given total development costs,
conventional financing terms, and typical operating expenses. The household
living in this unit is likely to be paying approximately 30% of income on rent
(not including utilities). This translates to a household with a gross income
of $102,000 per year.

This is a rather interesting claim that I haven't heard come up in this debate
before. I'm not sure if it's just because it made more sense to sell condos in
2007 (before November) or because construction costs are actually so high you
can't build apartments that cost less than $2500/month and/or $3.20/sf.

It seems that research into cheaper building types, and regulatory initiatives
to permit those, ought to be part of a solution. Although since the majority
of the value of a property in SF is often the land, a land tax might be called
for as well.

------
llimllib
Doesn't assuming that demand is exogenous ensure that their model will return
the result that they want? It seems that how exogenous demand is is the
central question in the housing debate; if SF is so desirable that building
more luxury apartments just brings in new rich people, then this model is
useless.

(I think, and hope, that it's not. But I think the author danced around the
central question by building this model.)

~~~
akanet
I think Sonja's study does more than "prove a point" \- it also illustrates
exactly _how_ "luxury" housing helps everyone, which is a huge sore point in
local politics. Understanding of the nature of how flexible preferences and
different levels of wealth interact is still a useful exercise.

It would be very difficult to devise a study to prove whether exogenous demand
is real, but a casual examination of San Francisco suggests that it is not -
SF has built very little housing and still consistently out-attracts many
other metro areas.

