
The Shame of Palo Alto: An Interview with Kate Downing on Affordable Housing - jseliger
https://stanfordpolitics.com/the-shame-of-palo-alto-an-interview-with-kate-downing-on-affordable-housing-edddfe142d45#.60ip1iuro
======
hkmurakami
It seems that we made a pact with the devil by positioning housing as an
investment asset. By doing so, we've encouraged people to commit a very large
fraction of their net worth into a rather illiquid asset, tying their
financial fates to the future assessment of that asset. As a result,
protecting the price and appreciation of this asset has come to overshadow the
other crucial roles that housing plays in our society.

If I bought shares in AAPL at $50 (now $100+) and someone comes along asking
that AAPL let them buy some shares for say, $65, I'm obviously not going to be
happy since the value of my investment is under threat. This is the kind of
reaction we've unfortunately promoted for ourselves. It didn't have to be this
way, as other countries have shown us. But now that we're here, it's hard to
imagine a way to turn back time.

~~~
vtange
It's a double whammy when you also consider that property taxes are generally
based on real estate value. City and local governments are dependent on that
income and have little incentive to see real estate values (and thus tax) go
down.

~~~
maerF0x0
Also governments get tax not on the value of a single property but the
cumulative value of the properties (emphasis on the plurality) .

If my 1M house gets replaced with 10x 250k units the government has 2.5x its
tax base. See how affordability and solid tax base can coincide?

~~~
Retric
Local government costs also go up as population increases.

~~~
mjmahone17
The relationship is not usually linear, though. With density comes efficiency
in services. Though some of that efficiency is eaten by the additional cost of
doing the work.

~~~
Retric
Not really teachers are linear with population size. An overpass is vastly
more expensive than a stoplight and still cheaper than a subway system.

So, yes for small changes to population size a city need not spend more an can
simply degrade services slightly, but doubling population size quickly gets
really expensive.

~~~
maerF0x0
I would have thought that the linear system was still more expensive than the
dense system (within some reasonable limits). Consider the single family home
as the null case, everyone lives in single family homes as far as the eye can
see, the distance that family must travel to get to the core of a city is
greater than any other existing family (that is new homes are on the outer
ring of the city and thus progressively further and further from the core). So
that family consumes more road miles daily. Vs if you grow in density you do
not create anymore miles of road because those people only have to travel a
shorter distance. And when the inevitable overpass comes, instead of needing
overpasses from 1/2radius of the city you may only need them for 1/4 etc
because the people are already in the core and do not need to come from as
far.

just some thoughts on efficiency of density vs dispersement

------
jseliger
Relatedly: "More housing density keeps Seattle affordable for younger
residents:" [http://www.seattletimes.com/opinion/more-housing-density-
kee...](http://www.seattletimes.com/opinion/more-housing-density-keeps-
seattle-affordable-for-younger-residents/). Seattle is doing better than SF or
NYC: [http://www.vox.com/2015/12/23/10657690/seattle-housing-
crisi...](http://www.vox.com/2015/12/23/10657690/seattle-housing-crisis) but
still not good enough. Tokyo should be its example:
[http://www.ft.com/cms/s/0/023562e2-54a6-11e6-befd-2fc0c26b3c...](http://www.ft.com/cms/s/0/023562e2-54a6-11e6-befd-2fc0c26b3c60.html).

~~~
ryporter
I moved from Palo Alto to Seattle in 2014. One factor was cost of living
(including taxes), but another was that Seattle had a large number of very
nice, relative new high rise apartments. I had my pick of great apartments,
while in Palo Alto such apartments simply don't exist.

The housing problem in Palo Alto is not simply one of affordability. It's also
a problem of desirability among those with the means to pay.

------
jurassic
I get depressed every time I think about the Bay Area housing situation. As
half of an early-30s professional couple looking at our baby clock and anxious
to start a family, I don't see how I can possibly provide a middle-class
lifestyle for children while staying here. The choices are to join the
bleeding edge of gentrification by moving into a slum like East Palo Alto or
commit to severely degraded quality of life that comes with a megacommute.

I don't mind leaving and I probably will, but I do resent it when people act
like two highly-educated and gainfully employed young people wanting to live
where they work is some kind of unreasonable millennial self-entitlement.

~~~
lpolovets
Not sure what part of the bay area you live/work in, but where have you been
looking? I bought in Redwood City last year and the prices, while high
relative to the rest of the country, are probably manageable for many
professional Bay Area couples. You can get a decent 3 bedroom for $900k-$1.2m,
which is probably ~$3k-$4k/mo for [mortgage + property taxes - tax breaks].

~~~
TheCoelacanth
Wow, only a million dollars for a 3 bedroom house. That's so affordable /s

~~~
lpolovets
I know it's very expensive relative to the rest of the US, but:

1) It's way cheaper than Palo Alto (where a 3br is probably $2m).

2) This would be affordable in the bay area for many couples, especially when
at least one person is an engineer.

------
Animats
Palo Alto has the problem that people don't leave.

It used to be a college town. University Avenue had four bookstores. But then
people stopped moving away. About a decade ago, Palo Alto did a survey of
residents to find out how long they intended to live where they were. Most
said they intended to live there for the rest of their life. This implies Palo
Alto becoming a retirement community.

University Avenue now has zero bookstores.

~~~
karma_vaccum123
Not just Palo Alto but California-wide....Prop 13 makes dying of old age in
the home you raised your children in the cheapest option. Literally anywhere
else people move to, even a downsize, will result in higher property taxes

Related to this is the shabby conditions of many homes...the aged can't afford
to renovate, but they also can't afford to move. They die in a tear-down

------
maerF0x0
Seems to be the same old story we've long known. Government interference in
markets leads to distortions. Yet year after year we act surprised. And when
it comes time to setting up a government, we vote for the person who promises
to spend others' money on our pet project.

~~~
jhanschoo
I'm tired of hearing the ideological position that government interference is
absolutely bad. I live in a city-state where government housing and policies
and strict zoning at once makes housing affordable for the middle and lower
class insulated from fluctuating rents, and protects public spaces from
overdevelopment in a land-scarce island.

~~~
xapata
You're right in one sense -- all government (in)actions should be considered,
not an "interference" per se, but a choice made with at least some
understanding of the consequences on society.

As for the problem of interfering with the market... One issue is that a well-
functioning market depends on the idea that price captures all information.
This is central to the idea of the "invisible hand" guiding individuals to
arrive at the correct level of supply to optimally satisfy demand. When
government actions set prices, the market participants no longer receive the
correct information. In turn, the market will arrive either at too much supply
(and waste) or too little supply (and unsatisfied demand).

In the case of housing, the government usually takes action to set prices for
some homes lower than what market forces would arrive at. Therefore, the
market will under-supply and some folks who want housing will not have it. The
answer is to either allow prices to move without intervention or for the
government to subsidize the supply of housing.

~~~
tbihl
I agree with you on all the theory, but I'd add that if you take the subsidy
option, you'll forever have to clamp down harder and harder as the effects of
the distortions amplify.

I'm actually open to the idea that the government option could work; I just
find it entirely antithetical to the ethos of the US.

------
ScottBurson
Kim-Mai Cutler's excellent and thorough analysis from a couple of years ago
[0] is still broadly relevant, though I think there have been some changes --
the whole Google bus thing blew over, I guess, and Mountain View's city
council got largely replaced, the new council being more housing-friendly. But
there's still a lot in here that's applicable.

ETA: Oh, and here's a great piece on Henry George [1].

[0] [https://techcrunch.com/2014/04/14/sf-
housing/](https://techcrunch.com/2014/04/14/sf-housing/)

[1] [https://techcrunch.com/2016/01/29/nothing-like-this-has-
ever...](https://techcrunch.com/2016/01/29/nothing-like-this-has-ever-
happened-before/)

------
davidw
Relevant:

[http://marginalrevolution.com/marginalrevolution/2016/08/col...](http://marginalrevolution.com/marginalrevolution/2016/08/collective-
land-ownership-in-palo-alto.html)

[http://marginalrevolution.com/marginalrevolution/2016/08/lai...](http://marginalrevolution.com/marginalrevolution/2016/08/laissez-
faire-in-tokyo.html)

[https://www.washingtonpost.com/news/wonk/wp/2016/08/10/why-c...](https://www.washingtonpost.com/news/wonk/wp/2016/08/10/why-
cities-need-to-care-more-about-works-in-them-not-just-who-lives-in-them/)

[http://www.nytimes.com/2016/07/04/business/how-anti-
growth-s...](http://www.nytimes.com/2016/07/04/business/how-anti-growth-
sentiment-reflected-in-zoning-laws-thwarts-equality.html)

[http://www.bloomberg.com/view/articles/2016-07-27/zoning-
has...](http://www.bloomberg.com/view/articles/2016-07-27/zoning-has-had-a-
good-100-years-and-that-s-plenty)

Get involved:

[http://sfyimby.com](http://sfyimby.com)

[http://www.strongtowns.org](http://www.strongtowns.org)

------
ermterm
As much as I appreciate all these articles expounding the plethora of issues
stemming from housing in the Bay Area, I can't help but feel thoroughly
discouraged.

It seems that despite an abundance of chatter, we'll never see any change. If
things were going to be fundamentally different, any time soon, we'd see
indications of that. Instead it's just articles. Articles, on articles, on
articles.

~~~
lindenksv1
Don't be discouraged! YIMBY groups are popping up all over the Bay Area
working to make a difference in their cities. Join a group's mailing list and
show up at your city council when they ask you to. Easy. Bring enough friends
and we'll see real change.

Live in Palo Alto: paloaltoforward.com Live in Menlo Park?
www.imaginemenlo.com Mountain View?
[http://balancedmv.org/](http://balancedmv.org/) San Francisco?
[http://www.sfbarf.org/](http://www.sfbarf.org/)

Some headlines: [http://gizmodo.com/yimby-groups-are-organizing-across-the-
us...](http://gizmodo.com/yimby-groups-are-organizing-across-the-us-to-make-
citie-1771699132) [https://nextcity.org/daily/entry/who-are-yimby-first-
meeting...](https://nextcity.org/daily/entry/who-are-yimby-first-meeting-
boulder)

[http://www.forbes.com/sites/scottbeyer/2016/06/30/what-
is-a-...](http://www.forbes.com/sites/scottbeyer/2016/06/30/what-is-a-
yimby/#6345d767b597)

------
will_brown
While it is fine to call out the City Council, I am surprised there wasn't an
acknowledgment that the City Council is a reflection of the will of the people
in the City. If it were really an issue to the community they would elect new
Council persons.

Since the majority of the stakeholders on this issue likely can't vote to
change the Council because they don't live in the City, I would recommend a
boycott. One thing the transit workers could do is organize to the extent they
don't buy anything within the city limits. No gas, no food/lunch, no shopping,
no entertainment, etc... Once you get local business behind a political issue
the rest typically fall in line or they may find themselves ostracized within
their own community.

~~~
lindenksv1
The problem with the "will of the people" is outlined here pretty well:
[https://www.washingtonpost.com/news/wonk/wp/2016/08/10/why-c...](https://www.washingtonpost.com/news/wonk/wp/2016/08/10/why-
cities-need-to-care-more-about-works-in-them-not-just-who-lives-in-them/)

A small minority of NIMBY homeowners can capture and control a city council
fairly easily. When you are well off (and are retired or independently wealthy
and don't work...) and you're in a town of 65,000, that really means there are
maybe at most 1000 people actually going to City Council and paying any
attention to it. That means that if you've lived there for 30 years, you know
all of them and your networks are very deep. So, a small minority who has time
and resources can effect a lot. And meanwhile young people, working people,
people with young kids, people working 2-3 jobs, etc they're not paying
attention, they don't have those deep networks, and frankly they only show up
to vote in presidential elections. Plus, people who like how things are going,
don't really dig into this stuff and have no reason to think anything is
wrong. If you think Palo Alto "is on fire" and "going to hell in a hand
basket" because you have to drive by a new apartment building, then you show
up to council and you show up to vote. But if you have no issue with new
buildings, you've got no reason to show up and you're far less concerned with
voting. So, problem #1 is that people who are most affected are not paying
attention or do not know that they should be paying attention.

Problem #2 is as outlined in the article above. When every city council is
captured by existing homeowners, no town decides to add housing. Every town
prefers to add jobs that bring in tax revenues but thinks they have little to
gain from allowing more housing, because of the attendant infrastructure costs
(like new schools). And so collectively, they make choices that drive up the
cost of housing, drive people away from jobs centers, create homelessness, and
which contribute to income inequality as people spend more and more money on
housing because of an artificial constraint on housing supply. Added together,
this stuff hurts our economy and it's killing off the middle class.

------
whack
I used to live in Silicon Valley for many years. Devil's advocate: Why
_should_ Palo Alto provide affordable housing? People who want affordable
housing can find it in Menlo Park, East-PA, Mountain View, all of which are
just minutes away from Palo Alto. The reason why people don't want to live
there, is because they want to live in a neighborhood that's as
exclusive/upscale as Palo Alto. And yet, if Palo Alto gave in to demands for
Affordable Housing, it would lose that very upscale/exclusivity that people
are seeking in the first place.

I've always argued that San Francisco needs more affordable housing, because
it's not just a neighborhood, it's a _city_. Anyone who lives outside of SF
has to expend considerable effort in getting to SF, hence why the city has a
duty to provide affordable housing _within_ the city. However, this argument
doesn't apply to Palo Alto. It might be a city, logistically speaking, but
given its small size and extremely close proximity to other "cities" around
it, it's really more of a neighborhood than a city. And I don't see the evil
in having some neighborhoods within a metro area that are more
upscale/exclusive than others.

~~~
khuey
None of those places are affordable anymore, with the possible exception of
parts of East Palo Alto (and even that pool is drying up fast).

The problem with your logic is that just about every city on the peninsula has
decided it can be the "exclusive/upscale" neighborhood in the region. And the
ones that aren't on board with that can't possibly make enough of a dent in
the regional jobs/housing imbalance on their own to matter. Thus people
commuting to Palo Alto from Gilroy and Tracey.

------
vadym909
I'm surprised that none of the YCs startups have tried to solve this problem.
People really want 'affordable housing' and YC's motto to its startups is to
'make something people want'\- so what gives?

~~~
prostoalex
Does the problem scale beyond Palo Alto and San Francisco? Do residents of
Topeka or Detroit have similar issues with housing affordability?

~~~
lindenksv1
The problem in the Bay Area is that since 2010, we added about 500,000 jobs
and only 50,000 housing units. Roughly speaking, jobs gives you a sense for
demand and housing units give you a sense for supply. Our jobs-housing ratio
is completely out of whack. That's what makes the Bay Area so expensive. I
actually don't believe any of the nonsense about this being a "destination
area" or that there is "insatiable demand" \- the demand is directly driven by
job growth and you can see that plainly. People are not moving here from
Nebraska and taking on housing that is multiple times more expensive just
because it's pretty here- they're doing it because they got a job offer here.
So no, Topeka and Detroit don't have this problem because their jobs growth
isn't so far out of whack from their housing growth.

------
_ph_
We see the same problem here in Europe, maybe to a less extreme extend. We
have a few economy hotspots with rapidly raising real estate prices. One
fundamental problem is, that those people, who could change things have litte
interest in changes. Homeowners like to see their property value rising and
for cities life is easier without a growing population.

If one says: let free markets take care of that, the problem is exactly that
there are no free markets. A free market would mean, that anyone owning a
piece of land could build there without limitations. But zoning laws and
building size regulations prevent exactly that. As a consequence, building
permits have exploded in value like taxi concessions once did. They are no
longer tied to the economy of building/owning a cab, but of a limited market.

Munich is one of the most expensive cities in Germany, but it is closely
surrounded by farmland. The housing problem could be solved easily, if more of
it were allowed for building. But as this happens only at a very small speed,
land value can multiplay up to 100x when a building permit is issued. This
multiplier shows how skewed the market is.

------
ChuckMcM
_" Downing and her husband, an attorney and programmer, respectively, say they
simply could not afford to pay almost $150,000 per year for housing alone
while starting a family in Palo Alto."_

It's interesting the difference a couple of miles make. $150,000 per year is
$12,500 a month. The most expensive house for rent in East Palo Alto (3 miles
away) is $6,000 (half that) and there are many choices under $4,000 per month.
They could live in Gilroy and ride the train for free[1] for around $3,000 a
month. They could do even better if they decided to rent an apartment or a
townhouse instead of a detached single family home.

Whining about not being able to afford to live in a neighborhood where multi-
millionaires want to live is not very productive. Unlike San Francisco there
are a _lot_ of housing options up and down the peninsula, and since they work
(or used to) in Palo Alto it is extremely close to the train station (so an
easy "no drive") commute, which saves them even more because the City pays for
their rail ticket and they don't have to buy gas.

[1]
[https://www.cityofpaloalto.org/civicax/filebank/documents/40...](https://www.cityofpaloalto.org/civicax/filebank/documents/40189)

~~~
arkadiyt
"They can move elsewhere" is not a reason to not build more housing - it is
reasonable (and desirable) for people to live in the city that they work in.
If your argument is that they can pay 3,000 a month for the privilege of
living 50 (!) miles away from work in Gilroy then that still doesn't do
anything for the "teachers, police officers, and other working and middle
class people" \- you know, the people who actually keep the city running.

~~~
toomuchtodo
Or move the jobs out of ridiculously high COL areas?

An area of land has a carrying capacity dictated by the will of the people who
live there through their votes. Why fight it when you can simply move work
elsewhere?

~~~
vadym909
The weather man. You get to 'live' almost twice as many hours because of the
weather. Add top companies, upcoming companies, jobs, schools, colleges, city
stuff, nature stuff, Sports and you just can't beat it. After all you only
live once.

~~~
aianus
Huh? When I lived in SF all daylight hours were spent in the office...

------
narrator
No owner of an oil company wants to live next to a refinery. No owner of an
auto plant wants to live next to the plant. In the Industrial era, owners
wanted to live far away from where the work was done because it was ugly and
polluted. This created the suburban pattern and cheap housing close to work
for workers. This is basically Oakland.

Rich Tech entrepreneurs, executives, highly paid programmers, and VCs want to
live close to the tech "factory" and they want it to be a nice place. They
don't care where everyone else who works there lives, just as long as they
don't screw up their nice neighborhood with excess traffic, pollution and
density.

It's as simple as that. All this stuff about economic policy and zoning laws
and the general decline of western civilization is a whole lot of
overanalyzing, IMHO.

------
ben_jones
Is living in the Bay Area a privilege or a right?

~~~
lindenksv1
It's not a privilege or a right. But it's a smart policy that will make us all
richer, healthier, and more environmentally friendly. You can read more here:
[https://medium.com/b-copy-com-longform-content/why-can-t-
tho...](https://medium.com/b-copy-com-longform-content/why-can-t-those-people-
move-to-be7f70e8ff91#.b5l2b7f3p)

------
stretchwithme
Neither Hilliary nor Trump will stop feeding this monster.

------
fhrui
I found these whining hypocritical and snobbish. I can't afford a house in
Palo Alto even if I work there. I don't complain about it just like I don't
complain about not being able to purchase a luxury car. I don't expect the
people who CAN afford these things to just lower the price and give them to
me.

Many cities near Palo Alto have houses at a reasonable price, East Palo Alto,
East Menlo Park, Mountain View, Redwood City, just to name a few. Why doesn't
the author want to raise her kids there? BECAUSE SHE DOESN"T WANT HER KIDS TO
GO TO SCHOOL WITH THE AVERAGE JOE! She wants her kids to go to a school where
Joe Millionaires send their kids, while only paying the price of an average
Joe. How could that be possible?

Her mentality is the same as that of the people she's accusing of not making a
change. She just makes less money and she's loud.

~~~
ScottBurson
Your theory doesn't explain why she's moving to Santa Cruz -- the schools are
nothing special there.

~~~
lindenksv1
We're moving to Santa Cruz because we wanted to live in a walkable area. If
you travel up and down the peninsula, any house near the walkable downtown
area is going to be $2M+. Yeah, sure, you can buy for less and have to travel
by car absolutely everywhere. But why spend $1.5 to live in a dead cul de sac
when you can spend the same money to live in a lively walkable area near the
beach? If you're going to hang an albatross around your neck, you better think
it's awesome. We're sick of driving everywhere and we want our kids to be able
to go bike around the neighborhood safely.

~~~
dekhn
As I've pointed out elsewhere on this post, you've setting up a ton of
requirements that can't be met. While I appreciate that you want to live in a
"walkable area", that's pretty much the first requirement you should drop.
That's a "want to have", not a "must have" in housing. Like I've pointed out
elsewhere, you're setting up specious arguments when you insist of a bunch of
details, like living directly in PA, living directly in a walkable area, being
able to bike on the streets in your neighborhood.

~~~
lindenksv1
The point is that if two professional salaries aren't enough to buy a home in
Palo Alto, then it highlights how much everyone else must be struggling. It
highlights just how far away all of our service workers must live. Highlights
just how miserable housing prices and commutes have gotten for the vast
majority of people in the Bay Area who aren't lucky enough to have two
professional salaries. If two professionals are, according to you, expected to
have a half an hour commute, then everyone else is melting into their car
seats every day.

~~~
dekhn
By the way, in San Mateo, my children go to school with a number of children
whose parents are "service workers" for neighboring cities. They live in San
Mateo- most of them have bought fixer-uppers in areas like East of 101 where
prices are lower (unfortunately, also very close to the freeway, with lots of
pollution and noise). Obviously, this is anecdotal, but it's clear that there
are people who have recently purchased in this area and are commuting to
nearby cities.

------
youngButEager
The east coast of the USA was settled first, recall. What did they do back
east to 'solve' this problem of "we're running out of space"? They increased
the density of occupants per unit of land -- they built UPWARD.

That will have to happen here too. It's already happened in LA.

There will always be crybabies like this attorney during the growing pains of
a popular 'destination city.'

For now, think of turning the Peninsula into tall buildings, concrete and
asphalt. Think how the picturesque drive up highway 280 to San Francisco from
the South Bay will be affected.

Everyone wants the nature. Not the tall buildings, concrete and asphalt.

Crybabies need to do precisely what this gal chose -- LEAVE. There's the door.
That's how markets work -- when the price of a good or service is too high,
demand drops. Well, she's a living example of a smidgen of demand
disappearing.

People who don't like markets should move to Venezuela or North Korea or Cuba.

~~~
lindenksv1
There is no free market in housing. Supply is very tightly constrained by the
city via a system of very stringent zoning (3 stories max most of the city,
only 3% of the city is even zone for multifamily housing) and taxes. What you
see happening in the Bay Area isn't the result of the laws of supply and
demand, it's the result of the laws passed by city councils. There's no
developer in the world who wouldn't love to build more housing in one of the
most booming places in the country. They're not not doing it because it
doesn't make financial sense or because there's no demand there. They're not
doing it because the housing market in the Bay Area has been regulated to
death.

