
Upzoning will ease housing affordability problems - jseliger
http://cityobservatory.org/will-upzoning-ease_affordability/
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hash872
Not a NIMBY. But. What these type of pieces never discuss is _how much_ they
think rents will be brought down by upzoning.

Manhattan/the Bay Area/LA/DC would need staggering rental decreases to reach
anyone's definition of 'affordable', much less the government's definition of
a middle class family. Like, 33-50%+. I struggle to find examples of this
happening in market economies outside of a major natural disaster.

If the US was an authoritarian dictatorship and we bulldozed every single
family home in the Bay Area, and replaced them with 100 story apartment
buildings as far as the eye can see, of course rents would dramatically
decrease. Seeing as that's not an option- the discussion is how much could
rents be brought down by upzoning in a market economy where only so many homes
are sold every year, developers can only build so much per year, development
is very economic cycle and interest rate driven, etc. Like, upzoning only
works once the existing single family home owner sells, and then a developer
purchases. Did you know the average turnover in many neighborhoods is 1-2%
annually? Thousands of units are not exactly going to flood the market
overnight.

I'm for upzoning generally, but people assign it magical properties that don't
exist IRL. The whole NIMBY/YIMBY/build more discussion is kinda reaching
unrealistic fever pitches among the right crowd of people who, like, follow
Noah Smith on Twitter or whatever

~~~
zjaffee
Upzoning would not make a place like manhattan more affordable, there have
been studies
([https://www.federalreserve.gov/econres/feds/files/2018035pap...](https://www.federalreserve.gov/econres/feds/files/2018035pap.pdf))
that evaluate what up to a 20% increase in housing supply would bring to any
one given area and they never say it would fall by anything more than 2% (and
that would be if the supply was introduced all at once in todays current
environment).

What is shown by this is that, when you build more housing in desirable areas,
people will always move in to fill it. The value of which being that more
people can now experience such desirable areas. In fact, the price decreases
aren't coming from the actual housing supply increase directly, but that
prices fall when there is a bigger competitive pool of those seeking housing
and those supplying it even with 1:1 increases on both sides.

So what's the solution?

The truth is there isn't one, in our current political environment we will
neither see a command economy that seriously solves housing issues (or even
something like what singapore does). We won't see national multifamily by
right zoning/building codes that enable economies of scale for high density
construction. We won't see every suburb in America allow density increases to
the level that automotive travel becomes a serious hassle. Additionally, we
won't see major financing efforts come about for new housing production at the
scale of a trillion dollars a year (which is the level of investment needed
from a debt financing perspective).

Within the broader market, the cost of financing and construction are just too
high right now for housing prices to fall on the production side of the
equation. It is not possible to build 1000 sqft apartments in existing dense
parts of the US that cost $100k on the production side (what it would cost to
build a similar sized average single family home) in any of these major
cities, and that's before land acquisition costs.

The truth is, that the most viable way for creating affordable housing in this
country right now would be to build an entirely new city made up of moderately
sized row homes that would have the ability to sprawl as such for 60 miles in
any direction from its center.

~~~
hash872
Was with you until that last sentence. The most viable way to create
affordable housing is to admit that a very small number of Tier 1 US cities
are effectively full- and encourage smart young people to move to Denver and
Charlotte and Miami and Raleigh and Indianapolis and Phoenix and Burlington
and Madison and.....

But yeah, everything else you said is spot on. I previously worked in
commercial real estate, and I find the Matt Yglesias-types' understanding of
how property development works to be bordering on magical. I mean, again, I
fundamentally agree with the YIMBY movement, and that many zoning laws are
glorified rent seeking. But the affordability issue is fast leaving rational
discussion and entering belief system territory. Manhattan & the Bay Area & LA
are expensive because the demand to live there is 10,000x or 20,000x what it
is to live in, say, Milwaukee. This is the root of the problem- you cannot
possibly build enough to sate demand in a non-command economy

~~~
pcwalton
> The most viable way to create affordable housing is to admit that a very
> small number of Tier 1 US cities are effectively full

Density of San Francisco: 18,838/mi^2.

Density of Barcelona: 41,000/mi^2.

> encourage smart young people to move to Denver and Charlotte and Miami and
> Raleigh and Indianapolis and Phoenix and Burlington and Madison and

This is a failed strategy, and a bit of reflection shows why it is. Think from
the perspective of Google. If Google thinks the best engineers are in the Bay
Area†, Google needs to be in the Bay Area. Otherwise, the best Bay Area
engineers, _who have a choice in where they work by virtue of the fact that
they 're the best engineers_, will go work for competitors. Now realize that
this dynamic is true for Apple, Facebook, and even Amazon and Microsoft, and
you see why the situation is the way it is. Given this, the realistic options
are (1) drive everyone but the rich out of the Bay Area; (2) build more
housing. So far, rich municipalities like San Francisco are choosing option
(1) under the guise of "progressivism".

Besides, even if it were possible to force Google to move, it isn't fair for
rich people in the Bay Area to gentrify Modesto just because they don't want
to build housing.

†I'm not arguing that engineers in the Bay Area are _actually_ better than
engineers elsewhere. The point is that the big tech companies think that the
best concentration of engineering talent is here, and economically, that's
what matters.

~~~
mwcampbell
I find it ironic that leading _Internet software_ companies, of all things,
don't go all-remote and start hiring people from all over without requiring
them to relocate to a few over-populated hubs. Wouldn't that solve the
problem? We know that distributed software teams can indeed work effectively.

~~~
pcwalton
If the market was going to solve the problem that way, then it would have by
now. Hoping that Google would hire remotely more often won't fix the housing
crisis. Some employees prefer offices, and not all jobs can be remote, such as
Apple's hardware work. And there are other benefits of physical proximity:
meetups, conferences, venture capital, etc. etc.

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Justsignedup
So what you're saying is a published paper failed peer reviews yet is heavily
cited.

Welcome to modern science reporting and interest groups. :(

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Tiktaalik
The important question is who the new housing is for.

Building new housing for locals is good, but in some cities what is occurring
is new housing is being explicitly marketed to foreign investors seeking
yield. This doesn't benefit locals and doesn't ease affordability problems.

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CodeWriter23
Post title is materially different than article headline.

~~~
mjevans
The transposition of two words (the first two) seems to make the headline less
clickbaity, more clear, and accurately reflect the general opinion in the
article. I feel it's a good and fitting title.

~~~
CodeWriter23
The article does not arrive at that conclusion at all. It actually tears down
the Upzoning idea and further states nobody is making the Upzoning argument
anyway. Aside from the title of this post.

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AbrahamParangi
The arguments against increasing the supply of housing remind me of the
arguments that losing weight isn't just a matter of calories in and calories
out. I mean- yes these are complex systems we're talking about, yes there are
lots of effects and if you paint with a broad brush you're going to make
mistakes sometimes.

But at the end of the day there are simple dynamics you can't get away from.

~~~
maneesh
Do you think induced demand might be a problem? It's been shown that by
increasing the size of highways, for example, you increase traffic:

[https://www.wired.com/2014/06/wuwt-traffic-induced-
demand/](https://www.wired.com/2014/06/wuwt-traffic-induced-demand/)

~~~
xvedejas
I think induced demand is real, but it's a second-order effect. So while
building one unit might attract an additional 0.1 people to an area (for
example), it's not going to attract more people than it houses. So building
more housing is still the right thing to do to lower prices. Even if you don't
get perfect efficiency of 1 person's housing needs met per 1 unit built,
meeting the needs of 0.9 people is still pretty good.

