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The American Housing Crisis Might Be Our Next Big Political Issue (citylab.com)
86 points by jseliger 36 days ago | hide | past | web | favorite | 128 comments

Unfortunately it seems so far that voters in California are reacting to the problem by supporting more of the policies that caused the problem in the first place, e.g. rent control, opposing new market-rate housing, etc. It's pretty easy for politicians to sell those bad solutions, which is why we ended up with them in the first place.

I doubt the YIMBY movement is going to solve the problem, because they have alienated many lower-income voters.

The amount of popular support for rent control depresses me in the same way that the popularity of lottery tickets does. People in general seem to have an endless capacity to believe that the rare, improbable, valuable opportunity will go to them.

Rent control to reduce uncertainty for people already living there isn't a lottery odds thing - it's not a solution to the problem of hard to find new places, it's a solution to the problem of getting priced out by external forces.

It has side effects, but is also addressing a specific problem people want to handle that isn't necessarily fixed by "just build a bunch of new market-rate housing."

Weakening rent control in the 90s in CA didn't prevent the current homelessness problems, so I have some skepticism around taking that even further. Pushing people who could afford marginal housing into no longer being able to afford it seems like a bang-up way to increase homelessness.

Part of the root of the problem seems to be cities that trying to both avoid densifying but also increase commercial and office space and occupancy and jobs. Either policy would be fine by itself, but they explode when put together. Some cities are slowly starting to realize this, but saying "we don't need a constant economic growth rate of X% if we don't want the feel of our city to change" may not be an easy choice for politicians to sell.

It's a lottery in that if you are lucky enough to have a certain kind of lease already you deserve to get cheap rent for life but not if you don't already have a certain kind of lease. It's not something you qualify for by falling into a condition where you need it or it stops when/if you no longer need it. I know plenty of people that became quite wealthy and of course still get rent control.

Good point. I was thinking of this from the perspective of people who can't afford to live in place x, not people trying to avoid being forced out of place x by rising rents.

I'm not well-versed in the state of rent control in CA, but I am seeing more rent control put forth as a viable alternative to just building more residences. That strikes me as a bad idea.

> It has side effects, but is also addressing a specific problem people want to handle that isn't necessarily fixed by "just build a bunch of new market-rate housing."

It is a sad fact of life that the best outcome for everybody is to let the economically productive take first pick of any available resources; because they will by definition take them and turn them into more resources.

This idea that someone has a right to live somewhere because they were there first is not unreasonable, but the path of least suffering is that people pay the market price for rent.

There needs to be pretty overwhelming evidence that the problem is with what consenting adults agree to rather than the government being unreasonable with the rules on constructing new building. I'd bet that the US hasn't reached that threshold yet.

It is very much not a "by definition" truth that the people who, say, happened to snag nice tech industry salaries for their coding abilities (or their visionary decision to process credit card transactions online, or whatever their particular thing is...) will be more "productive" and make more "resources" out of having a house than people who happen to have lower salaries.

This is just self-aggrandizing "The folks life has already financially favored deserve every continued advantage over everyone else because they are so smart and talented and God's chosen ones" market-over-everything nonsense.

> It is a sad fact of life that the best outcome for everybody is to let the economically productive take first pick of any available resources;

Which is to say that the people who create money (what's more economically productive than willing money into existence?) via issuing credit (banks) or borrowing on the US's account (the Fed) will have first pick of available resources.

Why does the market price in one city need to be several times higher than in another? Why do so many of the high-paying tech jobs need to be concentrated on the west coast instead of more distributed? Are the benefits of that concentration truly higher, and truly purely rational "path of least suffering," in order to justify all the costs of it?

You also make an distinction between what consenting adults agree to in contracts and what those same consenting adults do in local governance and regulation. But why wouldn't they have the right to say "we don't want buildings over three stories here," say? Why is that necessarily "unreasonable" yet a landlord deciding to raise someone's rent 40% wouldn't be?

“They” don’t own the buildings, but the landlord owns his. If no one wants to pay an additional 40%, he gets to pound sand.

> It is a sad fact of life that the best outcome for everybody is to let the economically productive take first pick of any available resources

That is not a fact of life, it is simply a hypocritical way of legitimizing monopolistic advantage. What one defines as economically productive will unequivocally align with the groups one favors over others.

Power is not natural, it is created and reproduced, and naturalized beyond the realm of critical thought by false claims to the facts of Life.

Does life really as facts? Which life?

“Economically productive” isn’t a subjective interpretation. It’s what produces the most money. In a society we tax productivity and use the revenue collected to run services that lift up those at the bottom. More money is available for redistribution when we are collectively more productive. Suppressing productivity in the name of fairness is highly satisfying to a large contingent of politically active folks who are passionate about it, but better outcomes can usually be purchased with the tax revenue it brings.

Case in point: neighborhoods that are proud of themselves for thwarting evil developers in the name of affordability end up with fewer affordable units, because we fund affordable units as a percentage of total construction.

Don't forget to price in, account for, factor in, and otherwise adjust the numbers to match externalities, other market irrationalities, sesonalities, etc.

For example, if SF wants to solve housing (providing shelter) by municipally mandated equality between purchasing power of people, this has a certain cost, and this has a certain appeal for some residents. Would they pay more taxes to get council erected units for the less fortunate? Maybe. So these preferences have to be calculated and priced.

Sure, the market would get the most new units online in a given time, which would result in prices falling. But it seems like SF wants an apmost centrally planned solution.

Which these days means mostly ephemeral resources.

They save the tax cut and buy back stocks.

They are not starting farms to create more food or building new kinds of companies — not doing economic net new things. They’re growing their own ephemeral wealth pile

The old ways, best ideas, they have all died out in human society. No longer do we worship Roman Gods and build pyramids for Pharaohs

It’s hubris and and vanity to think we have the iron clad solution today in our time

We’re just carrying water for dead and selfish

Consenting adults who have been told this is exactly right their entire lives by government backed research into propaganda models gifted to university and media and advertising will I’m sure magically come to their senses

Rent control isn't the fundamental cause of high housing costs: it's mostly a matter of supply and demand. And, yes, rent control limits supply a bit, but nowhere near as much as complicated, arcane, and expensive building and zoning codes.

Given the trade offs, the only reforms I'd make to rent control is having some kind of gradual income requirements. The higher your income, the less rent control you get, up to the point (say, $100k+) where you aren't protected by it at all. Even that is mostly for optics, though, and wouldn't help housing costs too much.

Agreed, but my primary bone to pick here is that people seem to be proposing further rent control as a viable solution to the housing problem, rather than fixing existing restrictive building codes.

Further rent control is a viable solution to the problem of existing residents being displaced. It isn’t a solution to the difficulty of moving to desirable areas, but rent control advocates don’t consider that a legitimate problem. Or at least are okay with dampening the upward mobility of already affluent creative-class types to protect marginalized communities.

Notice how the possibility that actually non-affluent people would move somewhere for a better job is not something they think about.

Nope, that's because rent control makes that problem worse, so it's best to ignore it.

Hahah. Well, if rent control's high level of support raises your blood pressure, wait till I tell you about San Francisco's popular BMR lottery... ;)

A low-income applicant has a nonzero chance in a BMR lottery, which is better than their 0% chance in a market-rate building. There is a logic to it. Unfortunately the thinking usually stops there, rather than considering how to raise the chances overall.

According to this article:

> The urban design think tank SPUR estimated in 2014 that San Francisco had “roughly 172,000 units of rent controlled housing” at the time, about 45 percent of the city’s entire housing stock.


It's not reasonable to consider all rent-controlled housing off the market, however. Most don't have tenants pay a rent substantially diverging from market rent. People constantly move, even if they are in a rent controlled apartment.

To wit, I'm "Rent Controlled" in SF, but since I moved apartments last year, my rent is controlled to something north of $3k/month. I've had several other friends move recently from and to other Rent Controlled units. Saying a large swath of the city is rent controlled isn't very informative without actual rent data.

The the extent rent control has an impact, it'll be negative. If rent control with serious teeth was ever passed, it would become a fundamental cause of high housing costs (or other, worse issues, depending on how it's implemented)! And I think in specific markets (San Francisco in particular) it may have more of an impact that you realise.

But you're right that the issue now is zoning and building codes of course.

The real risk there is that it would incentivize landlords to select the highest-income tenants possible (more so than they currently do).

Good point. Existing residents needing rent control, however, would get to maintain their protections. And I see the policy argument for maintaining their protections being much stronger than a generalized right to the same rent.

This is called a means test. Strangely enough rent control schemes virtually never come with a means test.

The problem isn't with rent control, it's wit rich folks opposing new construction because of various flimsy reasons.

Where do you think new housing has come up most in the Bay Area? Poor neighborhoods with lots of rent control, or rich neighbourhoods?

(Hint: you don't hear about gentrification issues in rich parts of the bay area because nobody can build new things there)

I feel like its a branding issue. "Rent Control" sounds good, I don't think people consider it beyond the initial feeling the words imbue. It is also weird that young people are generally in favor of rent control even though they move frequently and it is just another wealth transfer from the young to the old.

(to be sure, the most insidious form of rent control in California is Prop 13)

> I doubt the YIMBY movement is going to solve the problem, because they have alienated many lower-income voters.

I think you're right and part of the problem is reflected in your comment. YIMBYs are supremely confident in its diagnosis of the complex housing problem: it's rent control and other impediments to the free market. They are so confident that it's literally at the level of flipping the bozo bit[1] on low-income and minority housing activists and attempting to speak on their behalf. They think the answer is so obvious that to think otherwise means you're being manipulated by rich white NIMBY homeowners.

That's understandably a bit insulting. It's led longtime housing activists to note that YIMBY has a "white privilege problem... They don't understand poverty."[2]

Meanwhile housing activists are saying things like, hey, maybe it has something to do with, I dunno, massively defunding the major force in constructing affordable housing for the poor and working class (HUD)?[3] Perhaps the income disparity is so great between low-income renters and tech workers that there is a wee bit of understandable skepticism that market-rate development alone will bring down the market price to something the working poor can afford?

YIMBYs need to do a better job of listening to and understanding the legitimate concerns from these communities if they want to be successful -- not attempt to talk over them (literally[4]) or rush through legislation that gets patched up later after protest.

[1] https://en.wikipedia.org/wiki/Bozo_bit

[2] http://www.latimes.com/politics/la-pol-ca-housing-bill-failu...

[3] http://www.sfweekly.com/news/the-great-eliminator-how-ronald...

[4] https://www.youtube.com/watch?v=3WrVEYKVtfU

> YIMBYs are supremely confident in its diagnosis of the complex housing problem: it's rent control and other impediments to the free market

YIMBYs do not have a position on rent control, because both sides are advocated for and debated.

The biggest problem with the YIMBY movement is people blindly accepting criticisms of YIMBY without bothering to investigate what YIMBY movements actually believe.

When there was a big panel discussion in my small Bay Area town last year, without a YIMBY member on the panel, the panel all concluded that YIMBYs oppose affordable housing. However, in this small town, the ONLY PEOPLE WHO SHOWED UP to advocate for recent affordable housing projects were YIMBY members. And it turns out that SB 35, the only YIMBY legislation I know about, is actually about building affordable housing.

So please stop reinforcing false beliefs.

YIMBYs do a great job of listening. They have changed their engagement in response to this. They are politically naive in that they believe they can advocate for ideas and trust that people will listen to them, instead of seeking out engagement of current power brokers first. And for example they didn't expect SB 827 to get the momentum that it got, perhaps not realizing that including transportation and basic good urban planning they will wake up a lot more people than with they did with the SB 35 affordable housing bill.

California politics is all about optics, unfortunately. At least, it is, until we stop letting that happen.

> because they have alienated many lower-income voters.

How so?

They think the YIMBYs are dismissing their concerns about gentrification and displacement. I'm not sure that's true, but either way, the YIMBY movement's image is of a bunch of affluent white tech workers who don't care about low-income, minority residents whose neighborhoods might get gentrified. That image will need to change if the YIMBYs want to succeed.

Minorities in CA are more likely to support building more homes than whites.

Yes but not necessarily market-rate developments that accelerate gentrification and displacement. BMR housing, for sure.

I don't know why you are being downvoted - SFgate recently published an article talking about Yimby members yelling over minority groups and those minority groups basically called Yimby a bunch of "affluent white tech workers".

So it's definitely a problem of Yimby not managing it's image and forming alliances well.

I think anyone who's trying to shout down another group based on their race doesn't deserve to be allied with.

Because they don't have low income leaders in their organization and they've been dismissive of minority concerns. See: http://www.sfexaminer.com/sb-827-rallies-end-yimbys-shouting...

While I support the Yimby approach the truth is it is largely led by upper middle class white people. To get things done in politics, you don't to have the best argument, you need to have the best consensus of citizens and $$ supporting you. The yimby org doesn't realize this - they think they can steam roll over minority groups to get things done, but frankly they need to a better job building bridges with these groups. This is how politics work.

The fundamental interests of the various groups aren't necessarily fully aligned, are they?

E.g. it may be the case that rent control and other roadblocks increase the cost of housing in the long run (bad for anyone new moving to the Bay Area), but it certainly benefits the current occupants of rent-controlled housing.

That's one reason to be slightly skeptical of the label 'minority' organizations—it's unclear whether all minorities have the same interests at stake. In particular, minorities who currently live in below-market cost housing have markedly different expected payoff from a change in policy than minorities who currently live outside of the city.

Certainly, good politics and making nice can smooth over some amount of disagreement, but is there really a mechanism right now that could make everyone better off?

I, too, would like to live in a world where:

- Minorities and/or lower income people aren't priced out of the city

- ... and will have enough units to live in in the future

- and widespread construction so tech workers or other immigrants have cheaper rent

- the character of our neighborhoods aren't gentrified away

- and it isn't too expensive to build

...but experience as engineers tells us that there is always a compromise to be made when you ask for everything. The political fight here is who is will end up compromising, and how much.

I agree with everything you said. I also support the YIMBY solution (building more housing to drive down prices). However, my only point (which HN seems to downvote) is that the YIMBY party in San Francisco has an image / branding issue. They are perceived as being techies out of touch with lower income and minority groups. As you have rightly pointed out this is probably a flawed view, but it is a branding issue.

A hilariously biased article... how anyone could dream of linking that as a reference astounds me

To me, expecting US housing markets facing affordability problems to build their way out of their affordability problems ignores the fact these markets are markets. And it ignores the timelines and investment goals of real estate investors.

Sure real-estate investors often complain about regulations. But those complaints are rooted in the effects of regulation on liquidity and profits, not on afforadability. Up market housing gets built because that's what people with money want [1] and where the net returns from developable parcels are often higher...commercial development has much higher potential returns still. That's why the big money like insurance reserves often prefers Class A office, retail, and industrial REIT's over single family or condominiums.

The big money in real-estate that drives markets is at a scale where affordable or even ordinary housing deals aren't big enough. The timelines of big real-estate money are often 30-50 years to match liabilities like life-insurance. The only part of the US housing market which comes close to that timeline is conventional 30 year mortgages. But at $100-200k per deal, it takes thousands of deals just to get $1 billion out the door. Then the thirty years is still just theory: there's refinancing and home sales making the practical investment turnover five or ten years (times thousands of investments).

Unaffordablility is a sign of high market demand where affordable housing is less preferred by investors than raw land or unredeveloped redevelopable property. Holding developable property means there's a real asset beneath the investment and the risk/reward can be spread across multiple economic cycles. Construction not only requires the injection of additional capital, but ties the risk/reward to a particular economic cycle. Again, it is worth keeping in mind that at the macro level the real-estate markets are largely driven by parked capital not borrowed money in the form of money. B2C isn't what drives real-estate markets over the long term.

The US housing market is driven by government intervention. FHA mortgages and the mortgage interest deduction are two easy examples. These exist because traditionally there has not been much incentive for the bulk of capital in the real-estate market to invest in houses for ordinary Americans. Historically, the sprawling checkerboard suburbs are largely the result of smaller ad hoc deals not the really big players. Though that's changing a bit, the involvement of the big players tends to encourage housing to move upscale and into multi-use developments with commercial and retail components..."the affordable lifestyle" doesn't look good on a sales brochure.

[1] Selling to people with money is a good sales strategy.

San Francisco is essentially built out as far as zoning will allow. Attempts to fill in the gaps are frequently opposed and defeated in the community review proces. So I’m skeptical that there’s a lack of interest, but if you’re right, what’s the harm in zoning for more units anyway? If there’s truly no interest after the standard 700sqft “luxury apartment” falls to its Manhattan, Seattle, or Chicago price (all of which are a steal for SF), the only change has been on paper.

Sorry for not being clear. The disinterest in "affordable" or "market rate" housing is by the entities with sufficient capital to influence the overall real estate market across economic cycles. To stay in San Francisco, Millennium Tower might illuminate my interpretation of the macro real-estate market because Millennium Tower actually got built, contains what seems like a meaningful number of units, and those units are luxury rather than market rate.

Millennium Partners [0] navigated San Francisco's notorious entitlement process. That's what they do as sophisticated developers. Part of that navigation (according to Wikipedia) was refusing to submit the project to peer review. In real-estate development terms, that usually means lawyering up and running rough-shod over city staff and usually garnering project support of line staff's political superiors. Better real-estate lawyers cost more money and city staff attempts to influence every real-estate development whether luxury or market rate (that's their job and why there is an entity called the "planning department"). The important point is there are a lot of fixed costs with real-estate development that only weakly correlate with project size. [1]

More importantly, the money behind Millennium Partners needs big expensive projects:

With these projects, Jeffries created a new investment vehicle to provide equity capital. The resulting financial structure included a consortium of German financial institutions including ERGO, Provinzial Wuerttembergische, AXA Colonia Immobilien AG, Energie Baden Wuerttemberg AG, as well as Goldman Sachs' Whitehall Fund and George Soros and his Quantum Realty Fund Limited. [2]

These are the interests that drive speculative real-estate development and speculative real-estate development is where most housing comes from these days, public housing is mostly done and dusted.

To put a finer point on the lack of deep market interest in building housing, consider Apple's new headquarters. Residential was never even on the table for the parcels Apple acquired from HP. No residential developer was going to outspend Apple for property adjacent to Apple's existing campus[3] and if one had, the housing would have had to have been luxury not market rate to make the numbers work. At the reported $3,000,000/acre, 20 dwellings/acre and 4:1 construction to land ratio each unit would be ~$750,000. Once you're at $750,000, there's no reason to cap unit mix at a 4:1 cost. That's just where they will start.

That brings us to risk. How quickly can Silicon Valley actually absorb 2000 $750,000+ units? What finances $1.5+ billion+ of residential development? Not today. Back in 2010 when housing prices were falling and financial markets were still unsteady. Apple was able to purchase because it had a pile of cash. Residential developers didn't.

The only people Apple was competing with were institutions interested in parking money in real-estate and waiting for the value to go up. In an alternate world where that happened, there is no reason to assume that the HP parcel would have wound up as housing. It might have, but the most likely outcome is it would have remained as the "higher and better" commercial use.

[1]: In residential development there can even be an inverse correlation between entitlement costs and affordability: i.e. an SRO will probably face more political friction than luxury apartments.

[2]: http://millenniumptrs.com/ see Christopher M. Jefferies profile.

[3]: Even commercial developers couldn't make the numbers pencil out for commercial reuse of the existing buildings.

That's one of the fundamental problems "bugs" with popular democracy- most popular decisions are often far from the best.

Green lining, red lining of old disguised with terms and claims that make you feel guilty opposing.

I’d say even the present form of rent control needs reform. People should be means tested every so often so that you don’t end up with situations like where the burning man self described founder, mr. Harvey, who had money kept his rent controlled apt till the end.

> People should be means tested every so often

This would create disincentives for seeking a higher salary (because an increase in salary might be offset by getting kicked out of your BMR unit).

That’s okay, if people wanna shoot themselves in the foot and undermine their own career development, so be it, but often enough you have people who can afford market rate housing living in rent controlled properties, more or less undercutting the programme itself.

> they have alienated many lower-income voters.

It seems like lower income voters reliably vote against their economic self-interest across the United States.

Which voting block, besides rural land owners, does this?

This is a regional issue, not a national one. Most urban Americans do not live in cities with skyrocketing housing costs.

it's a national issue because it keeps people from moving to where jobs are.


Then the jobs will move to where the people are.

A community near me is booming because telecommuting makes it practical to commute to NYC by train twice a week. Eventually that will lead to new business and economic activity. We shouldn’t be screwing up property rights everywhere because tech companies are too stupid and have too much dumb money to geographically diversify and prefer to pay too much for talent instead.

It doesn't work like that. Stockton and Tracy aren't magically experiencing a jobs boom because we forced all the poor people to move there.

No, that region is over cooked and at capacity.

IBM, GE and other legacy technology companies demonstrated in their heyday that you can run engineering organizations in all sorts of places. Mainframe tech was done in Binghamton, Kingston, and Vermont of all places.

What property rights are violated by blocking an apartment building from being built on a vacant lot? The rights of the owner of the vacant lot.

Out of migratory curiosity, what community?

The one my friend was telling me about recently was Catskill, NY. It’s about 30-40 minutes south of Albany. Some of the market attracted to Columbia County is crossing the river.

It’s a struggling area with a lot of nice cheap property, both in and out of town. The Hudson Amtrak is about a 15 minute drive and 2-2.5 hour trip to Manhattan.

IMO Upstate once you get out of the Hudson Valley is relatively cheap and nice.

I thought one third of the country lived between Virginia and Massachusetts, with nearly the second third living on the west coast.

Something like 80+% of urban Americans live in cities with an average house price below $300k.

The question is where do people in their 20-40s live and also how fast is housing prices growing in those areas. Yes you might live in an area that has houses below 300K but if incomes are low and the annualized growth of house prices is 2-3x the inflation rate you got a problem.

It's not just a SF or NYC problem. Look at what is happening in Denver, Austin, and Pittsburgh. All these cities are seeing dramatic housing price increases.

I live in Houston, with 2.3 million other people. The most expensive area of town is maybe 2$ a sqft to rent.

I live 10 minutes from downtown in a triplex, where the other two units(I own) rent out for 1,900 a month, and my wife and I get 1,400 sqft. I bought it for 200,000.(beautiful neighborhood built around 1910,)

And it's very easy to make 140,000+ here as a developer. It's hard to make google/netflix 300k-400k, but you probably don't need to be as good either.

Every time this discussion comes up, someone points out Austin as if it somehow validates the idea that housing is expensive everywhere. But, no. Austin is expensive, but very few people live there. That's why I provided the statistic. Forget individual cities and look at the macro number: more than eighty percent of urban Americans live in affordable metro areas.

I don't know where you're coming from with Pittsburgh, where the average home price was $125,000 in 2017.

If somebody wants to make the argument that housing prices are a calamitous problem for tech industry employees, that will be supportable. But most Americans don't work for the tech industry (I would not be surprised if most programmers don't work in the tech industry).

> more than eighty percent of urban Americans live in affordable metro areas.

I'm sorry but you didn't prove that. You proved that 80% of Americans live near houses that are under 300k. To prove that 80% of Americans aren't suffering from housing issues you would have to show that 80% of American households earn an income such that with 25% of that income they can afford a reasonable home. I don't know the answer to that.

I perfectly understand that insane housing prices are a local Bay Area issue. What I'm unsure of is what the case is for most of Americans. The reason I say this is because my high school friends set (of whom 0% are engineers and 0% are in Bay Area), a significant portion (>30%) are struggling with housing related issues. I know that's anecdotal, but I'm just asking if anyone has a real data point to indicate if the housing issue is national or not. Citing that most of America has low house prices does not answer that question.

For context I grew up in an area where a 100K house would be considered luxurious so I am perfectly aware of how low housing prices are in America compared to Bay Area. That area also has lost tons of jobs so in order to support themselves, the younger generation has had to move to higher COL cities where there are jobs available (and where they can't afford housing). If you have any references that show that 80% of the population can easily afford local housing then I would gladly agree with your assertion that the housing issue isn't national.

Go look at house price to income ratio rankings. They broadly track house prices, which is to say, Chicago --- which does not have a housing price crisis --- appears in the same place on both rankings, and San Jose appears on the top of both lists.

> but if incomes are low

For most people, housing swallows every bit of the income difference and then some. The difference between making $90k a year and, say, $60k a year doesn't look so bad when the housing costs are 5-10x cheaper.

If your goal is to own a detached home, then the costs are so disparate that most people who could buy a house in the Midwest tomorrow won't earn enough to own such a place on the coasts in their lifetime.

>All these cities are seeing dramatic housing price increases.

Because people from SF and NYC are saying "F it, I'm cashing out while I'm winning" and moving to those places.

For a US election, it really is how many Congressional Districts (House) or States (Senate) is this an issue.

Although, if it is the party of the incumbent is in charge of the municipalities where this is a problem, it might get a bit uncomfortable for the incumbent to place it as a major part of their reelection strategy.

The South is the most populous region with 114 million but includes part of what you mentioned. If you combine Texas (28 mil) and Georgia (10 mil) you would almost get the population of California (38 mil). Florida also has 20 million people.

Is that true? Housing costs are skyrocketing in almost every major city with job growth.

Yes, it is true.

Although as a resident of a rural area, hours away from the city, after many years of stagnation, the local average price has risen by 50% in the last two years.

I keep seeing parallels to the situation in USSR after WWII - there was a chronic lack of housing: some of the housing stock had been destroyed in WWII, there were new couples that were owed (by the state) housing, and of course the existing housing stock had further deteriorated (it was that many years older than before the war).

Khrushchev championed the construction of pre-fabricated concrete "plank" 5 story buildings - they built 2 factories in different parts of USSR and cranked them out, delivering them mostly by train to all corners of the country.

The designs were pretty much the same, down the interior furnishings and apartment layouts (a plot point of the perennial New Year's Eve favorite movie, "Irony of Fate"), and fit and finish were sub-standard. BUT, people did get their housing, had kids, went on with their lives.

With all the post-USSR criticism of Soviet leaders, you realize that Khrushchev had very few bad things said about him...

I think the person, or organization, that is seen to (somehow, however they do it) solve the housing problems we have, will have a great deal of political goodwill and possibly political power.

EDIT: some "Khrushchevka Housing" info https://www.citylab.com/equity/2017/03/the-disappearing-mass...



Some readers unfamiliar with the matter might conclude based on your post that Khrushchev somehow managed to solve the problem. No. In most places, you had to wait a couple of decades (or longer). I left USSR at the age of 36; we , the family of 4, occupied a 160 sq ft apartment (with "partial conveniences" - you probably know what that means), which we inherited from my grandmother, with no chance of getting anything else in a lifetime. We couldn't buy an apartment either, even if we had money (we didn't) - "cooperative" housing was not available. BTW, I worked as a project lead in a military research center back then, so the situation was not due to low status or something. Here's an article that provides some details (in Russian, sorry): https://masterok.livejournal.com/2892813.html

EDIT: BTW, would it be a good idea to organize AMA thread for those who'd like to get some first-hand account of what the life in USSR looked like in the 60s,70s,80s (all aspects, including technology)?

Thanks for your addition to my post. Khrushchev built a lot but it was not a fully solved problem, based on your post.

I am not Russian, have been to Russia, speak only a little bit of Russian.

I think an AMA thread would be a very good idea! I would be interested to hear more about DRAKON and any LISP and AI work that was done during those periods.

Perhaps not, but my experience visiting Moscow recently suggests that they're in perhaps a slightly better place? There are dense residential areas in various parts of the city, even if the housing stock is older and less than stellar. Those areas are well-served by transit, which is expanding, improving, and generally seems to function better than most of what's in the Bay Area. It's by no means perfect (protests against renovation/relocation programs and the current waste management snafu clearly demonstrate otherwise), but at least they're doing something, as opposed to what appears to be a partial "ignore the problem and we can keep single-family homes throughout all of the SF Bay Area forever" mentality here.

If you visited it recently: please keep in mind that modern-day Russia is not USSR. It's completely different country - at least in terms of economy. In USSR, money meant NOTHING. In today's Russia, it means EVERYTHING. That's the difference.

EDIT: forgot to mention that Moscow is not a typical Russian city. You won't make a big mistake if you consider it a separate country. Whatever you observe in Moscow is specific to Moscow only. The state of the roads/public transportation across the country at large is (reportedly) not much better than it used to be in USSR (on average).

I love learning about accounts like this because some of it is so alien to the way things work in the Western capitalist system. I grew up later but still saw some tail end of communism and some things like

* You were told which job you would get

* You would be assigned an apartment to live in. Imagine going to the DMV but instead it's a housing office where you'd get a place

* You could opt out of paying for a TV subscription but then a government agent would come to put a seal on the TV. They put a couple of pieces of lead around the electric plug, and crimp them on with a special tool that stamped a tamper-evident pattern. Just wild!

* In the early days I am told there would be frequent "work actions" where workers at random companies would be asked to go outside and do manual labor where needed e.g. when clearing right of way for a railroad, laying ties, etc.

There's not really enough space here to elaborate, so very briefly:

1) basically yes, but ... (the story is really too long)

2) hell no! What do you mean by "assigned"? If after University you got the job in a different city (not very common arrangement, and normally this different city would be some place you would never consider as a first choice for living), you could get a room in a shared apartment, in which you would get stuck forever, even after you got married. But still, there was a chance to get a separate apartment eventually (with family and kids, certainly). But if you stayed in your native city - (90% of cases) situation was really dire... long story. (BTW, you couldn't move to another city afterwards either, except by way of marriage. There were some loopholes for workers though. Again, I'd need a "switch" statement with some "cases" to elaborate.

3) Never heard of such things. Don't remember paying for TV at all, and under no circumstances they would cut it off: TV was the main instrument of propaganda).

4) Work actions, as you call them, were normal occurrence, and some types of these actions were a lot of fun. Though gathering potatoes under the rain was not very enjoyable by itself, we were always provided with the supply of technical spirits (diluted to 40%) to keep our morale high :)

EDIT: I used the term "technical spirits", b/c that's how the stuff was called in Russia - it's the supply of low-quality (rather stinky) spirits allotted to computer center allegedly for cleaning electrical contacts, but was never used for that purpose b/c it had much more important applications, including (but not limited to) as alcoholic drink and a medium of exchange

Somewhat similar to what the YIMBY people in the US are proposing, the ones in Moscow are currently planned to be torn down to build higher-density housing and many of the people currently living in them are rather upset about it.

I see a lot of discussion of YIMBY policies like building more market-rate housing. My intuition favors these kinds of policies, but when I've tried to find high quality evidence that they actually achieve objectives like:

- Lower housing prices overall

- Lower housing costs for low-income households (heading off the concern that only building market-rate housing could hypothetically lower the price of luxury housing without meaningfully reducing housing costs for low-income households)

- Fewer people have to leave the area because of high housing costs

... I haven't been able to find much. What are the best sources that say that YIMBY policies and especially pro- market-rate housing policies actually work? Or the converse - that affordable housing quotas or similar policies tend to make housing less affordable overall.

I'll try my best... (I don't know what I'm talking about.) A quote I pulled from Google Books:[1]

"Impacts and Outcomes of Affordable Housing Schemes

"[...] However, a recent review of the literature [...] suggests that both benefits and costs of inclusionary zoning schemes have been overstated:

"[...] but only modest amounts of affordable housing have been produced through IZ programmes."

By way of definitions via Google Search:

"Inclusionary zoning (IZ) is an affordable housing tool that links the production of affordable housing to the production of market-rate housing. ..."

[1] Urban Planning and the Housing Market: International Perspectives for Policy and Practice. Nicole Gurran, Glen Bramley. Springer, 2017. Page 344. Google Books ID xmomDwAAQBAJ.

Tokyo/Japenese housing regulation is often cited as evidence for this hypothesis.


The Japanese are used to living in tiny accommodations. If we follow their route we could probably reduce costs a lot. Get rid of parking spots. No outdoor patio. Can easily reduce the square footage by 50%.

As far as I can tell, they basically don't build Japanese apartments without outdoor patios. No one has dryers, everyone hangs their clothes outside.

But to your point, my anecdotal impression is that even though the average 1 bedroom or 2 bedroom in Japan Tokyo is smaller than an equivalent in the US, the price per sq foot in Tokyo is also much less than in New York, San Francisco, or Los Angeles.

Hard to find reliable, cross-country data but this blog post [1] pegs price for rental square foot for SF at $4.75 and Tokyo at $2.79.

It's also true about the parking, but again regulations are at play here. Minimum parking requirements are the norm, not the exception in the US. Developers can’t build less parking even if they want to. Even a giant metropolis like San Francisco didn't start to eliminate minimum parking requirements until the late 90s [2].

1. https://www.rentcafe.com/blog/rental-market/what-is-1500-wor...

2. https://www.livablecity.org/parking-history-sf/

> YIMBY policies like building more market-rate housing

It's important to note that, at least for California, the only YIMBY victory has been this SB-35 Planning and zoning: affordable housing: streamlined approval process [1]

So I think it's really important to stress that "marketrate only" is not a YIMBY ideal. That's something else.

[1] https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml...

I’m not sure how to engage with this question. The overwhelming majority of homes in capitalist countries were built for profit and sold at market rate under regulatory regimes that didn’t prohibit this. A human settlement can only exist because it was, at some point, permitted to intensify its built environment with economic and population growth. Every affordable dwelling with neighbors in its line of sight is evidence of YIMBY policy working out well at some scale. We just didn’t call it YIMBY policy until a political bloc showed up opposing it and declaring the city full.

What exactly is is that you’re looking for evidence of?

It will probably be a big issue and be solved as well as education costs and health care are being solved right now. There will be many words and no solution. There are way too many people benefiting from the current state.

If you want to really address the zoning problem on a cultural level, you have to find a way to create an "expectation" of the quality of life in some category of multi-unit building which is acceptable to the modal American. It's pretty typical to expect apartments to be noisy, smelly, not-so-private places which are not so desirable to live in. I can't say my own experience living in an apartment has really contradicted this, either.

I'm speculating here, but I think that part of the reason people oppose housing types considered unpleasant is that people may be less likely to stay in them if they have the opportunity to move. If you move into a nice unit (house, townhouse, apartment, whatever) in a stiff market, and the market eases up and you can afford to move, you might not, because moving is a lot of work and the expected benefit is small. But if you move into an unpleasant space in a difficult market, you're likely out of there as soon as you have the chance. This might imply that unpleasant housing types are more likely to become vacant during a market downturn, and because of problems associated with vacant housing, people might want to avoid unpleasant housing being constructed near them. The key exception here are the small add-on units recently legalized in San Francisco; because the main unit will remain occupied, issues associated with vacancy and disrepair of the subsidiary unit are prevented.

However, there aren't clear standards that determine whether a multi-unit building will be a place people want to stay, whereas SFH are usually for whatever reason expected to retain their occupants. So when I say "to create an expectation", I mean an expectation among the neighbors that whoever moves in is going to like the place they live in enough that they won't move out in five years when the market cools off. And if you expect the market will never cool off, you're also assuming you never solve the housing crisis, which is not a good founding assumption for making plans to solve the housing crisis.

I could imagine standards like: external entrances, private outdoor space (balcony), in-unit laundry, sound insulation, and separate ventilation. But those are just my preferences; any actual standards ought to be based on reliable evidence of some kind. It may be possible to survey the kinds of units that people move out of during housing market downturns in order to identify some predictive characteristics which can both influence housing standards and allay the concerns of voters.

I think you’re on to something, but at the same time it’s the nicer multifamily buildings that face stiffer opposition, due to the perception that such buildings are inherently reserved for the impossibly wealthy. Outside the YIMBY camp, no one believes that building enough of these could make them affordable. But when you really look at it, the most extravagant high-rise condos are physically equivalent to below-average houses with no yards. Made abundant enough, they should be priced that way.

>but at the same time it’s the nicer multifamily buildings that face stiffer opposition, due to the perception that such buildings are inherently reserved for the impossibly wealthy.

I do think you're looking at two different opposition demographics here. On the one hand, you have homeowners concerned about the future of their neighborhood; on the other hand, you have low-income communities concerned about gentrification. While they occasionally support the same political candidates -- particularly in San Francisco -- they live in different places, and crucially, the latter often live in neighborhoods which have had many apartment buildings for years (e.g. the Mission). These are not entirely separate fights, but I did mean to address the homeowners' concerns in this particular argument, motivated by the observation that suburbs are quite common and underutilized. I would even say that building larger apartment buildings in low-income medium-density districts is the norm for addressing housing issues right now (that and building exurbs), while upzoning less dense areas is not currently performed in a way that seems to point to a more general strategy for addressing housing issues.

Look at Canada (Vancouver and Toronto specifically) for a glimpse of how bad it can get if anti-development urban policies combined with pro-home-inflation monetary and banking policies are allowed to run unchecked. The prices are even more insane than San Francisco / Silicon Valley when considered as a multiple of median income.

It's really kind of incredible. These prices seem economically impossible, yet there they are and houses are apparently selling. It seems like there actually is no ceiling to house prices. A lot of people blame cash buyers from overseas using real estate as a financial instrument but I have yet to see hard evidence that this is prevalent enough to explain this madness.

I think TO housing starts have outpaced population growth. I think it's actually just a bubble. Different from a place like SF where supply is the limit and demand is exploding from real economic factors.

Toronto at least seems to be starting to deflate. e.g. https://twitter.com/JohnWake/status/996524868102336512

Too late for us but hopefully it will make obtaining a home easier for our children!

We routinely oppose building for the majority because the homes built would not fit a minority.

Vancouver is proposing new parking norms that force at least half the parking spots in a residential parking garage to be extra tall, to accommodate tall vans for disabled people.

This is a great idea, but it again raises the cost of building new homes, for the benefit of the minority who need a full-height van because of their disability.

The 'crisis' (an overused word) has developed since Glass-Stiegel was repealed. There used to be two kinds of banks.

It became possible to think of houses as investments. Stop the speculation. Return to sound principles.

Or will we wait until the same thing happens to food, water and then air? Can't happen? Why not?

This is a regional issue and it boils down to the fact that micro-managing what people build on their own damn property has had negative consequences.

Regulation isn't going to solve this problem. Regulation caused it.

Cheap detached homes are the norm in the vast majority of the United States. What's happening in California and the Northeast Corridor is a serious problem that should be addressed, but the issue isn't going to catch on at the national level, because, again, cheap detached homes are the norm in the United States.

When Millennials on the coasts talk about how their generation won't ever own homes, I have to wonder if they're seriously that out of touch.

Here's a house that's for sale in my hometown of St. Louis. I just picked a neighborhood at random and selected the first house I saw for sale around this price (~$100k):


This is a quiet, safe, well-maintained, working-class neighborhood. That house is nothing to write home about, but it's not a bad little bungalow, either. That'd be a great home for any young family.

I get it, I get it -- "but then I'd have to live in St. Louis!" That's funny, I guess, but who is the joke really on? How much is that ocean worth to you?

> Cheap detached homes are the norm in the vast majority of the United States

Perhaps by land area. But not necessarily by population.

Something like 1/3rd of the population lives in the DC-NYC-Boston corridor. Throw in the West Coast, Chicago, etc. and you're looking at a much more national problem.

Chicago is an odd inclusion in that sentence.

That's a good point, but, despite what some may wish, we don't actually have a national politics that's decided by a straight-up popular vote. There are a lot of people in those cities, but they don't always wield proportional influence on national issues.

>Something like 1/3rd of the population lives in the DC-NYC-Boston corridor. Throw in the West Coast, Chicago, etc. and you're looking at a much more national problem.

There's a lot of people who live in single family houses in those areas.

A lot of people don't seem to understand that not all housing is a good investment, and that paying rent and making your landlord pay for repairs and maintaining the house while you invest your money elsewhere is often the smarter move.

How many years do you have to pay mortgage on that house before you break even? What state will the city be in in 15 years? What will your actual ROI be? How long will it take to sell the house?

So you can buy a house in St. Louis, one of the worst cities in the US for crime. That doesn't make that house a good investment. It makes it a mediocre investment that will probably barely keep up with inflation and be a pain to sell when you decide to move.

Relevant article: https://www.wsj.com/articles/my-10-year-odyssey-through-amer...

> I get it, I get it -- "but then I'd have to live in St. Louis!" That's funny, I guess, but who is the joke really on? How much is that ocean worth to you?

Ironic sentiment from someone living in New York. I don't see you moving to St. Louis to buy a cheap house.

> I don't see you moving to St. Louis to buy a cheap house.

I own a home very near the one in that Zillow link.

You are downvoted by those who realize they are in a rat race. I got the hell off the coast for grad school 25 years ago, and now live in Kansas City suburbs. Good schools, good paying tech job, almost paid for house, and healthy retirement funds. You people are crazy clamoring over those coastal tech jobs. Maybe 1% of you will strike it rich. The rest are in the rat race.

Nah, it's simpler than that. People have some bizarre views about the Midwest, as evidenced by the FUD-laden reply to my post above:

- "What about crime!?" (Most of the region is quite safe. The MSA is about middle of the pack on crime. Yes, there are some bad neighborhoods. And there's a ~0% chance anybody reading this on HN would ever live in one of those neighborhoods.)

- "How long will it take to sell a house in St. Louis?!" (The housing market is doing fine there.)

- "Do they even have jobs in St. Louis?!" (Median household income in the metro is a pretty healthy $52,340.)

I think I have a pretty good idea what that guy imagines St. Louis -- and Cincinnati and Indianapolis and Milwaukee and Kansas City -- to be like, and I strongly suspect it's got a pretty loose relationship with reality. Unfortunately for cities like St. Louis, marketing is important, and there's probably nothing I could say that would change that guy's mind. There's almost nothing in his comment that makes any real sense, but it is what it is.

From experience, people do not want you to respond to complaints about the high cost of housing on the coasts with evidence that the problem isn't universal.

If you accept that the South and the Midwest are legitimate places to live, then you're forced to really consider it, which is difficult -- moving long distances is hard! It's much easier to conclude that those places aren't real options.

It’s a fiat induced worldwide suicide pact. Only one way out.

the focus on housing is short sighted. there will always be a physical limit based on the geography of the area. most political agendas are focused on concentration of wealth to maximize public programs i.e. mass transportation. i think we've reached a point where redistributing high paying jobs across a larger geographic area is the only real solution for most large cities.

Which of these cities is even near to the physical limit?

I think you're getting downvoted because none of them are at any sort of physical limit.

Density is amazingly good for humans: it promotes huge amounts of intellection and economic growth.

Density is what so much of the country is yearning for, and being denied by prior generations and entrenched wealthy residents.

There's only one place density should go: cities. And they have a ton of room for growth in the US to even match other dense cities in world, such as Paris.

physical limit is probably to narrow to effectively argue my original position. there are many limiting factors including physical boundaries of geography. consider the political climate, economic environment, accumulated technical debt of past construction practices, artificial boundaries development by cities to bolster real estate values, not to mention investments made by individual home owners and businesses. there are a lot of forces at play to gain consensus especially when you have significant momentum moving along a trajectory started easily 30 years ago that led us to where we are today. and not to mention the accumulated debt of a city like san francisco which the last i read was at $10B. these forces are like concrete or better yet non-newtonian in nature, the more you stir the pot the more rigid it becomes.

i agree there are a lot benefits to density, i'm not down playing those benefits. but i do think we have a lot of great technology in play and coming down the pipe that allows us to have many of the same benefits across large geographic areas.

also i feel large cities are captive to it's wealthy benefactors whether it's a company, an individual, or a politician who wields influence.

more importantly, it's far easier to create incentives to entice companies with high economic value and high paying jobs to an area with few competitive forces.

There will always be a limit, but we are artificially constraining city populations to tiny fractions of engineering limits, with immense human, environmental, and economic costs.

i agree with your assessment that we are artificially constraining city populations. i feel it's more than just the engineering potential that limits a city's capacity. consider the political climate, the economic environment, the sunk cost by existing home owners, businesses, and city services, the accumulated technical debt of legacy construction practices, artificial boundaries developed by cities to bolster real estate values, and not to mention the accumulated debt of a city like san francisco which the last i read was at $10B. there are a lot of forces at play to gain consensus especially when you have significant momentum moving along a trajectory started easily 30 years ago that lead us to where we are today. these forces are like concrete or better yet non-newtonian in nature, the more you stir the pot the more rigid it becomes.

more importantly, it's far easier to create incentives to entice companies with high economic value and high paying jobs to an area with few competitive forces.

Stop printing money.

Could you elaborate?

Not GP, and this comment is copied from earlier in my history, but...

One example: the US central bank's (Fed) Quantitative Easing (QE). In my view, QE's inflation happened before QE started. A significant purpose of QE was to prop up the loans made before the financial crisis. The inflation happened with the creation of trillions of dollars of securitized sub-prime housing loans. Rather than allowing those loans to default, the Fed is acting as a buyer of last resort through QE MBS purchases [0]. Without the Fed, much less money would be available for housing loans, and their prices would return to historical ratios to income [1, 2]. [0] https://fred.stlouisfed.org/series/MBST

[1] https://archive.nytimes.com/www.nytimes.com/imagepages/2006/....

[2] Blue line in http://www.econ.yale.edu/~shiller/data/Fig3-1.xls

It's not a terribly elaborate solution, just a simple and good one: let's have the federal reserve stop promoting monetary policy that encourages reckless spending, easy money, expensive houses, and tons of plastic shit.

Some people present it as a solution to all the world's ills, which it is far from. But it's a good foundation for many solutions for many ills.

It still won’t matter in real terms. Real housing prices will still continue to rise, until the fundamental housing shortage is solved in places like the Bay Area.

It’s not really a solution so much as it is a bandaid. Sure, you could raise interest rates and nominal house prices will go down. But it doesn’t solve the problem of limited housing supply in places like the Bay Area.

The REAL cause of the housing crisis is more and more rich people/companies view real estate as a way to make money. Not just as a way to park wealth to defend against inflation, but to make $. With astounding return rate.

Frankly, I think the only way housing crisis can be resolved is

1. taxing severely anyone who owns multiple house/condos (not apartment units) with the plan of renting. Probably gradually higher tax rate based on number of units or monthly rent fee.

2. Heavy tax for profit made from flipping a house.

The goals of the tax would be to control excessive amount of $ from flowing into real estate.

Real estate investment is made out to be a really smart/great investment. But why?

It's a good investment at the right time. Most of the time it's a place to live. If you're over leveraged it could be bad. Of course it depends. But the potential rate of return can be pretty astounding.

Anecdotally, I bought a modest house in Seattle a long time ago, when you could do zero down payments so I just paid some closing costs, etc. I rented out rooms to friends to cover most of the mortgage. I was making less than 6 figures at the time. After 3 years, I sold it. After commissions, etc the return on investment was 12x. And it was tax free. If I'd kept it another 10 years until the current boom, apparently the ROI would have been closer to 40x. Not many other investment vehicles can offer that. Of course I moved to the bay area and didn't immediately buy a new house so I'm totally screwed now, along with everyone else.

If your goal is to create a Venezuela like housing crisis sure, you could do 1 & 2. I'm not sure the rest of us want that.

My goal is not to create a Venezuela like housing crisis.

But housing investment is sucking in $ from everywhere, even non-American investors. Some at top are raking in money while everyone else is paying for it.

There is a reason more and more wealth is concentrated in less and less people at the top.

Sounds reasonable. And I'd add that a house is not only seen as an investment but also a safe investment, so people are going out and leveraging themselves through a bank loan to 5x their downpayment. I don't think I could buy anything else that big with such great interest rates.

Agreed. Real estate investing should be disincentivized.

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