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All of the people I know who left NYC also left because of housing costs, even though New York has been putting up new housing at an insane rate.


NY has not been putting up housing at an insane rate. Housing in NY is actually being constructed at one of the lowest rates in the last century. Adjusted for business cycles (we're in a peak now), NY is building less housing than they have build in ~100 years, and Manhattan is at its lowest density since the 1890s. The current period is only a "boom" relative to 2009-2012 when basically no new housing was constructed.

Manhattan has a glut of luxury condos that are sitting vacant but Williamsburg, Bushwick, Greenpoint and LIC have seen a boom (https://www.wsj.com/articles/a-building-boom-pushes-new-york...) over the past few years.

Commercial real estate has gone up a lot as well and has led to a ton of vacant retail space. My father had a carpentry shop in bushwick and just had his land lord triple their rent.

They have seen a "boom" relative to 2009-2012 when literally zero new housing was built, they have not seen a boom relative to 1900 - 2009, especially when accounting for business cycle. I understand that you are seeing what you perceive to be a lot of housing construction, but relative to historical trends and population/household size trends, there is very little housing construction happening in NYC.

The "boom" is relative to all of 2000s. Look at the number of permits in 2015 [1], especially in the outer boroughs.

My argument, as someone who grew up in Brooklyn and Queens, is that building new housing doesn't really drive the prices down. I have a lot of friends who had to move or shut down their small businesses because of the rising costs.



"building new housing doesn't really drive the prices down" there is a lot of empirical evidence against this claim, and almost no evidence for it. Rising costs in cities are due to a few factors: (1) lack of new housing, (2) changing economic conditions in which high paying jobs are moving from the suburbs to the cities (to be fair, there is a small factor in very few cities of super rich people buying housing and not living in it, but that is largely confined to Manhattan, London, and suburban Vancouver, but is not broadly an issue in housing affordability) From after WWII through the 80s, American cities were largely in this strange largely racism induced recession (white flight to the suburbs) which caused a historical aberration of cheap housing and commercial space in cities. That trend was a very short counter trend blip in the 5000 year history of real estate in cities. The way forward is to build a lot more housing in cities, as its eminently clear that lots of people want to live in them, that living in cities is better for the environment than the alternative, and that our economy would be doing much better if the desired urbanization was actually allowed.

I love cities, think they are great, and live in the Bay Area myself. I don't know how old you are, but much of the flight to suburbs was due to the building of freeways and the fear of nuclear attack on cities. Younger people did not grow up with bomb shelters and duck and cover drills at schools, so living in a big city is not something they fear. If we have a nuke or two blow up a few cities today, there might be flight out of the cities once again. I sure hope that doesn't happen.

White people didn't leave cities because of the threat of nuclear attacks, they left because there was an incredible amount of racial unrest, violence, and rioting. There is a lot of research on the issue [0].

Climate change is a much larger threat to anyone under 30 than nuclear annihilation is, and the balance of evidence we have says that urban lifestyles (car free/car light, living in a multi family home) has a smaller carbon footprint than traditional suburban living.

[0] https://en.wikipedia.org/wiki/White_flight

How would you possibly be able to estimate the probability of nuclear annihilation? There are 13,000 nuclear warheads ready to launch on a minutes notice.

I don't know old you are but duck and cover drills were a thing in the Bay Area well into the 80s (although typically for earthquakes not warfare).

And if you ask anyone who was in school during duck and cover, they would tell you they took it about as seriously as a tornado drill.

Yes, nuclear duck and cover drills is what I was referring to.

I agree with you that on aggregate across most cities all of this holds, but it's not alway the case for top cities like SF and NYC, where the true demand is way higher than potential supply.

I'm not a NIMBY type and am not complaining about gentrification but am speaking to the fact that building new housing in Williamsburg and LIC helped double average housing prices in the surrounding areas [1]. I used to hang out in williamsburg in the late 90s and early 2000s, when it was an industrial area and bushwick when it was a complete dump. All of the yuppies who live here now would have never stepped a foot in brooklyn/queens if these areas weren't rezoned. I live in Greenpoint now and pay over 3x more than my grandmother used to pay for a similar apartment 2 blocks away from the early 90s till late 2000s.

We should definitely build more housing, but we also need to admit that rising income inequality is the real problem here. A large portion of our country has not seen their wages grow and are a medical emergency away from living on the streets. SV is home to worlds most valuable companies, it might be time for them to start paying their taxes so we can provide a safety net for people who need it like every other developed nation.

[1] https://www.propertyshark.com/Real-Estate-Reports/2015/10/14...

The right metric is new homes per capita by which NYC is about as bad San Francisco.

It doesn't help when there are insane regulations like dedicating double digit percentage of new units to be "affordable"/subsidized/section 8. Anyone with a full time minimum wage job would not qualify for "affordable" housing, you literally have to not work at all, it's such a scam.

Don't get me started on this. I helped an friend get into below market rate (BMR) housing in SF. She paid approximately $330k with almost no money down for a 2 bedroom, 2 bath condo in the center of Hayes Valley. Today, equivalent market rate units in her building sell for $1.5k to $2m.

Basically, there is a supply of homes that are available to you at three points: 70%, 90% and 110% of the median income. How these three points are chosen I don't know. Very few are at 110% of median income. Most are available to those that make 70% or 90% of the median income.

The reason this is bullshit is because it's estimated that you need to earn about 400% of the median income to be able to afford a market-rate home in SF. This pretty much leaves everyone between 110% and 400% of the median income without any real options.

Worse yet, by making a policy that covers the just above the center of the income distribution to the bottom, you basically disincentivize those voters from becoming active and involved in supporting solutions that help the entire distribution. Basically those between 110% and 400% end up a permanent minority unable to achieve support for policies that will help their cohort.

Needless to say, I don't live in California anymore, despite earning almost 3x what she earns because I can't really afford to buy into the market. California is fundamentally broken.

> She paid approximately $330k with almost no money down for a 2 bedroom, 2 bath condo in the center of Hayes Valley. Today, equivalent market rate units in her building sell for $1.5k to $2m.

How does that work if/when she wants to sell the place? Is there some sort of cap on what she can sell it for?

She can only sell it for the purchase price adjusted for changes in the median income. If the median income in the city goes up (which it does over time because lower income renters are eventually forced out of the city), then she can sell it for more. It obviously won't increase as fast as market rates, but it will go for more than she purchased it. The house needs to be sold back through the BMR program. It can only be willed if her heir(s) also qualify for the BMR program at the time of death.

At the end of the day, she gets the benefit of not having to tie up cash in home equity. While other people are paying $6000 or more a month in a lease, she's paying a little over $2000 a month in a lease and gets to put all the excess she has into more liquid assets like an index fund.

There are several ways to handle this, but a common one is to have a deed restriction that sets a maximum resale price and requires the buyer to meet income eligibility criteria.

I wrote some about this, and about how I'm worried that wealthy people could abuse this, in https://www.jefftk.com/p/affordable-housing-workarounds

The entire idea is preposterous. The solution to affordable housing is oversupply of housing. Gov should incentivize new construction to reduce prices and let the market fix it.

Strong disagree, the solution to affordable housing includes a very large amount of private/free market housing, but the free market won't really address the needs of people below 30% of the median income. Additionally, good affordable housing is one of the best anti poverty tools that we have. IMO the long term solution is robust private market housing construction for the middle class, and a robust public housing construction system for those who truly need it.

> the free market won't really address the needs of people below 30% of the median income.

It will if it’s not illegal to build. SROs are illegal. Boarding houses are illegal. Houses below a certain minimum are are illegal.


> From 2013 to 2017, Tokyo built many houses as the whole of England.

> House prices in Tokyo are now 9% lower than they were in 2000, while in London they are 144% higher, adjusted for inflation.

Anyone using Japan as an example of housing prices does not understand Japanese housing.

Zoning in Japan is done at a national level, not local. Once an area is designated for housing, housing goes there. Because of this there is a constant flow of new housing, which drives the price of old houses down.

This is not possible anywhere zoning is done at a local level. Anytime one person has the ability to stop another from building you immediately create NIMBYdom and where the NIMBY exists, more housing does not because the NIMBY cares about nothing but their own property value. But that also feeds into the insane American idea of housing as an investment rather than a place to keep birds from crapping on you.

Until the NIMBY is eliminated, and housing is no longer sold as an investment, housing costs will not go down.

So why can’t we use Japan as an example? That seems like a laundry list of good ideas.

> the free market won't really address the needs of people below 30% of the median income.

Why? Do you think a poor person's vote is worth more to the government than their wallet would be to a house builder?

Is it impossible to make an acceptable house at 30% the cost of a median earner's house?

Your reasoning is valid for people whose productivity approaches zero, in which case welfare can indeed be needed. But the current housing problem is systematic and touches a far bigger percent of the population, and thus shouldn't be solved with charity.

Imagine you are a property developer. You borrow money to buy land and want to build as many housing units on that land as you are allowed to and sell them for as much as you can. Buying granite counter tops in bulk and selling the housing units as luxury is going to make you a lot more than trying to cater to the bottom of the market, so nobody does, unless forced.

Do it enough times and there will be an oversupply of such housing, pushing price down to the cost of land + construction. With no profit margin at that price developers will target higher and lower price points. The solution is always just more construction.

Public housing is a complete failure and the epicenter of violence in every city. Name a current project in ANY big city you'd raise your family in?

Gemeindebau in Vienna Austria.

The problem is that in most areas the government is primarily voted in by existing landowners, who don't want more housing, and don't care if lower-income renters are being forced out.

The non-landowners are either not abundant enough, or only plan to live here for a short enough period of time that they don't bother to get involved in local politics.

While this is the whole "NIMBY" thing... is that really a problem? No one complains that Americans can't vote in Britains elections, to set their laws. The whole point of voting is that the people who actively live there get to decide what happens to their city.

Yes, that's a problem. Nobody that bought a home on the vague notion that they HAVE to make money off of it when they sell it will ever vote to have a homeless shelter built across the road.

I think the cause and effect is intertwined. Many of the people who now plan to only stay for a few years have that attitude because they feel disenfranchised and locked out of the planning process, while at the same time being priced out of the ability to put down roots.

Here in New York, at least, the eligibility for those units is based on the median income in the neighborhood where the building is. In some cases these affordable units end up with requirements that are pretty substantial, e.g. https://www1.nyc.gov/site/hpd/services-and-information/housi...

I don't see anything in your link about NYC putting up housing at an insane rate, and my understanding had been that NYC housing growth was at historically low levels?

Here's a link with some more data https://streeteasy.com/blog/nycs-unsold-condos/.

The rezoning and redevelopment of the queens and brooklyn waterfronts brought a ton of new high rise condos with it. I live in northern brooklyn and there's a new condo building being built on almost every block. At the same time there's more vacant storefronts than I've ever seen and the only businesses getting by are coffee shops, hair salons and trendy modern american restaurants that charge $18 for burgers and fries.

If that’s not making enough of a dent, it’s not evidence that it’s not helping at all.

Compared to CA, NYC is building like crazy from my anecdotal observation.

Your article talks about 16k condos over 6y, which is ~3k/y. That's not zero, but that's really not very much housing compared to the ~8M population of NYC. I know this isn't the total of New York housing construction, but it's so little you wouldn't expect it to help much.

For example, during the 1920s NYC was building housing at about 7%/y! Housing was much cheaper then, and through the period of low demand, but when demand picked up again we didn't let people resume building at anywhere near historical rates.

I found total construction numbers: ~25k new units in 2017, depending on how you count (https://www1.nyc.gov/assets/rentguidelinesboard/pdf/18HSR.pd...)

That's only about 0.3% housing growth.

Sorry, I used 8M people as the denominator for growth instead of 3.5M units, so it's more like 0.7%

The storefronts are only there because of significant state tax credits for including them.

Like all things real estate, there’s some other tax angle where the owners make more money demanding commercial rents above what the market can afford than actually renting it. They probably securitize the losses somehow.

Is it housing cost or housing risk? Is one thing to put a million dollars into a home and sell it for $1.4m five years later. It’s another thing to owe s million on a place that’s now worth $400k.

That's not a thing in California. Loans on residential property are non-recourse, so if you owe more than it's worth you just stop paying.

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