The ability of citizens to restrict or prohibit building in their jurisdiction is extremely strong, basically everywhere in the developed world[1]. There's not much they can do to affirmatively cause things to be built - that still takes capital and expertise - but local controls have stifled many, many, many parts of economic development and greatly skewed the economy.
Citizens having a say in what is going on in their neighborhood is why housing in the bay area isn't expensive, they use that say to prevent the construction of new housing.
Massachusetts and Colorado arrived at expensive housing markets through other means, but as far as I know they don’t have any sort of massive lock-in incentive like Prop 13.
The lock-in incentive is counterproductive but the main cause is still zoning.
Prop 13 makes it so long-term owners don't want to sell because moving triggers a huge tax hike even at the same property value, and the most idiotic thing about it is that you also get the tax hike if you build anything new on the land. It would actually have been a major pro-housing rule if adding new units kept the low taxes.
But that still doesn't reduce turnover to zero, and with prices as high as they are there, that would mean developers snapping up any property that comes onto the market and turning it into multiple units that are each worth the original price. Unless prevented from doing so by zoning, which is the actual problem and the same one causing it in other states.
The main contribution of Prop 13 isn't a direct effect, it's that it makes residents more inclined to support the restrictive zoning rules that actually cause the problem.
You're right that zoning plays a major role in housing shortages. It's just my opinion that had Prop 13 not been codified into the state constitution, residential development may have flourished under the extreme demand.
1978 was a bad year not only because of the passage of Prop 13, but the subsequent municipal votes in SF and LA to force them into compliance with the statewide zoning restrictions of the Consistency Law. CEQA became weaponized and successfully used by NIMBYs to thwart new development.
However, specific to post-1978, municipalities saw residential areas as a tax burden and enacted growth caps and levied "impact" fees. This was a direct effect on housing development as governments did not want to bring in new residents without the property tax base to support infrastructure, education, etc. It wasn't just an inclination to support restrictive zoning, it mandated lowering density. Meanwhile commercial zoning flourished as commercial taxes became more relatively viable. As a result, LA now has 1 house for every 2-3 people, and nearly 2 parking spaces for every 1 person.
Zoning is a problem. I just think that maybe it wouldn't have turned out this way without Prop 13.
> This was a direct effect on housing development as governments did not want to bring in new residents without the property tax base to support infrastructure, education, etc.
Based on how Prop 13 works, creating new developments is exactly what you need to do to sustain your tax base, because a brand new building can't be paying an amount of tax locked in 30 years ago, and a developer who wants to take an existing property and add more units is one of the only buyers that would be able to value a property with a locked in assessment value more than the existing owner does and thereby cause them to sell and reset the rate.
> As a result, LA now has 1 house for every 2-3 people, and nearly 2 parking spaces for every 1 person
The parking spaces are the nature of the geography. Southern California is bordered by Arizona and Nevada, i.e. the desert, and then on the other side of the desert are the rocky mountains. Even the inland parts of SoCal are mountainous and dry. This picture tells the story:
A viable regional mass transit network requires a threshold amount of population density that you're never going to get in a region that looks like that outside of localized pockets, and localized pockets means everybody in them still needs a car since it's the primary way to get in or out.
It also has a propensity for sprawl even without zoning restrictions that require it because a desert near a major population center is going to get filled with single family homes even if taller buildings are allowed simply because there is available empty space.
Notice that the number of parking spaces per capita is also high in San Francisco and Seattle, but not in New York.
What the restrictive zoning does is make that even worse, and make housing unaffordable as soon as you run short of empty lots.
That’s the general idea on how Prop 13 works - what you miss is that it can simultaneously make any new development attractive relative to a frozen parcel and make dense residential development less attractive than competing land uses. Why build apartments when you can build a hotel? That’s if the incumbent wants to sell in the first place, which they historically don’t since there’s little to no economic pressure to do so.
Your parking spaces point is somewhat circular. Southern California is not uniformly dense. The major reason for why there’s so much parking is because it was mandated by the government.
I think we’re on the same path to reasoning though: status quo zoning in expensive US metropolitan areas generally sucks, Reagan-era housing tax policy also sucks.
> Why build apartments when you can build a hotel?
That one's easy. Because if you stop inhibiting people from building things when there is more demand than supply for hotels then they build some hotels. Then some local demand for hotels gets satisfied, at which point building more hotels becomes less profitable than building more apartments and so they build apartments.
> That’s if the incumbent wants to sell in the first place, which they historically don’t since there’s little to no economic pressure to do so.
"You're receiving $1M worth of net present value in rent but they're offering you $2M" is a pretty good economic incentive. Meanwhile they want to do that because once they add more units the additional units would generate $10M worth of net present value to whoever they sell them to, and therefore they can sell them for $10M.
> Reagan-era housing tax policy also sucks.
It seems to be a common mistake that people think raising property taxes would lower rents. The theory is supposed to be that less productive (i.e. low density) use would be disfavored, but that's pretty suspicious considering that higher density use is already dramatically more profitable per unit land wherever it isn't prohibited by zoning.
On top of that, whenever the property tax applies to buildings and not just land (as is the case approximately everywhere in the US), it does completely the opposite because then constructing new units increases the amount of property tax paid and then rents need to increase by that amount before new construction is profitable.
Prop 13 is uniquely ridiculous not because it caps property taxes for existing owners but because the exceptions to it (i.e. the tax resets to a higher rate on sales and new construction) create perverse incentives. But if you replaced it with something like "max property tax is $1/sq ft/year" it would create a pretty strong incentive to build housing, by reducing the property tax component of rent required to justify doing so.
