It seems like we’re always stuck in an indecisive state of choosing between the interests of the wealthy and the interests of the struggling, and we can never get out unless we make the “right” choice (which is always implied to be the interests of the struggling)
Maybe the choice has already been made, and people just don’t like the outcome. What then? Barring a massive catastrophe or economic downturn I don’t see the Bay Area housing problem getting better in my lifetime.
Where these sorts of articles comes from is observers who would like to change that narrative.
If the roles were reversed I doubt these observers would be calling for a change in narrative.
That isn't actually what happens -- and the misunderstanding is what causes so much of the conflict.
If you rezone for high density, the price per square foot goes down, but the price per acre goes way up -- because suddenly developers will pay you a mint for your land so they can knock down your house and build a high rise there.
The people who theoretically lose out are the people who own property way out in the suburbs, because most people won't want to live there and spend two hours in traffic every day once they can afford to live in the city. But even they don't really lose out because now they can afford to live in the city and the value of not having to sit in traffic every day is worth more than what they're losing on their house.
The whole thing is just a huge misunderstanding. A cynic might suggest the narrative was devised by the banks to drive up mortgage loan principal amounts. Or the car companies to keep people from living in places with viable mass transit.
Either they let the pressure out gradually or the thing is going to pop.
Probably not.
> Companies will move away from areas where their employees can't get hosting.
And if that happens in even a small degree, housing prices will drop, relieving the problem. It's only a problem if their is a sharply threshold where below which no one moves out, but just above which lots of companies do. That's not entirely implausible, but it's not all that probable.
> Not many have to move before the rest start to follow
That right there is the highly speculative part; if it's true, you have an out of control positive feedback loop, but otherwise it's a self-controlling negative feedback loop.
The USA has never had housing priced at such a high number of hours of work before.
Not me, and not lots of other homeowners, judging by the polls. NIMBYism is common, but most Californians do want more housing constructed.
Ha. History seems to side with the wealthy on that one.
The future of the Bay Area will be outsourcing lower waged jobs that also includes software engineers, QA staff, administrative, etc. to other areas of the state or country where cost of living is less expensive. It's already happening, just ask around.
Again, because the value turned around by SWE peeps etc. for tech companies has an actual cap. You can't pay a QA/SW engineer $500k/year just so they can afford live in the Bay Area. They'd have to be one hell of a QA/SW engineer if that was the case. I just don't think it's worth it for tech companies at some point.
After all that happens, the jobs left here will be primarily managerial; c-level execs, product managers, business analysts etc.
Those too, if the housing situation doesn't improve, will be outsourced to lower cost of living areas as well.
Again, it's inevitable given the numbers.
Much of the wealth being generated in this area is being sunk back into real estate. The high wages in tech in the Bay Area are high because they're subsidizing a corrupt housing market.
Eventually the only people left in the Bay Area will be executives and really high-paid lawyers.
Yesterday's headline: "Alphabet median pay close to $200k" https://www.investopedia.com/news/googles-alphabet-median-pa...
Those are not all executives and high-paid lawyers.
One of the biggest reasons why a 1300 sq.ft. house in Sunnyvale now sells for $2M is because a lot of engineers are perfectly capable of paying for it.
In my tract, 5 houses out of 35 have changed owners in the past years (it's a neighborhood with lots of first owners who are now in their eighties). I've talked to all the newcomers.
Without exception, they are dual income engineering families who work for Google, Facebook, Apple and some other tech giants.
That's $400k income per year and plenty to cover a $1.725M 30 year 4.1% mortgage payment of $8500 per month.
I'm pretty happy with the salary that I make as a SF-dwelling/working software developer, but I recognize that it's absolutely insane when compared to same-industry salaries in locations with less ridiculous housing markets.
At some point, companies are going to throw in the towel and decide it just doesn't make financial sense to pay their employees that much just for the privilege of being located in the bay area. Then the jobs move away and you end up with a local recession. This will be hard to do initially for companies sized like Google or Facebook, but a ton of smaller companies can open offices elsewhere and slowly transition staff away. They're already doing it, even.
Facebook looks roughly the same.
The leverage of a software engineer to produce money is really quite astounding when you get them in large herds.
I'm pretty sure the Bay Area is going to be just fine.
I don't think that's sustainable. This is called working your way so far up the supply chain that you pop off the top and fall out.
Eventually the entire supply chain below you collectively asks the question: "Why are we paying these people? What do they do anyway?" Then the supply chain starts looking for ways to wiggle out from under you.
Yes, that is selfish, but I'm not going to apologize for not wanting an apartment complex next door. That said, I'm not going to vote against a state level politician who wants to relax zoning laws to improve affordable housing.
It has nothing to do with the inhabitants.
It's about the ugliness of these kind of buildings and everything that goes with increased density (traffic, street parking etc.)
No, it frequently does have to do with the inhabitants. That's why you saw Forest Hill homeowners kill an affordable housing development because "the new development would house 'severely mentally ill' and 'severely drug addicted' people" [1].
[1]: http://www.sfexaminer.com/city-pulls-funding-150-unit-forest...
You don't like the 'look' of 'ugly' building? I guess you better save up for the neighboring lots.
You don't like it when some of those houses are replaced by an apartment complex.
What is there not to understand?
He didn't tell anyone what to do. What are you so upset about?
No, they don't. All homeowners don't have the same utility function. Not living near people of different socio-economic strata is a very important factor in some people's utility function.
> When the only people who can afford to live within 40 miles are senior software engineers, surgeons, hedge fund quants, corporate executives, and large landowners, the whole community becomes a fake and lifeless place.
The features you see as “fake and lifeless” are what many people actively desire and seek out. Aesthetics are highly subjective.
That's reasonable.
But what is not reasonable is if you try to enforce that preference on next door. Your house is your house. Your neighbours house isn't.
Speak for yourself. Not all homeowners want less density. I wouldn't have become a homeowner if the only houses available had yards with picket fences.
You can think of it as an interesting experiment in collective land ownership.
I'm using "own" meaning "control" here.
But I can have the desire for the conditions to stay the same.
See Zuckerberg's purchases in Palo Alto for example.
That's definitely an original kind of argument.
At least that's what I'd be referring to if I were to make the parent's argument.
Increasing housing supply by 50% will increase homelessness because you have 50% more people willing to financially support it.
Neighborhoods in Tokyo have no local control over zoning, and houses are widely understood to be a depreciating asset, not an investment. So Tokyo builds enough housing and homeowners can't pull up the ladder behind them.
The homelessness rate in Tokyo is astonishingly low and decreasing: just 1600 people in a metropolis of 13.6 million. Almost everybody can afford to live somewhere, because there is enough housing for everybody to live somewhere.
You may think I'm saying that your neighborhood has to look like the Ginza area, and I'm not saying that at all. Tokyo contains some calm, beautiful, residential-focused cities such as Setagaya. (If this is confusing: a metropolis can contain a city.)
That doesn't have very much to do with whether there are enough places to live. If the places where the careers are have fewer available places to live than they have people, it doesn't matter how dedicated you are, you can still fall out the bottom of the market.
Homelessness however is more a multi-headed beast, and Japanese culture likely plays as much into a lack of people on the street as does housing availability.
But I suppose that's par for the course for the US, where individual expression and selfishness is valued over collective good.
And if we recognized "physically being present before others" as a natural right, I imagine the Native Americans would have a much better situation than they do. Thinking that's a right for some but not for others is the height of hypocrisy, but that seems to be what a lot of incumbent property owners here seem to believe.
That being said, I'm hard pressed to call desired housing density a natural right.
https://www.vox.com/2016/8/8/12390048/san-francisco-housing-...
The first may benefit current land owners a lot, but the second is absolutely essential for lower incomes to succeed at all.
This is not a zero-sum move, and is fact hugely beneficial to everyone. When there's fixed housing supply, that's when things are closer to a zero-sum economic game.
http://marketurbanism.com/2018/02/05/density-working-poor-ou...
The reality is that the apartment building goes up and you house is worth nothing unless the government allows an eminent domain for your property or a developer with the bucks to buy out the neighborhood shows up.
Until that happens, your house lost a third of its value because there's an apartment next door. If you're unlucky, rates go up and you're stuck.
Is it really controversial to say that a regular single family house in a single family house neighborhood will go down in value when somebody decides to plant an apartment complex right next to do?
Making a real estate purchase is a risk. Making a huge one is a huge risk. Right now, the Bay Area is prioritizing rewarding the obscenely wealthy and rewarding massive risk-taking by the moderately wealthy.
If those risks don’t pan out, but people can afford to live here, I’m not that upset.
People who are disrupted by this can build character by living in a van or move to any of the hundreds of metro areas that are more affordable -- it's not my problem. If you work for some tech company, you should appreciate that controlling a resource like a technology or real property has benefits.
FWIW, I chose the latter option and live in a mid sized urban core. I make about half of what I'd make in the Bay Area, but my costs are probably about 80% less, even factoring in private school. So if you make a choice to live in a van as a rational actor, that's your choice. Own it.
I totally get that, but it's a) unfortunate that when one buys a home, their financial self-interest becomes immediately opposed to the needs of the overwhelming majority in this city who rent, and b) ridiculous that city politics safeguards the value of these risky bets by homeowners at the expense of literally everyone else.
Mainly because homeowners are more engaged in the city politics? If renters or would-be homeowners were more engaged, this would have been a totally different situation.
But see, now you have introduced an "us vs them" mentality to this discussion with homeowners on one side and non-homeowners on the other. If I, a homeowner with 800K mortgage, is going to face people like you who want to act in a way that will reduce the price of my home below 800K thus wiping out my equity in my home and saddling me with an underwater mortgage, then I am going to fight tooth and nail against any new housing.
Figuring out how to add new housing without affecting the value of existing homes would go a long way towards getting buy-in from existing homeowners.
You took a large gamble with a massive sum of money—what is literally a lifetime of earnings for most families in the US—and are now arguing that the city should continue to prioritize the positive outcome of your gamble over the needs of the hundreds of thousands in this city who are struggling to get by.
This leveraged gamble has been growing at a rate of 8–9%, and with typical mortgages here it’s reasonable to guess you’re seeing over a 12% return on that gamble annually as a result, after mortgage interest and property taxes. Pardon my complete lack of empathy for the hardship you might endure should your gamble only return 5%, were we to consider the needs of the rest of this city over your own.
Sure, once this happens enough times, and supply starts to meet demand, you're absolutely right in that a single-family home's value will drop when it's adjacent to an apartment complex.
(Then again, it could also be quite valuable to someone who wants a single-family home when the norm becomes larger complexes.)
Also note that the current value of your home is driven almost entirely by artificial scarcity. There's nothing intrinsic about it that makes it worth so much.
The problem from my perspective is that the "crisis" of housing is really a boomtown phenomenon. The problem exists because companies can afford to pay people enough, which won't last forever.
You're saying that if you have the only single family house in a high density area that house will actually be worth less?
I think it's very unlikely either of those things would be true.
a) Correct.
b) Beneficial to most participants in the market, well off (mainly due to luck in timing) NIMBY's being the exception.
If people really want to address the housing issues, they need to start actually listening to people who object to more housing instead of just calling them names. There are legitimate downsides to more housing and higher population that will need to be addressed.
Those governments, by design, serve the interests of their local citizens. That is, the population they serve is inherently skewed toward existing property owners. You can't fix this by complaining about money in politics or whatever, that's not why it's happening.
The solution has to be at the broader government level (i.e. in Sacramento in this case), wrenching back some of the control that has traditionally been local in the interests of the broader population and not just, say, Palo Alto residents.
It is unfortunate that the most disenfranchised demographics are the ones least likely to vote/organize.
Of course this assumes renters actually vote. As noted before, most do not. Thus the tyranny of the minority situation.
Lots of people want to live in Cambridge, MA. Cambridge is lovely, walkable, and bursting with jobs. But not everyone who wants to can live in Cambridge, because Cambridge has large areas of inappropriately low density that homeowners fight to preserve.
Many people who work in Cambridge live in Everett. Everett is kinda shitty. It doesn't even have good transit to and from Cambridge.
People who live in Everett and want to live in Cambridge can't vote on Cambridge housing policy. They can only vote in Everett.
Local control of zoning sounds so democratic, but it's a tool of rent-seeking, exclusion, and discrimination.
This assumes that the claim that 63% of SF is renters is correct. I don't know the truth of that.
If even a quarter of those people are immigrants, that tips the scales quite a bit.
It should also include at least a selective repeal of proposition 13 for non-occupant residences and a re-assessment of all such residences to tax those who are using our real estate as a financial instrument rather than a place to live.
I'd also be in favor of an extra tax on out-of-state residences held by non-occupants and on out-of-state non-occupant purchases.
Non-residents cannot hold governments accountable (by voting) for how they use the money which allows the towns to side step one of the core principals of democracy (not to mention that non residents don't have as good information on which to evaluate the performance of local government since many local issues will not affect non-residents). I would have no problem taxing people who enable this by having income or vacation properties in towns they don't live and taxing local property owners who vote for the people who do it.
This accomplishes the original goal of the initiative — to keep fixed-income seniors in their homes — without starving localities of property tax money and disincentivizing them from allowing new housing to be built.
Politically, passing these changes would still be hellishly difficult, particularly the second one, which is not so easy to understand. One way of putting the problem is that Prop. 13 represents a massive transfer of wealth from future California residents to present ones. Of course, the future ones can't vote against it since they don't live here yet.
You'd get a lot less resistance there. You're not messing with cost of living for owner occupied homes, just second properties, investment properties, and of course all those foreign cash buyers using our real estate as a money laundering vehicle.
They are leasing you your place at market rate. The market rate is affected by supply / demand of rental units, not landlord costs. The only way they could pass the extra tax onto you is if you are not market rate and there is a law that allows them to do this, or if increasing property taxes on apartment buildings decreases the supply of rental units - an unlikely scenario.
Not sure what you mean by this: my landlord can raise my rent for whatever reason (or no reason), by any amount they desire.
I can choose whether or not I want to pay it, of course. But I imagine moderate increases to cover at least some (and maybe all?) of the cost of a property tax increase would be swallowed by most renters, given that moving is also a cost, and often a large one.
In fact, we have empirical evidence for this. The campaign for Prop. 13 claimed that landlords would pass on the savings, but after it was passed, no corresponding drop in rents was observed.
The question, though, is the magnitude of this effect compared to the other forces acting on supply. I think it's small. The value appreciation being enjoyed by rental property owners greatly outweighs the small increase in property taxes they would pay without Prop. 13.
It's still my understanding that landlords of multiple units who have tenants in rent control would have a massive problem with the repeal of Prop 13. It's one of the things that go hand in hand with rent control and keep costs low. They would have a strong argument for being unable to maintain their buildings and run a business without Prop 13.
Prop 13 doesn't keep total costs low for landlords, it just shifts costs from property taxes to other things.
Of course, about 80 to 90% of the existing homeowners (in many neighborhoods most people bought they're homes more than 20 years ago, you can verify this for yourself on zillow) won't like that, as they're currently paying about 0.1 to 0.05%! So, it's a pretty hard sell.
I'm much more in favor of incentivizing people to support positive change than just bringing out the big sticks. How about giving everyone in the neighboorhood a property tax credit if they vote to upzone? Or giving companies big tax breaks if they allow 50% of their workforce to work remotely (tackling both housing and transportation issues)?
There is an idea of excluding commercial properties from Prop 13 too (I think they shouldn't have to be covered to begin with, the whole idea of prop 13 was to "keep that old lady in her house when she has retired and cannot keep up with raising expenses").
Also props 58 and 193 allow to inherit Prop 13 tax assessment by children and grandchildren (again against original idea of prop 13 to just help elderly with living in their places when retired) so Prop 13 expanded that way to became multi-generational.
We can consider excluding non-primary residences from it too.
But if that isn't the case, then wouldn't a home have to be sold to cover the tax increase? So you couldn't keep a home in the family, either.
Also why new homeowners not inheriting it are supposed to be paying property taxes in full?
this would mean proposing that the law that's supposedly meant to help old people would actually be limited to those old people
I pay more than 4x what my parents will ever pay in property taxes on their home that is worth more than 4x what mine is.
Prop 13 was, pardon my french, such a dumb fucking proposition.
The Law: https://therealdeal.com/la/2017/10/05/will-new-california-la...
The Effect: https://www.mercurynews.com/2018/04/02/community-reacts-to-d...
The current hole was dug by local governments being very involved in telling property owners what they could and couldn't do over many decades.
Why will recursion fix the problem?
The bay area is rich enough and enough of that is tied up in property that if it perceives it needs to buy influence in government in order to keep it's wealth it will probably be able to do so then the problem will be even more entrenched because it will be entrenched at the state level.
More like, California and Federal level policymakers have been too lenient and let town and city level politicians make too much selfish policy that hurts the state and country level economy and progress.
The economic powerhouse areas don't belong only to their current residents. Everyone in the country has a right to strive for wealth and a better life by moving to economically active regions. We shouldn't create a society where your economic class is determined by where you happened to be born.
Its wretched, but that is the society we live in today! Why haven't you picked yourself up by your bootstraps yet? /s
> Intellectual honesty requires taking numbers seriously. Either we prioritize making the Bay Area affordable for all of us or we don’t. The less housing we build, the more wealth will be trapped in high housing prices. Unless we decide to grow our housing stock to accommodate our economy, we are continuing to choose the interests of those who are rich or who already own their homes over the interests of the struggling middle and working classes.