Examples:
+ Mission Street between 16th and Ceasar Chavez is a rail corridor. There was a proposal to limit this area to 8 story buildings. SF counterproposed and adopted a height limit which was on a per-property basis the lower of either a) what was presently built there or b) what city staff recommended, to preserve the character of the neighborhood. (Source: http://www.slate.com/blogs/moneybox/2013/04/11/san_francisco...)
What is currently built there includes e.g. two- to three-story non-operating pornographic theatres. (Source: I periodically walked past them while doing business in SF.) Reasonable people can disagree on whether one prefers non-operating pornographic theatres or new housing. San Francisco has decided, through their elected representatives, that they affirmatively prefer the theatres.
+ San Francisco has a complex, interlocking system of permits required to approve new construction, which is designed to and has the effect of minimizing it.
SF has built an average of 1,500 new housing units per year, for the last several decades. I pulled that stat from an advocacy organization which quotes it as what is realistically possible given that SF is filled with "strong communities, both those concerned about equity and those with more NIMBY interests, that will not allow the radical deregulation many developers (and the growing ranks of Ayn Rand libertarian techie counterparts) seek"
http://www.sfccho.org/wp-content/uploads/2014/02/Whose-Futur...
The population of SF has increased by almost 100k in ~15 years. (2001 census: 777k, 2013 census: 837k, all signs point to it accelerating) At that point, Ayn Rand libertarian techie propaganda ^H^H^H^H^H^H fourth grade math takes over.
What about south of San Francisco? Couldn't you build five story or higher apartment buildings there? Again, using Streetview, it looks like there are many newly built suburbs (or maybe they are just well-kept?) but almost all of them are single homes. Which isn't dense enough to solve the housing shortage. Also quite a number of golf courses and country clubs around. :)
Oddly enough south san francisco still seems to be fairly expensive, especially along the decent public transit lines. Assuming you're commuting to the city every day, you are trading say, an extra hour or two a day in commuting time for cheaper rent.
Real estate economics is not fourth grade math.
Barriers to new construction is of course the problem. If you had to fill out a lot of paperwork and get government permission to build a tractor, and there was a shortage of tractors, the solution wouldn't be to give farmers more cash to procure a tractor, nor try and control the price of tractors, nor pass laws restricting use of tractors. The solution would be to build more tractors. With enough tractors, it woudotn even matter if the occasional farmer kept one in the barn unused.
I don't know how people develop this blindspot with housing - if the prices are going up too much it is because demand is exceeding supply. Everyone is reluctant to say the lack of supply is an issue, and I don't know why.
And honestly, if I wanted to live in a cess pool like Houston, I would move there. Houses are cheap enough (comparatively) but it is a huge icky sprawl.
Let's say there are 10 people renting apartments that a monopolist plans to buy out, and each of their properties are 'worth' $1, meaning you could reasonably expect to pay $10 for one property. They also rent out their appartments for $1 each.
What happens when the monopolist starts buying properties? He buys a few, and they notice he's going for a monopoly. They will raise their prices, because they know it will be worth it for the monopolist to pay $20 or even $30 to aquire their properties.
Let's say, through a miracle, the monopolist endures these exponentially growing raised prices, buys 9 of the 10 properties, and raises rates to $3 to cover the losses he's had to put into buying his last couple of properties.
Well, the 10th would be able to rent his land out at nearly the same price as the monopolist, say $2.50. But notice that the 10th property owner didn't have to over-pay for his land, so he will is making way more profits than monopolist, which would price his property out of the range of the monopolist.
You aren't making sense. The monopolist doesn't buy "10 apartments", they just buy the entire building since those 10 people are "renting." You only have to buy from the person who owns the building; even in an non-free market renters have no ownership rights.
> Well, the 10th would be able to rent his land out at nearly the same price as the monopolist, say $2.50. But notice that the 10th property owner didn't have to over-pay for his land, so he will is making way more profits than monopolist, which would price his property out of the range of the monopolist.
When did the 10th renter become a property owner?
And anyways, the monopolist doesn't corner the market directly; they use inside information to buy cheap, and have excess capital to take advantage of market opportunities. How many old west movies are premised on some rich guy trying to buy up all the land in town because they know the railroad is coming through? Those are actually based on "true stories." The late 1800s was full of that.
In what way does that apply to SF?
SF is already sold out, so it doesn't apply at all; there is nowhere to build and all the property is spoken for. It might have applied 110 years ago after the great fire, or even in the early 90s after the S&L crisis, but not today.
On the contrary it is an inevitable risk to any commodity that can be monopolized.
The monopolist can make more from the resource because he will be able to charge more than the current owner. Thus he can offer the current owner more in cash than the owner could ever make renting it. If the owner is a rational actor he will always sell out to the monopolist.
In your analogy, the holdout charges $2.50 rent, the monopolist plans to charge $1000. The monopolists borrows 100 years rent and offers it to the holdout who, being rational, sells. The holdout makes more money, the monopolist makes more money. Only the tenant looses.
It is that way with every commodity that can be cornered. That is why we need to enforce anti-trust laws.
In the event the current owner did not sell, the monopolist could use part if his holdings to eliminate his competitor by selling at a loss. So stretching your analogy, he could use rent from distant apartments to offer discounts on those near his competitors until his competitor goes broke.
I'm curious, has it really happened at a city level? Seems to me that it would get prohibitively expensive, since other owners would see the massive demand and push up the prices, but that's really just a supposition.
There isn't anyone with enough money.
Just to by a simple suburban street takes millions and millions.
Even someone with the cash resources of Apple could maybe get one or two suburbs of San Francisco before the prices started rising fast and they priced themselves out.
Cornering a market happens periodically in small markets like commodity futures or stocks in a single company - and usually only for a brief period.
You could make the argument that you could 'buy' a government by buying all the available currency. Technically it's true but practically it's not. Who would want to own a monopoly in real estate anyway? People and businesses are sticky, but not stuck. If the rents got out of hand they'd just move.
Best to start when the land is cheap, and when you are going to build infrastructure to increase the value of the property. So the railroads with tracks and stations, amusement park operators (Disney World...), or it could be a factory with lots of jobs in a depressed area.
Besides, you can you have a constrained space in a free market?
I'm dissapointed this type of thinking still pops up. The whole point of this article is to discuss increases in supply.
"In these areas, community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction."
In other words: zoning.
I've spoken to both policy wonks and developers. IIRC, a good 70% of our land is zoned residential. Everything else is being redeveloped as fast as possible. The single biggest bottle neck is lack of available land.
Community resistant isn't simply just NIMBY. Methinks there's also self-image. Maybe like an inertia thing. Like the incumbents don't want to become "that kind of city".
Many are super reluctant to upzone residential areas (to permit greater density). And the upzones that do occur, are often via the backdoor, by introducing mass and public transit.
Resistance to redeveloping our South Lake Union area (think Amazon) was huge. A light industrial area with a smattering of hovels. A real dump. The political opposition was impressive. So a former mayor pushed thru a super silly trolley car and got the whole area upzoned. Clever.
For non-Seattleites, this will add context (South Lake Union, circa 2005): http://www.seattle.gov/economicdevelopment/files/south_lake_... http://www.seattletimes.com/seattle-news/nickels-outlines-fu...
That doesn't seem sensible to me. One additional unit of housing will reduce prices by some very small amount, but rake in quite a bit of cash for the company owning it, in the current housing climate in SF. Closer to some kind of sane equilibrium, those numbers might start to balance out, but right now they're pretty far apart.
http://m.theatlantic.com/magazine/archive/2007/11/a-tale-of-...
Just saying.