Governor Brown is trying to move legislation that would allow developments that meet a minimum below-market allocation to bypass local approval completely.
If this becomes law, NIMBYs will become extinct quickly as developers will just bite the bullet and include a lower-cost component to get fast-track approval to build directly from the State. And they'll get it.
Personally I feel that we are really getting close to killing the golden goose. At some point, companies will leave or grow large satellite offices elsewhere if housing becomes unattainable even to well-paid employees. We need to inform change, not fight it.
I support this change, but it applies to the zoning that exists. If it passes, NIMBY efforts will shift to down zoning. Down zoning has already happened in many cities (including San Francisco), but it could be taken further.
> If it passes, NIMBY efforts will shift to down zoning.
For once, CEQA would actually protect the environment: Nowadays, downzoning requires an impact study. There's no way any credible study could conclude that promoting sprawl is good for the planet.
Unfortunately, environmental review is often a vehicle for ensuring that people get as many chances to complain and obstruct as possible, even if the environmental impacts are minimal. An example of absurd objections in this vein can be found in the Virginia Avenue Tunnel replacement project, where residents objected because:
a) It would lower their home values (note that the railroad tunnel predates the houses by a few decades, and the railroad has talked about doing this project for 2 decades)
b) Extra train traffic means more pollution. Seems reasonable, until you realize that the tunnel is almost literally in the shadow (it's on the south side, not north, so not quite literally) of an interstate. Guess who's responsible for most of the air pollution.
c) The project calls for railroad to temporarily run in a exposed trench while building the tunnel. Residents are worried about what would happen if an oil tanker car caught fire. Unfortunately, a glance at the map indicates that this is not on the routes between oil supply centers and oil demand centers, and, as Baltimore found out (see https://en.wikipedia.org/wiki/Howard_Street_Tunnel_fire ), fires in tunnels are much worse than fires in the open air.
> Unfortunately, environmental review is often a vehicle for ensuring that people get as many chances to complain and obstruct as possible, even if the environmental impacts are minimal
Yes, but this time instead of an individual development being up for CEQA obstruction (which favors NIMBYs), proposed rezoning would be subject to environmental review. This means pro-growth people could use the NIMBYs' own favorite tool against them, preventing down zoning. Poetic justice.
Generally speaking, the downzoning already happened decades ago.
In CA, various state laws require that cities zone some parcels for new housing. Often, that housing never happens because cities can disapprove even zoning-compliant projects on those parcels. The by-right law is intended to fix that problem.
Unfortunately, the by-right law does not seem likely to pass the legislature. If you support it, you should call and email your state reps.
If as-of-right passes, and NIMBYs shift to downzoning, we can pass another law to deal with that. After all, if as-of-right passes, the legislators who voted for it would probably also be willing to vote for restrictions on downzoning -- especially when downzoning is done in direct opposition to the intent of the as-of-right law they just passed.
There already is a law[1] that prevents downzoning: the Housing Element law. Every 7 years, local governments are required to create a document (the Housing Element) that demonstrates that they have zoned enough housing for their share of the estimated regional population growth (Regional Housing Needs Allocation (RHNA)). But almost every locality (especially San Francisco) routinely falls short of the allocated housing production[2]. The housing by-right bill is the Governor’s attempt to fix the perceived flaw with the Housing Element law that localities promise that they will allow a certain number of housing units but break their word by rejecting the actual projects during discretionary review.
"Personally I feel that we are really getting close to killing the golden goose. At some point, companies will leave or grow large satellite offices elsewhere if housing becomes unattainable even to well-paid employees."
Good! Fantastic! Brilliant! Because that's the start to an actual, sustainable solution for this problem. I have no problem with construction, but diversification of the tech industry is far more important.
It is absolutely insane to believe that you can continue to cram the global tech industry into the popular third of the SF peninsula (i.e. the ~20 square miles east of Divisadero and north of Cesar Chavez), and maintain affordable housing. No matter how much you build, it's going to be ridiculously expensive, because developers do not build into falling markets. Manhattan and London and Tokyo are not cheap places to live, despite decades of construction. Moreover, even in "high-rise" cities like Tokyo, most of the residential construction is under 5 stories. Those cities sprawl to accommodate their population. SF doesn't have that option.
At this point, the only rational solution is for the tech industry to diversify geographically. It's better for SF, it's better for the companies, and it's way, way better for the employees.
Yeah, well...certainly another feasible option for affordable housing is a huge economic crash followed by two decades of negative growth and/or deflation.
That said, I fail to see how this makes me "wrong"...I said that most residential construction in Tokyo is under five stories, and that the city sprawls. Both are true statements. Tokyo has enormous, far-flung suburbs of low-rise buildings, and most of the population lives there.
It's better than SF, in that you do see taller (i.e. 5-10 story) buildings along major roads, and the buildings have a smaller footprint, but these things are details. Tokyo is a gigantic, sprawling city. It's something like 20 times the size of SF.
Prices will rise anywhere demand is concentrated. There is simply not enough land in most of the Bay Area for reasonable rents, as additional supply will be quickly soaked up (just as building additional road capacity is futile, and is quickly swamped with more traffic).
You can use either the carrot or the stick to promote tech companies to either deploy satellite offices across the country or enable remote work, but this is not a planning problem, its a tech sector externality.
With apologies to Sam Kinison, "Move where the land is cheap."
I have no problem with construction, but you're equivocating.
The SF housing crunch is an acute, hyper-local problem, obviously caused by a tech bubble. Rents were declining in SF as recently as 2009. Rents decline rapidly as you get further from the city.
The long-term price trends of homes in (say) San Luis Obispo, while interesting, is of little relevance to the discussion. The markets are so different that you can't draw any conclusions (except, perhaps, that Prop 13 is a horrible law, and that mortgage interest deduction is a disastrous public policy choice).
You're easily "shocked", I suppose. I'm not making a moral judgment, I'm pointing out that SF has gone from declining rents to a "crisis" market within a few years' time. The rent crisis is acute, and it's quite obviously due to a bubble on the demand side.
I could have just as easily used 2012 as the year, because rents were more-or-less flat in SF from 2010-2012, after some declines in 2009. Rent lunacy began concurrently with startup valuation lunacy.
It's not just a local problem though: there is a steady flow of people moving to, say, Portland because they have no hope of owning a house in the Bay Area in a place close to their jobs. As a consequence, prices in Portland are growing rapidly. Same thing here in Bend.
There is also a nationwide increase in housing prices going on: the Case-Shiller housing price index is back where it was in 2008, before the crash. But San Francisco's problems go above and beyond this macroeconomic trend.
Political resistance to new housing also comes, paradoxically, from low-income people too in San Francisco. Obstructionists use the term 'Affordable Housing' to rebrand subsidized housing [Market rate housing is also rebranded 'Luxury Housing']. So when measures are proposed in SF, groups can't weather the political backlash of being against subsidized housing because they will be branded as "Anti Affordable Housing"!! ["Who in their right mind would be against that!?"] Normally the subsidy comes from amortizing the cost of building the development/homes over fewer and fewer market rate owners until the breaking point where it's not profitable [Don't forget, in SF any profit a developer makes in housing is 'evil'] for a housing developer to build. In the Mission District, it's common to have housing development stalled because it doesn't have enough subsidized housing to pass through the atypically excessive 'planning' process. Even when The City buys a lot to build housing it sits, stalled for years because of bureaucratic waste and inefficiency[1].
Effectively what's happened is that rent control has sheltered many residents from the market rate of housing to a point where they are effectively locked into staying in their current rental and will never be able to afford to move to a new rental or ever buy a house. Given that they have no hope of ever being able to afford market rate housing and the government of San Francisco is has the power obstruct planning process for a myriad of reasons [that are surreptitiously used to exercise backhanded influence rather than judicial assessment] they have every incentive to resist everything that's not subsidized. Comically to the point where obstructionists tried to literally block all housing, lest it be 100% subsidized.[2]
SF is not special or unique at all and the rich and poor do not agree on housing policy. Both groups are looking out for their immediate near term interests.
The rich want to maintain their low density single family neighbourhoods exactly as they were when they bought into them.
The poor simply want to keep their current home and have it not torn down, as every other apartment is almost certain to be dramatically more expensive to rent than their current one.
If the city suggested building mid rise buildings with a percentage of below market units in leafy rich neighbourhoods far from low income areas you'd see that low income persons would be quite happy about this development. The rich wouldn't be.
Of course this is almost never the case. Rich homeowners vote in greater numbers and have the time and capacity to fight back, and so what we see is that the areas first in line for redevelopment are almost always low income areas (ie. The Mission) while rich ultra low density areas are left untouched.
Both the rich and the poor oppose almost all new construction. So yeah, they agree.
> If the city suggested building mid rise buildings with a percentage of below market units in leafy rich neighbourhoods far from low income areas you'd see that low income persons would be quite happy about this development. The rich wouldn't be.
I don't believe that. There are many in SF who oppose all new construction, and many others who want 100% of new construction to be subsidized housing.
The claim that low income persons would oppose new low income housing in rich areas that they do not live in is not believable and I'd love to see the evidence of that. There is none.
People need to stop trying to make the housing issue a one dimensional fight of pro-housing vs anti-housing. It's dramatically more complex than that.
Naive question: how much would it distort the market if prices were allowed to rise on undeveloped land, but there was a sort of "land-value control" equivalent to rent-control on developed land, preventing its value from rising? (Maybe implemented in terms of a tax at time-of-sale that takes away however much profit was made due to property-price inflation and just hands it to the city instead.)
> Maybe implemented in terms of a tax at time-of-sale that takes away however much profit was made due to property-price inflation and just hands it to the city instead.
Apart from being unjust, that approach would completely break the market and put people out on the street. You buy a house for $200k; its value increases to $400k; you sell it, and the city takes $200k, leaving you with $200k. You now cannot afford any of the houses currently for sale for $400k, even though the additional $200k you don't have would just go to the city, and the seller just gets the $200k you actually have.
Typical price controls affect both sides of the transaction, so the house value can't increase, or doesn't increase faster than a certain limit. That at least doesn't directly prevent people from selling one house and buying another comparable house.
To answer your original question, though: to what extent do the areas in most dire need of housing have any undeveloped land? Those areas don't have much undeveloped land; they have underdeveloped land. If you had price controls on undeveloped land but not on developed land, at some point you'd end up with a price inversion where a given property with a house on it has less value than the same property without the house. At which point someone wanting to extract the increased value could demolish the house and then sell the land at market value.
> You now cannot afford any of the houses currently for sale for $400k
Why would the houses continue to be for sale for $400k? I can't see why people would bother to charge any more than the price they bought the house for, once they realized that the government would pocket any profit. If selling for either $400k or $200k gives you either way $200k, it's in your interest as a seller to sell for the lesser amount, because you get more buyers more quickly that way.
> At which point someone wanting to extract the increased value could demolish the house and then sell the land at market value.
That was actually partly the point! It incentivizes property-management companies to try to lobby to remove the NIMBY barriers in the way of tearing down old buildings.
> Why would the houses continue to be for sale for $400k? I can't see why people would bother to charge any more than the price they bought the house for, once they realized that the government would pocket any profit. If selling for $400k or $200k just gives you $200k, it's in your interest as a seller to sell for $200k.
That sounds like a plausible (but not certain) outcome, assuming a 100% tax with no way around it. I wouldn't underestimate creative (legal) solutions, though. A structure like this creates major incentives for under-the-table sales, fees, or anything that doesn't qualify as "part of the sale price". For instance, it would create an incentive for "buyer pays" transactions, where the buyer directly pays for all associated services involved with a sale without paying the seller directly, including those costs typically paid by the seller or split between the two.
> That was actually partly the point! It incentivizes property-management companies to try to lobby to remove the NIMBY barriers in the way of tearing down old buildings.
Interesting notion. What stops them from tearing down those old buildings today, though? It seems like the bigger problem is that they can't build new buildings that aren't just as sparse and under-developed as the old.
As an side note, this is almost the same as proposing price controls for the entire real estate market, since the price of land and housing are closely linked (at least in SF).
Let's say we implement full controls tomorrow in SF, where all real estate appreciation is capped at, say, inflation.
As demand for housing continues to grow, you'll find that the government-mandated capped price will rapidly diverge from what the free market price is, e.g. someone is willing to pay $1mm for a house but it can only be sold for $600,000.
Since the seller is essentially being forced to take a bath, property owners will simply not sell. The market becomes extremely illiquid and everyone loses.
The key to understanding the seller's behavior, by the way, is because under price controls the market becomes extremely asymmetric. An excess of demand means that every potential seller has MANY potential buyers who are all willing to pay the asking price, so buying becomes a huge lottery. So if you own a property and you sell, there's very little chance you can change your mind later on and buy a different property, whereas in a normal market you just pay the normal transaction fees.
To go fully into la-la land here: what if, after imposing the price controls, you also imposed a slow-start exponential-growth land-value tax based on how long you've held a given piece of real estate—which would start sooner the higher-aggregate-worth of property you owned—such that it was then higher-ROI for property-management companies to flip properties before the tax started applying, but not generally higher-ROI for individual homeowners to flip their homes except perhaps after ~20 years?
(In other words: a roundabout mechanism to do to "land under your mattress" what inflation does to "cash under your mattress.")
> you also imposed a slow-start exponential-growth land-value tax based on how long you've held a given piece of real estate
Since the growth is exponential, if the pain becomes too great after N years, then everyone is forced to sell after N years. Looks suspiciously like a fixed-term lease, no?
So instead of price controls on real estate, now we've gotten rid of real estate altogether and just have price controls on rental rates.
This is one reason why mixing a command economy with markets is tricky, btw. Once you start down the rabbit hole of using coercion instead of price signals to get people to do things, you'll find you need to use more and more coercion (whether strange taxes or more draconian measures) to make things work.
I do agree with everything you're saying here. It just seems to me that "people holding onto things that are serving them no use, making a market illiquid" is exactly the sort of thing a government would want to disincentivize, and taxes are how governments disincentivize things. (Sometimes without thinking about that consequence, like with income tax, but I digress.)
The interesting thing here, to me, is that the government wouldn't want to control allocation as in a command economy; instead, they merely want to punish people for making the market inefficient. They want the market to clear, so that they don't have to figure out how to centrally allocate anything. We already have a lot of government regulations with this explicit goal. I'd be shocked if we couldn't work one out for real estate.
I think it's wise to distinguish between efficiency and fairness.
The SF real estate market right now is quite efficient; houses and condos sell quickly at the going market rate, but you might find the effect on the allocation of housing to be very unfair in that some people have much easier access to housing than others.
Price controls favor fairness over efficiency; e.g. selling bread below market price means everyone waits in line, which is by definition inefficient. It is fair, however, in that both rich and poor wait equally.
> They want the market to clear
That's what I mean by compulsion begetting compulsion -- the market clears just fine right now, but price and/or rent controls will probably make it not clear, at which point you need to add other taxes to force it to clear again.
A variation of this taxation proposal exists and has been at work for several years in Ontario. While it is not a 100% taxation on the rise in value of the property, it is indexed to ~2% (for anything above $400,000) of the sale value.
If you live in the Bay Area and you'd like to get a voter guide emailed to you right before the election detailing which candidates and propositions are best for increasing the housing supply, you can sign up here: http://www.sfbarf.org/pages/vote.html
Is this the same group that was going to call themselves BARF (Bay Area Renters' Federation)? Seems good. This is probably a better name and more generalizable to all the other cities that need it.
Any insights into what the YIMBY position is on rent-control? They don't even mention it in their platform, which seems like a big omission (and obviously not accidental).
While I fully support this movement, I do believe rent control has been an effective way of slowing down gentrification and forcing residents out of the area (although there are exceptions to this, of course). As an engineer who should not have rent control but still does I do recognize the system does have its limitations.
this is such an important subject and I'm happy it's finally getting attention in larger tech community. while housing is a regional issue, it also all starts at home with each city committing to housing policy changes. in Palo Alto Adrian Fine is leading that change - he works for nextdoor.com, he was born and raised in Palo Alto, he is a young, urban planner, govtechy and cyclist. let's start paying attention and start small - if you live in Palo Alto or know someone who does - check out www.votefine.com and support him any way. housing is a social equality issue
I agree with the pessimism that we are unlikely to completely solve the problem with these measures, although I believe that is for political economy reasons and not because it's impossible. However I also don't think we should let the perfect be the enemy of the good.
> I wonder how many new houses would need to be built to reduce prices to what I would consider affordable.
A single new unit permits one additional family to live in the Bay Area. Even if we don't build enough to let everyone live here who wants to, each one we do build counts. And if we built enough it would actually bring prices down.
> I wonder why developers would want to sell houses at that rate when new townhomes in Dublin are going for 700k and your looking at 1m+ for a new home
Developers just need to earn a spread between development cost and purchase price. Developers will happily build units as long as that spread is sufficient compensation. We are a long way from bringing that spread down to zero (and if we ever got there houses would be much cheaper!!).
> I wonder how people with high home values, especially those who bought in high, will feel about losing so much of their home's value
Increased as of right property rights actually increases land value and probably ends up being net positive for homeowners.
> suspect homes in SF won't become "affordable" again until another economic crash of some sort
This is probably true, but increased supply can at least alleviate the problem.
Prices won't lower at all. This is a movement by large SF landowners to raise the worth of the land they already own, using credulous tech kids as patsies. They will use new units as tax writeoffs and collateral for loans to scarf up land in gentrifying neighborhoods in other cities and other countries, so they'd rather let them sit vacant than let rents or prices drop by a penny.
This is the same as when pharmaceutical companies set up and fund patient advocacy organizations.
I'm not sure I'm that much of a conspiracy theorist, but I definitely don't buy what's being sold; making housing affordable. Affordable to me doesn't mean you can physically locate yourself in SF, it means you can own a home while growing your wealth and saving for retirement. The old wisdom was 1/3 your take home for housing, max.
If people really want to talk about making housing affordable lets here what affordable means to them and how many new homes at what price would be required to get us there. Yes, I KNOW if you build enough homes prices will drop. Tell me what the target is and how many homes are enough. Otherwise, yeah, it smells like people with some sorta ulterior motive selling snake oil.
Demand that they publish funding sources. PACs and 501c4s; my bet is that the mean contribution is $20K, and probably not from the "YIMBYs" that are protesting the fact that they can't afford BYs, but from a half-dozen or fewer very wealthy people.
The largest distortion to the housing market in California is Prop 13, and its effect is statewide not just confined to SF. This is a large reason why escaping SF's rules by going to bordering/nearby cities doesn't result in significantly lower housing costs.
More new supply is great, but doubt it would be enough to significantly offset the much larger effect of Prop 13.
Remember that a lot of the issue isn't zoning, it's parking minimums. Forcing every studio apartment to have at least two parking spots is an effective (albeit horrific) way to force low density.
Your example is theoretical, this particular constraint does not appear in San Francisco. New buildings (even huge ones) are being built with little to no parking.
Fair point. I actually was thinking more of the bay as a whole (its own basket case with regards to getting housing built) than SF, which was an error considering that the article is focused on SF.
Not to take a stance one way or the other, but I can provide background on why (in SF at least) these aren't mutually exclusive.
More homes means either building on new land or adding density to existing land. There isn't much "new" land available in SF, but knocking down existing buildings is still very risky. Even if your proposed development meets every existing zoning regulation, it can be shot down.
So "more zoning control" here means putting more control in the actual zoning regulations, as opposed to allowing anyone to try and stop the process via ballot measure or legal challenge.
Increasing supply (building more or denser housing) will naturally decrease prices, which is where the investment bit comes in.
> So "more zoning control" here means putting more control in the actual zoning regulations, as opposed to allowing anyone to try and stop the process via ballot measure or legal challenge.
The phrase "more zoning control" sounds like increasing the amount and complexity of zoning regulations, rather than, as you suggest, removing unwritten rules.
It sort of does increase the amount and complexity of the (explicit) regulations, though; it's forcing unwritten rules to be written down. (At which point we would then have control over keeping or removing them.)
"Make the re-zoning process more predictable" would maybe be a better slogan.
They're saying almost exactly the opposite of that - establish clear rules that, if followed by developers, lead to automatic approval, rather than the current mess of endless, case-by-case approval processes.
> "stop treating homes as investments"
This is specifically deaing with government policies that prioritize houses' utility as investments over their utility as consumer goods - eg by restricting supply.
They can certainly be in opposition in some scenarios, but in the case of SF, they fit together in a way that's coherent, if not well defined by the article.
Zoning control != zoning restriction. Control over zoning can mean things like mixed use, autonomy at the lower levels (versus "our hands are tied by group X" situations), and issuing permits on a "default yes barring interrupts" basis, instead of a "default no pending complex approvals".
Treating homes as investments is what leads to most NIMBY ways of thinking, which while harmful to the region at large, make perfect sense on a homeowner level. Many SF land owners have bought in at overvalued levels and continue to pay or receive overvalued rents. Motions that would make the city more affordable on the whole threaten the size of their returns, so people who treat homes as investments are often in direct opposition to what would be good for the less rich.
TL;DR the 3 pieces you mention can coexist as "more homes, of more varieties, regardless of the fact that will threaten existing homeowners' ROI"
> Treating homes as investments is what leads to most NIMBY ways of thinking, which while harmful to the region at large, make perfect sense on a homeowner level. Many SF land owners have bought in at overvalued levels and continue to pay or receive overvalued rents.
This is something that puzzle me. If areas are upzoned and higher-density redevelopment becomes possible, then housing prices will drop. But housing prices aren't the same thing at all as land value. If I owned a small low-density unit on a small plot of land, I wouldn't be able to sell the house as such to someone who wanted to live in it for as much money, but I think the value if the property could redeveloped as-of-right at higher density would increase.
So at least some plots of land should increase in value.
If this becomes law, NIMBYs will become extinct quickly as developers will just bite the bullet and include a lower-cost component to get fast-track approval to build directly from the State. And they'll get it.
Personally I feel that we are really getting close to killing the golden goose. At some point, companies will leave or grow large satellite offices elsewhere if housing becomes unattainable even to well-paid employees. We need to inform change, not fight it.