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What's the Matter With San Francisco?
Thomas Sowell takes a look at astronomical housing prices in the Bay Area:
One of the county's middle-class communities is Foster City, a planned community built back in the 1960s. When the first homes were sold there in 1963, a three-bedroom house could be bought for as little as $22,000. If you wanted something bigger or fancier, or in a more scenic location, you could still get it for less than $50,000. Today, the average price of a home in Foster City is $1.2 million.
People who wring their hands about a need for "affordable housing" seldom consider that the way to have affordable housing is to stop making it unaffordable. Foster City housing was affordable before the restrictive land use laws made all housing astronomically expensive. Contrary to the vision of the left, the free market produced affordable housing -- before government intervention made housing unaffordable.
...
It is the land, rather than the houses built on it, which has become astronomically expensive in places with extreme "open space" laws and other severe land use restrictions. In some places without such laws, a house can be bought for a fraction of what that same house would cost in parts of California.
Though I agree with him on principle, Sowell is mixing apples and oranges here: "Affordable housing" and restrictive land-use laws are two different things. Though they often walk hand in hand (e.g., in cases where some developer can't do anything unless he dedicates a certain number of units as "affordable" properties), affordable housing restrictions are generally easier to get around than restrictions on growth, which do operate the way Sowell says.
How much they're operating, in this case, to inflate land prices is an open question. The Bay Area offers every possible attraction in terms of climate, geography, and location, and I'm wary of any attempt to blame the whole unaffordable-homes megilla on building restrictions, nor are such restrictions as uniform throughout the peninsula as Sowell's explanation would indicate. But you can't spend much time here without noticing how little development there seems to be for a place that has such high demand for housing. (It's especially strange when you contrast it with the development of office space: Since the mid-nineties, San Francisco's downtown and South of Market have changed beyond all recognition; places that used to have literally one two-story building punctuating an entire block of vacant lots are now entirely filled with office highrises.)
What's weird is how rarely, in San Francisco media, you'll hear the above argument made at all. The "crisis" in housing prices is almost invariably described as an inexplicable force of nature (in the local TV news) or as a conspiracy by developers (in the alt.weeklies). You'd think, in a city full of progressives who can talk all day about how they wish they could afford a home, somebody might have started to wonder whether there's a connection between political decisions and the fact that the city is remarkably segregated and prohibitively expensive. It's enough to make me think Tom Frank is right: American voters really are allowing political strategists to bamboozle them with bogus lifestyle issues and voting for a corrupt political machine that acts against their own economic interests. Just not the American voters Tom Frank is thinking of.
|6.2.05 @ 10:14PM|#
I sit here in Palo Alto in a house that earns more than I do most years, but I have to leave here or die to spend it. If I move, Palo Alto is worth less.
|6.2.05 @ 10:16PM|#
Tim,
If not for zoning laws and other regulations, the Presidio would
have been built up and there would be 10 more multi-story condo
buildings in the City - and then people would be talking about how
low real estate prices were. Despite being a smaller city with
limited land, regulations account for the largest part of our
housing costs. The voters who are landowners are quite aware of
this and thus are drawn to "preserving the skyline" or "saving the
Presidio" while all the renters are either too stupid to figure it
out or care about other issues more. Don't forget these are the
same people who vote for "living wage laws" that only serve to make
the City even more unaffordable.
|6.2.05 @ 10:40PM|#
This guy's in no position to be lecturing anyone about being
ignorant of how housing costs work.
I don't know what "vision of the left" he's talking about, but
every liberal or leftist I talk to is fully aware that restrictive
development laws are the cause of the housing affordability
crisis.
Funny how the phrase "snob zoning" never made it into the article.
Nope, it those progressives.
And the 9000 person reduction in the county's population doesn't
mean much if the the population now consists of many more, but
smaller, households. Especially if those smaller households are
still compelled to buy big houses on acre lots because nothing else
can be built.
|6.2.05 @ 10:41PM|#
One of the other factors playing into demand is that bank criteria for mortgages has loosened significantly since 1963 (heck, even since 1990). If people couldn't get zero-down interest only loans, but had to put 20% down instead, the supply of buyers would dwindle dramatically, as would home prices.
|6.2.05 @ 10:46PM|#
Sadly the same phenomenon has happened in Boston as well. I sold and moved to the 'burbs for a healthier, cheaper and safer life. It's interesting that it's the DINKs that mostly can afford to still live in the city/downtown areas. They still pay the property taxes that end up funding the schools that are overcrowded with other people's children. Those of us with kids tend to move to the suburbs so we can actually afford to raise a family in comfort - and send our kids to private schools so they can avoid the normal public school indoctrination.
s.m. koppelman|6.2.05 @ 10:53PM|#
"Building restrictions" can mean a lot of things. The problem
isn't regulation. It's the type of regulation that's dominated new
development the last fifty years. Thanks to urban building codes,
Chicago isn't succeptible to burning down all at once and San
Francisco won't fall down en masse in the next 4.9 quake. Is the
answer really as simple as getting rid of all those pesky fire and
structural codes?
Preservation regs and urban height restrictions do take some
brownfields off the table and stop older urban neighborhoods from
becoming denser than they already are. This certainly does restrict
supply. But at least old cities are already dense and richly
marbled with mixed uses. It's suburbs with their large-scale
single-use zoning, segregated land use, car-centered,
anti-pedestrian design and above all, across-the-board low density
by design that drive up prices and hinder the supply of desirable,
affordable housing.
In the worst way, the Silicon Valley suburbs cannot become San
Francisco. They cannot become as dense, as convenient or as livable
as San Francisco because they're regulated in an entirely different
and much more harmful and restrictive way than the most twee
historic district in SF. The solution to sprawl suburbs becoming
too expensive is not to bulldoze and erect more sprawl on any
remaining open space that's somehow been preserved but to bring
pre-automotive planning and development to the sprawl. Punch
through cul-de-sacs. Allow mixed uses in subdivisions. Have far
more than one through road per mile of grid. Allow new cities to
take shape, and the demand for ever more land for ever more sprawl
will fall off naturally. There will always be people who don't want
to live someplace dense, and it will be easier to accomodate them
if the obvious demand for livable dense places inherent in those
skyrocketing prices can be met. Why put all the burden on the
presently static inventory of places that are already dense?
vache folle|6.2.05 @ 10:58PM|#
Mr Sowell's abuse of redneck culture has earned him my undying emnity. What credibility can be left to him on this, or any, issue?
The Wine Commonsewer|6.2.05 @ 11:17PM|#
Joe, you must know a whole different bunch of lefties than I do.
|6.2.05 @ 11:24PM|#
koppelman, you must have missed this issue of 'reason':
http://www.reason.com/0502/fe.st.crime.shtml
TWC|6.3.05 @ 12:06AM|#
A lot of that run up in price has to do with the hot market in
the west. My house has tripled in value in five years. My cousin
bought in Mill Valley (Bay Area) five or six years ago in the mid
300,000.00 range and he now has the same problem that Walter Wallis
has.
Ann is right to an extent about loosened credit requirements
although my folks bought with 5% down FHA guaranteed in 1961. But,
a lot of the housing activity is from people selling out and
trading up. One thing certain, no average wage earners can qualify
for that 1.2 million house in Foster City.
That said, it doesn't change the fact that regulation acts to
reduce the housing supply.
|6.3.05 @ 12:12AM|#
Joe, the flaw in that analysis is that in San Francisco something like 70 to 75 percent of voters are renters, and they continue to vote this way. Arguably a renter may feel as strongly about the benefits of a nice skyline, uncrowded neighborhoods, trees, etc., as an owner-especially where big issues like the Presidio are concerned-but the net result is that they still vote in a way that will keep themselves from owning homes; and as I live here I can tell you they're doing it for largely "progressive" reasons.
|6.3.05 @ 1:00AM|#
but every liberal or leftist I talk to is fully aware that
restrictive development laws are the cause of the housing
affordability crisis.
As Wino said. In the local "liberal" weekly here in Memphis, as
well as in the regular paper, the typical villain is that the
county commission is corrupted (and occupied with) those rich
developers, who fleece everybody else (requiring new roads, sewer,
and school construction that the public pays for). It's to the
point where they want to declare a moratorium on new building- and
I have yet to see a single letter to the editor or editorial or
news article articulating the effect this would have on the ability
of working class people to buy a house, which it of course would
effect.
Now, in a week I'm moving to San Diego, where my $100,000 house in
Memphis would be worth 1.5 million. And it's very discouraging to
realize that most likely, *no* steps will ever be taken to allow
supply to come more in line with demand, because to do so would be
to ruin the investments of existing homeowners. Any move that would
make homes more affordable would send the housing market into a
depression, and numerous mortgages into technical default (the
house is worth less than what is currently owed). No democratically
elected government would allow this kind of instability, if it's
within their power to prevent it.
IMHO, they should move the airport out to the desert and sell the
airport land to the highest bidder- but to do so might add enough
housing to enact the above scenario. The only politically and
economically acceptable option is to merely slow the rate at which
real estate appreciates, which doesn't really create affordable
housing, since it's already out of reach.
|6.3.05 @ 2:01AM|#
The post should be titled
"What's the matter with California?".
Having just got back from El Dorado Hills, where there is plenty of
land, the going price just for a plot of land is $300K.
Just as an anecdote, I noticed a lot of refugees from the Bay area
building there. They even have a development where you can fly back
and forth to work (Cameron Park).
|6.3.05 @ 2:31AM|#
The other factor that I don't think has been mentioned is the effective prohibition on turning rental units into condos. Otherwise you would be seeing a lot of conversion in the current market as condo prices are selling at very high multiples of the implied value of the rental rates; rentals have been falling or flat for the last three years but condo prices have been rising. The fact that you have to enter a lottery to turn a TIC into a Condo still amazes me. This city is the most forward thinking backwards place I have ever encountered.
Evan McElravy|6.3.05 @ 2:34AM|#
Great Ape,
I don't know if you are recommending that link ironically or not
but I think that article is about the worst thing I've ever read in
Reason. British suburbia's crime problems have everything to do
with the country's insanely restrictive gun control laws and
self-defense laws and totally ineffectual policing and nothing to
do with urban planning. Of course, one of the authors was a pig,
er, law enforcement officer, so obviously that argument was not
going to get made. (Since when do libertarian magazines have cops
writing for them anyway?)
|6.3.05 @ 2:59AM|#
Dense Harvard study comes close to proving that zoning restrictions on density (not just high demand for land) result in unaffordable housing markets.
|6.3.05 @ 4:20AM|#
As Sowell wrote, "it is the land, rather than the houses built
on it, which has become astronomically expensive..." It costs about
the same to build a given type of house anywhere, the difference in
"affordability" is the cost of the place to build upon.
Many may find SF desirable for its climate, but the value of that
climate in the Bay Area is multiplied because people live
suffciently close to one another and have built an infrastructure
to support the megalopolis. Without roads, sewers, an airport, and
a million like-minded neighbors within 30 minutes travel time, the
ground and the houses may cost a little more than Memphis (due to
better climate), but not ten times as much. That huge increase in
value, and concurrent loss of affordability, was created by the
public who made the terrain functional.
An inequity arises when the value created by the public-at-large
through infrastructure building is captured by the few who owned
the ground before the sewers were built. If, instead, the increase
in value of the unimproved value of land was repaid to the
public-at-large who created it, much of the incentive for holding
land out of higher use, whether the mechanism is snob zoning or
anti-density preservation laws, is removed.
The appreciation of Walter Wallis's house is not the product of his
industry, and more fairly that annual rise should be returned to
the people of Palo Alto (and the Area). If Walter was compelled to
repay this compensation, he would be searching for ways to make the
land pay for its value, perhaps through a more-dense living
arrangement. The same ground could earn more rent and provide
housing for more people, if the monopolistic distortion of land
value was eliminated.
Even under such a Land Value Tax scheme, SF may be comparably
expensive due to its situation and regulatory costs, but removing
the incentive to keep using ground at low intensity creates a
correcting force toward a regional and national equilibrium in
housing cost. Most discussions on land use ignore the underlying
transfer of wealth created in common to the landholding few, and
neither supply nor demand adjustments will work until the more
fundamental difficulty is addressed.
|6.3.05 @ 9:04AM|#
The flaw in your reasoning, Tim, is that the snob zoning in the
San Francisco metro area (including the suburban counties
surrounding San Francisco - that is to say, the areas that are the
subject of this column) is based on policies voted on by people who
don't live in San Francisco.
The renters in San Francisco are not the ones voting for the snob
zoning that prevents them from being able to buy homes in the
suburbs.
One portion of the public - the people in the suburbs - are voting
on restrictive development policies that primarily effect another
portion of the public - would-be buyers, if the stock was available
- who don't get a voice.
|6.3.05 @ 9:08AM|#
Evan,
When I first shredded that crappy British article, I hadn't
realized that it was authored by a cop. That might explain the
multiple glaring errors in urban design theory.
|6.3.05 @ 9:14AM|#
BTW, I'm not claiming that snob zoning is the only regulatory
factor that increases prices.
But it is the most significant, and it always seems to slip the
minds of conservatives and libertarians when they discuss housing
prices.
They should have built on part of the Presidio, but let's not
pretend that doing so would have anywhere near the impact of
dropping the Lot Area Per Dwelling Unit in San Jose to 3000 square
feet.
|6.3.05 @ 9:19AM|#
Evan McElravy,
I read that article that Grate Ape references, way back in the day.
I was a good article about how the Brittish Government had a theory
about what they could do to make a more communitarian neighborhood,
that they theorized would reduce crime. They were completely wrong
and in fact there was an increase in crime.
It was a good article about government doing stuff that should be
left up to the free market, and the result being the opposite of
what they had anticipated. Very much in keeping with libertarian
thought, IMHO.
Of course the high crime rate is atributable to Britains self
defense laws and all that. But within the range of increased in
crime from the practice of a belief that it is only the government
that can protect you and your property, within that range, it is
possible that other factors may further increase crime, or may
slightly decrease the level of crime brought about by the self
defense laws.
That said, I am also of the belief that less regulations on
neighborhoods and skylines is a better thing. I think a free market
will produce the best most efficient and comfortable way of living.
If culdesacs are the safest way to live, then people will want to
buy houses in a culdesac. If multi story buildings are a good way
for people to live in hight density areas and be close to work and
recreation, then people will choose that.
|6.3.05 @ 9:20AM|#
A factor not mentioned by Sowell that actually does affect existing homeowners is the rapid increase in HO taxes/insurance as the appreciation of their property skyrockets...not unlike the folks on "Extreme Makeover Home Edition", who are typically poor as hell, living in a shack...then get upgraded to a McMansion with 3 plasma TV's in every room, and they're going to pay their homeowner's taxes/insurance how?
|6.3.05 @ 9:26AM|#
"I don't know what "vision of the left" he's talking about, but
every liberal or leftist I talk to is fully aware that restrictive
development laws are the cause of the housing affordability
crisis."
joe, you should come to ny. the problem here, according to that
crowd, is that there aren't enough restrictive development
laws.
|6.3.05 @ 9:36AM|#
Joe writes "no position to be lecturing anyone about being
ignorant of how housing costs work." *Anyone*? How about Barbara
Ehrenreich and the NYT? (Or various other bodies lionizing her
_Nickel and Dimed_, like SMU, according to something on Virginia
Postrel's blog a while back.)
Joe not only professes to know a very different bunch of
progressives than The Wine Commonsewer or I, he seems to be
ignoring the left in the media. Any bookstore should have a copy of
_Nickel and Dimed_, a best-seller several years ago. Read the
several-page section on housing in the concluding chapter. "It's
the market, stupid." Zoning and other restriction effects are clear
in the anecdotes she reports (why don't greedy developers convert
the lucrative trailer park to higher-density housing?) but she
writes as though they do not exist -- never mentions them at all. A
cynic might conclude that the end of kicking property rights when
they're down justifies collateral damage to the poor and to the
truth. Or a reviewer: "Valuable and illuminating...She is our
premier reporter of the underside of capitalism." -- NYT Book
Review, from the back cover.
I actually suspect Joe is right that they are *aware* of the impact
of zoning and the like, since e.g. Ehrenreich mentions she's a
homeowner, and most likely has learned by now that she can't
legally convert her home to a boarding house to try to help with
the problem. But published progressives seem pretty damned
complacent about people pointedly pretending the problem does not
exist. Are there any scathing leftist reviews of Ehrenreich for
this hypocritical (*I* care about the poor) misreporting of a
progressive mixed-economy problem as a market problem justifying
more central control? (by substantially the same central mechanisms
which are already shafting the poor!) I have complained about this
pointed omission on the 'net before, and no one pointed me to such
a thing, so I half suspect that no such (recognizably leftist,
recognizably close to the mainstream) negative review exists. But
maybe one of Joe's friends wrote one?
|6.3.05 @ 9:43AM|#
If lefties in general are so very aware that this is the
problem, then, um, who exactly is making all these laws? Who is
supporting the beaurocrats who make them?
Or is it just that they realize that, yes, it's the cause of the
problem, but since they're "progressive", they just don't give a
damn about making houses affordable---they care more about their
pet causes like protecting an endangered fly that lives in some
"wetlands" outside of town?
Joe, you may be on to something here. It's not that these lefties
are ignorant, they're just assholes. I know people like this. Hell,
I get a NRDC Biogems e-mail from John Adams every week blathering
on about how the world is going to explode if we don't save some
place by enacting uber-restrictive laws. No, it's not that folks
like this aren't aware of the fact that overregulation drives
housing costs through the roof---it's just that they care more
about other shit.
|6.3.05 @ 9:54AM|#
then, um, who exactly is making all these laws? Who is
supporting the beaurocrats who make them?
Here in Santa Barbara there's an unholy alliance between students,
landlords, and homeowners. The students hate the people who charge
them huge rents, and they "care about the environment." So you tell
the students that some greedy developer is going to build on
"habitat" and they'll vote in droves to oppose it.
The existing homeowners claim, of course, that their only concern
is the environment. In truth, they don't want the rowdy students
moving out of the student enclave, and they want their property
values to continue to soar faster than the rate of inflation.
(That's not a bubble if there's a legally fixed supply but growing
demand.)
And the landlords laugh all the way to the bank, along with the few
developers lucky enough to get the occasional permit.
T minus 156 minutes to thesis defense. Just killing time here to
avoid getting nervous.
|6.3.05 @ 9:55AM|#
joe:
I'm trying to get a handle on your argument here.
Are you saying
a) that it is zoning policies in the suburbs of San Fran that drive
up prices in San Fran by restricting movement out of the city to
those who can afford single family plots?
b) that San Fran itself has a zoning preference for single
residence homes?
I'm struggling a bit to reconcile your claim that the primary
culprit is snob zoning with Tim's claim that 75% of voters
rent.
|6.3.05 @ 10:03AM|#
Maybe it's an east coast thing, but the connection between
suburban zoning and out of spiralling housing costs is pretty
broadly understood in Massachusetts. The Boston Globe writes about
it, we've got a powerful group called the Citizens Housing and
Planning Association that's always plugging away at it, and we have
an anti-snob zoning law that allows developers to override local
zoning if they include affordable units in a project being built in
a community with a lack of affordable housing.
That said, there is a tension between environmental protection and
affordable housing. Smart Growth strategies like encouraging the
redevelopment of "greyfields" and promoting cluster housing (same
number of units on the lot as the underlying zoning, but located in
smaller clusters to leave desired open space and habitat) are aimed
at finding a solution.
But really, are you people trying to tell me that progressives in
San Francisco don't complain about snob zoning and sprawl policies
driving up regional housing prices? Because I just don't believe
that.
And one other problem I'm seeing is the assumption that every
attempt to preserve open space is somehow "progressive." NIMBYism
knows no party; you'd be amazed how many people who never gave a
damn about the environment suddenly discover they were a speckled
trout in a past life the moment someone wants to build more houses
near them.
|6.3.05 @ 10:04AM|#
Jason,
It's choice A. Housing markets are regional, not local. If you
limit the housing market anywhere in the San Francisco metro area,
you drive up the prices throughout the metro area.
|6.3.05 @ 10:36AM|#
"and we have an anti-snob zoning law that allows developers to override local zoning if they include affordable units in a project being built in a community with a lack of affordable housing."
Then it's still a restrictive zoning law. I'm in close contact with
developers every day, and they (and their co-investors) walk a
razor's edge when it comes to making a profit from their
investment. Forcing a number of units to be rented/sold at false
below-market value has a tendency to push them off the razor's
edge.
"are you people trying to tell me that progressives in San Francisco don't complain about snob zoning and sprawl policies driving up regional housing prices? Because I just don't believe that."
It's got nothing to do with whether they "complain" about it or
not; the fact is, it happens, and I don't see too much in the way
of major change. All the complaints in the world don't mean a
damned thing unless action follows, Joe. I look at it this way: the
problem is obvious enough as to be undeniable by any rational
person. Thus, these lefties are torn between the undeniable reality
of being a resident unable to afford a house, and the idealism of
"progressive" leftist social engineering. So, the talk out of one
side of their mouth and "complain" about regulatory barriers, but
when it comes to action, they don't follow through.
"NIMBYism knows no party; you'd be amazed how many people who never gave a damn about the environment suddenly discover they were a speckled trout in a past life the moment someone wants to build more houses near them."
Couldn't have said it better meself! Even the staunchest
libertarian/property-rights-champion will back away from principle
if Wal Mart tried to build a store in their backyard.
The other point here is the very real problem of locales cow-towing
to big developers and companies, and building infrastructure just
for them (at the taxpayers' expense, of course), all because they
see tax revenue and campaign donations as a reward.
gaius marius|6.3.05 @ 10:40AM|#
A lot of that run up in price has to do with the hot market
in the west.
just so this thread cannot in retrospect be said to have ignored
the 800-pound gorilla in the room:
these zoning and land-use arguments wouldn't matter a jot if the
american government hadn't decided to combat a burst stock bubble
by offering negative real rates for years -- in effect, creating
the greatest debt bubble in the recorded history of man, delaying
the painful correction of late 90s malinvestment by making the
problem immensely graver and worldwide in its consequences.
there. now, when we look back at this thread in the financial
devastation of years to come, we can say this was addressed.
:)
|6.3.05 @ 10:43AM|#
Jason-
The title is "Scattering, Emission, and Localization of Light in
Complex
Dielectrics".
Basically, it's 3 different projects about the optics of complex
materials. The first project is an experimental project that ended
with lessons learned. The second project is a theoretical project
that ended with significant predictions (predictions that I'm
working on testing). The third project is a computational project
that ended with useful results for industrial scientists. So it
covers the full spectrum of different approaches to physics
research.
Sort of the common theme is strong scattering. An object that
doesn't absorb light can be either transparent (if it lets light
through without scattering) or white (if light gets scattered and
hence randomized). (It can also be translucent but cloudy if the
scattering is weak.) So I asked several different questions about
these systems:
1) What happens if the scattering particles are arranged
periodically, like atoms in a crystal?
A lot of work has been done on these systems, and we did some more.
We saw some interesting stuff, but the types of systems that we
were making just don't have the right optical properties for
applications?
2) What happens if the strongly scattering system is layered?
A lot of work has been done on these systems because waves in such
systems have practical analogies in seismology and electronic
materials (electron waves). We studied a certain type of layered
system theoretically and predicted that if it exhibits certain
types of resonances then wave behavior is very different from what
had previously been predicted.
3) Finally, a lot of consumer products include plastics that have
been toughened by the addition of small particles. These particles
scatter light, making the plastic less transparent. We were asked
to come up with ways to reduce the amount of scattering without
reducing the number of particles or the size of the particles
(parameters that are fixed by other engineering constraints).
We showed that you can put coatings on particles to reduce the
amount of scattering, and we came up with models to explain the
circumstances in which the coatings will work best.
Anyway, that's what's occupied me for the last several years.
T minus 107 minutes.
gaius marius|6.3.05 @ 10:55AM|#
Can't we all just move back to the trees?
it's the libertarian ideal, mr borok! wouldn't we be happiest
living in caves like hobbesian savages? :)
fwiw, i'm selling my place in chicago and renting.
|6.3.05 @ 10:55AM|#
Evan,
I've got my own problems with the Chapter 40B law. But no one is
forced to do anything by it - it reduces the restrictions put on
the developers. It may not pass a libertarian purity test, but I
never claimed that it did. Yes, it is still restrictive - but less
restrictive, for the purpose of addressing the affordability
problem created by restrictive zoning.
What you recommend progressives in San Francisco do about the
restrictive snob zoning in surrounding communities, in which they
are not allowed to vote, except agitate for change? Hmm?
Mark,
No tree shall be maintained within 30 feet of any other tree,
unless a Special Permit is granted by the Hominid Board of Appeals.
Notwithsanding the preceding, no Special Tree Permit...
|6.3.05 @ 10:59AM|#
Can't we all just move back to the trees?
And they have built-in cul-de-sacs! It must be safer.
gaius marius|6.3.05 @ 11:01AM|#
such systems have practical analogies in seismology and
electronic materials (electron waves).
this (foggily) reminds me of undergraduate research work i did in
modeling electrostatic deformation of thin film polymers.
best to you, mr thoreau. liberty awaits!
|6.3.05 @ 11:10AM|#
Throw it out here thoreau.
What's your thesis?
Let me guess: proving that "JB=GG," right thoreau :-)
Evan McElravy|6.3.05 @ 11:27AM|#
I read that article that Grate Ape references, way back in
the day. I was a good article about how the Brittish Government had
a theory about what they could do to make a more communitarian
neighborhood, that they theorized would reduce crime. They were
completely wrong and in fact there was an increase in
crime.
The British government generally fails at its centrally planned
schemes? You don't say. Again, what this has to do with the virtue
or vice of traditional urban development patterns, I'm afraid I
just don't get.
Of course the high crime rate is atributable to Britains self
defense laws and all that. But within the range of increased in
crime from the practice of a belief that it is only the government
that can protect you and your property, within that range, it is
possible that other factors may further increase crime, or may
slightly decrease the level of crime brought about by the self
defense laws.
Naturally as far as other factors go. Crime is a complicated
phenomenon and about impossible to model for. Hence, any anti-crime
proposals fancier than locking up all the criminals we find and
letting people shoot robbers and rapists are probably best left
ignored. The article seemed to be pimping for the idea that we
should arrange our societies around the god of Safety (i.e.,
convenience to cops) first and foremost; a strange line of
reasoning for a libertarian magazine.
|6.3.05 @ 11:29AM|#
rmark,
Florida does not attrack an outsized portion of high way
earners.
Florida's housing market is an alternate universe, and should be
left out of any analysis.
|6.3.05 @ 11:40AM|#
If you limit the housing market anywhere in the San
Francisco metro area, you drive up the prices throughout the metro
area.
What you recommend progressives in San Francisco do about the
restrictive snob zoning in surrounding communities
joe, sometimes you're absolutely right, but then you go and
contradict yourself.
It is absolutely true that housing restrictions in one town (call
it snob zoning, regular zoning, affordable housing set-asides,
whatever) will affect the prices upward in that town AND the nearby
towns as well. And I think all property owners in and around those
restrictions are very happy that their property values are going
up.
But to imply that the most restrictive regulations are in the
suburbs is buck-passing. Cities are loaded with housing
restrictions themselves and the progressives should realize that
when they point the finger at someone else there are three fingers
pointing toward themselves.
I am not familiar with SF, but I am familiar with Chicago and
Boston and I see the same complaints and the same restrictions. Go
into the West Fenway and you see several one-story buildings,
mostly commercial, with owners just itching to convert those into
multi-story housing or mixed use developments and all kinds of city
red-tape grinding it all to a halt. Much of that red-tape is
brought on by the community residents themselves complaining about
things like traffic, parking, etc. Basically it's people in densely
populated areas trying to ensure things don't get more dense.
"Snob" zoning is all relative.
The same is true on the north side of Chicago where there are
dozens of industrial property owners itching to convert to housing
developments. But the neighbors and bureaucrats don't want the
housing because A) those industrial properties pay a
disporoportionate percentage of property tax compared to
residential, B) they don't want their job to move 20 miles away,
and C) they don't want their neighborhood more crowded. And D) it
props up their own housing property values, but it's a taboo to say
such a thing in public.
|6.3.05 @ 11:49AM|#
A factor not mentioned by Sowell that actually does affect
existing homeowners is the rapid increase in HO taxes/insurance as
the appreciation of their property skyrockets...
Property taxes are the spectre that's haunting the real estate
boom. There must be people who bought their places five and eight
years ago and are now on the edge of default because of their
taxes. No money down, interest-only loans, no-income-verification
mortgages: none of this stuff explains how people are affording
their astronomical property taxes-and I believe SF has the second
highest property tax base in America. A friend of mine (an only
child, natch) got his family to front him to buy him a beautiful
place in the Excelsior. They put up a big down payment and I'm sure
he's got an attractive interest rate, but the last time I talked to
him he was bellyaching about how hard it was to pay the taxes on
it.
At least San Francisco homeowners can console themselves with the
knowledge that their taxes are going to pay for the
worst school system in California.
|6.3.05 @ 11:51AM|#
T minus 156 minutes to thesis defense. Just killing time
here to avoid getting nervous.
Awww! Thoreau! Don't be nervous. You will do awesome. You will own
your thesis panel.
|6.3.05 @ 11:56AM|#
Russ D,
It's more than a little disingenuous for you to claim that a city
with several hundred units per acre is contributing to the problem
in a comparable way as a town with 2 units per acre. Particularly
when the dense city is working, successfully, to add thousands of
units every year, while the towns are determined to stop
growth.
And, in fact, Boston is doing a great deal to increase the number
of housing units available, from reducing the red tape on
brownfields to passing zoning exceptions. Boston is a very dense
city, that is working to become even denser. Nearby, you have very
low density suburbs that fight tooth and nail against every new
home. This is not relative; it absolute, documented, and easily
verifiable.
|6.3.05 @ 11:56AM|#
I think Sowell primarily and specifically objects to the open
space laws that afflict the Bay Area, especially on the Peninsula
(his San Mateo County) and notoriously in Marin County. Much of the
land is locked up by open space easements of one kind or another,
and the residents all like it that way so their precious Bay Area
won't turn into Los Angeles.
And some lefties might be on to the contradiction, but hardly all
-- a few years back I talked to a City Council candidate in Santa
Fe, N.M. whose campaign platform had two primary planks: more
affordable housing and an urban growth boundary. Sigh ...
|6.3.05 @ 11:59AM|#
Tim,
Doesn't Proposition 13 keep Californians from paying higher
property taxes as their homes' values increase?
Anyway, I think we can all agree that homeowners in those
circumstances should be able to add a rental unit to help out with
the bills. Oops, single family zoning again.
|6.3.05 @ 12:02PM|#
trotsky, ever look at a map of an English town or city? Very very rigid growth boundaries (no building on the Queen's land without her permission, you know). And nothing even close to the affordability problems we have. The solution is that they allow the developed area to be built at a greater density (remember the attached houses in the Harry Potter movies?), and expand the growth boundary when population pressures demand it.
|6.3.05 @ 12:13PM|#
Can't we all just move back to the trees? -Mark
Borok
[Intro music: "Journey of the Sorcerer" by The Eagles]
I'm increasingly of the opinion that we've all made a big mistake
in coming down from the trees in the first place. And I have also
said at other times that even the trees had been a bad move, and
that no one should ever have left the oceans.
|6.3.05 @ 12:30PM|#
as someone who lived through the dotcom crash, I've got my own
personal theory that rings truest:
there were a bunch of people who were worth a bunch of money on
paper. a bunch of the smart ones (including but not limited to
individuals, conglomerates, hedge funds, and venture firms)
realized what was about to happen, cashed out, and sunk it all into
real estate, figuring that it was at that point (say mid to late
1999) a sounder investment than tech. Then, when investment in
companies dried up and insane wages could no longer be supported,
property owners discovered that they could realize more short term
gain by letting their apartments sit empty for months of the year
and writing the whole thing off as a capital loss than they could
by renting the apartments at a price the market could stand. So a
lot of people could no longer afford to live there, packed up, and
left. The region still, however, had a surplus of buyers to
available land, so prices remaind sky high because they could - and
because the newly-minted millionaires who had survived didn't
really want to leave.
|6.3.05 @ 12:33PM|#
Joe, I am not sure that property in England is really that much
more affordable than the US.
England
real estate price trend
According to this chart, average home prices in the UK increased at
an annualized rate of 6.9% from 1995-2004. (I ignored 2005 because
the year is incomplete and the note of seasonal price drops in
winter.)
I couldn't find a similar analysis of average US price growth over
the same time period with a quick Google search. Anyone have a
link?
I do take your point that real estate prices reflect regional
factors that are not captured in national averages.
nmg|6.3.05 @ 12:45PM|#
Prop 13 only applies to an owner before 1978. Post 1978 owners
have no such protections.
This is one reason why rents are so low in California compared to
ownership costs, as is oft-cited by housing bubble theorists. A
sizeable portion of rental units are owned by someone who pays prop
taxes on the 1978 value of the property, so naturally rents across
the board will be lower compared the cost of becoming a new home
owner.
In the Bay Area, if you can believe this, many "progressives" are
calling for a repeal of Prop 13! This is utterly shocking
considering most of them are homeowners, which leads me to agree
that Thomas Frank is right, he's just got the wrong group in
mind.
nmg
TWC|6.3.05 @ 12:48PM|#
Joe, prop 13 in Ca works as long as you don't trade up. The myth
lies in the details however. If you live in an unincorporated area
like I do the taxes remain managable. However, you don't get any
services either (okay if you call 911 the Sheriff will eventually
show up)
If you live in a newer development you pay the 1% tax (that grows
by 1% per year) as well as long list of special assessments for
things like lighting and landscaping, flood control, vector
control, & trash pickup that used to be part of the basic
property tax levy but are now mostly seperate from the basic levy.
This tends to vary from area to area but you get the general
idea.
And in many cases you pay for Mello Roos bonds that were issued by
the developer to build the infrastructure in your development. That
cost is generally ongoing even though the bonds are usually 30 year
bonds.
AND cities have learned how to shift many of their costs to
homeowners associations by mandating greenbelts and sometimes
privately maintained areas that appear to be public. HOA costs are
not taxes per se but they often pay for some things that were once
the responsibility of local government.
Long way around the barn to say that many homeowners are paying
much more than the villified 1% mandated under Prop 13. The tax
bite (without HOA fees) often exceeds 2.5% and can exceed 3% of the
property value in some places.
|6.3.05 @ 12:48PM|#
It's more than a little disingenuous for you to claim that a
city with several hundred units per acre is contributing to the
problem in a comparable way as a town with 2 units per acre.
Particularly when the dense city is working, successfully, to add
thousands of units every year, while the towns are determined to
stop growth.
It's just as disingenuous, and snobbish, to say that Density A is
great but Density B is bad.
Boston may be adding thousands of units, but they could be adding
more based on the demand. Just like any "sprawl" suburb could also
be adding more. Both towns put the brakes on development. Raw
numbers show Boston "doing more", but on a percentage basis they're
both doing close to the same.
TWC|6.3.05 @ 12:56PM|#
Gaius, I tend to agree with you but I think demand will continue
to forestall the day of reckoning. People got to live somewhere and
the forecast for 16 million new faces in Ca during the next 20
years if accurate will guarantee an overall long-term rise in
price.
I like to speculate about what will happen once the US population
levels off in, what, 2070 or so? At that point prices will tend to
stabilize or perhaps even drop.
|6.3.05 @ 1:19PM|#
I live in the Washington DC area, and prices across the region
have been increasing around 20-25% annually. While 'snob-zoning',
preservationism and crazy lending practices are largely to blame
here, as in S.F., another factor may also be at work. The WashPost
published an interesting article on this topic that noted that most
of the suburban jurisdictions in this area (Montgomery Co., Md.,
and Fairfax Co., Va., especially), will greenlight every single
commercial development that comes their way, while simultaneously
preventing much new residential development. The theory is that
commercial developments are tremendous tax generators, while
residences receive a lot more in county services than they pay out
in taxes. And it creates the perverse result that our metro area is
creating tons of new jobs every year, but nowhere for the new
workers to live.
As someone who missed out on DC Metro real estate before it got
wacky, I wish that it was a bubble situation, since I could then
pick up some nice property at foreclosure for pennies on the dollar
a few years down the road, but unfortunately, the various
governmental policies at work (zoning and lending) have contributed
to a ridiculous supply/demand imbalance that doesn't seem likely to
abate soon.
|6.3.05 @ 1:34PM|#
Even the staunchest libertarian/property-rights-champion
will back away from principle if Wal Mart tried to build a store in
their backyard.
Well, if they didn't buy the backyard from me, I might call the
police on the surveyors when I saw them climbing over the
wall.
But I'm a minarchist, so no abandonment of principle.
</joke>
TWC|6.3.05 @ 2:21PM|#
--Even the staunchest libertarian/property-rights-champion will
back away from principle if Wal Mart tried to build a store in
their backyard.--
If they abandoned they ain't libertarian.
You shouldn't get to vote (as many communities have) on whether or
not Wal-Mart can build a store. That is a non-issue.
For that matter, nobody has ever built a hog farm in Beverly Hills
(regardless of zoning).
Matters like that are better handled by HOA's and deed
restrictions.
If the selling point of your subdivision is two acre lots then the
developer can simply put a deed resrtiction preventing buyers from
any further subdivision of the land, thus securing the flavor of
the development forever.
|6.3.05 @ 2:29PM|#
Russ D,
First, I didn't make any statements of preference about
density.
Second, there is a "carrying capacity" for development, a maximum
number of residential units that the services and infrastructure
can sustain. Despite being quite close to that level, Boston (and
Cambridge, and Lowell, and Somerville) are working to add
additional units. Lexington and Newton and Belmont and Sherborn, on
the other hand, are nowhere near their "carrying capacity," yet
they are putting the clamp on growth every chance they get.
|6.3.05 @ 2:34PM|#
Chris O,
The services demanded by housing varies widely, depending on the
number of kids. When I lived in a 56 unit converted mill, there
were never any more than a half dozen children living there,
because it's a pain in the but not to be able to walk outside
easily, or to have to walk up and down stairs and into a parking
garage to get to the car. Single family homes on large lots, on the
other hand, attract families like flies.
So the answer is, your community should get rid of all of its
single family zoning, and allow developers to build big
multifamilies at urban densities, in order to meet housing demand
without putting a lot of kids in the schools.
I'm sure this idea will be immensely popular, and is sure to be
adopted by the town council as soon as it is brought up.
|6.3.05 @ 2:52PM|#
The "common wisdom" here suggests zoning and growth regs drive
up the cost of housing. If true, then what scheme of regs would
drive down the cost of housing? Who, and how, has the right to
affect the price at which another might offer use of land?
joe: I enjoyed your comment about how your theory of planning
applies to anywhere except Florida. You've failed a test for
robustness.
|6.3.05 @ 3:44PM|#
"If true, then what scheme of regs would drive down the cost of
housing?"
I don't think regulations can reduce the price of land. The issue
is minimizing that harm, without throwing babies out with the
bathwater.
And I was referring to the "efficientfrontiers" guy.
And just as non-Euclidean geometry doesn't falsify the familiar
stuff, the bizarre folding of spacetime in the Florida real estate
market doesn't falsify theories that apply elsewhere.
|6.3.05 @ 4:32PM|#
joe,
How do you define the carrying capacity of a neighborhood? Seems to
me the whole discussion of "smart growth" centers around that very
point and, wouldn't ya know it, each town defines their carrying
capacity differently and changes it to suit their whims. Boston's
no different than Lexington from that standpoint.
|6.3.05 @ 5:27PM|#
Joe,
While I would prefer to live in a SFH--being a noisy musician and
such--I agree that density restrictions are part of the problem,
particularly in the 'inner core' suburbs. Bottom line, whether it's
a high-rise apt. building or a Beaver Cleaver house, there's not
enough of it being built in this area to supply the demand. And my
point was simply that govt. regulations interact with that problem
in several ways.
No doubt you are correct that the latte-sippers in Chevy Chase or
Rockville would never go for more density in their neighborhood.
The problem is that they have such a say at all over the use of
properties that they *do not own*.
|6.3.05 @ 10:12PM|#
joe: In your view, a planner seeks to minimize the harm of
regulation by balancing the inevitable cost of meddling against the
perceived benefit of meddling. There are no solutions, only
trade-offs, and the best you can hope for is that the cost of
regulation will fall on those "most able" to afford it. Thus with
planning one is implicitly advancing some political/social agenda.
It may be masked as "for the public good", but it is still screwing
Mr. A to help Mr. B.
How can we be certain that all the best plans of today are not
contributing to a new folding of spacetime? It's tough to plan for
the unexpected.
(It's our standard disagreement, but I'm still not tired of
arguing)
gaius marius|6.4.05 @ 9:45AM|#
Gaius, I tend to agree with you but I think demand will
continue to forestall the day of reckoning. People got to live
somewhere and the forecast for 16 million new faces in Ca during
the next 20 years if accurate will guarantee an overall long-term
rise in price.
mr twc, i think that demand is very overextended -- even in CA. a
million new people a year in a state the size of it can be absorbed
easily without prices going up 25% a year. they could be absorbed
while housing prices fall significantly.
i think a better illustration of what's happening is in the rural
midwest -- like wisconsin, where depopulation is already the mode
and house prices are expanding at a real 8% per annum anyway. it's
part of a national debt boom fostered by suppressed rates. when the
rates end -- be it growing inflation or china and japan refusing to
gorge themselves on us debt -- so do these prices, and a lot of
folks with ARMs and specialty mortgages (now over half of loans
made, i hear) are going to find that they can't keep their
property.
i know ordinary schmoes buying three and four places with what are
essentially zero-interest loans with thoughts of becoming real
estate mavens. when that's happening, the bubble isn't far from
peaking. when all the property that's been bought as
rental/investment comes back on the market in a higher interest
rate environment, it won't be pretty.
fwiw, prices tend to be sticky on the downswing -- so even a 50-80%
correction in real housing prices might take 10-15 years and be
abetted somewhat by inflation.
gaius marius|6.4.05 @ 10:09AM|#
before you reflexively mock 50-80% real decline, i'm trying to be modest. john templeton -- a more experienced authority than any of us -- expects 90% or more. and it isn't exactly unprecedented -- CA's OFHEO HPI decline from 1990-95, adjusted by CPI, was 26% under relatively mild boom-and-bust conditions.
Anton Sherwood|6.5.05 @ 1:33AM|#
Once upon a time (1992? 1994?) I went to a "neighborhood forum on housing" thingy on Haight Street. Terry Hallinan (then on the city/county board, later DA) very kindly opened the meeting by telling us what conclusions we'd reach; then we broke up into small discussion groups. I suggested - knowing in advance that that it wouldn't be taken seriously, being insufficiently punitive to landowners - that if regulatory impediments to building new housing were relieved, one result might be more housing and lower prices. My group's guide solemnly informed me that the housing market doesn't work that way.
|6.5.05 @ 10:26AM|#
Dynamist,
Your zero-sum model doesn't acturately capture the effects of
planning. Done properly, a zoning code will be a net positive, by
preventing the the juxtaposition of incompatible land uses from
preventing one of both uses from reaching its full potential. If
you have industrial land crammed in with houses, the operations of
the industry will degrade the neighborhood, and the steps taken to
protect the residential quality of life, such as truck restrictions
and noise complaints, will impinge on the industrial operation.
|6.5.05 @ 10:31AM|#
Gaius, and 8% reduction in population doesn't necessarily mean a
reduction in housing demand. The figure that drives housing demand
is households, not population, and households get smaller over
time, particularly in wealthier areas.
This why three deckahs in Doahchestah that used to have 20 people
living in them and barely produced enough rent to cover maintenance
are now occupied by 6 people, each of whom bought one floor for
$400,000.
|6.5.05 @ 10:35AM|#
Dynamist,
You like to harp on the unintended consequences of regulation.
Radical schemes for deregulation can have unintended consequences
too, you know. Particularly when you're talking about a market,
like land and buildings, that has never existed without a
regulatory regime in place.
You don't get a pass from having to argue your case on the merits,
just because your preferences come with the Milton Friedman Seal of
Approval. Not if you want to convince anyone who understands
housing and development, anyway.
|6.5.05 @ 10:36AM|#
Anton,
Landowners love zoning and regulation. They are the foremost
proponent of it. Every time I've gotten into a tough fight as a
planner, it has been because I wanted to reduce the regulation on
landowners.
I guess they're all suffering from false consciousness.
|6.5.05 @ 9:53PM|#
Large sections of the city of SF have, I believe, a really
severe height restriction: essentially nothing can be more than
three stories high. Some fairly-knowledgeable SF friends-- not
libertarians-- told me that this was all about the defense of
vested political interests, not for any sorta-legit purpose like,
say, earthquake damage limitation.
Go through Noe Valley, Bernal Heights, etc. and tell me you
couldn't make a big dent in the supply problem by letting condo
developers build those buildings four or five stories high rather
than just three.
Anton Sherwood|6.6.05 @ 1:14AM|#
Someone once told me that most of SF is de jure zoned for four storeys (or was it five?) but de facto you can't get a building permit for more than three. (Gee, I haven't used those terms in a long time.)
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