I live in the area. Proponents have couched this as a 'progressive' vs. 'nimby' effort, which like the rest of life is not true at all. Housing is complex, not good vs. evil, liberal vs. conservative, urgan vs sprawl. If you doubt this, watch how much this comment is downvoted.
One thing we know, based on over a century of data around the world: increasing density of housing has little effect on affordability, in the long run. More often than not, it has the opposite effect. More simply, we do it backwards: we claim--based on in-migration 'projections' that are nearly always overestimates--that there's a shortage and we must build our way out of it. Example: 20 years ago, Portland estimated a million new residents by 2025. Growth in that period: 105,000, in large part due to annexation.
This leaves out the realities of how things get built. Private developers do the work, for profit, most often for investment groups. If it doesn't 'pencil out', nobody will build it. And this is why 'affordable housing' demands, codes, agreements all get bargained down in the end. They have for decades in Portland, despite repeated promises of 'this time, we really mean it'. Developers hold the cards. I could list dozens of projects of thousands of units.
'But government can build/partner!', you say? No, that rarely works either, especially in Portland. 'But this is law and it must be adhered to!', you say? No, that's not true. When it comes to building, everything gets negotiated, and there's nothing that gets bargained harder on than public entities trying to set housing prices.
First of all, there's a really good chance you have the causation wrong. Some city gets really popular, people want to move there, density increases some pittance, and boom, increasing density just caused a massive spike in prices.
And second, today's luxury condo will almost always become tomorrow's "affordable" housing. Developers build something new and shiny matching all the trends, get their money and leave. When whatever style of countertop they are building now goes out of fashion, that place will be nice and cheap.
And lastly, even if that didn't happen, moving someone out of somewhere and into a "luxury" condo, still opens up the housing below. Even if it's someone new moving to town, they are still moving into the new condo, not fighting for the existing stock.
Not sure what "increasing density" you are talking about. No city has done that. SF rejected it, DC, etc. In fact, I'd bet more places have decreased density than increase it. The increases have only come in the past 5 years (Portland, Minneapolis)
There's only one guarantee - limiting density in a growing city with jobs does make housing less affordable. That has been the status quo in every major city in the USA over the past 50 years.
The striking example that comes to mind is Tokyo. Japan liberalized their zoning after their last housing crisis, and median income families in Tokyo can actually afford to buy homes in the city.
Housing isn't seen an investment in Japan, homes actually depreciate! The dynamics are way different, so housing is more affordable, but you won't make any money on it.
Makes sense for a physical good whose condition deteriorates over time.
People making capital gains on houses (whose values are determined mostly by local government and corporate investment relative to the national average) has always struck me as a sign of government being insufficiently aggressive about a) capturing the value it creates with infrastructure investment and b) wringing subsidy from high-paying corporations externalizing the problem of housing their work-forces.
There has never been a city in the US that has made housing more affordable by increasing density or legislating affordable housing. The 'why' of that is complex.
In times of massive apartment booms, rents have in fact held steady or decreased. Seattle is a recent example. There are only so many people who want to live in a particular city, so supply and demand do play a part here.
Based on your logic, we could build more apartments in a particular city than humans exist and rents would continue to go up, even if most of those apartments are empty. That clearly doesn't make sense.
Your last argument misses the point. As cities become more fashionable, not building more housing is a guarantee of increased costs due to supply and demand. In cities like SF, rents continue to rise faster than most cities. SF is also the hardest place to build anything. I wonder if those two are related.
Wow, talk about missing the point. That analysis looks at the correspondence between equilibrium compactness and price. It does not look at the marginal change in price for a marginal change in density.
I hope you can see the logical flaw in your statement "density increases housing costs".
Density and affordability are independent of each other. Affordability is about supply and demand now. Density is about supply only and says nothing about demand.
I have a master's degree in urban & regional planning. I'm a Portland native, and went to college here and studied the city fairly intently. But I'm not writing a paper here on HN.
I think a serious question for American urban planners to contend with is why the aspects of cities they try so hard to preserve were all established before their profession existed.
>If you doubt this, watch how much this comment is downvoted.
>One thing we know, based on over a century of data around the world: increasing density of housing has little effect on affordability
You're not getting downvoted for disagreeing. You're getting downvoted for asserting something that contradicts established economics with no sources, and backing it up with folksy us-vs-them demonization of such iniquities as "developers", "profit", and "negotiat[ion]". On a messageboard that was originally started for entrepreneurs, this is a particularly poor choice of strategy.
the evidence is in fact clear: zoning restrictions make housing more expensive.
On the West Coast, there is a persistent hope (among some) that restrictive zoning will prevent people from moving to the West Coast, but this is an impossible fantasy; it's simply nicer there, and a net westward migration of Americans will probably continue for another century. The ongoing westward migration may ebb and flow, and obscure the impact of policy changes, but it isn't going to go away, and the best choice for the long-term health of the urban ecosystem is gradual densification.
California has already convinced residents and citizens of other states to leave or stay away- it is only migrants from other countries keeping population growth going:
"Twenty-seven states and the District of Columbia lost population through net domestic migration between 2018 and 2019, six of which had losses over 25,000, and three of which experienced losses greater than 100,000. The top states with net domestic migration loss were California (-203,414), New York (-180,649), Illinois (-104,986), New Jersey (-48,946), Massachusetts (-30,274) and Louisiana (-26,045)."
Some of this simply isn’t up to humans. The West coast is pretty brutal nature wise. I do think it makes sense in major metros, rural areas (that are burning right now) probably not. A lot of water and resources the city gets still come from those rural areas. If the Hetch-Hetchy burned last week it could have had a significant impact on SFs water supply.
We also haven’t had a massive earthquake in awhile. Lots of unreinforced masonry structures in SF still, entire neighborhoods will be wiped out when it happens. New buildings will need to be much safer than existing ones.
Density sounds good and I’m all for it, we need to scale up our infrastructure though.
Also in SF pro-density movements are painted as pro-gentrification, getting the voters on board is hard.
This all costs money and convincing the locals to spend money now to support outsiders usually doesn’t work. The money will be spent on affordable housing for existing residents. This continues the cycle of new well off residents buying expensive homes and pushing more locals out of state or into affordable housing.
Honestly a big earthquake might be the only thing that forces the city to rebuild with safer higher density buildings.
I figured there'd be a lot of Googling for counter-arguments and some ridicule.
Despite the inherent difficulty in comparing different countries, I do think Tokyo is an interesting place to study. If you've dug deeper on why Tokyo had a period of flat housing prices, you might have noticed the larger picture.
Accommodating more people at the same, high prices is a benefit you seem to ignore. And historic growth shouldn’t be used as an input to an estimate of demand because growth itself depends on supply.
>>And growth shouldn’t be used as an input to an estimate of demand because growth itself depends on supply
This is famously untrue with housing. Because it's so hard to match units demanded to units built, housing growth nearly always precedes demand. How? By leaning on estimates of demand (in-migration, etc.), which I mentioned above. And those estimates are almost always severe overestimates.
"""This suggests that consumption leads production during neighbourhood gentrification, and that developers are reactive, not proactive, in their investment decisions."""
Do you not know basic economics? If I can build a house for $500000 and sell it for $600000 I'm going to build a house. I don't give single damn if someone makes up random numbers. All I have to care about is whether I can find a buyer. Looking for a buyer is equivalent to looking for demand.
Every time someone talks about something as brain dead as saying housing growth precedes demand they are just showing off their loyality to their political "tribe" because there is not enough ignorance in this world to believe something this stupid.
Do you know what 25 year olds are going to do if housing is too expensive but their parents have a nice 2500sqft house that they refuse to sell? They are going to stay at their parents house or live with a room mate because that's what they have been forced to do. If you build a house/apartment of course it is going to be filled immediately because there are already people in the city who are waiting for you to build the damn house. Not a single person has to migrate or come from a different region.
When you are saying "housing growth precedes demand" you are actually talking about "pent up demand" over several decades but trying to hide it via political speech with an agenda behind it. It's basically equivalent to saying "we have screwed up for 50 years now it's going to take decades to clean up the mess we have created so why bother? Let's just blame the few remaining people who are doing their part to fix this mess for causing the problems we have created.".
I agree. Honestly, my belief (no sources!) is that cities are expensive precisely because there are so many regulations and restrictions about what can be done, and where.
Modern cities and suburbs have ZERO flexibility in how they can adapt to changing times. The reality is that zones of certain kinds of activity are fluid. The economy is fluid. The culture, the weather, and the land are all fluid! So why do we try and harden it into a concrete set of laws?
The way we have conceived of things in the US has created such a separation between us. We see our homeless neighbors and we are powerless to help them. They are homeless precisely because of all the ridiculous laws we created.
Creating property lines, and housing laws incentivizes all of us to build high walls, and protect our shit at all costs. We need a community model for housing. I'm not saying I have the answers at all, but it should be clear that what we have now is failing most of us. I say this as a homeowner myself.
Say we have a city. Currently there are 10,000 old apartments. I decide to go in and build an additional 10,000 new apartments. Why would the price to rent one of the old apartments go up?
I don't understand what the proposed mechanism is at all.
In theory construction costs of taller buildings are higher, in practice housing prices far exceed cost of construction everywhere. Some rich people buy luxury apartments as second or third apartments but don't live in them.
None of these are enough to make the entire cities more expensive to live in but they are highly visible so those who need to justify their selfish actions (preventing housing) seek deniable plausibility in them.
>If you doubt this, watch how much this comment is downvoted.
There are few more efficient ways to make it sound like you're not arguing in good faith than to preemptively claim that all who downvote you are being unreasonable.
>Portland estimated a million new residents by 2025. Growth in that period: 105,000, in large part due to annexation
This is self-fulfilling. If you build no new housing, there will be no realized population growth.
>Private developers do the work, for profit, most often for investment groups.
Most people do most work for profit. This is not necessarily a bad thing. Developers will, of course, only build when they can turn a profit. That's what capitalism means. But we should be able to arrange things such that the community benefits. If you remove artificial costs (e.g. bad-faith environmental reviews, meaningless red tape for code- and zoning-compliant projects), then the cost of development goes down, and so prices should settle lower. And when the top of your demand curve moves into those new, expensive housing units, they move out of somewhere cheaper. Any supply removes pressure from the market - you want rich people moving into expensive housing, because it means they're moving out of less-desirable housing, which will then necessarily have lower prices.
> Private developers do the work, for profit, most often for investment groups. If it doesn't 'pencil out', nobody will build it
This is a huge reason why the notion that our housing affordability problems can be boiled down to "simple" issues of "supply and demand" is false.
Developers don't over build supply. Why would they? There's no economic reason to. Whenever any sort of overbuilding occurs which would oversupply , it is always by some accident (eg. a pandemic), and the taps are turned off immediately.
We see an example of this in nearby Vancouver BC, where foreign buyer taxes and speculation taxes have cooled demand for expensive concrete condo towers which were often marketed in Asia. Suddenly these products are no longer being produced and housing developers have shifted to other things.
I hope you see the problem in your logic. You've just said developers only build when people want more housing when stakkur claims that people only want housing because developers have built more housing.
The conflict is that you two are saying the laws of supply and demand don't work because of two mutually incompatible reasons.
Those two things can't be true at the same time. So either of you must be wrong. And it's pretty obvious that your comment is the only one that doesn't violate basic logic. However, just because you're not wrong doesn't mean you're capturing the whole truth.
>This is a huge reason why the notion that our housing affordability problems can be boiled down to "simple" issues of "supply and demand" is false.
>Developers don't over build supply. Why would they? There's no economic reason to. Whenever any sort of overbuilding occurs which would oversupply , it is always by some accident (eg. a pandemic), and the taps are turned off immediately.
Building exactly as much housing as needed would still result in lower prices. When you have 10 houses and 20 people only the 10 richest people get a house because they are bidding up the prices. If there are 20 houses and 20 people then everyone gets a house. If there are 25 houses and 20 people then landlords will compete with each other and try to lower the rent they charge to fill their units. Villages with 1€ houses exist for a reason.
Do you know what the worst mistake in housing discussions is that everyone tends to make? Everyone talks about the price because that is what people can see and what people are familiar with. No one talks about housing in absolute numbers. Nobody thinks about the fact that one more house means one more person. Everyone is thinking about how an "evil" house is going to raise housing prices even further because people are only familiar with expensive housing because they made it illegal for inexpensive housing to exist, when policies like this reform are intended to allow inexpensive housing.
> Those two things can't be true at the same time. So either of you must be wrong
Stakkur is wrong :)
> Building exactly as much housing as needed would still result in lower prices
Yeah don't get me wrong here. Cities still need to allow developers to build.
Not building is not the solution and only limits supply and results in price pressure on the poor as we've seen in SF, as when a rental turns over a landlord jacks up the price.
My point is simply that private developer is not a panacea since eventually the profit motive stops them from building.
For prices to really fall you need a developer to build an over supply of housing, which means continuing to build in an environment where rental prices are falling and building more housing is worsening as an investment idea. You need developers without a profit motive.
This means that you need to have a government agency that is constantly building housing to meet a set vacancy target, regardless of whether or not it would be profitable to do so.
I have no idea where you are getting your data. Zoning density restrictions and overuse of historic landmark status create artificial scarcity of land resulting in higher housing costs. These both create market failures in housing.
In Japan for 20 years there have been federal laws overriding local law that restricts zoning density.
The result: in Tokyo they have been building 140,000 housing units per year compared with 20,000 in NYC and 90,000 for all of California. The cost of housing as not increased at all in the past 20 years because these market failures (in this case also called "rent-seeking") in real estate are not allowed to occur in Japan.
In Tokyo, builders made condominiums too much in small spaces and gov don't stop them well, so these made too much crowd in train/station at morning and lack of nursery school, meanwhile non-big cities losing population. Centralization is another problem.
One thing we know, based on over a century of data around the world: increasing density of housing has little effect on affordability, in the long run. More often than not, it has the opposite effect. More simply, we do it backwards: we claim--based on in-migration 'projections' that are nearly always overestimates--that there's a shortage and we must build our way out of it. Example: 20 years ago, Portland estimated a million new residents by 2025. Growth in that period: 105,000, in large part due to annexation.
This leaves out the realities of how things get built. Private developers do the work, for profit, most often for investment groups. If it doesn't 'pencil out', nobody will build it. And this is why 'affordable housing' demands, codes, agreements all get bargained down in the end. They have for decades in Portland, despite repeated promises of 'this time, we really mean it'. Developers hold the cards. I could list dozens of projects of thousands of units.
'But government can build/partner!', you say? No, that rarely works either, especially in Portland. 'But this is law and it must be adhered to!', you say? No, that's not true. When it comes to building, everything gets negotiated, and there's nothing that gets bargained harder on than public entities trying to set housing prices.