Palo Alto is absurdly expensive. People who want to come here for jobs can't afford to live anywhere nearby. What to do about it?
I have repeatedly made recommendations to the Council to expand the housing supply in Palo Alto so that together with our neighboring cities who are already adding housing, we can start to make a dent in the jobs-housing imbalance that causes housing prices throughout the Bay Area to spiral out of control. Small steps like allowing 2 floors of housing instead of 1 in mixed use developments, enforcing minimum density requirements so that developers build apartments instead of penthouses, legalizing duplexes, easing restrictions on granny units, leveraging the residential parking permit program to experiment with housing for people who don’t want or need two cars, and allowing single-use areas like the Stanford shopping center to add housing on top of shops (or offices), would go a long way in adding desperately needed housing units while maintaining the character of our neighborhoods and preserving historic structures throughout.
She also warns
If things keep going as they are, yes, Palo Alto’s streets will look just as they did decades ago, but its inhabitants, spirit, and sense of community will be unrecognizable. A once thriving city will turn into a hollowed out museum.I found Ms. Downing's letter noteworthy in that it did not include the usual Bay Area nostrums -- the government must build "affordable housing," freeze rents, ban new construction (yes, this is proposed) or otherwise take counterproductive actions. Those steps can preserve some existing low-income people at high cost -- creating a different kind of museum, really -- but make matters even worse for people who want to move here to work. Few local voices appreciate that expanding supply can do a lot to lower prices, and enhance age and economic diversity.
As the post notes, the coverage and comments in the local newspaper are worth reading as well. These are local issues, handled by local governments, responsive to the wishes of their local residents. A lot of residents like things just as they are and as they are going, or have quite different views of cause and effect of housing policies.
I'm sorry Ms. Downing is leaving. Good local government depends on hard work by people like her, not crabby bloggers. We all spend too much time focused on Washington and Presidents rather than these kinds of important issues.
Update: Alex Tabarrok at Marginal Revolution on the same letter. Alex points out just how much we have all lost property rights.
Exactly!
ReplyDeleteBut Palo Alsto is hardly the worst of it. There are extensive regulations, stipulations and zoning of land use from San Diego to Orange County to L.A. to Santa Barbara and up to Northern California and through Seattle and Portland---the whole West Coast!
In Newport Beach, Orange County, one cannot build a structure of larger than 250,000 square feet without hotel approval--by a direct vote!
And how about minimum residential lot sizes in Connecticut?
Unfortunately, property zoning was ruled Constitutional by a split decision of the Supreme Court in 1926. The Court gratuitously noted that without zoning, apartment buildings would be built in single-family detached neighborhoods.
You know, we can't have free markets where we live.
I hope John Cochrane fortifies himself (perhaps with Dutch courage) to write another blog post: "Single-Family Detached Neighborhoods? Send in the Bulldozers!"
Really, property zoning has to be done away with.
Otherwise, we are left with, "Some regulations are good, and we people in charge will decide which ones."
After that, I hope Cochrane writes a post in favor of decriminalizing push-cart vending and all types of truck retailing.
As of now, the right-wing has come to tolerate food trucks and embrace Uber.
But why limit truck-retailing to prepared food? Why not anything? Clothes, books, fruits, electronic gadgetry, anything the public wants. Services too.
Vulgar Marxist analysis has limitations.
But why the outlawing of push-cart vending and truck retailing, and the extensive use of property doing?
What has any of that got to do with free enterprise and opportunity?
"There are extensive regulations, stipulations and zoning of land use from San Diego to Orange County to L.A. to Santa Barbara and up to Northern California and through Seattle and Portland---the whole West Coast"
DeleteAnd yet San Diego, Santa Barbara, and Palo Alto are some of the nicest places on earth to live.
Probably just a coincidence...
Anonymous,
Delete"And yet San Diego, Santa Barbara, and Palo Alto are some of the nicest places on earth to live. Probably just a coincidence..."
Not a coincidence at all. The revealed preference of essentially everyone is for ferocious zoning enforcement. Where do economists actually live? Where does Robert Shiller actually live? Where does Bryan Caplan actually live? Where does Brad DeLong actually live?
It is well known that Houston, TX has no city zoning. The local business community is notably hostile towards zone. However, essentially everyone (who is anyone), lives in neighborhoods with restrictive covenants that make zoning (elsewhere) look like legalized anarchy.
"And yet San Diego, Santa Barbara, and Palo Alto are some of the nicest places on earth to live. Probably just a coincidence..."
DeleteNo coincidence. When you have restrictive zoning and regulations, you price out the riff-raff (and the working class and the middle class) and create a very nice exclusive bubble at the expense of everyone else. That is the point.
"If things keep going as they are, yes, Palo Alto’s streets will look just as they did decades ago, but its inhabitants, spirit, and sense of community will be unrecognizable."
ReplyDeleteReally? Bringing in a bunch of low-income people of various ethnicities will help foster a sense of community?
Apparently she's not familiar with Robert Putnam's research showing that diverse neighborhoods have lower levels of social trust, less altruism, fewer friendships, and less civic-mindedness.
"Apparently she's not familiar with Robert Putnam's research showing that diverse neighborhoods have lower levels of social trust, less altruism, fewer friendships, and less civic-mindedness."
DeleteShe is probably well aware... For some people the societal woes of "diversity" are a goal, not a problem.
I don't think you have to worry about "low-income people of various ethnicities" moving to Palo Alto any time soon.
DeleteAllowing more housing to be built in Palo Alto is not going to bring in low income people except to the extent such housing has a small number of set-asides for low income workers. What it's going to bring in is more of the people who already work at Tesla, VMware, HP, SAP and many other companies in Palo Alto who are today driving in from several cities away. Our population doubles during the day as workers commute to their jobs in Palo Alto. More housing is going to allow those people to walk or bike to work and will make room for everyone else on the highway.
DeleteOh no, "various ethnicities"!
DeleteBefore Stanford economists are able to fix the world, they have to be able to fix Palo Alto. Good luck.
ReplyDeleteZoning laws are a rational way of preventing negative externalities. You learn this stuff in Econ 101. Somehow people forget it later.
ReplyDeleteFrom some prior comments of mine…
Like it not, but congestion, low(er) quality schools, and high-crime neighbors are the large negative externalities that homeowners (quite reasonably) care about. Of course, a smoke-belching factory would be undesirable as well. However, the threat of a new steel mill being built in Brentwood, CA is rather small. The probability of apartment buildings is considerably greater.
Rules enforcing minimum lot sizes, height restrictions, exclusion of street-level shops, multi-family homes, etc, are simply rational mechanisms for preventing deep negative externalities. You may not like this, but it is just Econ 101.
As for a common law alternative to zoning, that’s absurd. The law simply doesn’t allow a home owner to sue a developer over congestion, crime, and public school quality, etc. Zoning is the mechanism that works, which is why it is so popular. Famously, the city of Houston has no zoning. However, it has restrictive land-use covenants that put municipal zoning (elsewhere) to shame. Predictably, the neighborhoods with restrictive covenants are the nicest and most expensive.
It is certainly not true that zoning (in general) prevents higher-value uses for land. It is probably true, that one homeowner could sell out at a profit to an apartment developer, but then the rest would be stuck with lower, not higher home values.
Here is a better way of understanding this issue. Opposition to zoning is just cynical rent seeking (using the mask of faux libertarianism) based on exploiting the tragedy of the commons.
Just Econ 101.
My actual name is Peter Schaeffer (not Skeptical Economist)
ReplyDeleteFor the record, the key Supreme Court decision was Village of Euclid v. Ambler Realty Co. The vote was 6-3. Somehow I doubt that the majority was comprised of "collectivists" or opposed to "property rights". They were, however, aware of "externalities", something modern "libertarians" seem ignorant of.
ReplyDeleteThe supporters of zoning seem to be very concerned that 'those people' will move in next door and thus ruin their bubble society. That is the crux of the "externality" argument.
ReplyDeletePerhaps there are some people here who need to confront their inner prejudices.