Tuesday, May 14, 2019

Almost sane housing supply

California, despite being a one-party state, is actively debating SB50 that would over-ride local zoning laws and allow construction of apartment buildings, especially near transit areas.

This is almost a remarkable outbreak of sanity. In a divided government, one can keep touting slogans. But when one party takes over, apparently permanently, they do have to actually govern, and eventually some reality must sink in.

Housing in California is ridiculously expensive. After California tried everything else -- "affordable housing" mandates on developers, subsidies, rent controls, public housing, and so forth -- it is finally facing the fact -- we need to just let people build. Given that California will not allow more land to be devoted to housing -- wisely, in my view -- and given that the first generation housing stock was built cheaply, using a lot of land for little house, the natural place to allow people to build is up: replace small single family houses on large lots with apartments, townhouses, or even single family houses on smaller lots.

The problem here is local zoning laws, building laws and various impeding regulations, which are more or less designed to preserve enormously expensive museums of 1950s suburbia. So SB50 overrides local laws.

The end result, though is saddled by a trip through the progressive sausage factory. I recommend Joe DiStephano's analysis with beautiful maps.

The first stop was rather clever: wrap it in green. "You can build" was never going to fly in California. So the original effort, SB25, restricted the effort to areas near transit. Who can object to allowing apartments near transit, so people can get out of their cars? Moreover, with this twist, SB25 put the kibosh on one standard local trick for restricting construction, requirements for lots of onsite parking.

The transit clause extends to "high quality bus corridors." Now in one sense that's great. Other than nostalgia and cuteness, and outside places like New York City, buses are much better transit options.  But one of the main reasons buses are great is that it is much easier to move a bus line than to move a rail line. You can be on a "high quality bus corridor" tomorrow.

"Jobs rich areas" are now included. Allowing people to live nearer where they work is better than any "transit" idea. That too is a little strange though. If people were allowed to build housing, jobs would locate there quickly. Housing first redevelopment is not too hard an idea.

Alas, the bus and jobs exemption only waive density and parking, and allow cities to keep height limits and other zoning restrictions. Which they will do.  

Then it descends into madness, and an invitation to endless litigation.

"Sensitive communities" are exempt. That means (still quoting Joe), "‘High Segregation & Poverty’ or ‘Low Resource’ in TCAC Opportunity Maps," "Other local areas determined by each regional government through a collaborative process," and "Tenant-Occupied and Rent Controlled parcels."

California will write a law allowing the construction of apartment buildings, and conversion of houses to multifamily units, yet will specifically exempt the areas most obviously in need of redevelopment. Once upon a time governments granted subsidies and tax breaks for redeveloping such places. Minorities and poor people will instead be condemned to live in rotten housing and rotten neighborhoods. Heaven forbid a few apartments get built near transit stops, some yuppies move in, grocery stores and coffee shops grow to serve them, and the rest of the neighborhood. 

Joe's maps tell the story. Where in LA will California allow apartments? Not in the places that need redevelopment! Perhaps if people could build apartments, these might become "jobs rich areas!"   

As its local governments are devoted to maintaining museums of suburbia, the state government is devoted to preserving museums of poverty, racial segregation, and lack of businesses and services. 

(To be fair, the state law only over rides local zoning laws. There is nothing that stops the city of LA from allowing development with or without SB50.)

As a classic example of how we got in to this mess, consider the instant reaction on the Menlo Park nextdoor.com 

Now, if we do a little Bayesian Improved Surname Geocoding -- not perfect, but good enough for the Justice Department to sue auto dealers -- we can conclude that the author is white, wealthy, lives in a house worth at least $3 million dollars, and a reliable progressive Democrat, bleeding hearts over climate change and inequality. Yet this post is worthy of the darkest anti-immigrant keep-the-poor-out    climate-denying right-winger. All the people who rehab the $3 million single family houses to $6 million single-family houses in Menlo Park drive in from 50 miles away, as do those who mow the lawns, wait the tables and so on. The young bright kid from Fresno who might get his break working here has little hope of finding a place to live. I guess there is a lot of hypocrisy going around these days, but this is pretty glaring.

Also echoing the local zeitgeist and how-did-we-get-in-to-this-mess thoughts is the ongoing saga of the Flintstone House. NYT here, and a good article at the Guardian If you've ever driven down 280, you've seen this cool house. It was recently sold, and the new owner took up the Flintstones theme:

More great pictures at SF Curbed. How utterly cool, you undoubtedly think. What did the city do, make it a historic landmark to preserve it? No, the city is suing Ms. Fang, the owner, for landscaping without permits and "community input."

From the Guardian
... the tastemakers of Hillsborough have not extended their favor to the experimental stylings of William Nicholson, the architect...It was in response to the Nicholson’s construction of the Flintstone house in 1976 that the town first established its Architecture and Design Review Board (ADRB), ... established “so there would never be another home like that built in Hillsborough”.
...Mrs Fang claims that she attempted to work with town of Hillsborough to obtain the proper permits for her landscaping work, ..she says she feels like the town is playing with her like a cat with a mouse – “play, play, play, bite, until I die” – and claims she has interacted with the town 44 times while attempting to comply. At one point, the town lawyer pressured her to paint all the mushrooms a single color, she says. “Every time I complied with their request, they moved the goalpost,” she says.
"Design review," which produces Disneyland replicas of craftsman houses and bland identical French farmhouses, allows its executors to stymie permits with endless arbitrary whimsical requests for esthetic changes.

Bottom line, any residual meaning of "private property" is vanishing in California.

(I received a few comments from fellow libertarians last time I wrote about these issues. Shouldn't communities have the right to pass whatever restrictions they want? If they want to preserve a $5 million per house replica of 1950s suburbia, and wall out the unwashed masses, hypocrisy aside, why should the state stop them? I counter, this is not libertarianism, the defense of private rights, this is untrammeled majoritarianism, by which your neighbors via the city strip you of your right to sell your house to the highest bidder, do what you want with it, and strip the ambitious kid from Fresno who wants to move here of his right to be supplied by a competitive marketplace. It's also a monstrous inefficiency. A neighbor who is hurt by $500 from his dislike of looking at your property can destroy millions of value to you. Anyway, it's a longer discussion which I acknowledge here without getting in to it. )


  1. There are absolutely people who view local property zoning as a tool to keep the poor away. But far more common (at least where I live) are those who just can't figure out how their town is supposed to manage the transition from "suburban museum" to high-density housing. That requires new infrastructure and -- thanks to crushing regulatory burdens you've covered so well in prior posts -- building new infrastructure takes an absurdly long time.

    So yeah, sign me up for less property zoning. But first you need to tell me how my town is going to build the new schools, roads, and water infrastructure (my town has been dealing with shortages lately) fast enough to accommodate the influx. Because I just don't see how the math can work... 2 years to plan and build apartments, 4 years for a school, longer for roads and water... it seems like all the additional people would arrive well before what we'd need to take care of everyone.

    1. You're probably right about government's incompetence. But I'm not sure that means we should give government even more power.

    2. The incremental rate of expansion is important. There is a relevant range for the rate of growth that can be accommodated before the next infrastructure increment is necessary. Infrastructure tends to come in large chunks, but the population trickles in. Schools will get more crowded until the new ones are finished. All costs are variable in the long run.

  2. Houston, the city with( almost) no limits. Here's the link.
    urbanland.uli.org/industry-sectors/city-almost-no-limits/. Seems to offer reasonable solutions.

  3. Albert Saiz has a really nice paper on land use regulation, geographic constraints and housing supply (QJE 2010 https://www.brown.edu/Departments/Economics/Faculty/Matthew_Turner/ec2410/readings/Saiz_QJE_2010.pdf ).

    Among other things, he shows that land use regulation is clearly influenced by geographic constraints. The paper has the expected regressions but if you just eyeball his data you see places constrained by water and steep terrain aalso score high on the Wharton Regulatory Index. (For example, Ventura is scored as 79% undevelopable land and has a WRI of 1.21 while Dallas has 9% undevelopable and WRI of -0.23.) I don’t find this surprising but I do find it discouraging. It’s not just arrogant NIMBY jerks and idiot politicians, when people their particular patch of paradise is threatened, they make bad rules.

  4. The US needs a constitutional ban on property zoning. Otherwise, property owners extract rents from the rest of the population--- indeed, some posit that enough can be extracted in economic rents to more than offset income gains. You see this in Hong Kong, where people spend a fortune to live in a "nano flat," that is 120 square feet.

    However, the US appears unable to build either housing or infrastructure in quantities needed. This does place another hue on the arguments over immigration.

    After a lifetime in California, I can tell you it was a nicer place before it became too crowded and too expensive. Living standards in California are going down.

  5. This seems to ignore free association and contracts. Rather than zoning restrictions, you could have HOAs that prohibit multifamily homes. That's just part of the contract for living in the community. If these communities went that route, would you grant the government the power to prohibit those private contracts?

    The real problem appears to be a lot of angst about too little housing and giving the government a lot of tools to try to fix it. If you stop all the subsidies then it would work itself out - potentially with a lot of pain in the transition. The earlier rent control post is relevant. Stopping rent control in NYC is difficult for those currently benefiting but would still be more efficient. Ditto for unfunded liabilities, the longer you wait the more severe the required adjustment.

  6. There is a housing problem in the Bay Area and coastal California cities, where the cost of housing is astronomical. But the rest of California, though higher than most of the rest of the country, does not have those problems. Leave it to the state and the central planning folk, to desire a statewide solution to solve a local problem.
    And as one who has lived in a neighborhood, where a family moved in with their drug dealing son, who set up his business on our street corner, it is no fun and unsafe living in that type of environment. I now live in a safer area and enjoy my life and my family's safety much more. But I don't want the state telling me that I have to accept those who don't value my private property rights or my privacy or the lifestyle that my current community affords.
    It is never a good idea to let those who lead the state of California to dictate to my, or any other community, how we should live.

  7. The libertarian objection is strangely ubiquitous. What do libertarians think of the 2nd amendment? It prohibits your city from prohibiting you from having a gun. Is that big government overturning the rights of local governments, or limited government? I have never understood this.

  8. Making people freer to do what they want with their property. What a concept. While this is clearly a step in the right direction I'm 1000% sure CA will screw this up.

  9. In accordance with Ricardo's law of Rent, prices of houses where people want to live is determined not by supply but by the income of the occupiers.

  10. Beware the NIMBY's. If anyone has had the frustrating experience of chasing down the tentacles that prevent affordable housing, look no further. There was some research done that even the use of the term "affordable housing" triggered images of drug use, alcoholism, poverty, and crime -- things most people don't want in their backyard, even IF the evidence said the incidence of such factors/events was low. It was enough to lather communities into forecasting the apocalypse, worrying about all the terrible things that would happen. A cynic might say the real concern had to do with private property valuations and associated perceptions.

    Ah, preferences matter, yes?

    One has to wonder if sanity only emerges after periods of insanity. Augustine stumbled across something similar in his writings -- one must go through the process of dissatisfaction in order to figure out what they really want. I think we're on the verge, especially in places like CA, where preferences have to go through an incremental and internal transformation. Yes, collective/shared experiences of reality can force some severe contemplation as to how to "fix things" and "do better." There are periods of abrupt changes in preferences, but for the most part, change is incremental and brews.


  11. A note just as SB50 was killed in the Senate:
    I am really surprised that the deregulation of land use so hard. After all, while it may be that some landlords use zoning as a way to create government-enforced cartel, housing policy is very local - the landlords in the most desirable places, low-density suburbs close to the city centre probably stand to gain a lot out of slightly less onerous zoning. If people in the well-accessible suburb allowed themselves to double the density would it decrease the per-unit price two times? I don't think so. So it is selfishly sensible thing for them to do. In effect, you could imagine a housing competition between various cities in the Bay Area - but it doesn't happen, and I am really surprised by that

  12. Also, I can't find it easily but I have read an article suggesting that the political implications of restrained housing are dire. Essentially, any improvement in the city with the restrained housing will be gobbled up by the landlords; as such renters will not care too much about fighting crime, or improving transport, or anything else: all the positive effects will be just causing rents to rise. I have already seen this logic in London: some people were against the extension of public transport to their area because such extension will increase rents there.

  13. SB35 also helps with sanity in Cupertino


  14. Speaking of NIMBY, keep the poor out hypocrisy, Dr Cochrane works at a highly exclusive university that requires that people go through a complex and secretive admissions process to have the basic right to enroll in a course. They enact a strict (draconian?) E-Verify process to prohibit people without the right admissions papers from enrolling in course or enjoying basic equal rights as admitted members. One stated justification is to preserve the culture, and values, and identity of the university.

    Stanford is nominally "private", but it operates similarly to officially government universities like UCLA.


Comments are welcome. Keep it short, polite, and on topic.

Thanks to a few abusers I am now moderating comments. I welcome thoughtful disagreement. I will block comments with insulting or abusive language. I'm also blocking totally inane comments. Try to make some sense. I am much more likely to allow critical comments if you have the honesty and courage to use your real name.