My hypothesis has been that renters stopped voting. They tend to be transient, younger, non-voters while landowners tend to be older, rooted and vote fervently. Density hurts landowners by decreasing property values and landowners vote.
The younger owners tend to also vote based on social "wedge" issues which means they don't need to be catered to on this issue whereas asset owners tend to vote based on their interests and have to be catered to otherwise they'll vote for the other party.
I believe this also explains the rise of progressive political factions that propose a lot of policies that seem to favour the disenfranchised but in reality benefit the rich and the asset owners. Their policies let the rich and the well off virtue signal without any consequence to their income or wealth. Voting patterns in large cities in Canada, for example in Toronto, supports this.
> I believe this also explains the rise of progressive political factions that propose a lot of policies that seem to favour the disenfranchised but in reality benefit the rich and the asset owners.
This, so much. Segregation has once again become overt Democrat Party policy, only now it's disguised as "fighting against gentrification".
> My hypothesis has been that renters stopped voting.
Who are these renters who stopped voting? I can only speak for Australia, however the average age of renters has been rising for decades. Most of Gen Y have come to terms with the fact they will likely never own property in a major city. These people keep voting, but their vote isn't accomplishing anything.
> Density hurts landowners by decreasing property values and landowners vote.
How does density actually hurt landowners? If you own a house in a heavily consolidated urban area your property value will hardly have decreased. Look at the value of houses in Ultimo, Chippendale, Pyrmont, for instance. Also consider that maybe people just don't want to live in a highrise legoland, or think that endless urban consolidation is a good thing for our cities.
> How does density actually hurt landowners? If you own a house in a heavily consolidated urban area your property value will hardly have decreased.
Correct because, and I can only speak for America, those big cities stopped building. San Francisco alone is short about a quarter million homes, like 33% of the existing population. There’s a whole Wikipedia article on it. That’s why it’s so unaffordable.
> Also consider that maybe people just don't want to live in a highrise legoland, or think that endless urban consolidation is a good thing for our cities.
This is a pretty funny position to take. Those cities didn’t get to high rises because nobody wanted to live in them. You know those buildings are full … right? If nobody wanted to live there prices would be way lower and they never would have built denser housing.
Tokyo is a great example of a major metro where supply and demand are roughly equal and they haven’t seen houses increase in price since 1990. Their units cost a bit more than cost of construction. This is the power of federalizing zoning rules so city councils can’t get between you and building a house on your property.
> San Francisco alone is short about a quarter million homes
If they added a quarter million homes, do you think they would still be short another quarter million homes?
Not saying densification is bad. But in some cities the density can keep increasing and not have any drop in demand. Apartment prices in dense cities don’t drop?
> If they added a quarter million homes, do you think they would still be short another quarter million homes?
Not in this market, haha. The number was based on the quantity of houses added vs the quantity of jobs added in SF and the surrounding area. (From [1]: "For example, from 2012 to 2016, the San Francisco metropolitan area added 373,000 new jobs, but permitted only 58,000 new housing units") But over time? Maybe.
> Apartment prices in dense cities don’t drop?
There are very few cities where supply of housing is allowed to meet demand for housing - but as I mentioned, Japan is a great example. Japan hasn't seen an increase in the cost of housing since edit: [1995, not 1990 as I mistakenly claimed in GP post]. [2] Compare to the US. [3] What happens is that they stop going up in price.
Yea, also adding more homes or more units will just increase rents and prices anyway, especially with higher interest rates.
At the end of the day a lot of people have this very wrong idea that living in the best weather and in the epicenter of a global city with top-tier jobs, food, etc. will ever be “affordable”. It simply will not be. Ever.
Tokyo has all of those things, and yet. Why do you think supply and demand do not exist in the housing market? Why is this the one market on earth where it won't ever work? If you have as many houses as jobs in the nearby area then it will be more affordable. That's just facts.
Further higher interest rates lead to lower house prices, to an extent (but only to the extent supply exceeds demand) because people buy houses based on monthly mortgage affordability.
People have looked into this. Here are the results. [1]
> The resultant high demand for housing, combined with the lack of supply, (caused by severe restrictions on the building of new housing units) caused dramatic increases in rents and extremely high housing prices.
I'm not saying you'll be able to live in SF for the cost of living in a shack in the corn belt, but there's no reason it'll be "unaffordable forever and there's nothing we can do about it" when that historically wasn't the case and there are other global counter-examples. And a ton of research was done on this.
> Why do you think supply and demand do not exist in the housing market?
Why would you think that I think this? That's really confusing.
I think the issue you have here is that you are thinking in extremely simplistic terms and not really accounting for real supply and demand in this particular market. Instead of looking to Tokyo (which is a generally bad example because Tokyo and Japan are not great generalized models) you should look to New York City to see what will happen if you continue to build housing in the Bay Area. It won't get cheaper, in fact, the more you build the more expensive it'll get for a few of reasons:
Interest rates
Housing standards (environment, earthquakes, etc.)
Developers do not want to build low-margin housing so they'll only build "luxury" housing with cheap, but perceived higher-end finishes so they can charge more rent per sqft
Lack of available workers
As developers build additional housing they'll only build for higher rental rates, but because there is a near infinite demand for housing in San Francisco and California as a whole, as additional units come onto the market they'll raise the median rent, but it won't make existing housing cheaper, it'll just be the new floor. If you could build a million units or something in a year, you may be able to reduce prices, but construction doesn't work that quickly. Demand far outstrips supply and will continue to do so.
Tokyo is incomparable for a few reasons, but you can start by examining Japanese birth rates, immigration policy, and California's comparable car-only infrastructure.
Historical examples aren't very useful here because historically there were far fewer people, travel from the highly populated east coast to California was long and arduous and the benefits were "unknown", and people had a lot less money and stronger family ties. Trying to do global comparisons is generally suspect as well. But I guess if you want to see what things would look like, New York City, Hong Kong (pre commie China takeover) and the similar extremely high housing costs and density are appropriate versions of the future of the Bay Area real estate market. With that being said, who knows what will happen with remote work and the like, but probably won't have much in the way of price reductions there anyway over the longer term.
If you want less expensive housing you'll have to live somewhere else. That's just how the world works.
I mean here's my responses to each of the four points you raised:
1) Interest rates make existing housing stock less expensive as people are unable to afford a property of the same price based on fixed monthly payments.
2) Housing standards are relatively consistent, and you know Tokyo is on a fault line right?
3) Developers will happily add any kind of unit they think they can sell, just look at what the city of SF is rejecting on a regular basis. But even if you only build luxury housing, that pushes existing wealth out of less fancy units opening them up to lower wealth tiers. New supply is new supply. Period.
4) Lack of available workers factors into cost of construction, but cost of construction is absolutely dwarfed by market prices. If we were close at all to it, we could include (4) but we're just not.
> Tokyo is incomparable for a few reasons, but you can start by examining Japanese birth rates, immigration policy, and California's comparable car-only infrastructure.
This constrains demand, but the point remains that in their market supply and demand meet. Supply and demand can meet by increasing supply or by decreasing demand. Btw, Japan’s immigration policies are actually very lax, but the perception of their culture as unwelcoming to outsiders creates little actual demand. The US immigration policies by contrast are significantly more stringent.
Density and transit are a chicken and egg problem. More density however allows you to invest more in transit.
> If you want less expensive housing you'll have to live somewhere else.
This wasn’t the case historically and there’s no reason to think it can’t be the case in the future except for lack of zoning reform. Anyways if you want to take up the supply/demand thing feel free to take it up with Wikipedia, which cites plenty of sources that provide contrasting examples.
> That's just how the world works.
I disagree, but thanks for your perspective.
I look forward to your treatise on why supply and demand stops working when it’s nice outside ;) Especially since during COVID rents fell massively in SF as supply outstripped demand - even thought the weather remained lovely.
> Interest rates make existing housing stock less expensive as people are unable to afford a property of the same price based on fixed monthly payments.
You are making overly-simplistic assumptions. Interest rates are one factor that can lead to prices going down to balance monthly payments, but you're forgetting that developers have to borrow money as well to build new housing or new condos or apartment units, renovate existing properties, and other things including running their businesses. This causes their IRR to change, and where a fixed monthly income from a new 35 unit apartment for rent or condo building or housing development makes sense at 0% or 1% rates, it may become unattractive at a higher rate or prices and rents have to increase to account for IRR. Don't make the mistake of assuming that higher interest rates simply lead to cheaper housing across the board. Even so, higher rates don't necessarily mean that housing prices go "back" to some historic price, and even then you have to account for various markets. San Francisco is going to be different than Denver, or Miami, or Topeka.
> Housing standards are relatively consistent,
Housing regulations, build rules and quality, size, etc. all these factors are consistent across the US and Tokyo/Japan? If so, that's news to me. I don't recall Ohio where I live having the same environmental reviews (for example) as California, or the need to build to withstand earthquakes. Or are you saying that Tokyo and San Francisco have the same housing standards?
> Developers will happily add any kind of unit they think they can sell, just look at what the city of SF is rejecting on a regular basis. But even if you only build luxury housing, that pushes existing wealth out of less fancy units opening them up to lower wealth tiers.
While it's true that San Francisco in particular may be rejecting units, you are making a mistake by equating "developers will happily add any kind of unit they think they can sell" with "developers will happily add any kind of new unit they think they can sell at an internal IRR based on interest rates and market conditions".
You are also mistaken because you believe that adding "luxury" housing creates a drop in prices for other housing, that does not necessarily follow when there is pent-up demand at the cheaper price points. What you do is just increase the median rent price, not lower it, in markets like San Francisco or New York or other highly desirable areas.
> New supply is new supply. Period.
Overly-simplistic and you can show that this isn't the case by a simple thought experiment where a developer builds nothing but $50,000/month condos or $5mm homes - supply is added but doesn't alleviate housing shortages.
> Lack of available workers factors into cost of construction, but cost of construction is absolutely dwarfed by market prices. If we were close at all to it, we could include (4) but we're just not.
What do you mean "cost of construction is absolutely dwarfed by market prices"? Are you saying that it's cheaper to build new housing and sell it than it is to sell existing housing?
> This constrains demand, but the point remains that in their market supply and demand meet. Supply and demand can meet by increasing supply or by decreasing demand.
Sure but you are oversimplifying things and you can't generalize Tokyo to the US or San Francisco. Do the same thought experiment with Hong Kong, Singapore, or London.
> Btw, Japan’s immigration policies are actually very lax, but the perception of their culture as unwelcoming to outsiders creates little actual demand. The US immigration policies by contrast are significantly more stringent.
I'm not sure this is true anyway, but it doesn't matter if the effect is the same = fewer immigrants. Difficult to compare Japan versus anywhere really so I'm not sure why you continue to do so.
> Density and transit are a chicken and egg problem. More density however allows you to invest more in transit.
Yes but it is still an existing problem which is why I mentioned it. Hard to build new housing when you have mandatory parking minimums and such (I believe but could be wrong that these were removed in California as a whole last year).
> This wasn’t the case historically and there’s no reason to think it can’t be the case in the future except for lack of zoning reform.
By that rationale land in California should be free/extremely cheap because it used to be in 1880.
> I look forward to your dissertation on why supply and demand stops working when it’s nice outside ;)
So climate isn't a factor in housing prices? Why are you taking such extreme positions? "supply and demand stops working" who said that? Certainly not me.
> Especially since during COVID rents fell massively in SF as supply outstripped demand - even thought the weather remained lovely.
I mentioned COVID already but it also primarily applies to office vacancies. San Francisco in particular is still very expensive to live in even despite COVID for obvious reasons - it took a global pandemic and entire shutdown of the city to get rents to drop. Populations ebb and flow, markets go up, they go down, etc.
This idea is pure fantasy. This condition of classifying people as NIMBYs if they disagree with you on this topic is incredibly toxic. There are a plethora of totally valid reasons why people would be opposed to endless urban sprawl, consolidation, and population growth.
> plethora of totally valid reasons why people would be opposed to endless urban sprawl, consolidation, and population growth
Totally agree. But the counterpart of that is rising housing costs. If you accept that tradeoff, you aren't a NIMBY. This covers many homeowners. But renters opposed to development while complaining about housing costs are trying to suppress their housing costs by increasing others'. That externalization is textbook NIMBY.
Thank you for taking the time to make a nice reply, and for not taking my criticism of your post personally. I really appreciate that.
I feel like you have a very arbitrary definition of NIMBY. I'm writing this post right now from the 14th floor of a highrise building in Sydney's inner city, in the apartment I rent from a landlord who lives in mainland China. There are still rows of historic terrace houses in the nearby suburbs that have been heritage listed. I'm sure property developers would love to turn these into more highrise apartments. Even though I'm renting, I don't want these to be replaced with endless new apartments. I could list a dozen reasons too. For one, I don't think this would help create a city that people would actually enjoy living in.
I've been told by people who would know that one of Sydney's big problems is that property developers are able to artificially inflate property value by staggering the release of newly developed property onto the market. So more development isn't necessarily going to solve any of this country's problems with property value. It hasn't so far.
> There are still rows of historic terrace houses in the nearby suburbs that have been heritage listed. I'm sure property developers would love to turn these into more highrise apartments. Even though I'm renting, I don't want these to be replaced with endless new apartments. I could list a dozen reasons too.
Funny, I would have the opposite opinion. Just because someone was alive and rich back in 1950 or whenever these cute little houses were built, doesn't give them more of a right to live in that area than others, in my opinion.
Let's face it, most of these cute litte historic houses are probably owned by the same mega-rich investors and CCP party members as your apartment building.
1 person having a garden does not justify 15 families not being able to live there.
NIMBY means not in my backyard. As in, I want the benefits of a thing but not its cost. Wanting affordable housing while denying development is NIMBY. Saying no development because you want higher property prices is not NIMBY, it's prohibitionism. (Depending on the environment, it could be reasonable and/or heartless.)
> been told by people who would know that one of Sydney's big problems is that property developers are able to artificially inflate property value by staggering the release of newly developed property onto the market
This is prudent pipeline management. Why would you bid up the cost of materials and labor only to dump the finished product at a loss?
On supply and demand: American house prices are elastic, but over long timelines [1]. In Sydney, dense housing is more elastic than detached housing [2]. The abundance of those historic terrace houses, together with long development approval times, cause the high prices and relative price inelasticity.
Doesn't this contradict your central thesis? If the supply of housing doesn't exceed the demand, the price isn't going to drop. How can urban consolidation actually benefit the renter class if property developers are able to artificially increase the value by restricting supply until mechanisms like immigration cause demand to catch up?
No. In development-constrained world, particularly one with long approval timelines, you need to make money on margin. In a less-constrained world, you can bring to force economies of scale and make money in volume.
The thesis is: if you have an anti-development environment, developers will maximise margins. This isn’t a conspiracy and it isn’t artificially increasing value. It’s survival. If ten houses will get built but there is demand for twenty, and everyone pays the same for labour and materials and lobbyists, all those houses will be as high end as the market will bear. You’re competing in getting the right to build; the market is inelastic. If anyone can build twenty or thirty houses without years of approvals, you’re going to prioritise your costs, because there is a chance you don’t sell every single house. You’re competing on price and value; the market is elastic. (You also get a learning curve.)
This is why Sydney has price inelasticity for detached housing. The scarcity is a policy choice.
This sounds intuitively correct with regards to the economics of property development. I'm not a property developer though. I'm not really that concerned about their profits. I'm a young person renting an apartment in a city that is rapidly becoming unaffordable for the average Australian. The point of my post above was: If property developers are legally able to artificially constrain supply to maximise their profits, then how does all this YIMBYism actually benefit me? The main argument I hear for urban consolidation is that increasing supply lowers the cost. If this doesn't actually happen, then what's in it for us again?
> There are a plethora of totally valid reasons why people would be opposed to endless urban sprawl, consolidation, and population growth.
There really aren't, though, in the sense that the costs (both societal and individual) drastically outweigh the benefits. Of course prohibitions on new construction are narrowly beneficial to specific individuals. Who wants some guys starting up new construction at 7AM next door? If you like your quiet little block, then why on Earth would you want it to densify? Somebody else's construction project is little more than an annoyance, after all. If you can ban it, then great!
The problem is that these individual preferences come with enormous costs, both economic and with respect to individual freedom. When weighed against the downsides, those banal individual preferences about densification are no longer compelling.
In short, yes, people do have rational, coherent reasons to oppose growth, but, no, those complaints are not in the end valid.
Everything in your post is just your own personal opinion.
> The problem is that these individual preferences come with enormous costs, both economic and with respect to individual freedom...
What if I don't agree with increasing the population? If I don't want to increase the number of people in the city I'm living in, then why on earth would I want urban consolidation? Does anyone actually enjoy living in a tiny apartment, as opposed to being able to afford a house with a yard? The need for endless population increase is not just some foregone conclusion. Not everyone here is an SWE living in SF, with SF problems, and SF opinions.
> In short, yes, people do have rational, coherent reasons to oppose growth, but, no, those complaints are not in the end valid.
I don't agree with your opinion. Should I just classify all of it as 'invalid'?
> What if I don't agree with increasing the population? If I don't want to increase the number of people in the city I'm living in, then why on earth would I want urban consolidation?
I’m not sure what kind of answer you’re looking for with those “what if” questions. What if you preferred that the human race go extinct? I suppose the answer to all of these “what if” questions is simply that other people will disagree with you and oppose you in various ways.
> Does anyone actually enjoy living in a tiny apartment, as opposed to being able to afford a house with a yard?
In order to answer this question for yourself you need to first accept an iron law of economics: because decisions are not made in a vacuum, there is no such thing as an abstract preference, only constraints and tradeoffs.
My preference is that I have a 10,000 square foot single-family home located on an otherwise empty block of land just south of Central Park. That way I get everything great about single-family living and access to the economic and cultural superpower that is Manhattan.
But, and I mean this technically and in the kindest way possible: literally who gives a shit?
Everything in life is tradeoffs. The NIMBY position is that tradeoffs can be wished away by legislation. But they cannot. It only deranges the situation.
>What if I don't agree with increasing the population? If I don't want to increase the number of people in the city I'm living in, then why on earth would I want urban consolidation?
In the case of the western world, what population growth? The amount of couples in the first-world having children has slowed to a trickle in the last few decades. This seems to have spooked governments in the western world into enacting policies to encourage immigration, ostensibly to prevent a decline in economic growth coinciding with a shrinking population. The only place where the birth rate is actually increasing is Africa.
My personal theory (which people are free to disagree with) is that the decline in birth rate in the first-world is a reaction to overpopulation. Although I acknowledge that extrapolation from this example is risky, we know that some animals lose their desire to breed when population density increases, and in captivity. Is it so strange that humans could be similar?
> What public policy do you endorse that has the ability to significantly reduce the number of people being born?
I'd endorse free contraception.
Options I'd oppose but others might favor include not requiring insurance to cover fertility treatments, prohibiting IVF entirely, mandatory birth control until marriage, sterilization as punishment for crime, and removing the child tax credit. Plus restricting immigration and increasing deportations which have a similar effect on the people/housing ratio.
(But I'm in favor of more people being born, and building lots more housing)
Increasing the level of education for women. Increasing the access to pre-natal care for women. Decreasing the poverty level generally and specifically for young families. Moving more people out of agricultural work.
Those things are highly correlated with lowered birth rates, though I suspect the last one is probably not applicable to the US.
The birth rate in the US is 1.64 children per woman. It’s already a significantly shrinking population, replacement rate is around 2.1 children per woman. The US only maintains its population through immigration.
The public policy you want to reduce population growth is simply development. There’s a strong negative correlation between HDI and birth rate. The US, Canada and virtually every other developed nation would lose about 20-40% of its population in a single generation were it not for immigration.
I think non-participation has been the standard since primary elections were established. The 20% who do reliably vote in them tend to be home and business owners, whose concern over their housing investment has increased.
I don't think renters ever voted significantly. That being said, this is true. 60% of LA county rents, yet in local elections, 60% of voters are homeowners, and only half of eligible voters participated in the last election despite everyone being mailed a ballot by default and having almost a month to fill it out.
Density also helps landowners, lots that are zoned for multifamily are worth more.
