(2024-10-29) Zvim Housing Roundup10

Zvi Mowshowitz: Housing Roundup #10. There’s more campaign talk about housing. The talk of needing more housing is highly welcome, as one prominent person after another (including Jerome Powell!) talking like a YIMBY.

A lot of the concrete proposals are of course terrible, but not all of them. I’ll start off covering all that along with everyone’s favorite awful policy, which is rent control, then the other proposals.

Table of Contents

• Rent Control.
• The Administration Has a Plan.
• Trump Has a Plan.
• Build More Houses Where People Want to Live.
• Prices.
• Average Value.
• Zoning Rules.
• Zoning Reveals Value.
• High Rise.
• “Historic Preservation”.
• Speed Kills.
• Procedure.
• San Francisco.
• California.
• Seattle.
• Philadelphia.
• Boston.
• New York City.
• St. Paul.
• Florida.
• Michigan.
• The UK.
• Underutilization.
• Get on the Bus.
• Title Insurance.
• Perspective.

Rent Control

Matt Yglesias reminds us rent control is not the answer, unless the question is how to destroy the housing stock of a city without resorting to aerial bombing. He also reminds us that Biden’s actual rent control proposal is in and of itself a nothingburger, but the act of proposing or enacting it carries expectations issues.

It also impacts the current supply.

What, you say? How could that be? Several ways.

Rent control directly means landlords will not maintain the current housing stock. It will be allowed to decay

Jay Martin: Today, I discovered that some actual human adults believe:
The majority of a rent check is profit to a building owner.
That you can renovate an apartment after 42 years in NYC for a few thousand dollars.
That an apartment in a 98 year old building, lived in for 4 decades, doesn’t need to be renovated if it’s “taken care of.”

A proposal to coin the term Rangel effect, for when people like second longest serving member of the house Charlie Rangel end up with multiple rent controlled apartments

The Administration Has a Plan

Kamala Harris: We need to build more housing in America

The plan is a mix of things. The headline proposals like the $25k are not great. If you dig into proposals and details, there’s other things that are a lot better.

There’s also Obama’s now-famous YIMBY endorsement

Matt Yglesias notes this is great, but worries about this making the issue too partisan, noting how Democrats trying to get housing built led Trump to go on his absurd ‘abolish the suburbs’ tirades.

On Harris’s headline housing plan of national rent caps, what fascinates me is not that all the economists say it is terrible – so far so obvious – but that so many do not ‘strongly’ say so. Economists really do have too many arms

Trump Has a Plan

Donald Trump has gone full NIMBY regarding hallucinated plans to ‘destroy the suburbs,’ similar to how Project 2025 says localities must have final say in zoning laws and regulations, and a conservative Administration should oppose any efforts to weaken single-family zoning. Which is one of the low-key most destructive ‘normal’ policies available.

But he does have an interesting counterproposal, from a while back, in theory.

Donald Trump: Almost one-third of the landmass of the United States is owned by the federal government, with just a very, very small portion of that land… we should hold a contest to charter up to ten new cities. (charter city)

Build More Houses Where People Want to Live

Prices

Average Value

Tyler Cowen notes that net migration is out of cities towards suburbs, and thus claims this implies average value is higher in the suburbs, even if externalities are better in the cities.

I say no, this is a civilizational skill issue, as in NIMBY, full stop. The outflow is a mechanical result of there not being sufficient houses where people want to live

Tyler similarly speaks of the surplus from cars, and yes most people get large surplus from their car, of course they do, but exactly because they lack alternatives. They are priced out of places cars are unneeded and we don’t supply mass transit.

Zoning Rules

Your periodic reminder that our most beloved neighborhoods would mostly be illegal under modern zoning rules, and that the rules are typically arbitrary, destructive and stupid.

What I’ve gathered after this post, & in my years of observation, is most people who design, build, & work in placemaking & creating our built environment hate “non-conforming” zoning rules & agree they hold us back from making lovable places. So how’d we get them? NIMBYism

Max Dubler: Basically all of America’s best-loved neighborhoods were built before zoning and the overwhelming majority of them would be illegal to build today.

Alex Contreras rants about floor area ratio and 20 foot setbacks and facade rules in particular, as it can render projects impossible for no good reason

Zoning Reveals Value

In a second more fun case, Scott Sumner shows us the auction for The Chet Holifield Federal Building, also known as the Ziggurat.

the property includes not just the office building, but also 89 acres of land in one of California’s most desirable communities, just a few miles from Laguna Beach. The article contains this graph [of the auction going from $125 million up to so far $154 million].

this is the second auction for the 53-year-old Ziggurat, The first, which required the buyer to preserve the Ziggurat structure, drew no bids. The lengthy response to the latest auction – without that restriction on development – suggests the buyer will likely demolish the structure designed by the late famed architect William Pereira.

From this information, we can infer that the economic cost of this particular regulatory barrier was at least $84 million

Can you imagine what would happen if we auctioned off, with actual no zoning restrictions you can build however you want, a large plot of land in New York or San Francisco? We should try it.

High Rise

*Nolan Gray: Canadian suburbs are building more high-rises than the typical major US city.

Aaron Green: There are currently only nine high-rises under construction in Los Angeles. In Austin, 23. In Atlanta, 51*

New York is large enough that its 207 are not impressive on a per capita basis. It is still in sharp contrast to places like San Francisco.

“Historic Preservation”

The very concept increasingly fills one with rage.

Adriana Porter Felt: only in California… someone is suing to stop a food bank from opening a new location because of a “historic parking lot

Speed Kills

Delays really do matter a lot. A new research paper estimates that a 25% reduction in approval times would increase the rate of housing production by 33% (!), of which 11.9% is purely pulling current projects forward (!) and the rest is starting more projects

Procedure

*Jason Crawford: We desperately need a third alternative to:

1. Authoritarian leader can build anything he decides on, over all objections from anyone affected
2. No one can build anything because it is stuck in years of permitting and approvals*

Neither of those are viable

*Mandating Minimum Housing Sizes is War on the Poor

Why would you force people to buy more space (or other features), especially more space in configurations they do not want or don’t much value?*

Zac: I lived in a studio that was less than 300 sq ft in order to live in the Chicago neighborhood I wanted on a budget and it was totally fine for me as a single person.

When you tell the poor that they must spend their money on something they do not want, you are declaring that you know better than them, and that they should instead give up other things and work harder. You are taking away their ability to live, and waging war on them.

Location and price often matter far more than size. The best way to be upwardly mobile is to move to where opportunity knocks, and not spend your money.

San Francisco

The first proposal to take advantage of San Francisco’s newfound inability to veto all new housing construction after SB 423 triggered is a modest 200 apartment units

I always find it curious why projects proposed in such spots are so modest. The people opposed to you are going to oppose you the same amount either way.

San Francisco has instead moved its focus to banning ‘a controversial form of software that is widely used by large property owners to set rents.’ This software used various information to figure out the proper rent to charge. The argument is that the software was effectively a form of soft collusion. There certainly is some danger of that effect to a small degree, but mostly this ensures that the market functions more efficiently

Oh, right, they do have Golden Gate Park, a bigger park than NYC’s central park, except they put it in a place where there’s no one near it and there’s no BART that gets you there either.

California

Density bonuses sound like invitations to game the system, because they are. And That’s Good, mostly

a project was just approved in unincorporated LA county that used an incentive to get an extra 1287% density bonus!

There should not be a cap on density in most cases, if the project makes economic sense

Gavin Newsom signs five YIMBY-backed bills.

Seattle

Seattle relaxes many rules for office-to-residential conversions, including affordable housing taxes, design review and various land use rules. The obvious question is indeed why not apply (most of) these changes everywhere?

Philadelphia

*Don’t threaten me with a good time: Looks like another case of ‘we built a lot more multifamily housing and now we have a rental glut and prices are falling.’

Which of course is being reported as bad news.*

Boston

The first step in getting more housing is to stop actively sabotaging housing construction, including sabotage in the name of a concern that someone, somewhere might earn a profit. In Boston this was named ‘fair’ housing

Nationally, the Democrats’ “consensus” permitting reform bill would institutionalize similar equity-impact-analysis requirements & invite anyone to sue and hold up a project if they think the equity analysis was inadequate.

That is essentially damn near a proposal to ban large housing projects outright.

New York City

There is a big fight over the ‘City of Yes’ proposal ongoing. The local boards hate it, because local boards hate housing and freedom, but that has been overridden before. It sounds like momentum is building. There’s still a lot of room to be more ambitious. It’s so absurd that New York City itself still has parking requirements, and all this talk of various ‘density bonuses’ makes one wonder why you need to be negotiating on that at all. This is New York City.

Mayor Eric Adams has called for 500k new housing units in the next decade. The current baseline is approximately 3.6 million. If this happened, would it indeed result in ‘abundant and affordable housing for anyone who wants to live in the city?’

I mean, lol, no

if you add 500k units, you’d likely get a price decline on the order of 10%.

The Manhattan Institute analysis of what it would take to get to 500k new units seems sensible

There is plenty of good land available in Brooklyn and Queens, if we gave it reasonable zoning. Whereas instead of facilitating this, we have new rules like requiring zoning changes to submit a ‘racial equity report’ which is Obvious Nonsense, and continuing to require environmental review for NYC housing, which is also Obvious Nonsense – moving people to NYC is strictly positive for the environment versus not doing that.

St. Paul

After [St. Paul MN] voters approved rent control, applications for new multifamily buildings plummeted by 82 percent

Florida

A full 20% of Florida homeowners are going without homeowners insurance.

Michigan

Homeowners associations lose veto power over rooftop solar, also various other home upgrades like EV charging stations

The UK

*Watch out, Labour’s forces are out there with a dastardly plan to build houses.

The Mail tells readers how to ‘become a green belt SUPER NIMBY’ and warns them to ‘watch out for officials turning up with binoculars,’*

Underutilization

*Matt Palmer: Around a third of the commercial buildings in my neighborhood are straight up vacant, more like half if you count the ones being parked as a “gallery” or similar unproductive function.

At this point I think govt needs to force landlords to sell properties that they won’t fill.*

David Hinkle: My understanding is they can’t lower the rents because it will trigger a loan re-collateralization they can’t pay. Commercial real estate is always valued as a multiple of rent prices. These contracts don’t work in a market going down. It’s only designed to go up.

This is rather flagrant bad design. A contract was designed that predictably does a very stupid thing if the market clearing rent goes down.

*Perhaps we can fix the banking regulations so that they choose better terms?

The alternative is to tax extended vacancy. Or it might be sufficient merely to end the tax benefits of staying vacant. A lot of the attraction of staying vacant is that you effectively get to bank the loss.*

Get on the Bus

14-passenger vans

• Trips every 30 minutes
• $18 to and from the airport
• Three pick up/drop off locations (Port Authority, Grand Central, Penn Station)

It makes a lot of sense, 15% of bookings last year came from airport trips.

if they can profitably run this route that means buses are failing to serve a brain dead obvious route that everyone uses and something has gone horribly wrong with commuter bus transit.

Caesararum: the bus that goes from GCT->Penn->EWR is so often so delayed that there’s a cottage industry in ubers and black cabs that poach people from the queue

*at least it was seen as a business opportunity. Why not integrate the shuttle with the app? Yes, the Q70 exists to get you to the subway, but a lot of people don’t know that, or they want to go one place and stop worrying about it rather than transfer into the subway system.

Indeed, for some reason I’ve never taken the Q70, even though it is a clear win once the route is pointed out*

Now we need to do something about JFK – yes you have trains available, and I do take them, but they’re both terribly slow.

Title Insurance

your periodic reminder that the whole Title Insurance Industry is a scam.

Yes, they technically provide a service, but they pay out pennies on the dollar. Somehow you have to buy it, and they manage to price fix by a factor of about five to ten.

How do we get a politics where ‘end title insurance’ is a good part of someone’s platform? Have the state take over tracking titles

Perspective

Matthew Lewis: You know what aren’t scarce in the United States? Cars.

You know why cars aren’t scarce? Because we build 16 million of them per year.

You know how many homes we build per year? About 1.4 million.

Don’t tell me the United States is a country. We’re a car company.

Logan Bowers: Imagine how expensive cars would be if every city and town in the country had a distinct 2,000 manual detailing exactly how each type of car has to be uniquely built to match the other cars in the neighborhood, but also the existing models of cars are illegal to build too.