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Affordable Housing

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600_stvy

Affordable housing lotteries in New York are really a sign of just how woeful the housing situation is in that city for the poor, not to mention the middle class.

In a January press message, the developers of Pacific Park Brooklyn suggested “the demand for affordable housing in the borough is tremendous,” citing more than 84,000 applications for 181 units at 461 Dean and “roughly 95,000 applications” for 297 apartments at 535 Carlton. These are among the first four residential buildings in the 15-tower project, which will contain 2,250 below-market units among 6,430 apartments in Prospect Heights.

But such catch-all statistics—regularly used in depicting the hunt for below-market units—camouflage how low-income applicants face crushing odds compared to middle-income ones.

Exactly 92,743 households (not quite 95,000) entered the lottery for the “100 percent affordable” 535 Carlton tower, city data show. But only 2,203, according to City Limits’ analysis, were eligible for 148 middle-income apartments, such as one-bedrooms renting for $2,680 monthly and two-bedrooms at $3,223, affordable to those earning six figures. (The massive Excel spreadsheets, with names redacted, were obtained via a Freedom of Information Law request.)

Also, 4,609 entrants vied for 44 units in the building’s other middle-income “band,” which includes one-bedrooms at $2,170 and two-bedrooms at $2,611, with rents set at approximately 30 percent of household income.

For less costly apartments, the competition was fierce. For the 15 moderate-income units, including seven one-bedrooms at $1,320, some 18,680 households applied.

More starkly, nearly 67,000 households, some 72 percent of the applicant pool, aimed at the 90 low-income units, including one-bedrooms at $589 and $929, for singles earning $21,566 to $25,400 and $33,223 to $38,100, respectively.

A good number of them were ineligible because their incomes either were too low or they fell between the two low-income “bands.” Also, 15 low-income units will ultimately be distributed outside the lottery, designated for homeless households under a new city policy.

While New York may be the worst city when it comes to affordable housing (or second, outside of San Francisco) it’s a growing problem throughout the urban core of our nation. The problem is that the new building is too unregulated, in that it allows developers to set the market, where the profit is all on the high end. What we actually need is a new round of public housing building, except that this time, the government needs to actually fund the housing instead of assuming it will generate the expenses needed to keep it up, which was the main problem with the notorious mid-twentieth century public housing projects that gave the whole concept a bad name when they fixed with white flight to make these buildings a living hell for residents. It’s good that there is some requirement for affordable housing, but it flat out isn’t enough and it never will be until the government mandates it.

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  • PunditusMaximus

    The actual problem is that a second order effect of the Obama/Geithner/Bernanke “shovel enormous quantities of money into the pockets of extremely wealthy grifters and hope something good happens” economic policy is that there is a lot of stupid money wandering around the high end. There really are only two things one can buy with this money — entertaininment and real estate in places people want to live.

    There’s only so much entertainment one can consume. The problem is that neoliberal collusion with conservative economics also means that there aren’t all that many places someone with the choice of anywhere to live would possibly choose. So the first-tier places (SanFran, NY) become utterly unaffordable, and the second-tier places (Seattle, Portland, San Diego, Hawai’i, some of Chicago) become rent-extraction machines, because owners can always sell out to stupid money.

    Vancouver had this pretty bad, but it was Chinese stupid money (same issues, politically). They put in a tax on foreign-owned property transfers and contained a lot of the damage. Of course, NY doesn’t even remotely have this option.

    • PunditusMaximus

      Remember, 2/3rds of every dollar in the finance sector is pure grift. The finance sector was about 3% of GDP in 1950 and is around 9% now.

    • postmodulator

      There’s only so much entertainment one can consume.

      Although it amazes me how much inequality has shaped even this.

      If you’re a musician these days, there are basically two potential sources of big-money revenue. Selling your songs to commercials, and playing private parties for the 1%. The money is so insane that very few people are immune; Beyonce does it.

      This trickles down into the tiered pricing every festival and concert has now($1500 3-day VIP package!), to the point where I just saw that you could pay $125 for a meet and greet with the Juliana Theory before a club show.

  • EvanHarper

    I would have thought, neoliberal shill that I am, that affordable housing lotteries in New York are a mainly sign of how far below market prices these “affordable” units are mandated to rent for.

    • Murc

      Yes?

      The fact that that’s true doesn’t also mean that the rent is too damn high.

  • Rob in CT

    It sure seems like we’ve got an undersupply problem. Whether that is addressed by public housing projects or private developers stimulated by relaxed zoning restrictions, or a bit of both, it needs to happen.

    http://www.motherjones.com/kevin-drum/2017/04/were-now-second-biggest-housing-boom-all-time

    • Dilan Esper

      Yeah. Certainly more public housing is needed, but the reason why all the new private housing is high rent units Erik decries is because so little of it is built. Djw and Matt Yglesias have written about this.

      • gccolby

        It’s pretty simple. If you can only build a small number of units, building anything other than luxury units is crazy. If you can build a truly huge number of units, you’re going to address more markets simply because you’ll run out of rich people to compete for.

        • djw

          If you can only build a small number of units, building anything other than luxury units is crazy.

          This is particularly true when the cost of the land is generally going to track the most lucrative project that could legally be built there (which also helps explain why building affordable housing in really expensive cities is sufficiently expensive that it’s almost certainly never going to scale to demand unless those cities find massive new revenue streams.)

          As far as targets of progressive ire about unaffordable cities go, a lot of that’s targeted at “greedy developers” would make a lot more sense to target at “greedy landowners who won the zoning lottery”.

          • gccolby

            It’s not too different from being angry about the ACA because an insurance corporation is making money under the law. In urban housing, the developers are (or should be) instruments of more equitable housing policy in the same way insurance companies are instruments of more equitable health care policy. The housing equivalent of single-payer is publicly-financed housing. It’s not a realistic solution in the current political environment.

    • Brett

      Supply is expanding rapidly in New York City, enough that rents have either greatly slowed down in increase or even gone down on average.

      It’s still not enough, and there’s stability to think about as well. New York City either should build a ton of affordable public housing, or they should use eminent domain to acquire most of the still affordable housing stock and create a bunch of community land trusts.

      • Rob in CT

        Supply is expanding rapidly in New York City, enough that rents have either greatly slowed down in increase or even gone down on average.

        Good to know! Yay.

        More of that would be good.

        • djw

          Construction booms are also contributing to modest declines in San Francisco and DC and maybe Seattle too. (LA, which has less housing growth per capita, is seeing some of the largest rent increases in the country right now.)

          The new luxury housing isn’t directly useful to people who can’t afford it, but insofar as it takes some rich people (who are moving to the city regardless of whether the new housing is built) out of the bidding for older, less fancy units, it’s still better for the overall housing affordability picture than nothing at all. (Unless too much of it is being snapped up by speculative investors who don’t intend to rent them out, which is only really a problem for a few cities, NYC being one of them. But that’s as much a symptom as a cause; it’s an attractive investment because they’re betting on continued housing scarity driving up the value, and that scarcity is a political choice.)

  • lmontheinternet

    There was an article a while back discussing how the “affordable” unit folks were being denied amenities at the buildings because eww poor people and then I found out how much those “affordable” units were going for.

    The rent is too damn high.

    Honestly, I make a good wage and live in an expensive city, 1 bedroom. No way I can afford kids, I’m barely making rent. And meanwhile, all they’re building are giant luxury places where a studio is 3K/month.

    I just want AC and an elevator and maybe be able to buy meat every so often…

    • Murc

      AC is actually a major ask in some cities. Even getting a place where you can put in a window or wall unit can be difficult depending on your locale.

      • lmontheinternet

        Yeah, I know. I just find it very frustrating that “wanting AC” is apparently a thing that only comes bundled in with buildings that have doormen, indoor swimming pools, gyms, etc.

        • Murc

          It is better than it used to be on account of freestanding AC units with attachments designed to fit into horizontally sliding windows have become more affordable, although not cheaper to run.

          Where I live, there are a lot of apartment buildings that retrofitted in the 90s and aughts by installing wall AC units in every apartment, which didn’t require them to gut the building to put in central air. (We have a lot of electric baseboard heat around here, which means no pre-existing ductwork.) We’re luckier than some places.

  • Karen24

    I agree on the need for more public housing, but can work on making it not hideous this time? Those mid 20th C disasters were caused by more than the failure of public financial support; the buildings were really ugly on the day they opened. I realize that aesthetics are not the most significant issue, but it’s still definitely an issue and, since there’s no immediate prospect of any of this happening, we should at least talk about it now.

    • Hogan
    • joel hanes

      Worse than being ugly, they created no spaces in which people would choose to live. When the stairwell or hallway is the only indoor public space, and the exits lead directly to bleak, bare surroundings, the pathologies of the architecture will be echoed in the social interactions of the residents.

      • ThresherK

        Yep. Plus the incredible crowding, and byproducts almost guaranteed with the non-mixed-income monoculture: Keep the castes separate geographically.

        I would like to know if SFHs in the good old American suburbs are still being built predominantly as monolithic subdivisions.

    • LeeEsq

      We should just give the job of building public housing the government of Vienna.

  • manual

    The problem is that the new building is too unregulated, in that it allows developers to set the market, where the profit is all on the high end.

    This is very wrong. We have a much more regulated housing market than we used to and it is less development friendly, relative to demand, than many countries. These fact free claims by liberal are not helpful to those trying to ease cost burdens in urban markets.

    • PunditusMaximus

      Regulation is not a dial that goes from low to high. If you wanna develop for the high end, it’s actually a lot easier than developing on the low end, because NIMBYs also have access to the process.

    • Just_Dropping_By

      The more relevant point is that even if all new construction in a market consists of luxury units, it depresses rents on existing luxury units, effectively making them “slightly less than luxury” units, which in turn depresses rents on existing “slightly less than luxury” units, and on down the line. (I.e., what was a luxury unit in a 1980s apartment building is not going to be considered a luxury unit by current market standards absent some substantial renovations.)

      • PunditusMaximus

        Sure, so long as you lock the borders to your city and don’t let anyone in.

        • djw

          The inflow of rich people is not determined by new housing being built specifically for them. Rich people are coming to Seattle because they’re being offered high-paying jobs. If they have to outbid a less-rich person for a not particularly fancy unit when they get there, so be it.

        • Just_Dropping_By

          Well, yes, growing demand can offset some or all of that effect in the sense that rents will keep rising for all types of units, but, as djw points out, construction of new units (luxury or otherwise) generally doesn’t cause people to want to move to a given metropolitan area. Increase in demand for housing generally precedes an increase in supply of housing.

          • djw

            There are definitely some desirable cities where increased supply that leads to a modest reduction in rents may induce some new demand–namely, recent economic refugees slumming in Daly City or whatever, happy to move back to the city if rents returned to a price point they could afford; under such circumstances increasing supply is more likely to stabilize or slightly lower the rents than seriously reduce them. But, stable is better than rising, and the more people in the city, the more tax revenue for the city to do things like affordable housing with.

  • N__B

    Stuy Town looks so pretty.

  • Srsly Dad Y

    Honest question, vaguely related.

    I’m white and live in D.C. In two years, I expect to move from a rental place in the White Northwest to another rental. What is the best left-wing move? It seems my choices of neighborhoods on the Metro lines are (1) mostly white and therefore structurally racist, (2) majority minority, where I would probably bid up the asking rent, not to mention looking like I’m trying be cool and make statement, or (3) gentrifying, with all of the tensions that go with that. And even if I found a racially and economically balanced area (Hyattsville, MD?), by moving there, I would tilt the balance toward white and rich. Honestly asking.

    • tde

      The answer is you’re racist

      /s

    • SatanicPanic

      Move where you want just be a good neighbor.

      • PunditusMaximus

        Move where you want to be a good neighbor.

    • lmontheinternet

      Honest answer: what’s the best commute? If you like libraries/other public goods, are they convenient to them? If you like walking, are they walkable? If you belong to a religious community, are there religious community centers/groceries near there? I haven’t lived near DC in ages, so for all I know things are different now, but back when I was there, the Red Line was, it seemed like, *constantly* on fire, so I’d avoid the Red Line ;)

      • CP

        I haven’t lived near DC in ages, so for all I know things are different now, but back when I was there, the Red Line was, it seemed like, *constantly* on fire

        Still is.

    • Sarcasm: Kalorama, where white privilege is so entrenched you can’t possibly make anything worse.

      Reality: You should move to a place that allows you take public transit to work, then concentrate on being a member of your community and participating in communities of interest (neighborhood associations, churches) so that you learn what people around you value. The rent thing is a distraction, as if you don’t other white people will. See, e.g. Shaw.

    • Srsly Dad Y

      Thanks for the replies. I’ve lived in the DC area for 20+ years, and I’m rich/frugal enough that I could live a few blocks from my office if I want to. My question is purely how to be a Less Bad Rich White Guy.

      No help from the super-regular commenters?

      • Linnaeus

        I don’t know if I count as a super-regular commenter, but if I do, I wouldn’t suggest anything much different than what others have already said here. Go where you want and buy/rent what you can afford. Just be aware of the context in which your choice is made and from there act in accordance with your principles.

    • gccolby

      Don’t make the mistake of thinking displacement of minority communities is about your actions as an individual consumer. The problem isn’t about YOU, and a guilty-feeling white liberal making different choices isn’t going to fix things. Move where you want to and can afford to live.

      • Srsly Dad Y

        I don’t think this is the consensus of the LGM front-pagers or commentariat, based on the Good Schools threads.

        • gccolby

          I don’t think this is the consensus of the LGM front-pagers or commentariat, based on the Good Schools threads.

          Uh. So what?

        • Linnaeus

          I wouldn’t go so far as to say that. Erik is the only front-pager who’s written much of anything on that, and his arguments get a lot of pushback in comments.

        • gccolby

          To expand somewhat: if one is wringing one’s hands about the most appropriately “left-wing move” one can make, and you can’t move to a white neighborhood because reasons but you also can’t move to a majority-minority neighborhood because reasons, well, that sort of suggests to me that the mental model whereby we try to address systematic injustices through deliberate decision making about our purchases or where we rent or buy a place to live is very badly broken. I mean, of course there isn’t an obvious solution here, because where you, Random White Guy, choose to buy a house can’t possibly move the needle.

          As for where schools figure into this, I don’t have much to say on it because I think choosing a place to live based on school quality is absurd and everyone just needs to stop doing it. But I don’t have kids, so there you go.

          And if this opinion is contrary to some supposed LGM orthodoxy, I don’t care because that’s not what I was going for.

          • Srsly Dad Y

            I should have started my reply with, “Thanks, I tend to agree with you, but ….”

  • LeeEsq

    Affordable housing by lottery is one of the worst ways to provide affordable housing because it is random rather than fair and universal. Many blue cities and metropolitan areas are having a housing shortage because zoning and other land use law prevents denser and more housing to be built. There needs to be more dense housing allowed in the cities and the suburbs even though a lot of people oppose this.

    • liberal

      Affordable housing by lottery is one of the worst ways to provide affordable housing because it is random rather than fair and universal.

      Agreed. It seems capricious.

      • Just_Dropping_By

        Is it more fair to award it to the person who camps outside the housing authority’s office to get their application submitted first? Or to award it to the person who can write the cleverest application essay? Because there’s going to be some sort of rationing mechanism based on the relative demand for versus supply of these units and it’s already been determined that price is not going to be the rationing mechanism.

        • djw

          Right, when the supply falls way short of demand, it’s either a lottery or something just as arbitrary (if you do it by waiting list, young people will never get it, which seems less than ideal).

    • N__B

      In general, yeah, but not in NYC. The problem here isn’t that developers here are constrained by density regulation, they’re constrained by greed. Why settle for only a 10% profit when they can build $4000/s.f. condos and get a 200% profit? (Until, of course, the next turn of the cycle, and the people left standing in construction when the music stops are out of the game SOL.)

      • Right–and the only reasonable answer to this problem is much greater government action on the issue.

        • N__B

          Yeah. The city government has picked up the pace a bit, but it’s still nowhere near enough.

      • SatanicPanic

        People get mad every time they hear about a new SF project that has $3500/mo studios, but prices are starting to level off there. The real action is in the suburbs though- get rid of their stupid zoning laws and you’d suddenly have plenty of space for development that wouldn’t be nearly the hassle developers deal with in urban areas.

        • PunditusMaximus

          +1000

          Other than NYC, the problems are very much in the nondense suburbs surrounding these cities.

          • LeeEsq

            I included the word suburban in my paragraph for a reason.

          • joho9119

            Boxed in by the ocean one one side, rabid NIMBYs on the other (and, let’s be fair, the NIMBYs are everywhere in the city as well).

        • joho9119

          Yeah imagine if the majority of inner-ring suburbs were zoned for four-to-six story construction with additional stories allowed near transit lines. We’d likely be able to fix a lot of affordability issues just with that.

          Also, many of these older cities cannot annex their burbs and rezone them. So… yeah not exactly sure how to proceed with this.

          • SatanicPanic

            California occasionally sues cities that don’t meet their affordable housing goals. I’d like to see more of that.

            • N__B

              The feds did that with Yonkers and won, but it didn’t generate much housing.

          • PunditusMaximus

            This is an area that I’d like to see more discussion of — cities are the creation of the states that empower them, and the relation is to a unitary state government.

            There’s no deep rule that says states can’t change municipal boundaries as needed to keep an area governable.

            • gccolby

              And a number of progressive city/state governments did this in the mid-century period. The entirety of Davidson County, TN was incorporated into the city of Nashville in 1963. There are several other consolidated city-counties in the South and Midwest.

        • Dilan Esper

          It’s not just the suburbs. There should be 4 million people living in San Francisco, not 800,000.

          • SatanicPanic

            Many parts of the city could easily be built up, for sure.

          • gccolby

            You’re on-point today, Dilan. In point of fact, ALL of our high-demand coastal cities need to be more populous than they are today. Much more populous. Shockingly more populous, I think, to the people living in them. The ideal SF wouldn’t be recognizable to it’s current citizens. Or Boston – this city should be closer in population to Philadelphia, given metro population and level of demand. NYC, too, should be bigger, but this would be less mind-blowing since it’s already the densest large city in the USA. But this should all be emblematic of how profound the problem is, and how badly cities screwed the pooch with the mid-century introduction of character and preservation laws, parking minimums, the like. Everything has to change. Housing, infrastructure, transportation. Everything.

            • Srsly Dad Y

              NYC should look like Hong Kong (all tall), and probably will in 100 years.

          • LeeEsq

            Somewhere between a million and two million in San Francisco and a similar number in Oakland. San Francisco is only 48 square miles in size and 4 million people on 48 square miles is excessive.

            • gccolby

              For reference, Manhattan has 1.6 million on 33.6 square miles. 4 million in SF proper probably would be pretty insane.

              • NewishLawyer

                Yep. Not too mention the public transit infrastructure could not handle it without a massive increase in funding.

                • Dilan Esper

                  We’re going to have to build that infrastructure anyway, even if the new residents move to fthe suburbs.

                • gccolby

                  It would take a lot less than 4 million to strain transit. Transit, transportation and infrastructure would need massive investment to support even relatively modest growth. But they do pay off.

              • LeeEsq

                Paris proper and San Francisco proper are about the same size. Paris has around two million people.

        • djw

          Well, and the suburbs-in-the-city. Some of the neighborhoods of Western SF have been incredibly successful at fending off even the most modest density increases in zoning. (God forbid their parking become slightly less convenient because their neighbor was allowed to turn a basement into a 1-bedroom unit.) Same for the ~65% of Seattle zoned for single family homes.

      • LeeEsq

        Business people will tend to go for the biggest profit.

        • SatanicPanic

          “Leave money on the table” is a hard pitch to make. Upthread I was trying to make the point that SF has seen rents level off even though they’ve mostly built expensive new buildings. And anecdotally here in San Diego I have friends who live in a very new building and that building is offering concessions for resigning for another year because it hasn’t filled up quickly enough.

          • PunditusMaximus

            At some point, people straight up cannot physically afford rent.

      • DAS

        The real problem then is all the money flowing into the NYC (area, actually … the effects are felt in the suburbs too) housing market that is driving up prices.

        We have plenty of housing stock in the NYC area. But any housing that is (for example) convenient to mass transit (and high density housing doesn’t work well without mass transit, because then people have cars, which need parking spaces), at least in our neighborhood, gets snatched up by foreign investors and rich people before the middle class have any chance to attempt to buy it.

      • quarternine

        “The problem here isn’t that developers here are constrained by density regulation….” Just curious: what do you think is stopping developers from building apartment towers in Park Slope?

    • Ronan

      “Affordable housing by lottery is one of the worst ways to provide affordable housing because it is random rather than fair and universal.”

      I dont really understand this (genuinely, Im probably misunderstanding). But what is a more fair way to allocate affordable housing if there arent enough houses to meet demand?
      Random allocation is surely just a way of assigning something, it’s not a solution in itself.

      • N__B

        But what is a more fair way to allocate affordable housing if there arent enough houses to meet demand?

        Combat. We’ll see how much those kids really want a home.

        • Ronan

          What would it take to convince you to take me in as your live in lord?

          • N__B

            Up-front cash.

      • NewishLawyer

        There are two buildings that do subsidized housing for artists in NYC. The problem with the lottery/waitlist is that it doesn’t take size of the family into account. So a single person might end up getting a three bedroom apartment because that is the next unit that becomes available or a family of four might get a one bedroom or studio and then you have to take it or leave and try again.

        • Ronan

          Really? That does sound pretty dumb.

      • LeeEsq

        Besides what Newish said, it allows some people to get sweet deals simply because their numbers came up and others struggle. An ex-wife of an early client got a bellow market rate duplex in Brooklyn Heights through a housing lottery.

    • NeonTrotsky

      Honestly, suburbs as we now know them should be completely restructured. They are incredibly space and energy inefficient, and environmentally costly as well.

      • PunditusMaximus

        Another +1000

      • ThresherK

        Let’s start with the exurbs, then leave the inner ring suburbs for last.

        If you don’t recall, exurbs were the places David Brooks was fluffing as the new “it” location, thirty miles from anywhere, for Patio Dad and Realtor Mom. I swear he was doing this when the Denver Post was already running their c. 2006 series on the mortgage default disaster.

        PS Have you read David Owens’ “Green Metropolis”? I found it useful.

        • N__B

          Let’s start with the exurbs

          I blame FLW.

  • liberal

    The whole housing thing is pretty much hopeless, because people left of center (the only ones who have any honest motivation to fix the problem) have no understanding of the driving economics: land rent.

    • lmontheinternet

      I’d be interested in hearing more about this, as a leftie dealing with other lefties yelling “NIMBY!!!11!!!!eleventy!!!” when they oppose every single building proposal that comes up in the neighborhood.

      There’s a proposal for a new building two blocks from me, that I desperately want to be built, but two of the public comments are honestly nothing but “oh noes my backyard! oh noes, construction vehicles! oh noes my view!” (aside: *what view*? there’s nothing scenic here) and the local elected official has come out against very strongly. Honestly, these are proposed 4 or 5 level apartment buildings, there’s already 14 story apartment buildings around here, what is their damage.

      tl;dr I need to get better at advocating for getting stuff built, would welcome a lesson :)

      • PunditusMaximus

        “Love me, I’m a liberal.”

        • lmontheinternet

          Dude, what? I’m asking a honest question about how I can help get things built in the place where I live and want to stay. If I’m going to talk to my local folks about this, I’d really rather go into it with a full understanding of the issue.

          • PunditusMaximus

            It’s an old song by Phil Ochs.

            This is a deep, old problem. It is profoundly intractable.

      • joho9119

        Submit a public comment explaining why the project would be good overall for the neighborhood and maybe get a friend or two to do the same. Shoot, create a form letter and give it to friendly neighbors. Doesn’t take a ton of pressure to shift someone on a hyperlocal project.

        • djw

          +1. Adding to pro-density, pro-development public comments is probably one of the highest-impact ways to dull NIMBY political power. It varies by city but in Seattle they’re really disciplined and diligent about it, getting a good mix of pro-development comments in there is particularly helpful for officials who do want the projects to move forward.

      • First Time Caller

        Read some of the discussion about advocacy and planning at Strong Towns.

        They have a slightly different take on density and approach it from a municipal finance perspective. In short, a town never collects enough in taxes for a typical 1-2 units/ac development to cover the cost of maintaining infrastructure.

  • tde

    Why in the world should we spend any public funds to subsidize people who want to live in SF or NYC?

    For the cost of building one subsidized unit in SF you could probably build dozens in less expensive locations.

    • First, because these are areas of enormous economic wealth with millions of jobs. Second, because dense urban living is far more environmentally friendly than sprawl. Third, because of social and economic justice concerns.

    • lmontheinternet

      “Want to live”, translated: my job is here, my relatives are here, the transit is good so I don’t need a car, there’s good hospitals, fewer people want to beat me up for being [insert identity here] than in alternate locations, oh and also my job is here.

    • PunditusMaximus

      Because we as lefties have given up on even trying to make the rest of America decent.

    • Captain Tuttle

      Do you drive a car? I live in New York City and gave up mine when I moved here. I don’t know the exact figures, but you are being subsidized for your lifestyle.

    • Brett

      It would be difficult because of jurisdictional issues and anti-density activism, but you could build much better high-speed transit connections between big cities and surrounding communities, and situate housing projects out in those outlying “satellite” cities. It’d be like a public housing version of “bedroom communities”.

      • erick

        Exactly. The biggest problem we have in the US is our lack of transit.

        Anyone who wants a job in the future economy has to move to a relatively small number of cities because there is no easy way to commute. A German can live in numerous small cities and commute to Frankfurt for work they don’t all need to move there.

        • gccolby

          Better intercity transit is desirable, but higher densities and living in the same city you work in is more desirable.

  • DrDick

    This has even become a problem here in the wilds of Missoula, where median home price is $250K, but median income is only about $44K.

    • NeonTrotsky

      Montana is growing in general isn’t it? That’s probably pushing housing prices up all over the state unfortunately.

      • PunditusMaximus

        Nah, it’s the same problem as everywhere else. Missoula is by far the best place to live in Montana, so folks are moving in with financial and tech sector grift money.

        • DrDick

          Pretty much. It is also a college town and a lot of those folks from out of state are buying up a lot of rental properties, which drives up prices. Rents are also higher here.

        • djw

          Missoula is by far the best place to live in Montana

          For whatever reason (more wealthy retirees? Proximity to Yellowstone?) housing in Montana’s other college town, Bozeman, is considerably more expensive, despite similar or slightly lower income levels.

      • DrDick

        Only western Montana and Billings. The eastern part of the state has steadily lost population for 40 years.

    • Murc

      This has even become a problem here in the wilds of Missoula, where median home price is $250K, but median income is only about $44K.

      Hmm, that is pretty high; financing 250k over thirty years at a decent APR, factor in property tax and homeowners insurance… geez, that’s like twenty grand a year before utilities even enter it.

      You could hack that if you didn’t have a kid, but of course the irony is that if you don’t have a kid you likely don’t need that much house, but if you have the kid you can’t actually afford the house.

      • Just_Dropping_By

        Hmm, that is pretty high; financing 250k over thirty years at a decent APR, factor in property tax and homeowners insurance… geez, that’s like twenty grand a year before utilities even enter it.

        You’re assuming no down payment there. With a 20% downpayment, only $200K is being financed.

        • Brett

          It’s not as bad, although you’d still struggle to provide that on a $44,000/year income. Realistically, that means one person working full-time while their partner works part-time if they have children (or full-time if they can afford day-care).

        • Murc

          Saving up fifty grand on 44k a year is a non-trivial task.

    • ThresherK

      How much of that are vacation “ranches”, etc, for wealthy folks who live elsewhere?

      In CT, the much smaller scale are the Litchfield hills, overrun with people from NYC on weekends.

      • DrDick

        Not too much here in Missoula. Most of those folks are just south of us in the Bitterroot Valley (Charles Schwab lives there), over in Bozeman, or up in Whitefish.

  • NewishLawyer

    The problem with housing debates and policy is that they are complicated and too many people seem determined to stand by their own pat theories and villains.

    1. Developers are not the villains but the greatest victory of landlords and the NIMBY crowd is to turn developers into the villains. Building lowers rent. It happened in SF, Los Angeles, and NYC. The problem is that many booming areas are dealing with decades of undersupply and underdevelopment and now need to catch up. The other problem is that the suburbs of Silicon Valley need to build and build now and build more but they refuse because most equity is held in home values in those communities.

    2. The reason building lowers rent properties is not because developers build family for moderate and working income people but because they build housing for people like me and my girlfriend. We are both professionals with good incomes in rent-stabilized apartments. These are good values for us but if there were more options for condos or homes, we would move out of our rent-stabilized apartments. Right now, even with the building boom, everything that is good is just too much of a stretch and doesn’t meet our medium-term needs if we want a space that would be good for having a kid in a few years. When people curse developers, they seem to be cursing “But developers don’t make housing for people like meeeee! They make housing for icky yuppies who like bougie things.”

    3. That being said, there is still a huge problem with income inequality that gets added to the housing debate. People can’t afford housing because they have job and income insecurity and too many of the gains go to just a small percentage of the population. From what I read yesterday, there is a huge problem with unemployment in retail because of the move to on-line shopping. This is going to hurt people of color who live in cities.

    • gccolby

      This.

      It’s not wrong to say the government needs to step in, but in general the government needs to do that by reducing constraints, rather than introducing them. In today’s cities, things like height limits and parking minimums (don’t even get me started on how evil parking minimums are) severely constrain the ability to make big gains in the housing supply. These restrictions need to be lifted. Here in Boston, the signature housing style is the triple-decker, built in huge numbers in the late 19th and early 20th century. Being light-frame wood buildings, they’re relatively cheap to construct, but most of the existing stock would be illegal to build today in most of the city because they don’t meet local minimums for off-street parking spaces. This is insane for environmental and social reasons, but there it is. This isn’t to say this style of building is perfect (modifications to meet modern safety and accessibility standards would be necessary), but it’s an example of a non high-rise housing solution that could nonetheless increase density dramatically.

      Honestly this is also a case where local governments should really rely more on technocratic experts and act with a bit less neighborhood accountability, not more. If cities can come up with a way to allow for transparency and accountability through a new process that isn’t the highly NIMBY and crank-prone neighborhood meeting, that would be great. Existing residents in a neighborhood should not have veto power over other people having a good place to live just because they happen to live in a certain place and others do not.

      Clearly, we need cultural changes, too. Neighborhood incumbency is no great virtue. People are entitled to pride of place and should care about where they live, but closing the gates goes beyond pride. Cities are dynamic, changing places, and it’s a real shame that municipal governments decided in the last 50 years or so to enshrine people’s resistance to that change in law. It has been a huge mistake and an injustice that needs to be undone.

      • PunditusMaximus

        Parking minimums are literally the death of cities.

        • DAS

          OTOH, unless (a) new housing stock is being built near mass transit, (b) there are stores, etc. within EASY walking distance of the new housing stock and (c) people moving into that new housing stock work in locations that are well served by mass transit, the people moving into the new housing will have cars. So it would be a mess unless there is parking for those cars.

          How much development can actually be placed near existing mass transit (and does existing mass transit actually have the capacity to add new customers in the new development) and existing stores, etc.? Even if you say that there will be a new bus line, it still feeds into existing mass transit that often is already overly crowded. And if people find that it is quicker for them to drive than to use mass transit, they may very well end up driving … hence there will be cars whether there are parking minimums or not.

          • gccolby

            There are absolutely new challenges created when you make it harder to park, but people who cannot afford to store their cars mysteriously become much hungrier for improvements in transit and non-automotive transportation facilities. And those improvements are easier to build when there’s less land occupied by stationary cars.

            No one said this shit was easy, but a) you have to start somewhere, b) reducing and eliminating subsidized parking is by far the best place to start, and c) as Punditus Maximus has already said, parking minimums are incredibly detrimental to urban vitality and growth.

          • djw

            OTOH, unless (a) new housing stock is being built near mass transit, (b) there are stores, etc. within EASY walking distance of the new housing stock and (c) people moving into that new housing stock work in locations that are well served by mass transit, the people moving into the new housing will have cars.

            That may be true, but it doesn’t make the case for parking minimums. Let developers guage demand for parking themselves. They’re more likely to overshoot than undershoot. If they undershoot, and competition for the free/subsidized on-street parking becomes sufficiently fierce such that people are willing to pay for more convenient and reliable parking in the neighborhood, then presumably someone will sell it to them. If not, it’s because probably because they say they want it, but not enough to actually pay the cost. That’s because usually, inconvenient on-street parking in low/medium density areas just means occasionally having to walk a block or two to get to the nearest on-street spot at any given moment, which doesn’t strike me as an urgent public policy problem worthy of implementing policies that but affordability at risk. (Let’s keep in mind that if our goal is increasing the supply of affordable housing, there are few worse things cities can do than implement parking minimums, which absolutely do contribute (sometimes a quite a bit) to higher housing costs.)

  • postmodulator

    Someday, in NYC and London, the luxury housing market will collapse because the Russian mafiya gravy train dried up.

    Something similar will happen someday on the west coast and in Vancouver when the Chinese plutocrat money dries up.

    What’s irritating is that it probably won’t lead to a housing price correction in any of those places. Urban developers have an almost preternatural ability to leave units empty indefinitely.

    • gccolby

      Urban developers have an almost preternatural ability to leave units empty indefinitely.

      Just for once, I’d like an actual cite for the oft-repeated claim that developers and building owners are sitting on vast numbers of empty units rather than lowering the price. There is truly a vacancy optimum in the rental market, for both renters and tenants. Renters set prices to allow a vacancy level that suits their purposes, of course, but anyone who’s ever hunted for an apartment in a city with high demand for housing knows that a complete lack of vacancies doesn’t actually benefit them. I simply don’t buy this widespread belief that mustache-twirling developers and owners are holding out on empty units for months to years rather than reducing the prices to better match demand, much less that any such phenomenon is an important contributor to the affordable housing crisis. These people want to make money, after all, and it’s a tight business. In fact, there’s ample evidence that prices have eased a bit in coastal cities as the economy has improved and cities have loosened up a bit on allowing housing starts. It’s only a start, but the evidence is that developers and owners will respond to increased supply or lowered demand with lowered prices.

      • Captain Tuttle

        I live in an historic building in Manhattan. For the last 7 years the only people living in it are the ones who have rent protection while the owners slowly do renovations to the building and the empty units. There must be a reason other than incompetence that new rentals or condos have not been put on the market.

        • N__B

          You may be underestimating the depths of incompetence that exist.

        • gccolby

          FIrst, what N__B said. Second, an anecdotal account of the situation in your building doesn’t constitute evidence that sitting on vacancies is a major contributor to the housing crisis.

      • postmodulator

        Just for once, I’d like an actual cite for the oft-repeated claim that developers and building owners are sitting on vast numbers of empty units rather than lowering the price.

        Does “driving around with my eyes open” count as a cite?

        • gccolby

          Does “driving around with my eyes open” count as a cite?

          No.

          To paraphrase you, people have a preternatural ability to see what they want to see.

      • Murc

        Just for once, I’d like an actual cite for the oft-repeated claim that developers and building owners are sitting on vast numbers of empty units rather than lowering the price.

        I’d be glad to!

        However, worth nothing: this is mostly a NYC and London thing.

        The real estate market in those two cities is such that owning pieces of property is a lucrative investment even if that property isn’t actually doing anything. Therefore there are places where people and organizations who have no actual interest in being landlords have bought housing stock as an investment vehicle, not a commercial vehicle. To them, the property is the equivalent of a stock or bond whose value is going to increase faster than the rate of inflation.

        Being a landlord is hard and requires investment and expertise. Why bother if the property is going to produce value anyway?

        This problem doesn’t have much salience in many other cities, tho.

        • SatanicPanic

          To state the obvious though, single family homes aren’t apartment buildings.

        • Vancouver (BC) as well, to the point that they implemented a vacant-unit tax in the city last year.

    • SatanicPanic

      I don’t know about that. There are some notable exceptions, but most developers want to offload their property as soon as possible, and they’ll make a lot more money selling a stabilized property. Usually the only time owners want to keep units open is when they’ve managed to drive out some rent-control tenants and want to sell it to someone else who can set new rents.

    • PunditusMaximus

      Vancouver already cooled off their market by putting in some very low-key brakes on foreign sales.

      https://www.bloomberg.com/news/articles/2016-09-22/foreign-buying-plummets-in-vancouver-after-new-property-tax

      • The Vancouver market cooling was temporary. What seems to have happened is that nobody listed anything new for about six months while they waited to see what else was going to happen (15% foreign tax, stiffer lending requirements, vacancy tax), and now the activity’s starting up again.

        Anecdata, but: we bought a condo in a 35-year-old building back in October for $480k. Two slightly-nicer units in the same building just sold for $600k and $570k.

  • Hummus

    Generally like your work, but the economic logic here is honestly pretty bad. The rich people buying high-end apartments/co-ops are not going anywhere. More high-end construction means that they’re buying those places instead of places a middle-low income family could currently afford. Now, production lower down the value chain would probably help more, but any new construction still eases the competition for housing. City housing markets are almost universally considered by economists to be one of the areas most amenable to free market, deregulating solutions: zoning restrictions on population density and rent control laws both do far more to inflate prices than construction of high-end units.

    • PunditusMaximus

      As someone who has worked in the field, I can say that most housing economists are talking their books.

  • Crusty

    This is one of those moments where we realize how lucky we are to have one of the all-time great builders as our president and an accomplished neurosurgeon as his HUD secretary.

  • quarternine

    Erik, I really like most of your writing — particularly your stuff on labor — but you’re just flat wrong on the zoning issue. Reforming zoning codes to permit more density isn’t in tension with building more public housing. Progressives can and should support both.

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