tag:blogger.com,1999:blog-1110014885778996459.post5793671345881315500..comments2024-03-29T00:15:52.716-07:00Comments on Idiosyncratic Whisk: Housing: Part 299 - Construction, health, and education employment. Which is unsustainable?Kevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-1110014885778996459.post-25955864862436773742018-05-29T13:13:11.101-07:002018-05-29T13:13:11.101-07:00Industrial is not more lucrative. If it was, the l...Industrial is not more lucrative. If it was, the land would already be being used for industry and residential zoning/ property rights would already be curtailed, and housing would be a commodity built based on rent. <br /><br />However, I don't think its valuable to consider that wishing that rules that prevent new housing being built would all be removed such that housing/cesspool/heavy industry on any site is what is being requested. <br /><br />In your specific example, CA electricity costs would mean your power plant starts out as a loser, jokes about Teslas aside. The only value you could add vs cheap empty land in BFE east CA is slightly lower distribution costs, but the distribution network is already built.<br />Anonymoushttps://www.blogger.com/profile/04004196680416945642noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-14764011950712669642018-05-26T11:45:43.429-07:002018-05-26T11:45:43.429-07:00Hi Kevin:
If I understand you correctly - and I&#...Hi Kevin:<br /><br />If I understand you correctly - and I'm NOT at all certain I do - you are defining "The problem ..." as being a lack of, or at least a sub-optimal level of, low-income affordable housing - particularly in certain areas you've deemed "Closed Access". Furthermore, that the "Closed" aspect of "Access" in this context is due explicitly to local government imposed/inflicted zoning restrictions. <br /><br />First, let me say that I am in complete agreement with you regards the second statement above - specifically that local zoning restrictions DO "Close Access" to alternative land uses. That is by design and quite intentional, by the way. I'm also in basic agreement that there exists a very low level of what you or I would consider "low-income affordable housing" in these "Closed Access" areas. As I indicated above, I lived there all through the 80's and into the early 90's, and I can personally attest to the lack of low-income affordable housing. And I visit there often (close friends and relatives), and the "problem" is even more severe now than it was then.<br /><br />Where I suspect we disagree - and again, I'm NOT at all certain I'm understanding you correctly - is that "Closing Access" in specifically these areas, has anything at all to do with intentionally denying affordable housing access to low-income folks or driving low-income folks out of these areas. MY assertion is: THAT is decidedly and demonstrably NOT the case. <br /><br />Applying the foundational economics principle of "Opportunity Cost", you should quickly realize that the (potentially) residential real estate prices prevalent in places like the SF Bay area have almost nothing to do with either interest rates OR lending availability. They have everything to do with the value of alternative uses for the land - mostly, Industrial uses. As a refresher, the economics principle of "Opportunity Cost" is defined as: "The value of the most highly valued <i>FORESAKEN</i> alternative." <br /><br />That is the point I was trying to make with Benjamin's hypothetical "two acres" example above. In the absence of a "zoning restriction" designating explicitly that "two acres" be designated "residential" or even "high density residential", no one would build "residential". They would build "industrial" - because it is more lucrative to do so.<br /><br />Or, as I stipulated above, I may well be completely missing your point.<br /><br /> Shayne Cookhttp://www.mercuryinfotech.comnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-76780119864884278172018-05-26T09:23:44.460-07:002018-05-26T09:23:44.460-07:00Obstructors not instructors Obstructors not instructors Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-70310299486900166992018-05-26T09:22:23.020-07:002018-05-26T09:22:23.020-07:00Shayne, there is certainly something to what you s...Shayne, there is certainly something to what you say. The problem is widespread enough to be arguably intractable. There are some places where it isn't so bad - Japan, South Korea, Germany, Switzerland. Part of the difference is political. But those differences are deep and not easily changed. And I agree that simply changing a law or two won't be enough. Zoning is really just one tool that is part of a broader framework that, in practical terms, has given too much control to local instructors in an era where urbanization and densification happen to bring tremendous value.<br />The sort of state-level restrictions on local rules that Scott Weiner is pushing seem like a step in a functional direction. But I'm no expert on those governance issues. I see my main input as pointing out the damages this is causing. Most notably that it caused a housing bubble that was disastrously blamed on other things. If the urban problem is never solved, I would be very happy if, at least, my work stopped this terrible policy of denying homeownership to a custodian in Omaha trying to buy a $90,000 cottage because restricted housing supply in California created a dislocation.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-46493752610397580442018-05-26T08:55:07.198-07:002018-05-26T08:55:07.198-07:00Just a quick observation for consideration by Kevi...Just a quick observation for consideration by Kevin,Benjamin and "Anonymous" ...<br /><br />Much has been made here (by all, especially Kevin), as to the restrictive nature of local Zoning regulations. And if I understand Kevin correctly, his "Closed Access City [Area]" construct is the direct (and detrimental) effect specifically of local Zoning restrictions. Actually, I agree (conceptually) with all of that.<br /><br />But the implication seems to be that, if "we" (as Kevin is so fond of saying) were to merely "roll back" or eliminate these "government imposed/inflicted" local Zoning ordinances - especially in these "Closed Access" areas - that there would somehow be a surge in home construction, and in particular, low income affordable housing. I'll state flatly that that implication is patently and demonstrably false. <br /><br />Any "rollback" of local zoning laws - anywhere - would be immediately supplanted with local "Homeowner's Associations" - with generally/probably more restrictive terms than the governmental zoning restrictions they replace. In fact, if you check various "Closed Access" areas such as the California Bay area (I lived there for 10-12 years), you will find that even highly restrictive, governmental "zoned" areas have "homeowner's associations" in addition, that are substantially more restrictive - AND more legally enforceable - than the "government" zoning.<br /><br />Benjamin offers a thought-provoking "challenge":<br />"Give me the right to build whatever I want on two acres in West Los Angeles, and you have made me rich for life."<br /><br />Well, me too. Except I wouldn't exercise my hypothetical "right" to construct high-density, low-income housing. I'd probably use it to house a small nuclear reactor to supply electricity to all those southern California folks driving Teslas. <br /><br />My point here being, no "granted right to build whatever you want on two acres..." - ANYWHERE - extends a "right" to degrade adjacent property.<br />See Ronald Coase.Shayne Cookhttp://www.mercuryinfotech.comnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-89705819791188537572018-05-24T15:45:58.755-07:002018-05-24T15:45:58.755-07:00At least here in the US, i think we should "g...At least here in the US, i think we should "give up" on big cities. Entrenched interests are too strong, it's a nightmare to build infrastructure, etc. I'd rather see the government make large investments in "tier 3" cities to try to build new competitors to the existing "tier 1" cities. Many people would happily move from the big cities but the momentum can't get going without a kickstart.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-30178290136470491802018-05-24T13:20:53.809-07:002018-05-24T13:20:53.809-07:00Not on topic but something I thought you'd fin...Not on topic but something I thought you'd find interesting. They are retiring Ataturk airport in the middle of Istanbul (as space-constrained a city as there is). So there will be a huge piece of empty land in the city. Seems like a good place to put some houses, but nope: it will be a Monumental People's Garden:<br />https://www.dailysabah.com/istanbul/2018/05/23/monumental-peoples-garden-to-replace-istanbuls-ataturk-airport-erdogan-says<br /><br />I wonder at what point the conventional wisdom changed from assuming that bigger cities were better to assuming that cities should be suburban wherever possible.<br /><br />Lewishttps://www.blogger.com/profile/10874343904654921159noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-69067688639757746122018-05-24T07:13:59.248-07:002018-05-24T07:13:59.248-07:00Well, I did say zoning. But my bigger point was al...Well, I did say zoning. But my bigger point was all this talk of the Fed, monetary policy, false-narratives is missing the point. The private market would solve the problem, if it could. 100% of our time should be spent on zoning.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-72339189513905880942018-05-24T07:10:52.598-07:002018-05-24T07:10:52.598-07:00Are you joking?
"There is nothing stopping p...Are you joking?<br /><br />"There is nothing stopping private capital from building an unlimited supply of homes knowing that future rental streams will deliver an adequate ROI (except zoning regulations perhaps). Yet they choose not to. Perhaps the private market simply isn't excited about future rental streams."<br /><br />Yes, nothing except you cannot build anywhere along the West Coast, in Boston of NYC, or many other places where property zoning restricts supply. <br /><br />Give me the right to build whatever I want on two acres in West Los Angeles, and you have made me rich for life. Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-84367622248096710022018-05-24T06:30:49.945-07:002018-05-24T06:30:49.945-07:00I really don't see a difference between housin...I really don't see a difference between housing and smartphones. In the case of phones, corporations made the upfront investment, knowing that future cash flows from the "service" would generate an adequate ROI. There is nothing stopping private capital from building an unlimited supply of homes knowing that future rental streams will deliver an adequate ROI (except zoning regulations perhaps). Yet they choose not to. Perhaps the private market simply isn't excited about future rental streams.Anonymousnoreply@blogger.com