San Francisco’s policies are out-of-line with building almost anywhere else. For example, nowhere in San Francisco do you get density bonuses for affordability (like in New York City) and nowhere in San Francisco can you build as of right (like in almost every other municipality). And, perhaps most importantly, no where else is there a belief that you can solve a housing affordability crisis without encouraging the building of more housing.
Read the whole thing.
In my view, the way to look at public policy in food, health care, education, and housing is that it seeks to stimulate demand and restrict supply. It makes no sense from the standpoint of economic theory, but it makes perfect sense from the standpoint of public choice.
I live in Palo Alto, which is perhaps even more insane in its housing policies (which I admit to having personally benefited from). Our motto appears to be, “Let’s tightly constrict supply and simultaneously subsidize demand. Let’s also complain loudly about both losing the character of our neighborhoods and the lack of affordability.”
On the one hand, we have some of the most restrictive policies anywhere in terms of what you can build, even in terms of square footage of single family homes. Of course, anything that looks high density faces a years-long battle and requires all sorts payoffs by the developer (in the forms of public amenities). Then they attempt to stimulate supply through affordable housing subsidies, which you can get all the way up to $250K/year in household income!
http://sanfrancisco.cbslocal.com/2016/03/22/250k-per-year-salary-could-qualify-for-subsidized-housing-under-new-palo-alto-plan/
In medical insurance, they have managed to restrict supply by subsidizing demand. Pretty ingenious.
$15 min wage + loose immigration enforcement makes it opposite for un-, low- and semi-skilled labor
But would SF and NYC be the “most productive” cities if they weren’t so exclusionary? You can argue that a network effect is amplified when every node is “high value.” Sort of like a big country club. We may have causality backwards. Would love to hear your thoughts on this.
People often talk about trillion dollar bills laying on the ground. Great Centralization Real Estate is definitely one of them.
Prince George’s County near DC has an average housing price of $247,000 and 330,000 households.
To the Northwest of DC the suburbs have an average price of lets say $450,000.
That yields about $67 Billion in trapped wealth. And that is just a rough comparison of some suburbs. Imagine if you started getting down to zip codes and blocks within the city itself.
Then multiply that by nearly every major city.
I think we can agree that the fact that half our major cities are controlled by barbarians does multi-trillion dollar economic damage. By far the greatest thing we could do to solve the housing crises is unlock this underused potential by clearing out the bandits holding this territory.