The incentives at a state level around housing might actually balance differently because at that level economic activity, jobs, etc. matter more than property taxes. Something that isn't often mentioned, because the focus is always on California or the US, is that property values are directly tied to the overwhelming majority of municipal budgets via property taxes incurred as a percentage of that value. Not only do constituents vote for more expensive residential property, local governments want expensive residential property even if their voters didn't.

This is exactly why California has been trying to move some of this power to the state level: local governments are fighting tooth and nail to hold on to their tax revenue.

ETA: The property tax thing is more complex, but still applies. States like Florida and California cap how much tax assessments can increase for property you own that is your primary residence.

This still encourages these states to drive up property values because it tempts you into cashing out via selling. Every state with this sort of cap also immediately reassesses real estate to the price it sells at the following year. A high property value versus the tax assessment is just a deferred revenue stream, so it's a driver to encourage consistent turnover in the market. The only real way to do that is to constantly drive prices up, which drives the cost of living up, which turns over the residents faster.

So capping tax assessments like that, just makes the cycle even more viscous, in my experience living in Florida for a time.

Sure there's plenty of houses in Detroit but you can't commute from Detroit to NYC or the Bay Area.

Single-family zoning was pioneered in Berkeley in 1916 specifically to prevent minorities from moving to white neighborhoods in Berkeley by pricing them out. After the Fair Housing Act passed outlawing restrictive covenants it became one of the most powerful lawful weapons to enforce class and race segregation in cities. [0] Now 96% of all residential land in California, over half of the Bay Area and 2/3 of SF is single-family exclusive zoning. The Bay Area, the single most economically productive place in the entire US has a population density of 600 people per square mile, in line with an average European agrarian hamlet.

Housing is not the only market in the history of the world that is immune to supply and demand. When supply is constrained to below demand, pricing rises to the highest level the market can bear. When supply exceeds demand, prices fall towards the cost of construction.

The premium capricious zoning policy in SF creates is estimated at $400,000 per unit. [1]

I don't understand how progressives took up the mantle of "no more housing thanks we're good, let's just apply rent control" as if rent control actually helps. In the face of an expanding population this is outright regressive policy. Studies in SF show that it reduced supply and increased prices. [2] If you have enough supply, prices don't increase, so you don't need rent control.

[edit] I once again remind readers that the housing market is interstate commerce and the federal government has the power to overturn all these silly zoning shenanigans. Japanese-style federalized zoning is a great way out of this. The Fair Housing Act itself was passed under the justification that housing is interstate commerce via the Dormant Commerce Clause. [3, 4]

[0] https://en.wikipedia.org/wiki/Single-family_zoning

[1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage

[2] https://www.gsb.stanford.edu/faculty-research/publications/e...

[3] https://nysba.org/how-the-dormant-commerce-clause-can-fight-...

[4] https://www.justice.gov/crt/housing-and-civil-enforcement-ca...

They will point to the fact that they only own 2% of homes overall, but they purchased 24% of sold inventory in 2022 and 40% in 2023. That is huge.

https://www.washingtontimes.com/news/2024/mar/15/in-shift-44...

That said, building codes also drive up housing construction costs: originally intended for safety, building codes now also enforce energy efficiency (including window size, insulation, etc.), accessibility, sound transmission, material selection (for reasons other than safety), beyond the usual structural design, electrical/HVAC safety, and fire concerns.

This is before we even get to planning codes (i.e., zoning) which has restrictions on lot coverage, etc. that end up causing stronger correlations between land prices and unit costs.

This coincides with treating housing as an investment. Older generations (even Gen X) will flaunt how great it is that their house went up by X% in the last 5 years. It completely ignores that housing is meant to keep a roof over your head and not be treated as a spreadsheet line item in your portfolio.

Because everyone is a YIMBY until until they own a SFH house in a nice neighborhood and a proposal to plop a Section 8 high rise next door comes up. Much the same way that sanctuary cities are "pro sanctuary" until tens of thousands of "asylum seekers" show up. It turns out there there actually _are_ consequences to these progressive policies that _will_ impact your life negatively, and it's all fun and games until it's your turn. That's precisely why you see these seemingly contradictory policies that exist in ostensibly very progressive municipalities. People want the feel-good policies, they just don't want the negative consequences to affect them.

The homeowners came out in droves to complain and fight it.

Real estate is how wealth building happens in America, but in the Bay Area and many other places we can't accept that we need entry level housing - condos that trade for what a house used to cost 20 years ago ($300-500k) because nobody wants development near them and nobody wants developers making any money

We need the State (CA) or the Federal government to come in and say to cities and counties, if you deny housing development that fits within your zoning guidelines, you will be putting some important funding source at risk. Otherwise the logjam will continue

California is largely a special snowflake where you can have your property value go to infinity and there is NO penalty to you (your taxes only go up a max of 2%, which is less than inflation).

It seems like a trend that voters are moving their states and jurisdictions to a similar tax structure. For example, Pittsburgh hadn't reassessed property prices from like 2012 (the bottom of the Great Financial Crisis) - and is being sued by many people due to this. And I think Michigan moved to a system where there's a cap in property tax increases as well (not sure).

Other than that - everyone else gets taxed more if prices go up.

Financially, it's obviously a winning trade. But most people are too strapped in cash-flow to prefer the trade.

The average person votes for restrictions like this because everyone wants to live in the special snowflake neighborhood that is walkable and quiet and close to everything, where they have space to park their car and play with their kids in the yard, and they give negative f#cks about anyone moving in and not being able to afford even a shoebox.

They own their house and they like about it, and the could not care less about your struggles.

It's less that they are James Bond villains wanting their property prices to skyrocket. That's a side-effect.

I would argue that these people are not progressive, but rather conservative. Not in the sense of current political climate (doubt there are many Trumpies) but in the general political sense.

I think this is mostly a caricature. Certainly there are people who don't understand the economics, but I think there are very few people who are saying "no more housing". However, what housing do we build and for whom? Who gets to live there and who profits? We're in this broken system where:

- local politicians do some amount of lip service to the need for affordable or below-market housing, and then roll back requirements for affordable unit percentages

- projects that get approved often find some way to reneg on their initial claims about how much of a project will be affordable, or do weird shenanigans like arrange to get their affordable units put in some other building, possibly in a different neighborhood. We have big affordable projects landing in Treasure Island (there's no public transit to speak of, the soil is toxic, and it's a food desert). I don't have the receipts on this, but I've been told some of the affordable units on Treasure Island were to let buildings on Yerba Buena meet their requirements without actually having BMR units in the building. Cuz rich people don't want to use the same elevator as non-rich people?

- a bunch of the "affordable" units don't make any financial sense and are effectively inaccessible, e.g. b/c the HOA fees mean that someone who meets the income requirements can't cover the mortgage + HOA + taxes.

- we have, depending on estimates, >52k vacant units in the city, including many luxury condos, which I think makes people reasonably skeptical about the efficacy of "trickle-down" housing making stuff accessible to people at the lower end of the market.

... so a new building might need to have 12% affordable units (they'll round down) which they'll try to put in the worst place they can find, and people who meet the income requirements to buy them may not even be able to actually afford them.

Meanwhile, Parcel K in Hayes Valley, despite having been designated for affordable housing for literally decades, has seen no development and many who have historically claimed the YIMBY label advocate against building housing there, because the people who can already afford the neighborhood prefer it as an open space.

In that context, I think most new residential buildings are extremely ineffective as a response to the housing affordability crisis. If they're not good at housing people who can't already get housing, what are they good at? I guess in some years they make money, which is, after all, what they were designed for. A progressive stance of wanting to build housing that more directly meets the greatest need, rather than more luxury units that rich people no longer want to buy, seems totally appropriate.

Also, when the price of market-rate vacant condos drops below the per-unit construction cost for affordable units (which I've heard is often > 1M), the city should have some mechanism to buy them at market rate and convert them to BMRs.