1/In response to this excellent thread:
and to most calls for building more housing, I often get the counterargument; "But don't build LUXURY housing!"
So let's talk about luxury housing, and what it means, and why we need to build some of it.
and to most calls for building more housing, I often get the counterargument; "But don't build LUXURY housing!"
So let's talk about luxury housing, and what it means, and why we need to build some of it.
2/Here are two possible meanings of "luxury housing":
Meaning 1: Market-rate housing
Meaning 2: Spacious units with lots of amenities (gyms, pools, etc.)
Meaning 1: Market-rate housing
Meaning 2: Spacious units with lots of amenities (gyms, pools, etc.)
3/Let's start with market-rate housing.
To alleviate a housing shortage, you DO need to build a lot of market-rate housing, because that's what prevents rich renters from raising the market rate by pricing poor renters out.
To alleviate a housing shortage, you DO need to build a lot of market-rate housing, because that's what prevents rich renters from raising the market rate by pricing poor renters out.
4/Housing crunches like the one in the Bay Area happen when companies move in, drawing lots of high-income workers to move in, to be close to their employers.
Where are those high-income workers going to live? Think about it.
Where are those high-income workers going to live? Think about it.
5/High-income workers are going to live in market-rate housing. If you don't build more of it, they'll BID UP THE PRICE of existing market-rate housing.
Any poor or working-class people in those existing units will be pushed out by the rent increase!
Any poor or working-class people in those existing units will be pushed out by the rent increase!
6/Poor and working-class renters in rent-controlled units will be protected, of course, but only partially.
Landlords can use the Ellis Act.
They can convert units to condos.
They can find a way. nytimes.com/2016/06/05/opi…
Landlords can use the Ellis Act.
They can convert units to condos.
They can find a way. nytimes.com/2016/06/05/opi…
7/Meanwhile, rent control ends up hurting poor and working-class people outside the city, as well as some who stay. bloomberg.com/view/articles/…
8/OK, but suppose you restrict market-rate housing, AND have a super-effective rent control regime and don't care about the negative side effects.
Where will the high-income workers then go live?
In cheaper outlying areas (Oakland, South SF).
They will GENTRIFY!
Where will the high-income workers then go live?
In cheaper outlying areas (Oakland, South SF).
They will GENTRIFY!
9/In the end, the high-income workers need to live SOMEWHERE. They will not simply vanish.
If you don't build new market-rate units for them to live in, they will live somewhere else that will hurt poor and working-class people more!
If you don't build new market-rate units for them to live in, they will live somewhere else that will hurt poor and working-class people more!
10/(Caveat: Gentrification actually isn't as bad as I made it out to be; it can have good effects too, and reduce racial segregation. But it definitely hurts some poor and working-class people. Anyway...)
11/So when a bunch of high-income workers move in, you should put them in market-rate housing, because there's nowhere else good to put them!
Market-rate housing is a fishtank for high earners.
If you don't build a fishtank for your fish, your house is going to get wet.
Market-rate housing is a fishtank for high earners.
If you don't build a fishtank for your fish, your house is going to get wet.
12/OK, let's talk about the second definition of "luxury" housing: spacious units with lots of amenities.
Building this kind of housing is inefficient in terms of creating density. For density, you should create lots of small units: sfgate.com/realestate/art…
Building this kind of housing is inefficient in terms of creating density. For density, you should create lots of small units: sfgate.com/realestate/art…
13/Having lived in Japan (before houses there got bigger), I am all in favor of micro-housing. Many Americans hate it. It's a contentious issue.
But everyone screaming about "luxury housing" should realize that the alternative to big nice apartments IS micro-housing.
But everyone screaming about "luxury housing" should realize that the alternative to big nice apartments IS micro-housing.
14/Anyway, if someone says you shouldn't build "luxury" housing, ask them what they mean.
If they mean market-rate housing, they're WRONG. You need to build it.
If they mean big nice apartments, they're a micro-housing advocate.
Let's get this straight.
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If they mean market-rate housing, they're WRONG. You need to build it.
If they mean big nice apartments, they're a micro-housing advocate.
Let's get this straight.
(end)
