Tuesday, June 7, 2022

NIMBY and California

This is Joseph.

The recent New York Times article on the twilight of the NIMBY was interesting just for the low level of actual good ideas for why new housing is bad. The idea was to build 20 condos on a hill in a neighborhood of detached houses. 

There ensued a decade of meetings, lots of legal back and forth, and a sign that said “Save Kite Hill.” The city also got a lot of letters. They said the project was an “insane” idea that would create “unimaginable density” and lead Mill Valley toward an “LA like destruction.”

Most of the letters raised questions about parking and traffic. Others voiced a more esoteric set of concerns, like “confusion for the post office.” One writer averred that anyone who lived in the new condos would be accepting a higher cancer risk, since their homes would be downwind from the wood-fired oven at a nearby restaurant.

Obviously, the people who currently live near the restaurant are innately immune to cancer? The post office is that understaffed that they can't add addresses? I think the real reason remains this:

“From my backyard I see the hillside,” Ms. Kirsch wrote from her Hotmail account. “Explain how my property value is not deflated if open space is replace(d) with view-blocking, dense, unsightly buildings.” 

Letting house get so expensive has been a terrible idea. It creates inequality (people who own homes gain massive profit from appreciation) and drives up housing costs in general considerably. The other reasons given for why there is a housing shortage are not compelling:

Ms. Kirsch does not deny that California has a housing problem but has a different narrative about why. In her telling the state’s problems have little to do with the lack of housing — a diagnosis that unites basically every liberal and conservative economist along with the Obama, Trump and Biden administrations — but instead blames investors who buy single-family houses, big technology companies, and inequality generally. 

Well, inequality is a factor, in that home owners become wealthier if they resist growth. Not sure how technology companies can be influencing the whole of California prices. As for investors, well an artificial housing shortage is a great way to make investment profitable.  

Now I don't live in California but the general issues here have been getting obvious. Expensive housing has numerous negative externalities and the leakage to transportation issues has not been great, either. One of the hard things with writing a piece like this is that you can really only call out the extreme cases; every housing and transit issue has local considerations and a quick overview makes no sense. It takes something like this, a small development that is unlikely to cripple a neighborhood to illustrate the problem. But that does not mean that development doesn't have costs, just that it looks like they have not been balanced.

Also, worth noting that this is a well reported California example but California is simply not the worst offender and the current list is a bit counter-intuitive. The worst ranked cities in California (Los Angeles and San Jose) are still more affordable than Hamilton, Ontario. Vancouver is far worse than Seattle, and New York City is more affordable than Seattle. More importantly, California is already moving to address housing affordability, maybe not in a perfect way, whereas I do not see this at all in the Canadian context (just look at difference in scale in this Canadian plan). 

 I worry that we'll never break this curse until real estate stop looking like a "can't lose" investment. 

1 comment:

  1. While this is, to be sure, an issue full of details and nuance, the root and most important cause of runaway home prices is simple economics: supply is insufficient to meet demand. I’m the vast majority of locations where this is an issue, it is artificial constraint of supply - and that is government intervention.