Housing affordability in San Francisco and London

It seems that the problem is actually very simple: If you want housing to be affordable, you have to allow new housing to be built.

http://ift.tt/2aQE0Sy

Quote:

Most big American cities and their surrounding suburbs have housing regulations that strictly limit the number of new housing units that can be built. As a result, the demand for housing in the most economically dynamic cities has dramatically outpaced the supply. For example, Trisha Motter, president of the Santa Clara Board of Realtors, told Curbed that the Bay Area added 64,000 new jobs in 2015, but it added fewer than 5,000 new homes. The result: Rents are soaring across the region.

Quote:

The reason, argues Financial Times writer Robin Harding, is that Tokyo does a better job of allowing housing supply to keep up with housing demand. In 2014, Tokyo issued permits for 142,417 new housing units. In contrast, the entire state of California — which has three times the population of Tokyo — issued permits for only 83,657 new housing units. Little wonder that demand for housing has outstripped supply in the Bay Area. In the United States, local housing markets are plagued by grassroots "Not In My Back Yard" (NIMBY) activists who organize to stop efforts to build town homes and apartment buildings in their local neighborhoods. Because every construction project is located near somebody, the result tends to be that little housing gets built anywhere. In contrast, Harding writes, Japan sets housing regulations at the national level. As a result, if a Tokyo landowner wants to knock down his single-family home and replace it with a six-unit condo building, there’s little that his neighbors can do to stop it. That can be annoying to individual homeowners, of course. But it also has the huge upside of keeping housing costs under control.

In California, you could see that it would be to the advantage of the owners of existing homes if their property values rise, so they may oppose allowing new homes to be built in order to make their own homes more valuable. At the same time, property taxes can be quite low, especially for those who bought a long time ago when real estate was not so expensive.

Quote:

In California, the assessed value is the property price at the last sale plus no more than a 2 percent increase per year. This limit on assessment value required by Proposition 13, along with the limiting factors on the tax rate, has the effect of limiting annual increases in property taxes.

So even in a neighborhood where property values are going up by 10%/year and the general rate of inflation is 3%, property taxes can only go up by 2%/year. It's clearly a system that favors the haves over the have-nots. If you rent, you are just out of luck I guess.

via International Skeptics Forum http://ift.tt/2aBrrK2