It's a bit juvenile to blame building codes without also admitting why we have them: they save lives. Look at the death tolls of earthquakes that happen in countries with and without enforced building codes.
On the other side of the coin, thanks to deregulation houses are commodities that people buy, sell and trade for profit, which raises their prices and causes volatility in the market.
Is that Atlantic article really comparing the building codes of Dallas and L.A. without admitting one of those cities has to plan for earthquakes and the other doesn't? And that one of those cities is already too big while the other is looking to grow? Where's L.A. going to get the water for these cheap new housing developments?
TL;DR building codes and growth restrictions are a lot more complicated than some rich people wringing their hands and using regulations to make themselves money.
Safety related building codes are not the issue. It's disingenuous to bring them up.
If they were the problem, then you'd have little difficulty building up Mountain View to SF level densities, or SF up to Hoboken (a suburb of NY) level densities. All you'd need to do is copy the safety features for already existing larger buildings (which currently meet safety codes) and build them everywhere.
> If they were the problem, then you'd have little difficulty building up Mountain View to SF level densities, or SF up to Hoboken (a suburb of NY) level densities.
You just said that if building codes were removed there would be "little difficulty" in doubling the density of San Francisco or tripling the population density of Mountain View? What?
Like there's no logistical issues involved of doubling or tripling the capacities of roads and utilities, figuring out where the trash is going to go, where the water's going to come from, etc. Like there's no reason a city might reasonably decide against unlimited growth.
This is so far removed from reality I don't even know where to start. At the bare minimum, if you're going to call me disingenuous at least make a case of why.
It is more complicated than rich people gaming the system to get richer, but that's definitely part of it, and the generations-long monopoly on land ("ownership", as much as any human can claim that a piece of the earth belongs to them and them alone) enables basically unlimited rent-seeking priced at whatever the market will bear.
http://m.sfgate.com/homeandgarden/article/What-San-Francisco... goes into what happens to building codes after e.g. an earthquake. TL;DR not much, and I'm sure SF will get absolutely wrecked in the next "big one", people will die because stuff is old and not up to code, there will be public outcry for safer buildings, developers will lobby against it and basically do anything they can to continue to slap apartments up as cheaply as possible while charging $3000/mo for a 500sqft studio, and they'll build even-more-expensive yet not much safer buildings in the ruins. Then repeat.
Eh. I don't believe this is true. For example, in the Great San Francisco earthquake, something like 90% of the damage was caused by fires. Most of these fires were and are caused by unsecured water heaters, rigid gas connections, etc. There are now building codes that improve on these issues -- all water heaters are now strapped, gas connections are flexible, etc. Among other protections that I know of, shear walls are mandated in certain cases, engineering reviews are done, houses are bolted to foundations at more regular intervals, the proportion of various walls that are windows is more limited, etc.
Yes, regulations were slackened in 1906, but
1. Earthquakes between 1906 and now show that regulations DO tighten over time. If developers are trying to lobby against these, they are failing. (More likely, the property owners paying the developers are the ones who would lobby. It benefits the contractor to charge for more work.)
2. Even if we didn't have historical evidence to discount your position, the resources available to the people of that time and the people of our current time are not remotely comparable. Our capabilities for manufacturing and building are dramatically more vast.
75% of all SF housing units are over 50 years old. Source: http://www.sf-planning.org/ftp/general_plan/Housing_Element_... So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes.
What ought to happen is proposition 13 ought to be repealed, along with the restrictive zoning laws. Then people who are sitting on lots of undeveloped property would have to sell it to developers, because the taxes would be unaffordable otherwise. And developers would put up new properties. Prices would then come back to earth and poor people would be able to live in houses again.
But the prevailing mentality in the US is that houses are investments, not places to live, so don't expect this to happen any time soon. Instead, you can expect politicians to intervene if housing starts to become affordable again, like they did in 2007. ("Oh no! Housing prices DECLINED!") It's basically a giant transfer of wealth from the young to the old. But people are too ignorant of economics to understand how and why it's happening, so you can expect it to continue.
You're right, and Prop 13 doesn't get nearly enough hate in these discussions. It's not just that people are sitting on investments like domain campers, though - it makes it impossible for many people to move, because if they did move to an equivalently valued home, they'd be paying many times their current property tax. This restricts the liquidity of the housing market and encourages hoarding, which leads to skyrocketing prices among the few houses that do go on the market.
If that was slowly phased out, prices would come down as more houses came on the market, and the houses that those people wouldn't represent such a huge jump in ongoing property taxes.
How does repealing Prop 13 change anything? Wouldn't everyone just end up paying the same or more taxes? Looking at property tax rates in other states (which presumably don't have such a law), we're about on par with them.
The people who can't move because of increased taxes would be forced to flee the state maybe?
We may be on par with them in terms of nominal rates, but those other states' property taxes rise with the value of the houses every year, whereas CA prop tax amounts are based on the cost at the time of purchase and adjusted at a max of 2%/year, even if their house appreciates by 10%, as it does some years. People who bought their houses in 1975 are paying taxes based on what their houses were worth in 1975 times roughly 1.02^40, or 2.2x. In the same period, the median home price went from $41,600 to $478,700, a rise of almost 12x. So, if they moved to an equivalently valuable home, they'd pay about 5.5x the amount of tax going forward, which can be very significant.
Housing prices take into account the amount of taxes one expects to have to pay, so if they're no longer locked, and one expects prices to rise, then the price one will be willing to pay will be lower. Also, prices will fall as more supply opens up, since there won't be such a big advantage to sitting on houses anymore, and people are more free to move to less expensive areas. Currently there's a bit of a rent control situation where the low rates can be passed on to your descendants, and there's a big incentive to stay in it rather than selling it and moving farther out, even if the place farther out is half the price. This effect is more pronounced on the high demand areas where prices have risen more.
Over time, the prices would adjust and settle. People may end up paying more tax overall, but we can play with the rate, or we could decide that the schools could use more funding (in many places, they could), and that we should keep the rate where it is. As it is now, the people who are just moving to CA are heavily subsidizing people who have lived here for a long time, and the lack of liquid housing supply is causing prices to shoot up.
"... but those other states' property taxes rise with the value of the houses every year, ..."
In Michigan, it's a bit more complex. The assessor calculates a State Equalized Value (SEV) on which the tax is based, and that cannot rise faster than the rate of inflation, or 5%, whichever is less. I assume lots of states have odd property tax quirks.
People who already own property in places where values are rising have no incentive to do anything to counteract the rising trend. So we have the spectacle of Mountain View denying Google's request for approval to build apartments for their employees near their campus -- at a time when housing in Silicon Valley is getting absurdly expensive.
I explained it earlier. Repealing prop 13 forces people holding on to undeveloped land to sell it to someone who can make use of it.
It's funny that people accept taxes of up to 40% on wages (things the middle class earns), but can't understand how taxing vast landed estates (things the rich owns) would "help." Suggest thinking this through more clearly.
"So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes."
That's a nice theory, but it's wrong. The city is requiring buildings to get retrofitted with earthquake safe structural foundations. It's every building with greater than a few units, so the rather small 100+ year old Victorian I'm in will be required to go undergo retrofitting by 2017.
The latest SF seismic retrofit program is for wooden buildings. Brick buildings, which are at much higher risk in an earthquake, were fixed long ago.
There were 1,987 unreinforced masonry buildings in SF in 1990, and all but 158 were fixed by 2013. That's why, all over SF, you see diagonal steel beams inside brick buildings, sometimes across windows. There are now supposedly only 29 unreinforced brick buildings left, mostly ones that are abandoned or scheduled for demolition. A few are still occupied, including some non-patient buildings at SF General Hospital.
In a really big quake, many buildings will be damaged, but structural collapse in SF should be rare. The occupants get to survive.
Oh, I missed where you mentioned this only applies to buildings with a minimum number of units -- I thought you meant there was a program that applied to single-family homes.
Re: reddit, pshaw, I was only there two and a half years. :) Most of the hard work was done before I showed up and after I left.
> So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes.
Even if we assume zero retrofitting of old homes, what about the future residents of currently-new homes which persist for another 50 years?
From most anything I've read, they've for the most part (yes, with some exceptions) tracked the overall inflation rate very closely, up until around the year 2000, when ratios and charts in the US and much of the world started to massively deviate from extremely long standing trends.
I think part of it is credit (money) creation out of thin air, and it has to go somewhere. Another part is the massive productivity gains of past decades, that also has to go somewhere, and it isn't going into rising prices of consumer goods for the most part.
To me, it seems logical that the ratio between median housing prices and median wages has to be rather constant over time, and if it isn't, there should be a measurable offset somewhere else, especially when the housing is by far the largest purchase 90%+ of people will ever make - yet, I see no proportional offset (of decreased spending) elsewhere.
Oftentimes governments will place extra taxes on non-primary residences which discourage using houses as an investment vehicle. I'm not sure about the history of this, though.
We have something like that in Italy, except financial institution were made exempt to protect them from the housing mortgage crash of 2008, and now are holding on empty houses waiting for market price to raise again.
They can't sell at a loss because all mortgages given were put in books at the 100% repayment price and now they need to wait not only for the house to recover the price lost since the crisis but also to raise in value to match the expected mortgage gain written in books, to avoid negative impact on their ratings
> ("ownership", as much as any human can claim that a piece of the earth belongs to them and them alone)
They can claim it as long as they can defend it, and historically that defense has been by force. It should make you feel better that (by and large) we don't need to kill each other in order to reserve a spot to sleep.
Someone might argue that your capacity to compete peacefully was hard-won by government or elites dominating the use of force. In other words, you don't have to fight because a bigger entity already won for you. But should that entity fall weak to an external force, I think we'll see that many rights are built on a foundation of power, rather than a peaceful morality.
There's definitely some legacy family land holdings, but I don't know how much that effects the market. I would like to know, but I suspect that as you touched on they're making money off rents, maybe lending.
What I was getting at are the houses that are bought and the mortgage goes into a CMO[0] or a CDO[1] because the new owner really had no business buying a house in the first place but they're "getting into real-estate" and the bank found a way to get paid for writing really questionable loans. Why are people without money even in the real estate market? (See the 2008 financial collapse for more details.)
And that's just the worst of it, there's still the more legitimate case where people move their wealth into real estate because it's a good medium-term investment. I can't fault anybody for that, but I do believe it raises prices for everybody.
It creates additional demand because the house not only provides shelter, but also takes on the form of an investment. How many people do you know who talk themselves into buying a house because of the potential pay off when prices rise?
It gets worse when foreign real estate speculation is allowed. Where I live most new condo developments are bought out by millionaires in Asia for the sole purpose of making money thus I need $700,000 for a tiny studio.
Supply and demand? Increase demand, supply is largely fixed* , prices go up.
* a house in the boonies isn't really a substitute for a house in the city. Every house has demand from people who want to buy it as a home plus the demand of people who want to buy it to rent/flip/scrape it.
You are confusing land and housing - they are not the same. Land area is fixed but habitable space is not. In built up areas the constraint on building new housing is largely regulatory (mostly planning regulations).
I don't blame building codes, but I do blame governments for just trying to derive their own building codes in an NIH fashion. Engineering best-practices (which is what building codes are) advance in global lock-step in every other industry, because—once it's proven that approach X fails less than approach Y under conditions Z—X should be used instead of Y for all Zs, no matter what country you find the Z in.
Regional considerations for things like earthquake proofing, density planning, etc. can be built into a single overarching engineering standard, just like considerations for different company shapes with different needs are built into a single larger tax code. There's nothing having many different local algorithms can optimize, that wouldn't be even more optimal as many different local parameter values to a single parameterized algorithm.
On the other side of the coin, thanks to deregulation houses are commodities that people buy, sell and trade for profit, which raises their prices and causes volatility in the market.
Is that Atlantic article really comparing the building codes of Dallas and L.A. without admitting one of those cities has to plan for earthquakes and the other doesn't? And that one of those cities is already too big while the other is looking to grow? Where's L.A. going to get the water for these cheap new housing developments?
TL;DR building codes and growth restrictions are a lot more complicated than some rich people wringing their hands and using regulations to make themselves money.