>Nobody lives in these condos for the most part. They are money laundering/tax shelter vehicles for the uber-rich, especially foreigners. The same phenomenon is common in south florida.
Which is the reason some people in San Francisco are skeptical about the ability of increased housing supply to contain or decrease housing prices. Adding supply that ends up being unoccupied because it's owned by absent uber-rich does little or nothing to decrease housing prices for locals. And if you demolish existing housing that is occupied by locals and replace it with housing that becomes pied-à-terres for the absent wealthy, you can, paradoxically, actually increase the price of housing for locals by adding new housing.
Of course, never building anything (like David Campos apparently wants) isn't the solution. But if one wants to decreasing housing prices for locals by adding supply, one needs to ensure that the housing is actually used by locals. Which I don't think anyone knows how to do.
> People are skeptical because they don't understand basic economics
Or they've learned that simple models don't always capture reality.
> When building policies are reasonable developers target wider swaths of the market.
Do the sources you've cited here or any others you're aware of present a reasonable number of situations where this has happened and led to a decrease in housing prices?
Because I've never been able to find any kind of decrease independent of a demand collapse.
>When building policies are reasonable developers target wider swaths of the market.
The only guarantee one has is that developers will build what generates the most profit for them. That's basic economics. If the most profit is found in housing for locals, then locals get housing. If it's in pied-à-terres, then they don't.
And when developers are allowed to build for the whole market, they will build first for the top... and then for everyone else once the high end is exhausted. The demand there is not infinite. It's not even close to infinite.
It only seems that way sometimes in SF because there is literal decades of pent-up demand that needs to be satisfied, resulting in people willing to pay quite high prices.
>The demand there is not infinite. It's not even close to infinite.
Neither is the supply of land.
The question is, can San Francisco build enough to satisfy this demand, without replacing so much of the existing housing stock that San Francisco doesn't look like San Francisco any more? I don't know. And maybe it's not important. Cities do evolve, after all.
But I do think the question needs to be asked, and debated.
The question is old. It's been asked. It's been debated. Both question and debate were old when both of us were young.
The answer is: yes. The heart of San Francisco lives not in a brick or a stone or a board, but in the hearts of San Franciscans. Gold in peace, iron in war.
Well, the impact is variable, though. If people are buying pied-à-terres out of the existing housing stock anyway, consolidating them into new luxury condos downtown makes those apartments available to regular renters.
Even if some new luxury apartments are pied-à-terres which would not be in SF in the absence of new construction, if some are actually occupied then rents for the city in general will also benefit. (New downtown high-rises with super-fancy penthouses can easily have many real residents on the lower floors.)
1) You have to be careful with your definition of "local". The major reason that housing prices are so high is that many more people would like to be SF locals than currently can be.
2) Buying an investment home in SF is basically a bet that the authorities will continue to keep housing supply growing much slower than demand, causing prices to rise. Speculation just causes current prices to better match expected future prices.
then it's probably going to attract the uber-rich. Why not just make a bunch of boring utilitarian apartments (not crappy ones, just high bang for the buck) and set restrictions on the scope of improvements allowed?
> But if one wants to decreasing housing prices for locals by adding supply, one needs to ensure that the housing is actually used by locals. Which I don't think anyone knows how to do.
Building it is an excellent first step. Housing that is never built will with 100% certainty not actually be used by locals.
That makes sense for undeveloped land (e.g. the Balboa Reservoir project). But there's very little of that in San Francisco. Realistically, adding to San Francisco's housing supply means replacing a lot of existing stock with higher density housing. If that higher-density housing is mostly or completely occupied by locals (by which I mean people who will be domiciled at that location), then it's a net win. But if not, then San Francisco residents end up worse off.
For example, say that a developer tore down housing for 1,000 people on some property, and then replaced it with housing for 3,000 people. That adds capacity for 2,000 people. But if 950 people were domiciled at the old property, but only 750 people are domiciled at the new property, then it's actually a net decrease in supply for people who reside in San Francisco. If the original property was old and run-down (which is what usually gets replaced in these situations), and the new property consists of units that have great appeal to wealthy people looking for a San Francisco pied-à-terre, then a situation like this is certainly possible.
Fortunately, that situation can be handled effectively through scale.
There is a limited number of wealthy people looking for a San Francisco pied-à-terre, and that is a market that can be exhausted without driving all other residents out. At which point standard market forces mean construction for the less wealthy will occur.
I generally agree with you from a policy point of view, but I think you're oversimplifying:
The number of wealthy people looking for a pied-à-terre in SF is not a fixed quantity. It seems to me that that number has grown significantly compared to, say, 10 years ago. And that that's mostly due to the increased prestige of the city (as perceived by that wealthy set). That prestige comes from economic growth, but also from a sense of how friendly the city is to pied-à-terres for wealthy people. So building more of them might just end up increasing the demand for them.
Sure, the process won't go on literally forever until the city is nothing but vacant luxury condos, but the total demand after that compounding effect has gone on a while may be much more than it appeared at first.
Over time, the number of people looking for a pied-à-terre is not fixed. This is true. This is also true for every other possible category of people.
Thankfully, this not-fixed number is also not infinite. Just as the housing market also does not need to operate over a fixed quantity of housing. Building more increases that not-fixed quantity so that the not-fixed quantity of demand might be met.
When you have an economic boom, you need to grow your infrastructure to match. Not sit around bemoaning that that might enable future growth that will, to a great degree, happen even if you don't grow infrastructure.
Look no further than the current housing crisis - accurately predicted in 2000 - to see the results of the notion that growing infrastructure is bad because it encourages use of infrastructure.
You just switched the subject of the conversation from "luxury condos for wealthy people" to "infrastructure". That's a tricky debate tactic. Of course you have to "grow infrastructure," nobody is arguing that in the abstract, but there's a lot of choices to make about what and how. Luxury condos are one type of thing that can be built, middle-income housing is another. They have different effects on the city. The current incentives that lead developers to building only luxury condos are not a law of nature or economics, they're a result of political choices by the city and state, and they can be changed.
Housing is infrastructure. Not building housing is not building infrastructure. If you don't build "luxury condos", then what was intended to be middle-income housing will become "luxury condos" because you failed to build sufficient infrastructure. This is not a hypothesis - this is an empirical observation from every city that's ever tried rent control.
There are exactly zero tricky debate tactics going on here.
Which is the reason some people in San Francisco are skeptical about the ability of increased housing supply to contain or decrease housing prices. Adding supply that ends up being unoccupied because it's owned by absent uber-rich does little or nothing to decrease housing prices for locals. And if you demolish existing housing that is occupied by locals and replace it with housing that becomes pied-à-terres for the absent wealthy, you can, paradoxically, actually increase the price of housing for locals by adding new housing.
Of course, never building anything (like David Campos apparently wants) isn't the solution. But if one wants to decreasing housing prices for locals by adding supply, one needs to ensure that the housing is actually used by locals. Which I don't think anyone knows how to do.