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Housing and the Progressive Coalition


lokisnow

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Housing is becoming one of the major political issues of USA coastal cities. Historically, progressives allied with conservative homeowners against density, development and displacement. The progressive housing coalition largely formed to combat the egregious tonedeaf overreaches by the central planning of federal governments interstate highway system in the late 60s and early 70s. However, that has created a legacy: today's urban housing crisis (a catastrophic lack of supply of housing both cheap and expensive and everything in between leading to equally catastrophic increases in the cost of all housing). For various reasons that political coalition is rapidly breaking down, leading to changes in policy and positions of various progressive subgroups.

I found this article pretty anazing, and definitely worthy of debate and discussion here.

https://thewpsa.wordpress.com/2015/08/09/the-progressive-ideological-coalition-and-the-crisis-of-housing-affordability-in-san-francisco/
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I will make this comment: I was in San Francisco last weekend, accompanied by a relative who is a professional handyman (I also have a fair amount of construction experience myself). We walked right through the heart of the Mission district (cited in the article) and thanks to an apparently possessed GPS, drove very, very slowly through other downtown parts of the SF area. Our collective assessment:

Most of the buildings in San Francisco are in dire need of being rebuilt or replaced (or at least most of the ones we saw). Collectively, the cities buildings has gone from 'charmingly old fashioned' to 'worn about the edges' to 'almost slum like' over the past few decades.

Apart from that, it has long been my contention that housing prices in many areas is far, far too high, creating situations where unless very well off, the prospective home buyer has to 'cheat' somehow to obtain a home. I believe we are looking at some sort of warped repeat of the collapse of 2007-2008 - right down to the bailout.
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In LA, west Hollywood fought to kill a residential small rise with ground floor retail because of "traffic" from residents they wanted a gym or grocery store instead, both of which would generate far more traffic than proposed residential developments. Gyms in particular generate far more traffic than any other usage.
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Apart from that, it has long been my contention that housing prices in many areas is far, far too high, creating situations where unless very well off, the prospective home buyer has to 'cheat' somehow to obtain a home. I believe we are looking at some sort of warped repeat of the collapse of 2007-2008 - right down to the bailout.

I think the next major crisis will be (at least slightly) different. I think major financial institutions will be leary of investing over leveraging themselves on tools that assume that foreclosures both rare and uncorrelated. Instead it'll be a different collective blindspot that will do them in.

 

Housing bubbles have burst many times before without taking the rest of the economy with them.

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I'm in NYC, and our landlord is doing the damndest to get us out. He just raised our rent from $1,675 to $2,140. He's trying to get the rent up above $2,700 so that the apartment Will no longer be rent stabilized. It would be deregulated and they can do whatever they want with it.

We're in the process of looking for something else now. I think de Blasio is doing a good job on this issue. We just happen to fall in that space where we don't qualify for any help, but aren't making so much that we can pay $2,100.
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What they need to do is pass either state- or federal-level zoning rules to override local zoning, and specifically make the lowest density residential zone something that allows for duplexes and small two- or three-story condo/apartment complexes that blend with the neighborhood. Fighting these battles at the local level is incredibly difficult, and what usually happens is that the rich and upper-middle-class areas fight off or even zone down their neighborhoods, squeezing development into poor neighborhoods with less political power.

 

That's why I don't really fault poor neighborhood activists for fighting new development and displacement, although I think the ultimate solution is less rent control/stabilization and more public housing (or de facto public housing that is banned from being sold at market rates). De Blasio is doing the best he can with this, since he (thankfully) can't expand rent control/stabilization, and doesn't really have the money to do a massive public housing push. Instead, they're using the subsidies and zoning code to create de facto public housing with designated affordable units. 

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Probably worth noting:

At least in my area, Habitat for Humanity houses are sprouting like mushrooms. One or two a year on a neighboring street, and more across town and in nearby burgs.

I have been wondering about this these past few years: Yes, lots of folks, many with degrees and wearing suits, loudly insist the economy is getting better, but if that's the case, then why the ravenous demand for low income housing? The income adjusted apartments in town have long waiting lists. And when folks hereabouts do look into buying a house, it seems like HFH or a 'Farm Home' (another low income program) are at the top of the list.

I see this elsewhere as well: folks juggling bills, working second jobs, applying for government assistance - not because they want to, but because they have to.

I get on the internet, and its more of the same across the country. Real hard to square with claims of an economic recovery.
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In LA, west Hollywood fought to kill a residential small rise with ground floor retail because of "traffic" from residents they wanted a gym or grocery store instead, both of which would generate far more traffic than proposed residential developments. Gyms in particular generate far more traffic than any other usage.

 

And gyms in West Hollywood generate far more traffic than gyms elsewhere.*

 

 

 

 

 

*Couldn't resist

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Not in the US, but I am looking forward to how Berlin's experiment on rent cap will help the housing problem here and the quality of flats in the city. Some say it is working but others say it will exacerbate the situation in the long term as it will discourage the building of non-luxury apartments,among other things. Time will tell in these situations.

 

Most of people here rent, but finding a flat within the ring-bahn can be exhausting. After horrible experiences with renting and being in flats where we were insecure tenants, Mr EB bought a flat last year (made possible by the sale of his London flat that he bought via the still-controversial Right to Buy scheme in the 90s). It was in a nice part of the city, in a mostly owner-occupied building (the seller just moved upstairs in another flat owned by her sister). The price was below market price because it needed a gut reno. (I think we saw 50 flats in a span of a year? It was soul crushing.) We really got lucky with this flat. The inventory of vacant flats here is not as large as in other major cities. We were also competing against other foreign buyers who bring with them suitcases filled with cash - according to one real estate guy we know - to buy flats they just saw for investment purposes (and probably money laundering schemes).  

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It's hard to say on the rent cap, since Germany also has very strong pro-tenant laws if I recall correctly - it's extremely difficult to evict someone. All other things being equal, it should be good for folks already in apartments, but difficult for people looking for them to rent. It will only help low-income people if they already have apartments, because otherwise landlords will go for higher income tenants even if the lower-income ones can pay the rent for security reasons. Undoubtedly that's why it's popular - existing tenants get the security, new tenants get screwed over but they're less noticeable. 

 

Those are only for long-term tenants, and it looks like the law might have exemptions for newly built apartments and short-term rentals. So as long as landlords only rent short-term or apartments built after 2014, they're good. Reading the position of the Tenant's Organization was amusing, though - "the fundamental problem is a lack of new properties", which they just potentially made worse with price controls. 

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Ironically, people get on SF for being slow-growth when it's one of the only Bay Area cities to actually meet the growth goals handed out by the regional planning agency. Cities like Mountain View (home of Alphabet) and Palo Alto have proportionally higher numbers of NIMBY homeowners and slower residential growth compared to job growth. Deadbeat neighbors not pulling their fair share.

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Garcetti is supposed to propose regulations encouraging 400,000 new residential units by 2020, mostly downtown, and recode LA should finalize this year in a major modernization and deregulation (by way of streamlining, combining and simplifying zoning) of Los Angeles 70 year old zoning code. In addition to five active rail lines under current construction and a 2016 half cent sales tax ballot measure that will produce another 45 billion in rail construction for LA big changes are happening. On the other hand, LA is benefitting from massive Bay Area tech flight in the mobile and gaming sectors, so all that may not be enough to offset the tech influx surging southward, fleeing the bay areas astronomical cost of living issues. Is Southern California becoming the New Jersey to Northern California's Manhattan?
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SoCal is still a zoning mess. The whole of West LA needs to densify.  

 

California's market is also made much worse by Prop 13, so people go through a lot of shenanigans to avoid property tax increases, and it primarily just hurts the schools since they can't properly fund themselves. 

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I'm a little leery of new developments and housing growth. I've seen a hospitals allowed to go out of commission to give room to new development. Even when it would dramatically impact response time for medical emergencies. I think any time you have a new development you have to take a look at the needs of a community. Will there still be public spaces? play grounds? what about room for schools? can we accommodate, or grow to accommodate the health needs of new citizens? what about transportation? When you increase the density of the area you need to take into account the quality of life for existing citizens and future citizens. I don't know if the current model is a sustainable one, or if we need to rethink urban development. I saw an interesting exhibit exploring those questions at the MOMA of all places. We have to think about the quality of life for current and new residents, and it doesn't mean freezing everything, but really looking at what growth means and needs from all angles.

Rethinking Urban planning:

https://www.moma.org/visit/calendar/exhibitions/1438

 

Hospitals to real estate:

http://ny.curbed.com/archives/2015/05/19/finally_a_look_at_lichs_hated_residential_conversion.php

http://www.crainsnewyork.com/article/20140102/REAL_ESTATE/140109988/former-queens-hospital-to-become-residential

http://www.brooklyneagle.com/articles/developers-submit-second-round-lich-bids-suny-2014-02-04-175400

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