Of course it's building more. But the question is what kind of more. Is artificially changing the density of every Single Family Home neighborhood going to create a more that depresses pricing? No. Because the housing will not all be built magically overnight. Units will come onto the market after: 1) The developer buys. 2) Tears down the SFH. 3) Builds a new multiplex. The capex in each of these steps guarantees that this will happen gradually (also as people are willing to sell) and since everything will be truly new construction (if you want to double density, say) it will come out on the highest end of the market.
This can make housing more dense and it can gradually lead to more units on the market. Potentially you could eventually reach competition dynamics that depress pricing. But in reality pricing is also dictated by: location, style, build quality, schools, and a hundred other factors. This is why trumpeting upzoning as though it will somehow depress pricing is dishonest or foolish. Since you can't double the density of LA overnight (even if you can double its theoretical denisty), it's naïve to pretend that this is a silver bullet.
My greater point was that the conversation around "housing affordability" has less to do with zoning than developer incentives. Developers need to be given the mandate (and the incentives) to build sub-market rate housing as part of much larger developments if you want affordability and a middle class in California cities.
you’re making a reasonable initial point and then veering into an unsupported conclusion. it’s reasonable to say that static analysis (upzoning reducing prices ‘overnight’) can’t capture real-world dynamics (prices will change more gradually at a macro scale, since development isn’t instant or uniform). but the idea that sub-market rate housing only comes through incentivizing/mandating developers is a wholly unsupported conclusion.
consider the thought experiment where most existing regulation, especially zoning limits on number/type of units, are removed in LA. you’d eventually reach a steady state where developers would make cost plus a small risk premium while prices generally go down as supply equilibrates with demand (housing starts equal net immigration). you’d get affordable housing without directly incentivizing developers at all. that’s because the market would be freed of distortionary burdens specifically designed to backstop housing prices.
that’s done by a number of regulatory mechanisms including zoning, ceqa, building codes, federal housing loans, distortionary incentive programs, etc. changing just one piece of that complex regulatory environment (developer incentives) guarantees nothing other than tilting the current market towards developers, not fixing the housing problem.
This is a great reply. Thank you for engaging instead of just dismissing me or downvoting.
I want to say I agree somewhat: regulatory environments, complex zoning and permissioning, leads to development overhead and ultimately higher prices for everyone. (Ironically I seem to be getting pushback from fiscal conservatives in these threads even though I think we mostly agree there.)
Where I disagree is from this point right here:
> you’d get affordable housing without directly incentivizing developers at all.
You'd get it somewhere. Not necessarily in the cities themselves, because the law of supply and demand is still going to outstrip however much you liberate the ability to build. Cities naturally become unaffordable. They concentrate wealth and economic output and then grow in value because there are not unlimited lots that are equally central to this concentration.
This means that affordability, particularly in the case of cities (like LA), which is the thrust of the upzoning argument, is not actually addressed merely by the removal of impediments to building or changing zoning. The economic regime cities build guarantees the displacement of middleclass dwellings over time. Eventually you reach a point at which all the hairdressers and school teachers no longer have a reasonable commute. The city eats itself in its ever-spiraling productivity.
When you have a large, high-traffic, high-output geographic area (like LA), you have to think more creatively about how to usurp market dynamics inside of that area. That requires below market-rate mandates, as far as I can see. The invisible handle of the market will not settle this because the affordable regions are naturally pushed outward over time.
In otherwords, I disagree with the premise of most of these comments: upzoning is not the final word, not even, in the majority, the most important word for affordability inside of cities. California as a whole will benefit from upzoning. The actual city of LA will not see pricing regress because, as you noted, there are actually many more barriers to building in terms of building codes, etc. and because of the realities I mention in my reply.
while LA (city) is denser than most people realize, LA (the region) is decidedly not dense overall, as large portions are low-to-mid density, choked by a tangled glut of roadways, and pockmarked with mini-downtowns intermittently. (poor) zoning is absolutely a significant factor in limiting supply artificially, which in turn backstops, and moreover propels, pricing.
you might be making more of a sociopolitical argument, that the rich are going to eat all the gains and more, while crowding out everyone else, through mechanisms like regulatory capture. that's possible, but the substance of that argument is not coming through very clearly amidst the economic tangents. it still doesn't support the idea that below-market mandates are necessary to bring prices to any natural, or artificially manipulated, affordable equilibrium. note that in a rich-eats-everything-world, we'd not have enough tax money to make housing artificially affordable. if the rich can dominate real estate in that way, they'd surely dominate tax policy in their favor as well.
> But in reality pricing is also dictated by: location, style, build quality, schools, and a hundred other factors.
All of those factors though are considered with respect to supply. If there are 11 homes and 10 buyers, then by necessity the prices for those homes must come down despite how good those homes are.
> This can make housing more dense and it can gradually lead to more units on the market. Potentially you could eventually reach competition dynamics that depress pricing.
You vastly overestimate the number of units that would need to be built to depress prices. Prices are set on the margin and a relatively small increase in supply (say 20% over 20 years which is quite feasible) can have a huge influence.
Going from 10 buyers chasing 9 homes to 10 buyers chasing 11 homes changes the dynamics an incredible amount.
> ...relatively small increase in supply (say 20% over 20 years which is quite feasible) can have a huge influence.
I think your framing of that number is a bit wrong, we've been under building demand by orders of magnitude for 40 years. Getting the sort of increase that might make housing "affordable", e.g. housing at only 3-6x the median household income, would require construction on an impossibly massive scale over the next 20 years.
To wit, the Sunset neighborhood in San Francisco has added 21 new homes since 2011. 12% of the city's land area has added just 21 new homes over the last decade. Generously 80 new residents of San Francisco, a city of over 750,000 people, have been added to 12% of the city's land area in a decade.
The amount of politics, money, and boots on the ground construction necessary to make housing affordable in West Coast cities is out of reach in any "business as usual" scenario in my mind. We'll need a crisis, until then, the mountain will remain unmoved I think.
that’s a very good point about pricing happening at the margin, but consider that housing isn’t nearly as fungible as laundry detergent, so there is still a fair bit of pricing friction in housing. that’s because the marginal pricing mechanism occurs at the sub-segment of truly comparable properties (that normalized measures like $/ft^2 can’t capture) not all properties in a locality.
This can make housing more dense and it can gradually lead to more units on the market. Potentially you could eventually reach competition dynamics that depress pricing. But in reality pricing is also dictated by: location, style, build quality, schools, and a hundred other factors. This is why trumpeting upzoning as though it will somehow depress pricing is dishonest or foolish. Since you can't double the density of LA overnight (even if you can double its theoretical denisty), it's naïve to pretend that this is a silver bullet.
My greater point was that the conversation around "housing affordability" has less to do with zoning than developer incentives. Developers need to be given the mandate (and the incentives) to build sub-market rate housing as part of much larger developments if you want affordability and a middle class in California cities.