But the land goes up in value because it is all single family homes so it becomes a limiting resource.
If you put up high quality high density apartment complexes next to Caltrain stations land cost would go down. Which is why the voters do not want that under any circumstance.
Increased development wouldn't necessarily devalue you asset, particularly if it's a single family house or a condo in a relatively low-density development.
Right now, the high cost of housing in the Bay Area is largely due to a couple of factors:
1 - high cost of labor. Rezoning won't change that.
2 - restrictions on right to build. Rezoning will reduce this.
3 - high cost of land. Rezoning will increase this, by making it possible to build more units of housing on a given area of land.
For most current homeowners, it's likely that 3 will outweigh 2. Developers will buy up some portion of single family housing stock (and low-density multifamily stock) to rebuild the lots with denser housing. That process will both increase demand and reduce supply of those types of housing, resulting in price increases.
At the same time, the average unit of housing will cost less, because there will be many more condos/apartments available. Owners of high-density condos would be the most vulnerable to seeing their asset values decrease. However, building big condo buildings is still going to be a complicated endeavor, so price adjustments will happen slowly over time. No one's going to get hosed, although their asset prices might go up more slowly over time than otherwise, or even be eroded by inflation in the long term.
At the same time, many of those condo owners will still come out ahead. They may be able to upgrade to a nicer condo than they otherwise could have afforded. They may also benefit from the second-order effects of lower average housing prices, in the form of reduced costs for non-housing items. If they run a business, it will be easier for them to attract and retain workers. Schools and other public services will also be better able to attract and retain quality staff, at a lower wage bill. Etc.
Probably more likely that nearby land that's within a decent bus ride of LIC will increase in value and higher density housing will be built there. The land that was right next to the existing subway stop was obviously already quite valuable.
Respectfully, I disagree. I have a handful of friends/colleagues who had apartment complexes built nearby their suburban McMansions, and each one had the same story: increased traffic and vehicle congestion, decreased available street parking, increased noise pollution, increased pedestrian traffic, and yes, increased crime. All of these things will make property values go one direction, and it ain't higher.
Extreme example: Back in the 90s, a friend bought a brand new, suburban home. Two years later, an apartment complex was built on a vacant lot about two blocks away. Two years after that, the apartment complex started accepting Section 8's. The crime started almost immediately. His car was broken into. His house was broken into. Loud music all night. Beer bottles on his lawn in the morning. His once quiet suburban home was no more. He eventually sold and took a significant loss. I know I'm the bad guy for pointing this out, but facts are facts, and money is real. Increasing density where it was never intended will negatively impact your property value.
(^^^ I was told there were lawsuits, but California officials got involved and squashed it, saying basically, "We said they could accept Section 8's, and there ain't shit you can do about it. Suck it.")
Another way to say "this will destroy land value" is "this will lower housing prices". That's the point.
But reality is more nuanced than that; the cost/value of apartments will go down, but the cost/value of single-family houses will go up, as there will be interest in buying the latter and turning it into the former. Land values will go up; rent and condo prices will go down.
Property values don't usually go down when you increase density. Look at NYC or Tokyo or Paris. If anything it usually makes the land value go up, especially if a developer knows they can buy it and put four units in it's place.
Yes, but crucially it's actually land that's valuable, not the housing that sits on it. The worry that allowing more density will tank home values is misguided. Land prices will keep going up as long as the land underneath the houses remains desirable. In fact, upzoning means more allowed uses, which means higher land values, which means more money for landowners.
There are two implications of this: 1) NIMBYs need to realize that allowing more housing isn't going to tank prices; if you're worried about prices tanking, you need not be; 2) YIMBYs need to realize that NIMBYs aren't exclusively motivated by greed. When they tell you that they don't want their neighborhood to densify they actually mean it. It's not covering for racism or greed. People genuinely don't want their neighborhoods to change.
There's hope in this. If the state forces upzoning, then people are going to grumble about it. And some of them won't be happy no matter what. But the average homeowner isn't going to be that upset about it once they realize there's money to be made.
But the incumbent single family homeowners that are so opposed to upzoning currently own both land and a housing unit. While upzoning might make the value of their housing unit go down the value of their land will go up.
Densification definitely isn't going to hurt many people's property values in the long term. Your 5000sqft lot could now be sold to someone who's going to build 10 units on it? That's still gonna be worth a lot of money.
That one's just a matter of messaging. I think you have bigger hurdles around:
* people want to have the same type of housing as they do today, or the opportunity to buy one of those less-dense single family homes in the future. If it's expensive, they can save up - or at least dream about it. If it's replaced with apartments, the option is gone entirely. However, there's lots of low-density commercial and industrial that can be upzoned instead! But if you're demonizing the suburbs and the single-family homes, instead of the single-use strip mall, you're asking for a lot more political opposition.
* and the biggest one to me: it takes SO LONG to build projects. You need streamlined plan approval, more labor availability, and a lot of money to do things in parallel instead of sequentially. Doing things in parallel also helps with some of the short-term property value hits you might otherwise get from a slowly-changing area.
But the only way you stop the land value appreciation is if people move out of the cities and the demand evaporates. And that's more likely if homelessness continues to increase than if you start doing something about the bottom of the housing market. Otherwise, a more populous city doesn't have lower land prices - look at Manhattan, SF, LA vs the rural US.
It's not just the property value of the neighborhood that's absurdly high. The rent/cost of the units in the newly built dense housing buildings is absurdly high too.
I mean living in LA, who would want to pay ton of money for a box of living space with no yard, and yet share subway with the less desirables (not my view of course). And the public transportation systems in LA doesn't really have the reach either.
I honestly don't know. I can see arguments in both directions, maybe more building makes everything more affordable and my property becomes worth "less" or maybe it results in nothing but expensive condos and my fancy neighborhood just gets fancier. I'm in the incredibly lucky and privileged position to not have to care that much about my personal home's property value. I spend a lot of money to live where I live. If I was interested in choosing where I live in order to maximize my wealth I'd move to a state with no income tax. Instead I choose to live in a place I love (both the Bay Area regionally and Oakland locally) and want that place to be as great as it can be. I think more people makes this place better. I want kids for my kids to play with on our block. I want empty storefronts to be full of new restaurants. I'd like my neighborhood and the Bay Area to get more affordable so my friends don't have to move away when they have families and are hoping to upgrade from a one bedroom apartment. I'd take a sizable hit on my property value to make that happen.
If there are truly no other options, then the developers are going to have to severely reduce the price of their real estate or choose not to build there. This is simply taking an implicit approach to things, which may or may not work.
If anything doing this is a way for cities to implicitly get citizens on board for investing more in public transit. All of the new apartment buildings in the hip parts of town don't have any parking for your cars, so you're forced onto public transportation more, which you might think stinks, so you now care more about voting for infrastructure improvement.
Multi family properties can be owned as a condo and therefore as an investment. The idea that land appreciates but the house on it doesn’t is absurd, if you subdivide into condos the condos don’t own the land the condo association does. But the condos are subject to supply and demand and have a price, either as rent or as an investment as a condo owner. The utility of the land is what has value. That’s why when you look at land for sale it’s not all uniformly valuable. Land that can be used for multiparty housing is more valuable than your typical city single family home lot because it has more uses. A 5000 sqft lot can only host so many people even if it’s zoned for multiparty construction. A 20000 sqft plot can host a bunch of units and is more valuable per sqft as a result. Once it’s been developed into a multiparty development the cash streams on rent or the implied npv represented in the unit price are for the HOUSING not the land - the housing is the useful element. But if you don’t think housing should be an investment, I still don’t understand who you believe should own the housing. Whoever owns it necessarily has invested their capital in it and presumably to make a profit - either through rent, or appreciation, or both.
I think the density argument is specious. If you increase density prices may drop in the short term but as prices drop demand increases and supply gets exhausted and you’re back to rising prices, just with more people. To make housing affordable you need to do the opposite and decrease densities by making it unnecessary to live in a small number of extremely expensive urban areas and make it more attractive to distribute people to many different cities. Just cramping more people into small units in SF doesn’t solve jack.
I think that cause and effect might be backwards - people only ever lay out the large upfront expense to build density when the land becomes valuable enough. And that only happens when people are clamoring to live in the same area.
If you then refuse to build up, it makes the affordability much, much worse.
Or the city an decide that the cost of upgrading are more than the future values of the additional units and not upgrade. Some upgrades in capacity have significantly higher costs than others. If the current system is the largest that can physically fit on the land the city owns they need to buy more land first. If they won't get a lot of new development it is better to stay just below capacity.
The above doesn't apply to the cities in CA we are talking about: there is plenty of demand. It does apply to some semi-rural small towns.
I wonder if there is any data on how upzoning affects suburban property values. I would prefer not to live in a single family detached house next to condos. Then again, the optionality to put 10+ units on a lot has to be worth something.
Building more doesn't devalue their land. It actually increases the value simply due to the fact that there's more revenue to be made on the same amount of land.
It also doesn't solve the housing crunch, because there's no meeting the demand. It doesn't matter how dense you go; even Manhattan isn't dense enough.
There are two things this does accomplish, though:
- It exacerbates the wealth divide, as it increases the market entrance costs and moves ownership into the hands of fewer and fewer "landed gentry" who, invariably, build rental units.
- It destroys quality of life for existing residents, as it foists all the scaling issues of upzoned density (traffic, crime, costs, required size of bureaucracy) right onto them.
If you put up high quality high density apartment complexes next to Caltrain stations land cost would go down. Which is why the voters do not want that under any circumstance.
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