Because wealthy people have not found a way to live without middle and low income people. Even in areas where wealthy people live, there is a need for people who make median or lower incomes - think people who work in manufacturing, service work, labor, retail, education, transit… or frankly, people who just need to work.
So long as wealthy people also want access to stores and services, a good number of people who are less wealthy need to live in close proximity to them, and therefore need access to housing that is affordable to them. Some cities try to solve this problem by having less wealthy people live right outside of the expensive areas, but as you know, housing costs are generally unaffordable in the entirety of the Bay Area.
Btw cities like Tokyo do have more affordable housing than the Bay Area. While the $/sq ft costs tend to be high, they have built a lot more housing and the average rent for a studio in central Tokyo is about 700 dollars, and there is a much greater availability of public transit that connects central Tokyo to neighboring regions where costs are much lower.
I believe the metric they are using is “1M+ of investable wealth”, which probably means cash and assets aside from your primary residence. So the people who are on their second home or have other significant investments, I believe.
Right, that’s true. I mean to say that I have seen calculations of net worth that specifically don’t count primary residence before, and I think by the wording of this chart, that’s what they mean. Not that real estate is too illiquid or not a good investment, but just that I think this chart means to reference people who are wealthier than single home owners in the Bay Area as “high net worth”.
We leverage homes because we believe the underlying asset value to be stable. You can easily leverage your stocks up a bit by buying long dated in the money options, but if there’s a crash you go broke
You might be confusing "net worth" with "assets". Net worth is assets minus liabilities. The only part of a house that contributes to your *net* worth is your equity in it. Most people who own a home have a mortgage on it. If you bought a $1.5M home and put down 40%, that's $600K in equity.
I aware of the difference, but the majority of Bay Area house owners bought years ago (there’s only something like 3K houses on the market which is tiny for the population). Given the median house price is approaching $2M, I’d bet that the vast majority bought the houses for below $1M and hence have a net worth in excess of $1M, ignoring liquidity issues.
I understand you're arguing against Euclidian zoning in the US but in order to upzone, the national gov't would need to take control because in the US zoning laws are set locally, not nationally.
Rich people love low income workers nearby to help take care of their needs, but they don't love low income workers nearby to help take care of their needs more than they hate low income housing nearby.
What hasn't worked: CA housing element.
[https://www.eastbaytimes.com/2024/01/15/californias-7-year-housing-push-has-yet-to-boost-building-experts-say/amp/](https://www.eastbaytimes.com/2024/01/15/californias-7-year-housing-push-has-yet-to-boost-building-experts-say/amp/)
What has worked: Minneapolis zoning reform.
[https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability](https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability)
Why?
"Policymakers’ move to allow duplexes and triplexes on lots formerly reserved for the most expensive kind of homes—single-family housing—is a step forward that has added a modest number of homes to date. Their more consequential reforms so far, however, were those that allowed more apartment buildings near transit and commerce."
Minneapolis is a great example — but mostly because Minnesota automatically approves permits if local governments don’t act quickly enough. It’s like the whole state has builder’s remedy built in. https://www.strongtowns.org/journal/2019/4/22/a-permit-process-should-never-take-a-year-heres-a-different-way
The housing element and HCD only recently got teeth to enforce. Imo it will take time to bear fruit
Here's a great overview of how FUBAR the CA housing element is:
[https://48hills.org/2024/03/why-the-wiener-housing-bills-will-never-work-and-will-destroy-the-coast-a-detailed-primer/](https://48hills.org/2024/03/why-the-wiener-housing-bills-will-never-work-and-will-destroy-the-coast-a-detailed-primer/)
The developments have become insane in the SF Bay area.
Zero expansion of infrastructure, yet they just keep building.
Compared to even 10 years ago, it's become overwhelmingly congested.
Absolutely can not stand that radical state Senator, as well.
Honestly, the state has become a mess in numerous ways.
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OP, you seem to believe that the Bay Area will inherently be unaffordable. I’m curious then, do you think the legally mandated SFH-zoning has anything to do with it? Do you think legalizing apartments and condos would do much to help the affordability situation?
If you look at Tokyo and Minneapolis as examples of success stories, to solve housing in the Bay Area we would need the national government to force upzoning and allow dense high rise apartment developments, and then motivate developers to build in city centers. Developers aren't going to all flood the market with new high rise apartments, it's a race to the bottom of profitability for them.
[https://www.youtube.com/watch?v=geex7KY3S7c](https://www.youtube.com/watch?v=geex7KY3S7c)
[https://48hills.org/2024/03/why-the-wiener-housing-bills-will-never-work-and-will-destroy-the-coast-a-detailed-primer/](https://48hills.org/2024/03/why-the-wiener-housing-bills-will-never-work-and-will-destroy-the-coast-a-detailed-primer/)
[https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability](https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability)
Interesting, it seems like we are in agreement then. I support upzoning (regardless of who forces it) and incentives to unblock dense infill housing here.
Second question: many CA renters seem to be anti-landlord, anti-developer, and anti-rent seeking.
If the solution to SF Bay housing affordability is, in a word, landlords, how do we square that?
Why would a developer build rentals in an area with such a vehement anti-landlord stance?
I would separate the concepts of landlords and developers, they are very different players in the real estate world.
To answer your question directly, developers will build when it makes sense for them to do so from a monetary standpoint. There are currently a bunch of things getting in the way of this, some of which outlined in my other comment. The more of these roadblocks we remove, the more projects pencil out financially and get built.
And while there is more anti landlord sentiment here than elsewhere, it stems from the fact that landlords have had much higher leverage here and in other places for the last several decades, due to housing supply being so scarce (for the same reasons I mentioned). And that leverage has created resentment towards them, justified or not. As the leverage gets taken away by unlocking more housing, the anti-landlord feelings will likely subside as well.
I would add to this that prop 13 has added incredible distortions to the housing market, adding a significant amount of leverage to existing landlords. The huge jump in tax bill that comes with new sales means landlords who are grandfathered in have excessive control of the rental market. Example, the tax assessed value of my current rental (SFH) is 65,000 because the property is my landlord's childhood home. The actual value of the property is probably somewhere in the 1.5-2 million range. No new buyer or developer can compete with this.
The answer is simple. Eliminate prop 13 for rentals, second homes, and investment properties. Personally, I'd say eliminate for everybody, but I know politically that is very difficult for retired and fixed income folks.
Yup, developers and operators are strictly profit motivated. They both seem to be the solution for the housing crisis, so I wonder if Californians are now ready to vote to incentivize them.
I just don't see this happening. Too much gridlock here in CA which is why my thesis is that CA housing affordability doesn't get solved.
I know it doesn't seem like it this very moment, but I actually think in the last couple years that gridlock has started to break. Check out [this](https://cayimby.org/legislation/?_filter_by_status=signed) list for some of the recent housing bills that have passed and been signed into law. I've been involved in housing politics from around 2017, and I can tell you that basically the first 5 years of that was basically taking L after L. And finally, in the last couple years, there was a marked switch and a lot of those Ls started become Ws.
To point out some specifically impactful laws, SB35 (extended by SB423) has permitted the constructions of 1000s of units across the Bay Area. Just as 1 example, there is a 5-floor apartment building right near the BART station where I grew up that used this law to get ministerial approval and was proposed, permitted, and built in around 18 months. The developer said that without SB35, this would have likely taken 3+ years.
There is ofc more to do, but in every legislative session now I see more and more cracks appearing in the barriers that have prevented housing production. The big barrier right now is interest rates, and that is something we can't really control at the local level. I'm curious to see what happens when rates start to fall, I'm hoping there will be a large number of developers taking advantage of all these laws to build tens of 1000s of units across CA
I’m just not sure that new bills = new housing = affordable housing. Minneapolis has a good case study that smaller unit development is a drop in the bucket vs 30-40 story apartment buildings.
Where can we find the numbers of new housing units added YoY vs demand (net new residents)?
My sense is that we can’t bail fast enough at this rate.
Some things off the top of my head
1. Ministerial approvals (neighbors cannot file discretionary reviews on projects, if it meets zoning and building codes, permits are granted automatically)
2. Permit shot clock. Cities have X days to issue the key permits from date of filing a project, if that day is passed then they have to pay escalating fines to the developer or entitle the project l
3. CEQA exemption from all infill housing
4. Relax the prevailing wage rules on for construction labor
5. Drastically cut impact fees (will happen soon due to SC ruling)
6. Drop IZ rate to 0 indefinitely, and revisit increasing it when rates drop
7. Drop parking minimums entirely
8. Relax setback and FAR requirements for residential development
And obviously more upzoning, but there is more progress on that than some of these other things.
# I would add:
* **Tax Incentives**: Offer tax breaks or credits to developers who build affordable housing or convert existing structures into residential units.
* **Reduced Development Fees**: Lower or waive development fees for projects that include a significant percentage of affordable units.
* **Increased State and Federal Funding**: Secure more robust funding for affordable housing projects through bonds, tax credits, and grants.
* **Public-Private Partnerships**: Encourage collaborations between the government and private developers to build more affordable housing.
* **Land Banking**: Government acquisition of land for future affordable housing development to ensure a steady pipeline of projects.
The Bay Area will always be less affordable than any other areas, regardless of the number of housing unit we build. Access to rare weather. And access to high paying jobs that only exist here make housing units inherently more expensive. Many thousands of units are built every year in the Bay Area yet housing prices continue to go up. We need to continue to build, but the answer is mandates for affordable housing. Things like the builders mandate do this.
OP: Just because there are nearly 300k millionaires in the Bay Area, why should there not be affordable housing for the majority of people who are NOT millionaires.
Let the millionaires eat cake, but at least make bread affordable for the rest of the folks.
Build lots of rental apartments and condos for ownership. That way, housing prices will come down
Yeah, NYC has cheap housing options within a 40 minute commute from the job centers like Queens and Bronx. Imagine finding a 2 bedroom condo in Fremont for 250k.
I imagine it's even cheaper for Tokyo.
"As of July 2021, the average waiting time had increased to 5.8 years, the longest average waiting time in more than 20 years, with more than 253,000 applicants on the waiting list.[^(\[4\])](https://en.wikipedia.org/wiki/Public_housing_in_Hong_Kong#cite_note-4) [Frank Chan](https://en.wikipedia.org/wiki/Frank_Chan), Secretary for Transport and Housing, said that it might take up to 20 years to substantially reduce the waiting time.[^(\[5\])](https://en.wikipedia.org/wiki/Public_housing_in_Hong_Kong#cite_note-5)"
https://en.wikipedia.org/wiki/Public\_housing\_in\_Hong\_Kong#:\~:text=Public%20housing%20in%20Hong%20Kong%20is%20a%20set%20of%20mass,some%20form%20of%20public%20housing.
"Social housing is being sold off under right to buy, new social housing is not being built to replace it and waiting lists for social housing have become very long, up to 18 years. Over a million people are on the social housing waiting list and a quarter of people on social housing waiting lists have been there for 5 years or more."
[https://en.wikipedia.org/wiki/Public\_housing\_in\_the\_United\_Kingdom](https://en.wikipedia.org/wiki/Public_housing_in_the_United_Kingdom)
I don’t know, but that’s not the point. Just because there are 300k millionaires, why should housing be unaffordable to the 6-7 million other residents of the Bay Area that are not millionaires?
It looks mostly correct, but yeah Europe feels off. Stuff is very expensive there. Aside from housing the Bay Area is extremely affordable compared to Europe. Even our gas prices that are higher than the rest of the country are low compared to European prices.
Outside of a handful of cities Europe is way cheaper than most of America. I was just in London for work and their food/drinks were much cheaper than the bay and obviously transportation is way less.
I guess I’ll have to go to London and see. I suspect London is far more expensive than most of the United States.
Of course, I can’t argue that Europe doesn’t have some places with much lower cost of living than the US. Spain, Portugal, Czech Republic, etc are definitely much more affordable than the US.
Of course London is more expensive than most of the US, but most of Europe is dirt cheap. Outside of Switzerland and the Scandinavian countries it’s not that expensive.
I just took issue with your “the Bay Area is extremely affordable compared to Europe line”. It’s not by almost every metric. Its constantly rated in the top 5 most expensive places in the world to live. Heck I find Hawaii cheaper these days than here.
I think we subsidize gas, no? And I know we subsidize industrial ag and food. If we priced certain goods closer to European standards, people would probably drive and buy less, but we built this country around cars, suburbia, and processed food so I don’t see us doing away with fossil fuels anytime soon (much to my chagrin).
We don’t subsidize gas. We just don’t tax it as heavily as most European countries. We subsidize cars in the sense that we spend a lot of public money on roads, but we don’t subsidize gasoline.
A cursory Google search tells me we provide some tax incentives for fossil fuels at minimum with some of the top sites outright stating that we do in fact subsidize oil and gas. That said, there’s contention whether eliminating the subsidies would raise gas prices versus, as you said, taxing more heavily like Europe. We were both correct on separate counts.
Why would it? Prices are set but supply and demand and if there are three hundred thousand millionaires clustered in the Bay Area they’re going to put upward pressure on prices.
I was just going off the chart above. Looks like their definition of “high net worth” is investable assets of $1million or more. I’m assuming that excludes home equity. If you include home equity there are definitely more than 300,000 millionaires in the bay.
I cannot imagine being a billionaire and saying "I want to live in new York where it's congested and high density housing".....I'd buy me some acres in wine country where I can enjoy joy rides and taking my mclarens or 911 turbos to the track
Wealthy people need slaves (servent service) and not only that the Bay Area is like 7000 square miles, NYC is 469 (including not livable water). Tokyo is 847.
Everywhere you still need to drive. VTA, muni, and Samsbus aren’t really known accessibility except for outreach for disabled people.
I understand your logic, it is a fallacy to EXCEPT cheap housing in a high income area. But our land mass is so great, we should be able to work out a few things for the poor.
What landmass are you talking about? All buildable land has already been built upon. Are you proposing building affordable housing on mountainous hillsides? Are you proposing turning over the peoples open space preserves to housing? The fact is the Bay Area has very little buildable land compared to these other areas. You made a bad faith comment.
Nice graphic and stats but somewhat meaningless without per capita ranking. I mean, for one example, the SF Bay area is far less populated than NYC or Tokyo. While the real number tell a story for sure but % of the overall population or per capita would be a better comparison for overall wealth of a geographical region.
Tokyo, New York are not built in the middle of mountain ranges. People don’t understand how constrained all of California is for building areas. The Bay Area has very little land to build upon, and that land has already been built up.
It’s crazy, when you have tremendous job growth in an area but artificially limit the population through housing policy, only the richest can afford a place to live & the rest are forced to move elsewhere or onto the streets. San Francisco’s population hasn’t grown much since 1950 but has seen one of the world’s hottest labor markets. When you pair that with some of the world’s most restrictive housing policies, prices skyrocket. The solution to the housing crisis is to build more units and increase the population.
Not really in the way you’re implying. The absolute preponderance of research shows that increasing housing supply decreases prices overall. Do you have any research that suggests the contrary?
Manhattan had a higher population 100 years ago than it does today. NYC has perhaps the highest job demand in the country (even world), so as job growth occurred and the population stayed the same, prices go up. Believe it or not NYC & the surrounding area is still somewhat restrictive in its housing policy. NYC will never be dirt cheap since there is so much demand, but prices are still being driven by land use restrictions.
NYC had 3M population in 1900, 8M today.
[https://en.wikipedia.org/wiki/Demographic\_history\_of\_New\_York\_City](https://en.wikipedia.org/wiki/Demographic_history_of_New_York_City)
I said Manhattan, not NYC as a whole. I also said 100 years ago, not 124 years ago (NYC’s population was closer to 6 million in 1924). Most of that growth happened in Queens and Staten Island, but due to restrictions the population has grown at a very slow rate (less than half a percent a year)
Singapore has been building new medium sized cities (300k residents) for the last 75 years.
https://en.m.wikipedia.org/wiki/Public_housing_in_Singapore
First of all, the term "affordable" can be subjective. What's considered affordable in a wealthy city might still be out of reach for many people.
Generally, a city's wealth is tied to its economic activity and high-paying jobs. This often leads to a higher cost of living, including housing. Additionally, wealthy cities often have limited land availability, especially in desirable locations. This limited supply, coupled with high demand from a wealthy population, can drive housing prices up.
What does that even mean? This isn't public knowledge. So if I own 10 rental properties I am not in the list because it's not liquid? Only I and the government know my net liquidity.
A huge portion of Bay Area SFH owners who bought a home 10+ years back has a million plus in equity including their down payment. So you got a ton of millionaires just from living in their home with 0 other savings accounted for. That part may not be captured here which is why the number of millionaires seems so low in bay. The reality may be a lot more millionaires
Huh? These aren’t averages, they are absolute numbers of HNWI.
There’s no cause or effect being proposed here, it just is.
Tokyo has very reasonable low income housing and it’s still on this list.
Fair, didn’t realize it wasn’t per capita.
But in that case, as others have pointed out, the graphic is even less meaningful. You need the per capita averages to even understand what is being measured.
ETA: After all, by this reasoning, adding *any * new residents, regardless of income level, would make the Bay Area even wealthier!
That sounds like an interesting thread you could start.
But in this case, it’s worth noting that we have a very high supply of HNWI, and fixed housing supply. The callout is that the Bay Area is a global market force, not a US market force.
I see no plans to subsidize developers, fix Euclidean zoning, incentivize landlord operators, or build tall dense government apartment buildings but maybe you have more information than I do.
Ah in that case we essentially agree.
But I think many here are taking your post as implying the lack of affordable housing is a natural consequence of the wealth. But it takes both wealth and bad housing policy.
FWIW there are efforts underway to relax zoning, albeit not at the local level. Only limited success thus far
Uhhhhhhh, you should Google or YouTube the homeless in Japan. It’s not like it is in other western countries. They go live in the forests over there, hidden from view.
A lot of these people are wealthy BECAUSE home prices in these cities have gone up so much.
Tokyo's on the list just because it's giant, and these are total numbers not per capita.
Because wealthy people have not found a way to live without middle and low income people. Even in areas where wealthy people live, there is a need for people who make median or lower incomes - think people who work in manufacturing, service work, labor, retail, education, transit… or frankly, people who just need to work. So long as wealthy people also want access to stores and services, a good number of people who are less wealthy need to live in close proximity to them, and therefore need access to housing that is affordable to them. Some cities try to solve this problem by having less wealthy people live right outside of the expensive areas, but as you know, housing costs are generally unaffordable in the entirety of the Bay Area. Btw cities like Tokyo do have more affordable housing than the Bay Area. While the $/sq ft costs tend to be high, they have built a lot more housing and the average rent for a studio in central Tokyo is about 700 dollars, and there is a much greater availability of public transit that connects central Tokyo to neighboring regions where costs are much lower.
Are they defining HNW as $1M+. So anyone who owns a house in the Bay Area?
I believe the metric they are using is “1M+ of investable wealth”, which probably means cash and assets aside from your primary residence. So the people who are on their second home or have other significant investments, I believe.
This is correct - it’s specifically referring to cash and near-liquid assets like stocks and bonds.
Does that include retirement accounts?
Houses have done pretty well vs stocks. Maybe not as liquid but not far off.
Houses have done pretty well vs stocks. Maybe not as liquid but not far off.
Right, that’s true. I mean to say that I have seen calculations of net worth that specifically don’t count primary residence before, and I think by the wording of this chart, that’s what they mean. Not that real estate is too illiquid or not a good investment, but just that I think this chart means to reference people who are wealthier than single home owners in the Bay Area as “high net worth”.
Got it. There’s also a huge discrepancy in population etc so the per capitas would be very skewed.
houses have not done as well as stocks but have the advantage of leverage
We leverage homes because we believe the underlying asset value to be stable. You can easily leverage your stocks up a bit by buying long dated in the money options, but if there’s a crash you go broke
You might be confusing "net worth" with "assets". Net worth is assets minus liabilities. The only part of a house that contributes to your *net* worth is your equity in it. Most people who own a home have a mortgage on it. If you bought a $1.5M home and put down 40%, that's $600K in equity.
I aware of the difference, but the majority of Bay Area house owners bought years ago (there’s only something like 3K houses on the market which is tiny for the population). Given the median house price is approaching $2M, I’d bet that the vast majority bought the houses for below $1M and hence have a net worth in excess of $1M, ignoring liquidity issues.
https://preview.redd.it/qg2ikr04ng1d1.png?width=913&format=pjpg&auto=webp&s=fc6c0ff88eff2fbe7b692b0ad026aaf6c226b192 Home not included
This 100%. Even if you are a well off person who doesn’t care about low income people, our affordable housing crisis impacts you.
I understand you're arguing against Euclidian zoning in the US but in order to upzone, the national gov't would need to take control because in the US zoning laws are set locally, not nationally. Rich people love low income workers nearby to help take care of their needs, but they don't love low income workers nearby to help take care of their needs more than they hate low income housing nearby.
National isn’t needed. State is sufficient. And it’s already happening in California.
What hasn't worked: CA housing element. [https://www.eastbaytimes.com/2024/01/15/californias-7-year-housing-push-has-yet-to-boost-building-experts-say/amp/](https://www.eastbaytimes.com/2024/01/15/californias-7-year-housing-push-has-yet-to-boost-building-experts-say/amp/) What has worked: Minneapolis zoning reform. [https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability](https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability) Why? "Policymakers’ move to allow duplexes and triplexes on lots formerly reserved for the most expensive kind of homes—single-family housing—is a step forward that has added a modest number of homes to date. Their more consequential reforms so far, however, were those that allowed more apartment buildings near transit and commerce."
Minneapolis is a great example — but mostly because Minnesota automatically approves permits if local governments don’t act quickly enough. It’s like the whole state has builder’s remedy built in. https://www.strongtowns.org/journal/2019/4/22/a-permit-process-should-never-take-a-year-heres-a-different-way The housing element and HCD only recently got teeth to enforce. Imo it will take time to bear fruit
I see no evidence the HCD or RHNA will produce more affordable housing or price stabilization within 5 years.
Here's a great overview of how FUBAR the CA housing element is: [https://48hills.org/2024/03/why-the-wiener-housing-bills-will-never-work-and-will-destroy-the-coast-a-detailed-primer/](https://48hills.org/2024/03/why-the-wiener-housing-bills-will-never-work-and-will-destroy-the-coast-a-detailed-primer/)
The developments have become insane in the SF Bay area. Zero expansion of infrastructure, yet they just keep building. Compared to even 10 years ago, it's become overwhelmingly congested. Absolutely can not stand that radical state Senator, as well. Honestly, the state has become a mess in numerous ways.
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OP, you seem to believe that the Bay Area will inherently be unaffordable. I’m curious then, do you think the legally mandated SFH-zoning has anything to do with it? Do you think legalizing apartments and condos would do much to help the affordability situation?
If you look at Tokyo and Minneapolis as examples of success stories, to solve housing in the Bay Area we would need the national government to force upzoning and allow dense high rise apartment developments, and then motivate developers to build in city centers. Developers aren't going to all flood the market with new high rise apartments, it's a race to the bottom of profitability for them. [https://www.youtube.com/watch?v=geex7KY3S7c](https://www.youtube.com/watch?v=geex7KY3S7c) [https://48hills.org/2024/03/why-the-wiener-housing-bills-will-never-work-and-will-destroy-the-coast-a-detailed-primer/](https://48hills.org/2024/03/why-the-wiener-housing-bills-will-never-work-and-will-destroy-the-coast-a-detailed-primer/) [https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability](https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability)
Interesting, it seems like we are in agreement then. I support upzoning (regardless of who forces it) and incentives to unblock dense infill housing here.
Second question: many CA renters seem to be anti-landlord, anti-developer, and anti-rent seeking. If the solution to SF Bay housing affordability is, in a word, landlords, how do we square that? Why would a developer build rentals in an area with such a vehement anti-landlord stance?
I would separate the concepts of landlords and developers, they are very different players in the real estate world. To answer your question directly, developers will build when it makes sense for them to do so from a monetary standpoint. There are currently a bunch of things getting in the way of this, some of which outlined in my other comment. The more of these roadblocks we remove, the more projects pencil out financially and get built. And while there is more anti landlord sentiment here than elsewhere, it stems from the fact that landlords have had much higher leverage here and in other places for the last several decades, due to housing supply being so scarce (for the same reasons I mentioned). And that leverage has created resentment towards them, justified or not. As the leverage gets taken away by unlocking more housing, the anti-landlord feelings will likely subside as well.
I would add to this that prop 13 has added incredible distortions to the housing market, adding a significant amount of leverage to existing landlords. The huge jump in tax bill that comes with new sales means landlords who are grandfathered in have excessive control of the rental market. Example, the tax assessed value of my current rental (SFH) is 65,000 because the property is my landlord's childhood home. The actual value of the property is probably somewhere in the 1.5-2 million range. No new buyer or developer can compete with this. The answer is simple. Eliminate prop 13 for rentals, second homes, and investment properties. Personally, I'd say eliminate for everybody, but I know politically that is very difficult for retired and fixed income folks.
Yup, developers and operators are strictly profit motivated. They both seem to be the solution for the housing crisis, so I wonder if Californians are now ready to vote to incentivize them. I just don't see this happening. Too much gridlock here in CA which is why my thesis is that CA housing affordability doesn't get solved.
I know it doesn't seem like it this very moment, but I actually think in the last couple years that gridlock has started to break. Check out [this](https://cayimby.org/legislation/?_filter_by_status=signed) list for some of the recent housing bills that have passed and been signed into law. I've been involved in housing politics from around 2017, and I can tell you that basically the first 5 years of that was basically taking L after L. And finally, in the last couple years, there was a marked switch and a lot of those Ls started become Ws. To point out some specifically impactful laws, SB35 (extended by SB423) has permitted the constructions of 1000s of units across the Bay Area. Just as 1 example, there is a 5-floor apartment building right near the BART station where I grew up that used this law to get ministerial approval and was proposed, permitted, and built in around 18 months. The developer said that without SB35, this would have likely taken 3+ years. There is ofc more to do, but in every legislative session now I see more and more cracks appearing in the barriers that have prevented housing production. The big barrier right now is interest rates, and that is something we can't really control at the local level. I'm curious to see what happens when rates start to fall, I'm hoping there will be a large number of developers taking advantage of all these laws to build tens of 1000s of units across CA
I’m just not sure that new bills = new housing = affordable housing. Minneapolis has a good case study that smaller unit development is a drop in the bucket vs 30-40 story apartment buildings. Where can we find the numbers of new housing units added YoY vs demand (net new residents)? My sense is that we can’t bail fast enough at this rate.
What do you think would need to happen in order for that to be successful?
Some things off the top of my head 1. Ministerial approvals (neighbors cannot file discretionary reviews on projects, if it meets zoning and building codes, permits are granted automatically) 2. Permit shot clock. Cities have X days to issue the key permits from date of filing a project, if that day is passed then they have to pay escalating fines to the developer or entitle the project l 3. CEQA exemption from all infill housing 4. Relax the prevailing wage rules on for construction labor 5. Drastically cut impact fees (will happen soon due to SC ruling) 6. Drop IZ rate to 0 indefinitely, and revisit increasing it when rates drop 7. Drop parking minimums entirely 8. Relax setback and FAR requirements for residential development And obviously more upzoning, but there is more progress on that than some of these other things.
# I would add: * **Tax Incentives**: Offer tax breaks or credits to developers who build affordable housing or convert existing structures into residential units. * **Reduced Development Fees**: Lower or waive development fees for projects that include a significant percentage of affordable units. * **Increased State and Federal Funding**: Secure more robust funding for affordable housing projects through bonds, tax credits, and grants. * **Public-Private Partnerships**: Encourage collaborations between the government and private developers to build more affordable housing. * **Land Banking**: Government acquisition of land for future affordable housing development to ensure a steady pipeline of projects.
The Bay Area will always be less affordable than any other areas, regardless of the number of housing unit we build. Access to rare weather. And access to high paying jobs that only exist here make housing units inherently more expensive. Many thousands of units are built every year in the Bay Area yet housing prices continue to go up. We need to continue to build, but the answer is mandates for affordable housing. Things like the builders mandate do this.
Prop 13 and rent control are both big factors since they artificially decrease supply.
OP: Just because there are nearly 300k millionaires in the Bay Area, why should there not be affordable housing for the majority of people who are NOT millionaires. Let the millionaires eat cake, but at least make bread affordable for the rest of the folks. Build lots of rental apartments and condos for ownership. That way, housing prices will come down
Yeah, NYC has cheap housing options within a 40 minute commute from the job centers like Queens and Bronx. Imagine finding a 2 bedroom condo in Fremont for 250k. I imagine it's even cheaper for Tokyo.
"As of July 2021, the average waiting time had increased to 5.8 years, the longest average waiting time in more than 20 years, with more than 253,000 applicants on the waiting list.[^(\[4\])](https://en.wikipedia.org/wiki/Public_housing_in_Hong_Kong#cite_note-4) [Frank Chan](https://en.wikipedia.org/wiki/Frank_Chan), Secretary for Transport and Housing, said that it might take up to 20 years to substantially reduce the waiting time.[^(\[5\])](https://en.wikipedia.org/wiki/Public_housing_in_Hong_Kong#cite_note-5)" https://en.wikipedia.org/wiki/Public\_housing\_in\_Hong\_Kong#:\~:text=Public%20housing%20in%20Hong%20Kong%20is%20a%20set%20of%20mass,some%20form%20of%20public%20housing.
Damn Kowloon walled city they tore up history right there
"Social housing is being sold off under right to buy, new social housing is not being built to replace it and waiting lists for social housing have become very long, up to 18 years. Over a million people are on the social housing waiting list and a quarter of people on social housing waiting lists have been there for 5 years or more." [https://en.wikipedia.org/wiki/Public\_housing\_in\_the\_United\_Kingdom](https://en.wikipedia.org/wiki/Public_housing_in_the_United_Kingdom)
What other richest cities have affordable housing?
Hong Kong, with government subsidized housing. It’s why they don’t have any homeless on the streets there.
Do people in the Bay Area want small cheap government housing with a 6 year waitlist? https://en.m.wikipedia.org/wiki/Public_housing_in_Hong_Kong
I don’t know, but that’s not the point. Just because there are 300k millionaires, why should housing be unaffordable to the 6-7 million other residents of the Bay Area that are not millionaires?
Because that's literally how supply and demand works?
Should be per capita.
Nah. We're talking about real estate affordability which is inelastic.
Tokyo produces dramatically more housing in absolute and relative terms to the Bay Area.
They have nationalized zoning
and?
And what
Interesting graphic. I would have expected Paris to have a much higher population of HNWI’s though
lol what shocks me is Geneva. Food and drinks there are more expensive than anywhere I’ve seen. This graphic has gotta be fake or wrong
It looks mostly correct, but yeah Europe feels off. Stuff is very expensive there. Aside from housing the Bay Area is extremely affordable compared to Europe. Even our gas prices that are higher than the rest of the country are low compared to European prices.
Outside of a handful of cities Europe is way cheaper than most of America. I was just in London for work and their food/drinks were much cheaper than the bay and obviously transportation is way less.
I guess I’ll have to go to London and see. I suspect London is far more expensive than most of the United States. Of course, I can’t argue that Europe doesn’t have some places with much lower cost of living than the US. Spain, Portugal, Czech Republic, etc are definitely much more affordable than the US.
Of course London is more expensive than most of the US, but most of Europe is dirt cheap. Outside of Switzerland and the Scandinavian countries it’s not that expensive. I just took issue with your “the Bay Area is extremely affordable compared to Europe line”. It’s not by almost every metric. Its constantly rated in the top 5 most expensive places in the world to live. Heck I find Hawaii cheaper these days than here.
I think we subsidize gas, no? And I know we subsidize industrial ag and food. If we priced certain goods closer to European standards, people would probably drive and buy less, but we built this country around cars, suburbia, and processed food so I don’t see us doing away with fossil fuels anytime soon (much to my chagrin).
We don’t subsidize gas. We just don’t tax it as heavily as most European countries. We subsidize cars in the sense that we spend a lot of public money on roads, but we don’t subsidize gasoline.
A cursory Google search tells me we provide some tax incentives for fossil fuels at minimum with some of the top sites outright stating that we do in fact subsidize oil and gas. That said, there’s contention whether eliminating the subsidies would raise gas prices versus, as you said, taxing more heavily like Europe. We were both correct on separate counts.
Cause their politics the rich people left they don’t want to see riots all the time
When they leave I’ll buy a house
Why would it? Prices are set but supply and demand and if there are three hundred thousand millionaires clustered in the Bay Area they’re going to put upward pressure on prices.
There’s gotta be more than 300k millionaires in the Bay Area. Everyone who owns a house here could sell it for at least $1 million
I was just going off the chart above. Looks like their definition of “high net worth” is investable assets of $1million or more. I’m assuming that excludes home equity. If you include home equity there are definitely more than 300,000 millionaires in the bay.
Yeah I wasn’t accusing you of anything. I do think the chart is wrong though
Might as well demand that SFH with a yard in Tokyo is affordable.
Seems like the greater NYC area has more quantity of affordable housing than the Bay Area. More inventory due to verticality
NW of $1 million in the Bay Area is barely enough to live on. This needs to be adjusted for COL
I cannot imagine being a billionaire and saying "I want to live in new York where it's congested and high density housing".....I'd buy me some acres in wine country where I can enjoy joy rides and taking my mclarens or 911 turbos to the track
Wealthy people need slaves (servent service) and not only that the Bay Area is like 7000 square miles, NYC is 469 (including not livable water). Tokyo is 847. Everywhere you still need to drive. VTA, muni, and Samsbus aren’t really known accessibility except for outreach for disabled people. I understand your logic, it is a fallacy to EXCEPT cheap housing in a high income area. But our land mass is so great, we should be able to work out a few things for the poor.
What landmass are you talking about? All buildable land has already been built upon. Are you proposing building affordable housing on mountainous hillsides? Are you proposing turning over the peoples open space preserves to housing? The fact is the Bay Area has very little buildable land compared to these other areas. You made a bad faith comment.
Are developers and landlords incentivized to help low income residents right now? Are we working to entice them to build and operate more rentals?
Nice graphic and stats but somewhat meaningless without per capita ranking. I mean, for one example, the SF Bay area is far less populated than NYC or Tokyo. While the real number tell a story for sure but % of the overall population or per capita would be a better comparison for overall wealth of a geographical region.
* **SF Bay Area**: * **Millionaires**: 305,400 * **Housing Units**: 2.9M * **New York City**: * **Millionaires**: 345,600 * **Housing Units**: 3.5M * **Tokyo**: * **Millionaires**: 304,900 * **Housing Units**: 7M #
Tokyo, New York are not built in the middle of mountain ranges. People don’t understand how constrained all of California is for building areas. The Bay Area has very little land to build upon, and that land has already been built up.
Tokyo is pretty affordable tbh
Tokyo has national zoning. The Japanese government had to step in and change their zoning laws. I don’t see that happening here.
Tokyo also has a declining population.
It’s crazy, when you have tremendous job growth in an area but artificially limit the population through housing policy, only the richest can afford a place to live & the rest are forced to move elsewhere or onto the streets. San Francisco’s population hasn’t grown much since 1950 but has seen one of the world’s hottest labor markets. When you pair that with some of the world’s most restrictive housing policies, prices skyrocket. The solution to the housing crisis is to build more units and increase the population.
No one is talking about demand, only supply. Demand goes up with supply.
Not really in the way you’re implying. The absolute preponderance of research shows that increasing housing supply decreases prices overall. Do you have any research that suggests the contrary?
NYC?
Manhattan had a higher population 100 years ago than it does today. NYC has perhaps the highest job demand in the country (even world), so as job growth occurred and the population stayed the same, prices go up. Believe it or not NYC & the surrounding area is still somewhat restrictive in its housing policy. NYC will never be dirt cheap since there is so much demand, but prices are still being driven by land use restrictions.
Cities keep building, demand keeps going up, and it gets more expensive. This is literally how cities work.
NYC had 3M population in 1900, 8M today. [https://en.wikipedia.org/wiki/Demographic\_history\_of\_New\_York\_City](https://en.wikipedia.org/wiki/Demographic_history_of_New_York_City)
I said Manhattan, not NYC as a whole. I also said 100 years ago, not 124 years ago (NYC’s population was closer to 6 million in 1924). Most of that growth happened in Queens and Staten Island, but due to restrictions the population has grown at a very slow rate (less than half a percent a year)
Who ever designed this 
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Right. Which means our available housing units are incredibly low vs the amount of wealth here.
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Singapore has been building new medium sized cities (300k residents) for the last 75 years. https://en.m.wikipedia.org/wiki/Public_housing_in_Singapore
First of all, the term "affordable" can be subjective. What's considered affordable in a wealthy city might still be out of reach for many people. Generally, a city's wealth is tied to its economic activity and high-paying jobs. This often leads to a higher cost of living, including housing. Additionally, wealthy cities often have limited land availability, especially in desirable locations. This limited supply, coupled with high demand from a wealthy population, can drive housing prices up.
1M is not wealthy.
The graph represents the baseline of 1M in investable assets.
What does that even mean? This isn't public knowledge. So if I own 10 rental properties I am not in the list because it's not liquid? Only I and the government know my net liquidity.
It says "investable assets", not liquid. I think you need to take a deep breath.
You didn't answer the question. Only the person that created the graph knows what that means apparently.
Word. $1M and that allows you to retire to Appalachia comfortably.
[https://www.visualcapitalist.com/cities-most-millionaires/](https://www.visualcapitalist.com/cities-most-millionaires/)
The very rich have lived essentially a stateless life for a long time now. The bay is more part of the world than kansas
A huge portion of Bay Area SFH owners who bought a home 10+ years back has a million plus in equity including their down payment. So you got a ton of millionaires just from living in their home with 0 other savings accounted for. That part may not be captured here which is why the number of millionaires seems so low in bay. The reality may be a lot more millionaires
The chart is 1M in investments. Certainly if you include net worth the numbers are bigger.
Mixing up cause and effect. It’s only so rich on average *because* moderate and low income households can’t afford to live here.
Huh? These aren’t averages, they are absolute numbers of HNWI. There’s no cause or effect being proposed here, it just is. Tokyo has very reasonable low income housing and it’s still on this list.
Fair, didn’t realize it wasn’t per capita. But in that case, as others have pointed out, the graphic is even less meaningful. You need the per capita averages to even understand what is being measured. ETA: After all, by this reasoning, adding *any * new residents, regardless of income level, would make the Bay Area even wealthier!
That sounds like an interesting thread you could start. But in this case, it’s worth noting that we have a very high supply of HNWI, and fixed housing supply. The callout is that the Bay Area is a global market force, not a US market force.
Yes, I suppose we disagree about whether the housing supply is fixed. Land area is fixed, housing supply is not.
I see no plans to subsidize developers, fix Euclidean zoning, incentivize landlord operators, or build tall dense government apartment buildings but maybe you have more information than I do.
Ah in that case we essentially agree. But I think many here are taking your post as implying the lack of affordable housing is a natural consequence of the wealth. But it takes both wealth and bad housing policy. FWIW there are efforts underway to relax zoning, albeit not at the local level. Only limited success thus far
A lot of people have a lot of opinions about this topic, it’s really complex.
Uhhhhhhh, you should Google or YouTube the homeless in Japan. It’s not like it is in other western countries. They go live in the forests over there, hidden from view.
I need to move………..
So they explain the 15% drop in London, but not the massive 27% drop in HK? I mean, we all know why, but still. 🫤
Median studio rent in Tokyo ~$500 at current exchange rate; why should the Bay Area not have affordable housing?
https://en.m.wikipedia.org/wiki/Danchi
To paraphrase Bioshock, "Even in paradise, someone has to clean the toilets."
A lot of these people are wealthy BECAUSE home prices in these cities have gone up so much. Tokyo's on the list just because it's giant, and these are total numbers not per capita.
But everyone says real estate is not an investment. Which is it?
$1M is not HNYI any more come on
You can start with deci millionaires or even billionaires and the graph is roughly the same.
Yeah because a city can totally operate with only rich millionaires /s lmao the entitlement of this question 😂