Tearing down historical housing would of grew economy by 10%

[chris08876]

The High Cost of Expensive Townhouses *

Recently, I was in San Francisco for work and remarked to a friend what a nice city it was to walk around in. Sunlight and fog bathe the three-story Victorians. Pocket gardens dot the hillsides. It's charming — as charming as Greenwich Village or Brooklyn Heights in New York, if not more so.

These neighborhoods are adorable. They are desirable. And they are a total economic disaster.

That's because those three-story homes in those cute neighborhoods house relatively few San Franciscans and New Yorkers, driving up housing prices, driving down density, and suppressing population growth. The city's residents end up shelling out astronomical sums of money to live there. And far too few people get to join them. Everybody would be better off if developers could rip down those houses and build apartments and condos — and I mean everybody.

A new study by Chang-Tai Hsieh of the University of Chicago and Enrico Moretti of the University of California, Berkeley, calculates that the United States economy would be nearly 10 percent bigger if just three cities — New York, San Jose, and San Francisco — had loosened their constraints on the supply of housing and let more people in during the past few decades. Let that sink in: 10 percent bigger.

To get that number, the economists imagined a world in which those three cities had average land-use regulations, rather than the highly restrictive ones you see in practice. Over time, millions more workers would have flocked to those cities, becoming more productive and helping the whole economy grow. The average worker would be making $6,000 more a year than they are. Annual economic output would be more than $1 trillion higher as of 2009. We'd all be better off.

It's an insane amount of money and highlights the real cost of policies like historical preservation, street-parking requirements, and height restrictions in cities like New York and San Francisco. Yes, they're there in part to preserve local character. Yes, they're there in part to keep cities beautiful. But they're also there to preserve housing values for incumbent homeowners, at the cost of keeping out thousands and thousands of other residents, sucking up a huge chunk of the earnings of the households that do rent in those neighborhoods, and driving up prices everywhere else in the city.

And that's just the well-known tradeoff in local terms — the important thing about this paper is that it underscores that the effect is national in scope. By jacking up housing prices and pushing workers to live in lower-productivity areas of the country, building restrictions mean a smaller economy. Think about that the next time you marvel at the window boxes on a cute brownstone.

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May 11, 2015
http://nymag.com/daily/intelligencer...ownhouses.html
*Audio on the topic (in link): http://www.wnyc.org/story/tearing-do...=wnyc-facebook

[MonkeyRonin]

"We'd all be better off."


Only if your sole measure of "better off" is financially. We'd also be richer if we worked longer hours and more days. Some things just aren't worth it.

[Centropolis]

Starting the right kind of war might grow the economy 10%.

[dc_denizen]

I just rode through Gowanus in NYC, plenty of land there to build condos and apartments.

[MayDay]

I'd rather see proper grammar in thread titles than a 10% bump in the economy.

[sbarn]

*facepalm*

[Nouvellecosse]

"That's because those three-story homes in those cute neighborhoods house relatively few San Franciscans and New Yorkers, driving up housing prices, driving down density, and suppressing population growth. The city's residents end up shelling out astronomical sums of money to live there. And far too few people get to join them. Everybody would be better off if developers could rip down those houses and build apartments and condos — and I mean everybody."

Everyone would be better off if there were 10x more of this type of area instead of the less charming and much lower density suburban areas that the majority of NA metros are composed of. You could fit many thousands more people within a reasonably accessible proximity to the central city if the city wasn't surrounded by many km of low density, NIMBY suburban regions that smother such infill.

The main reason that charming areas are so expensive is that they're so rare. We aren't building like this any more so all we have is what's already here. Seeking to eliminate something extremely valuable and precious to solve the "problem" of its high cost is insane.

[10023]

I think there's already a thread on this, and I think most of us agree that the authors of this study are missing the forest for the trees.

You know what else would grow the economy? Get rid of weekends. We can all just work 7 days a week and actually grow the economy by 40%.

[chris08876]

Some people would gladly work 7 days a week if they could. I think the best thing for ones career is to love it. The people who love being at work, idk, some may see that as a negative, but I think its great to have. When one finds work enjoyable, can't beat that combo. But obviously this isn't the case for most who can't wait until 4 or 5pm, and this is right when they get to work.

A couple of people I know who work at Fortune 500's would love more overtime, but companies aren't giving enough of it.

[ocman]

LA county, at least, has supply constraints that really have nothing to do with the supply of historic housing. It's mostly about traffic and how high-density complexes lower existing property value. If you knock down a Frank Lloyd Wright, it would likely be replaced by another single family unit.

[NorthernDancer]

"Would have grown", not "would of grew".

[vid]

It only would of grewed because of all the things we boughtten.

[BrownTown]

While I personally agree that this sort of low density housing is a huge waste of space so close to incredibly dense cities there isn't really much of a solution given people's aesthetic tastes these days. If you start putting up a bunch of European or Asian style apartment and condo buildings everyone decries it as some sort of Communist style of architecture. It also seems to be cherry picking the problem a little. These row houses might be lower density than should exist in such close proximity to the urban cores of cities like San Francisco and NYC, but every other city in the US has the same problem just to a lower scale. They have less dense central cores, but also far less dense suburbs surrounding them. There are a lot of large US cities where the sparse suburbs start as close as 1-2 miles from the very center of the city and extend for 50 miles further out. San Francisco and NYC need to be allowed to get denser to satisfy market forces, but plenty of other cities need to be FORCED to get denser simply to stop wasting so much money on inefficiency.

[ardecila]

Originally Posted by 10023

I think there's already a thread on this, and I think most of us agree that the authors of this study are missing the forest for the trees.

You know what else would grow the economy? Get rid of weekends. We can all just work 7 days a week and actually grow the economy by 40%.

Your outrage is only because of some weird value judgment that says new buildings are not as good as old buildings.

Otherwise, what's the problem with letting these neighborhoods go through a normal process of building replacement and growth? It worked just fine for the first 300 years of New York history, until zoning was introduced in 1916 and gradually grew to a draconian monster strangling the city's growth.

[mthd]

Originally Posted by some idiot

...These neighborhoods are adorable. They are desirable. And they are a total economic disaster.

That's because those three-story homes in those cute neighborhoods house relatively few San Franciscans and New Yorkers,.

other than all the other problems about the "logic" in this article, what really irks me is that the area pictured for san francisco is actually quite dense. census tract 163 is between 40 and 50 thousand people per square mile, much higher than the average density of any north american city, including new york.

the problem isn't "historic housing." tearing it down won't help.

[montréaliste]

Building higher density where lower density buildings used to be is what drives up valuation. Not the other way around. Besides, there usually is plenty of space on unrewarding property to build highrises. If San Francisco got rid of these Victorian and Edwardian houses, nobody would have a sane reason to visit the city and the economy would take a hit.
Think about that the next time you look up at the hundreds of air conditioning units on those neat condoboxes...

[BrownTown]

Originally Posted by montréaliste

Building higher density where lower density buildings used to be is what drives up valuation. Not the other way around.

Not really. It's basic supply and demand that if the supply of housing increases and demand stays the same then prices will go down.

Originally Posted by montréaliste

If San Francisco got rid of these Victorian and Edwardian houses, nobody would have a sane reason to visit the city and the economy would take a hit

Are a significant number of tourists really just driving around looking at all the pretty houses? I'd think they would be more focused on the attractions like the Golden Gate Bridge and Fisherman's Warf.

[599GTO]

Don't care if it would grow the economy by 100%. Don't touch the fucking townhouses.

[lio45]

As discussed already in other threads, I disagree with their logic when they say that the existence of that expensive, not-that-dense, historic housing stock is "pushing workers to live in lower-productivity areas of the country".

[Nouvellecosse]

Originally Posted by BrownTown

Not really. It's basic supply and demand that if the supply of housing increases and demand stays the same then prices will go down.

I think he means that allowing higher density buildings (such as by changing zoning restrictions and easing heritage protection) would increase each individual property's value since the property has the potential to be converted into many more properties rather than just maintaining the value intrinsic to itself. And this of course is often true. But actually building higher density would play to the supply and demand forces. If it was an area that wasn't already desirable, then new higher density development could create more demand because the first few pioneer residents could pave the way for a larger wave of people wanting to move in (gentrification). But this isn't the case for an area that's already extremely desirable.