Is there a coherent argument that loosening zoning laws will lead to affordable housing in DC?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let me explain how expanding the housing supply will reduce prices.

A developer buys a rowhouse in Petworth for $600,000. He levels it, and in its place, puts up five condos, each costing between $600,000 and $1.2 million.

No, that is not affordable housing by any stretch of the imagination.

But the people who buy them trade up from other places. And they leave behind places that other people trade up to. And those people leave behind places that other people trade up to. And so on. And so on. And so on. And so on. And so on. And so on. And so on.

The last area in that chain, the place where people least want to live -- housing prices go down there, because there, finally, supply exceeds demand.

Voila! Increasing the housing supply in Petworth leads to lower housing prices in Hagerstown, Maryland.

Don't let anyone tell you that increasing the housing supply won't reduce housing prices.

That's a super squishy and nice theory, but that's not how it works.

I already have, several times on this thread. I am the public finance lawyer. I have my MBA as well. I’ve been practicing 25+ years. Your theory doesn’t equate to reality. I do not agree that changing zoning laws will equate to an increase in affordable housing in this area. I do not believe in the “food pyramid” theory of upward mobility. You are first assuming all those people at the bottom on the pyramid are only there because the supply of something a little more expensive and to them more desirable. You are assuming that if D is built, someone from C will move into D, B will then upgrade into C, A into B and then someone who didn’t have housing before (homeless?, co-sharing?) will then become the new A. Even if you mix it up with rentals, the answer is still no. You are also assuming the market will self correct and rents/home prices automatically go down with an increase in supply.

1) developers are in the business to make a profit. There exist very few true nonprofit developers. People are not in the business of building an real property and selling/ renting it below cost. Period. This is why we have HUD, to subsidize rentals and home ownership programs.

2). Municipalities (local and state) have their own programs (in conjunction with HUD) to own and operate multi family housing. These are your Section 8. Operating a section 8 building is an insane amount of work. Besides the daily upkeep and maintenance of the building, there are additional requirements that must be met and certified every single year by HUD and the IRS. It is just too hard and expensive to have supply meet demand, anywhere, hence HAP vouchers exist but landlords really don’t want the hassle.

3). Single family affordable housing is super tricky. I worked on a deal in DC where the developer was strong armed by the DC government to allocate and donate 1/3 of the townhomes in the development they were building to be given under a special program where an owner would only need to pay $30,000 over a 20 year period, no down payment and they would own fee simple the property at the end of the mortgage. The towns homes at the time were worth over $450,000. It was a special home ownership program. People had to meet certain requirements (be employed, already be a resident of the ward, no gun charge convictions). A third party was brought in to be neutral and review applications and establish a lottery. Then the special requests started (a councilmember wanted his niece at the top of the list, the city only wanted unions who lived in that ward to work on the construction crew, the city asked for proffers for the police, hospital and schools, etc). After 18 months on the deal, the developer walked. It never was built.

4). There are just too many A and Bs in this area. Too many lower and lower middle class people who aren’t moving, they can’t. They won’t suddenly move up the pyramid if luxury condos are built and some people move up. When luxury condos are built, empty nested, DINKs, and very wealthy new comers move in. If it’s an empty nester, who moves into their old house? A family who needed more space when they had a second kid. Who moved into their old house? DINK. Who moved into their old apartment? A BIGLAW first year associate. The As and Bs are staying right where they are. No increase in affordable housing has been created.

A true increase in affordable housing will occur with a city/county builds more multi family. Period.

I'm the person who wrote the post about building condos in Petworth leading to lower housing prices in Hagerstown, and I actually agree with you. This business about how loosening zoning laws will lead to affordable house, in my opinion, is a bunch of hokum. No one can even explain how it would work. Sometimes people in favor of loosening zoning laws will say, "yes, the condos being built are for the well-to-do, but those people leave behind old places for someone else, and everyone will trade up." That seems like wishful thinking to me, and I was trying to make fun of that logic by suggesting the chain of people trading up would be extremely long, and that the real beneficiaries of building condos in Petworth would be people who live an hour and a half away in Hagerstown. Clearly the sarcasm didn't come through.

I used to be a pure supply and demand guy on housing problem is housing is a much more complex good

This article finally let me see the light

https://shelterforce.org/2019/02/19/why-voters-havent-been-buying-the-case-for-building/

Cliff notes version housing is segmented and building high end housing doesn't help anyone besides those close to the high-end.

"If housing markets are segmented, then when we build more luxury housing, the price of luxury housing falls (Econ 101). But if each new luxury unit does not correspond to one less household in the next market down (the ‘high-cost’ submarket), then the prices in the high-cost market will move less noticeably than the luxury prices.

Why wouldn’t there be a 1-1 change? For every new luxury unit, doesn’t someone vacate a less expensive unit down market? Not exactly. There are many reasons why the submarket units are imperfect substitutes. For one thing, as prices fall, households in the luxury segment of the market may consume more housing. This can happen when someone buys a second home or even when two roommates respond to lower prices by each renting their own place. But also, some luxury units may be taken off the market when prices fall, while others may be downgraded to lower-quality buildings because the lower rents may no longer be enough to support luxury amenities and services. There are a great many possible permutations, but at each stage in the process, adding one unit or removing one household from one tier does not automatically mean that one additional household will step up into that tier.

I think it is clear from this that we can’t expect new luxury development to have the same impact on rents at the bottom of the market as it does at the top. But how much less impact is not clear. In technical terms, there is no good recent data on the cross-price elasticity of demand between luxury housing and lower-cost housing. A large group of urbanists have taken to talking about the housing market as if these elasticities were close to 1 (increases in luxury supply have a big impact on the low-end rent). But it’s just as likely that the elasticity is closer to 0 (the rent at the bottom of the market is very insensitive to the level of supply at the top of the market)."

Then it seems like preserving rent control rather than tossing up lots of high end/dense housing in ward 3 should be a goal of this Mayor? Notice no one in Ward 3 has an issue with rent control. Everyone has an objection with building on every inch of land.

Did you notice that OP head Andrew (“Pajama Boy”) Trueblood didn’t acknowledge or include any rent controlled housing in Ward 3 in the mayor’s housing plan or in OP’s public outreach to push the Comp Plan rewrite. And in public forums he repeatedly defects questions on rent controlled housing Why? First of all, the fact that Ward 3 has thousands of rent controlled units (the second highest in DC) in areas with good schools and amenities is an inconvenient fact as he and Bowser push the simplistic narrative that Ward 3 should be “shamed” for having little affordable housing, in order to justify their agenda for upzoning and densifying a lot of Upper NW. Second, Trueblood and Bowser know that these existing rent controlled buildings in Ward 3 are precisely many of the “high opportunity” (for profits) sites that their developer allies covet for redevelopment into more upscale, market rate housing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let me explain how expanding the housing supply will reduce prices.

A developer buys a rowhouse in Petworth for $600,000. He levels it, and in its place, puts up five condos, each costing between $600,000 and $1.2 million.

No, that is not affordable housing by any stretch of the imagination.

But the people who buy them trade up from other places. And they leave behind places that other people trade up to. And those people leave behind places that other people trade up to. And so on. And so on. And so on. And so on. And so on. And so on. And so on.

The last area in that chain, the place where people least want to live -- housing prices go down there, because there, finally, supply exceeds demand.

Voila! Increasing the housing supply in Petworth leads to lower housing prices in Hagerstown, Maryland.

Don't let anyone tell you that increasing the housing supply won't reduce housing prices.

That's a super squishy and nice theory, but that's not how it works.

I already have, several times on this thread. I am the public finance lawyer. I have my MBA as well. I’ve been practicing 25+ years. Your theory doesn’t equate to reality. I do not agree that changing zoning laws will equate to an increase in affordable housing in this area. I do not believe in the “food pyramid” theory of upward mobility. You are first assuming all those people at the bottom on the pyramid are only there because the supply of something a little more expensive and to them more desirable. You are assuming that if D is built, someone from C will move into D, B will then upgrade into C, A into B and then someone who didn’t have housing before (homeless?, co-sharing?) will then become the new A. Even if you mix it up with rentals, the answer is still no. You are also assuming the market will self correct and rents/home prices automatically go down with an increase in supply.

1) developers are in the business to make a profit. There exist very few true nonprofit developers. People are not in the business of building an real property and selling/ renting it below cost. Period. This is why we have HUD, to subsidize rentals and home ownership programs.

2). Municipalities (local and state) have their own programs (in conjunction with HUD) to own and operate multi family housing. These are your Section 8. Operating a section 8 building is an insane amount of work. Besides the daily upkeep and maintenance of the building, there are additional requirements that must be met and certified every single year by HUD and the IRS. It is just too hard and expensive to have supply meet demand, anywhere, hence HAP vouchers exist but landlords really don’t want the hassle.

3). Single family affordable housing is super tricky. I worked on a deal in DC where the developer was strong armed by the DC government to allocate and donate 1/3 of the townhomes in the development they were building to be given under a special program where an owner would only need to pay $30,000 over a 20 year period, no down payment and they would own fee simple the property at the end of the mortgage. The towns homes at the time were worth over $450,000. It was a special home ownership program. People had to meet certain requirements (be employed, already be a resident of the ward, no gun charge convictions). A third party was brought in to be neutral and review applications and establish a lottery. Then the special requests started (a councilmember wanted his niece at the top of the list, the city only wanted unions who lived in that ward to work on the construction crew, the city asked for proffers for the police, hospital and schools, etc). After 18 months on the deal, the developer walked. It never was built.

4). There are just too many A and Bs in this area. Too many lower and lower middle class people who aren’t moving, they can’t. They won’t suddenly move up the pyramid if luxury condos are built and some people move up. When luxury condos are built, empty nested, DINKs, and very wealthy new comers move in. If it’s an empty nester, who moves into their old house? A family who needed more space when they had a second kid. Who moved into their old house? DINK. Who moved into their old apartment? A BIGLAW first year associate. The As and Bs are staying right where they are. No increase in affordable housing has been created.

A true increase in affordable housing will occur with a city/county builds more multi family. Period.

I'm the person who wrote the post about building condos in Petworth leading to lower housing prices in Hagerstown, and I actually agree with you. This business about how loosening zoning laws will lead to affordable house, in my opinion, is a bunch of hokum. No one can even explain how it would work. Sometimes people in favor of loosening zoning laws will say, "yes, the condos being built are for the well-to-do, but those people leave behind old places for someone else, and everyone will trade up." That seems like wishful thinking to me, and I was trying to make fun of that logic by suggesting the chain of people trading up would be extremely long, and that the real beneficiaries of building condos in Petworth would be people who live an hour and a half away in Hagerstown. Clearly the sarcasm didn't come through.

I used to be a pure supply and demand guy on housing problem is housing is a much more complex good

This article finally let me see the light

https://shelterforce.org/2019/02/19/why-voters-havent-been-buying-the-case-for-building/

Cliff notes version housing is segmented and building high end housing doesn't help anyone besides those close to the high-end.

"If housing markets are segmented, then when we build more luxury housing, the price of luxury housing falls (Econ 101). But if each new luxury unit does not correspond to one less household in the next market down (the ‘high-cost’ submarket), then the prices in the high-cost market will move less noticeably than the luxury prices.

Why wouldn’t there be a 1-1 change? For every new luxury unit, doesn’t someone vacate a less expensive unit down market? Not exactly. There are many reasons why the submarket units are imperfect substitutes. For one thing, as prices fall, households in the luxury segment of the market may consume more housing. This can happen when someone buys a second home or even when two roommates respond to lower prices by each renting their own place. But also, some luxury units may be taken off the market when prices fall, while others may be downgraded to lower-quality buildings because the lower rents may no longer be enough to support luxury amenities and services. There are a great many possible permutations, but at each stage in the process, adding one unit or removing one household from one tier does not automatically mean that one additional household will step up into that tier.

I think it is clear from this that we can’t expect new luxury development to have the same impact on rents at the bottom of the market as it does at the top. But how much less impact is not clear. In technical terms, there is no good recent data on the cross-price elasticity of demand between luxury housing and lower-cost housing. A large group of urbanists have taken to talking about the housing market as if these elasticities were close to 1 (increases in luxury supply have a big impact on the low-end rent). But it’s just as likely that the elasticity is closer to 0 (the rent at the bottom of the market is very insensitive to the level of supply at the top of the market)."

Then it seems like preserving rent control rather than tossing up lots of high end/dense housing in ward 3 should be a goal of this Mayor? Notice no one in Ward 3 has an issue with rent control. Everyone has an objection with building on every inch of land.

But no one is proposing building on every inch of land in Ward 3. Allowing townhouses or small apartment buildings on what’s currently zoned for SFH wouldn’t mean “building on every inch.” You need to increase supply and also affirmatively work to make sure some of the new supply is affordable. I suppose you’ve won the argument here against the straw man you’ve decided to defeat, which is that people think ONLY changing zoning laws will automatically lead to more affordable housing, but in reality that isn’t what the city is proposing to do.

If you travel wisonsin and conn ave in ward 3 there are tons of apartment buildings. Behind them is a neighborhood characteristic of single family homes and duplexes. There was some talk of allowing folks to convert garages to small dwellings, which was interesting. Beyond that, not sure why these low density neighborhoods are so provocative to the Mayor, esp as there are ample rent controlled units in the apartments on the main corridors.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let me explain how expanding the housing supply will reduce prices.

A developer buys a rowhouse in Petworth for $600,000. He levels it, and in its place, puts up five condos, each costing between $600,000 and $1.2 million.

No, that is not affordable housing by any stretch of the imagination.

But the people who buy them trade up from other places. And they leave behind places that other people trade up to. And those people leave behind places that other people trade up to. And so on. And so on. And so on. And so on. And so on. And so on. And so on.

The last area in that chain, the place where people least want to live -- housing prices go down there, because there, finally, supply exceeds demand.

Voila! Increasing the housing supply in Petworth leads to lower housing prices in Hagerstown, Maryland.

Don't let anyone tell you that increasing the housing supply won't reduce housing prices.

That's a super squishy and nice theory, but that's not how it works.

I already have, several times on this thread. I am the public finance lawyer. I have my MBA as well. I’ve been practicing 25+ years. Your theory doesn’t equate to reality. I do not agree that changing zoning laws will equate to an increase in affordable housing in this area. I do not believe in the “food pyramid” theory of upward mobility. You are first assuming all those people at the bottom on the pyramid are only there because the supply of something a little more expensive and to them more desirable. You are assuming that if D is built, someone from C will move into D, B will then upgrade into C, A into B and then someone who didn’t have housing before (homeless?, co-sharing?) will then become the new A. Even if you mix it up with rentals, the answer is still no. You are also assuming the market will self correct and rents/home prices automatically go down with an increase in supply.

1) developers are in the business to make a profit. There exist very few true nonprofit developers. People are not in the business of building an real property and selling/ renting it below cost. Period. This is why we have HUD, to subsidize rentals and home ownership programs.

2). Municipalities (local and state) have their own programs (in conjunction with HUD) to own and operate multi family housing. These are your Section 8. Operating a section 8 building is an insane amount of work. Besides the daily upkeep and maintenance of the building, there are additional requirements that must be met and certified every single year by HUD and the IRS. It is just too hard and expensive to have supply meet demand, anywhere, hence HAP vouchers exist but landlords really don’t want the hassle.

3). Single family affordable housing is super tricky. I worked on a deal in DC where the developer was strong armed by the DC government to allocate and donate 1/3 of the townhomes in the development they were building to be given under a special program where an owner would only need to pay $30,000 over a 20 year period, no down payment and they would own fee simple the property at the end of the mortgage. The towns homes at the time were worth over $450,000. It was a special home ownership program. People had to meet certain requirements (be employed, already be a resident of the ward, no gun charge convictions). A third party was brought in to be neutral and review applications and establish a lottery. Then the special requests started (a councilmember wanted his niece at the top of the list, the city only wanted unions who lived in that ward to work on the construction crew, the city asked for proffers for the police, hospital and schools, etc). After 18 months on the deal, the developer walked. It never was built.

4). There are just too many A and Bs in this area. Too many lower and lower middle class people who aren’t moving, they can’t. They won’t suddenly move up the pyramid if luxury condos are built and some people move up. When luxury condos are built, empty nested, DINKs, and very wealthy new comers move in. If it’s an empty nester, who moves into their old house? A family who needed more space when they had a second kid. Who moved into their old house? DINK. Who moved into their old apartment? A BIGLAW first year associate. The As and Bs are staying right where they are. No increase in affordable housing has been created.

A true increase in affordable housing will occur with a city/county builds more multi family. Period.

I'm the person who wrote the post about building condos in Petworth leading to lower housing prices in Hagerstown, and I actually agree with you. This business about how loosening zoning laws will lead to affordable house, in my opinion, is a bunch of hokum. No one can even explain how it would work. Sometimes people in favor of loosening zoning laws will say, "yes, the condos being built are for the well-to-do, but those people leave behind old places for someone else, and everyone will trade up." That seems like wishful thinking to me, and I was trying to make fun of that logic by suggesting the chain of people trading up would be extremely long, and that the real beneficiaries of building condos in Petworth would be people who live an hour and a half away in Hagerstown. Clearly the sarcasm didn't come through.

I used to be a pure supply and demand guy on housing problem is housing is a much more complex good

This article finally let me see the light

https://shelterforce.org/2019/02/19/why-voters-havent-been-buying-the-case-for-building/

Cliff notes version housing is segmented and building high end housing doesn't help anyone besides those close to the high-end.

"If housing markets are segmented, then when we build more luxury housing, the price of luxury housing falls (Econ 101). But if each new luxury unit does not correspond to one less household in the next market down (the ‘high-cost’ submarket), then the prices in the high-cost market will move less noticeably than the luxury prices.

Why wouldn’t there be a 1-1 change? For every new luxury unit, doesn’t someone vacate a less expensive unit down market? Not exactly. There are many reasons why the submarket units are imperfect substitutes. For one thing, as prices fall, households in the luxury segment of the market may consume more housing. This can happen when someone buys a second home or even when two roommates respond to lower prices by each renting their own place. But also, some luxury units may be taken off the market when prices fall, while others may be downgraded to lower-quality buildings because the lower rents may no longer be enough to support luxury amenities and services. There are a great many possible permutations, but at each stage in the process, adding one unit or removing one household from one tier does not automatically mean that one additional household will step up into that tier.

I think it is clear from this that we can’t expect new luxury development to have the same impact on rents at the bottom of the market as it does at the top. But how much less impact is not clear. In technical terms, there is no good recent data on the cross-price elasticity of demand between luxury housing and lower-cost housing. A large group of urbanists have taken to talking about the housing market as if these elasticities were close to 1 (increases in luxury supply have a big impact on the low-end rent). But it’s just as likely that the elasticity is closer to 0 (the rent at the bottom of the market is very insensitive to the level of supply at the top of the market)."

Then it seems like preserving rent control rather than tossing up lots of high end/dense housing in ward 3 should be a goal of this Mayor? Notice no one in Ward 3 has an issue with rent control. Everyone has an objection with building on every inch of land.

But no one is proposing building on every inch of land in Ward 3. Allowing townhouses or small apartment buildings on what’s currently zoned for SFH wouldn’t mean “building on every inch.” You need to increase supply and also affirmatively work to make sure some of the new supply is affordable. I suppose you’ve won the argument here against the straw man you’ve decided to defeat, which is that people think ONLY changing zoning laws will automatically lead to more affordable housing, but in reality that isn’t what the city is proposing to do.

If you travel wisonsin and conn ave in ward 3 there are tons of apartment buildings. Behind them is a neighborhood characteristic of single family homes and duplexes. There was some talk of allowing folks to convert garages to small dwellings, which was interesting. Beyond that, not sure why these low density neighborhoods are so provocative to the Mayor, esp as there are ample rent controlled units in the apartments on the main corridors.

She's trying to kowtow to the GGW crowd, which goes out of its way to paint all Ward 3 residents as NIMBY boogeymen. Bowser knows she'll never have true support from Ward 3 -- she lost to Catania there in the 2014 general election, and notice how few public appearances she makes there -- so why bother paying it a lick of respect? It's easier for her to try to shame them, even if her housing plan is pipe-dream garbage designed wholly to benefit the developers that line her campaign coffers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let me explain how expanding the housing supply will reduce prices.

A developer buys a rowhouse in Petworth for $600,000. He levels it, and in its place, puts up five condos, each costing between $600,000 and $1.2 million.

No, that is not affordable housing by any stretch of the imagination.

But the people who buy them trade up from other places. And they leave behind places that other people trade up to. And those people leave behind places that other people trade up to. And so on. And so on. And so on. And so on. And so on. And so on. And so on.

The last area in that chain, the place where people least want to live -- housing prices go down there, because there, finally, supply exceeds demand.

Voila! Increasing the housing supply in Petworth leads to lower housing prices in Hagerstown, Maryland.

Don't let anyone tell you that increasing the housing supply won't reduce housing prices.

That's a super squishy and nice theory, but that's not how it works.

I already have, several times on this thread. I am the public finance lawyer. I have my MBA as well. I’ve been practicing 25+ years. Your theory doesn’t equate to reality. I do not agree that changing zoning laws will equate to an increase in affordable housing in this area. I do not believe in the “food pyramid” theory of upward mobility. You are first assuming all those people at the bottom on the pyramid are only there because the supply of something a little more expensive and to them more desirable. You are assuming that if D is built, someone from C will move into D, B will then upgrade into C, A into B and then someone who didn’t have housing before (homeless?, co-sharing?) will then become the new A. Even if you mix it up with rentals, the answer is still no. You are also assuming the market will self correct and rents/home prices automatically go down with an increase in supply.

1) developers are in the business to make a profit. There exist very few true nonprofit developers. People are not in the business of building an real property and selling/ renting it below cost. Period. This is why we have HUD, to subsidize rentals and home ownership programs.

2). Municipalities (local and state) have their own programs (in conjunction with HUD) to own and operate multi family housing. These are your Section 8. Operating a section 8 building is an insane amount of work. Besides the daily upkeep and maintenance of the building, there are additional requirements that must be met and certified every single year by HUD and the IRS. It is just too hard and expensive to have supply meet demand, anywhere, hence HAP vouchers exist but landlords really don’t want the hassle.

3). Single family affordable housing is super tricky. I worked on a deal in DC where the developer was strong armed by the DC government to allocate and donate 1/3 of the townhomes in the development they were building to be given under a special program where an owner would only need to pay $30,000 over a 20 year period, no down payment and they would own fee simple the property at the end of the mortgage. The towns homes at the time were worth over $450,000. It was a special home ownership program. People had to meet certain requirements (be employed, already be a resident of the ward, no gun charge convictions). A third party was brought in to be neutral and review applications and establish a lottery. Then the special requests started (a councilmember wanted his niece at the top of the list, the city only wanted unions who lived in that ward to work on the construction crew, the city asked for proffers for the police, hospital and schools, etc). After 18 months on the deal, the developer walked. It never was built.

4). There are just too many A and Bs in this area. Too many lower and lower middle class people who aren’t moving, they can’t. They won’t suddenly move up the pyramid if luxury condos are built and some people move up. When luxury condos are built, empty nested, DINKs, and very wealthy new comers move in. If it’s an empty nester, who moves into their old house? A family who needed more space when they had a second kid. Who moved into their old house? DINK. Who moved into their old apartment? A BIGLAW first year associate. The As and Bs are staying right where they are. No increase in affordable housing has been created.

A true increase in affordable housing will occur with a city/county builds more multi family. Period.

I'm the person who wrote the post about building condos in Petworth leading to lower housing prices in Hagerstown, and I actually agree with you. This business about how loosening zoning laws will lead to affordable house, in my opinion, is a bunch of hokum. No one can even explain how it would work. Sometimes people in favor of loosening zoning laws will say, "yes, the condos being built are for the well-to-do, but those people leave behind old places for someone else, and everyone will trade up." That seems like wishful thinking to me, and I was trying to make fun of that logic by suggesting the chain of people trading up would be extremely long, and that the real beneficiaries of building condos in Petworth would be people who live an hour and a half away in Hagerstown. Clearly the sarcasm didn't come through.

I used to be a pure supply and demand guy on housing problem is housing is a much more complex good

This article finally let me see the light

https://shelterforce.org/2019/02/19/why-voters-havent-been-buying-the-case-for-building/

Cliff notes version housing is segmented and building high end housing doesn't help anyone besides those close to the high-end.

"If housing markets are segmented, then when we build more luxury housing, the price of luxury housing falls (Econ 101). But if each new luxury unit does not correspond to one less household in the next market down (the ‘high-cost’ submarket), then the prices in the high-cost market will move less noticeably than the luxury prices.

Why wouldn’t there be a 1-1 change? For every new luxury unit, doesn’t someone vacate a less expensive unit down market? Not exactly. There are many reasons why the submarket units are imperfect substitutes. For one thing, as prices fall, households in the luxury segment of the market may consume more housing. This can happen when someone buys a second home or even when two roommates respond to lower prices by each renting their own place. But also, some luxury units may be taken off the market when prices fall, while others may be downgraded to lower-quality buildings because the lower rents may no longer be enough to support luxury amenities and services. There are a great many possible permutations, but at each stage in the process, adding one unit or removing one household from one tier does not automatically mean that one additional household will step up into that tier.

I think it is clear from this that we can’t expect new luxury development to have the same impact on rents at the bottom of the market as it does at the top. But how much less impact is not clear. In technical terms, there is no good recent data on the cross-price elasticity of demand between luxury housing and lower-cost housing. A large group of urbanists have taken to talking about the housing market as if these elasticities were close to 1 (increases in luxury supply have a big impact on the low-end rent). But it’s just as likely that the elasticity is closer to 0 (the rent at the bottom of the market is very insensitive to the level of supply at the top of the market)."

Then it seems like preserving rent control rather than tossing up lots of high end/dense housing in ward 3 should be a goal of this Mayor? Notice no one in Ward 3 has an issue with rent control. Everyone has an objection with building on every inch of land.

But no one is proposing building on every inch of land in Ward 3. Allowing townhouses or small apartment buildings on what’s currently zoned for SFH wouldn’t mean “building on every inch.” You need to increase supply and also affirmatively work to make sure some of the new supply is affordable. I suppose you’ve won the argument here against the straw man you’ve decided to defeat, which is that people think ONLY changing zoning laws will automatically lead to more affordable housing, but in reality that isn’t what the city is proposing to do.

If you travel wisonsin and conn ave in ward 3 there are tons of apartment buildings. Behind them is a neighborhood characteristic of single family homes and duplexes. There was some talk of allowing folks to convert garages to small dwellings, which was interesting. Beyond that, not sure why these low density neighborhoods are so provocative to the Mayor, esp as there are ample rent controlled units in the apartments on the main corridors.

I am aware of what Ward 3 looks like, as I live in Ward 3 right near Wisconsin Avenue. There obviously isn’t ample rent-controlled housing in the city overall, nor enough housing, period. If it were up to me, the city would be buying available land and building good-quality public housing on those corridors, and would also ease zoning so that there could be higher density on blocks like mine. Part of the reason houses in our neighborhood are so expensive is that the only way you can buy or rent there is to buy or rent a whole SFH lot.

[Anonymous]

Anonymous wrote:
If you travel wisonsin and conn ave in ward 3 there are tons of apartment buildings. Behind them is a neighborhood characteristic of single family homes and duplexes. There was some talk of allowing folks to convert garages to small dwellings, which was interesting. Beyond that, not sure why these low density neighborhoods are so provocative to the Mayor, esp as there are ample rent controlled units in the apartments on the main corridors.

If you look at the entire ward there are not enough units affordable to low income people, there are not that many apts (though they are almost all on the arterials people travel on a lot - thankfully we have something called google maps you can get a better picture of the whole ward). There is an absurdly high number of SFHs for someplace at practically the center of the region. And even so, there all that is being asked, in terms of upzoning, is to make it easier to build other things.

[Anonymous]

Why wouldn’t there be a 1-1 change? For every new luxury unit, doesn’t someone vacate a less expensive unit down market? Not exactly. There are many reasons why the submarket units are imperfect substitutes. For one thing, as prices fall, households in the luxury segment of the market may consume more housing. This can happen when someone buys a second home or even when two roommates respond to lower prices by each renting their own place.

Oh my God. You think people living together as roommates involuntarily is a good thing? They should have to do that so you can keep your precious SFH only zoning?

But also, some luxury units may be taken off the market when prices fall,

Unlikely.

while others may be downgraded to lower-quality buildings because the lower rents may no longer be enough to support luxury amenities and services.

And thus become affordable - the units filter down.

I think it is clear from this that we can’t expect new luxury development to have the same impact on rents at the bottom of the market as it does at the top. But how much less impact is not clear. In technical terms, there is no good recent data on the cross-price elasticity of demand between luxury housing and lower-cost housing. A large group of urbanists have taken to talking about the housing market as if these elasticities were close to 1 (increases in luxury supply have a big impact on the low-end rent). But it’s just as likely that the elasticity is closer to 0 (the rent at the bottom of the market is very insensitive to the level of supply at the top of the market)."

Much more likely is that its somewhere in the middle. So adding more units at the top A. Helps SOMEWHAT with units further down - at least a little with units at the bottom, much more with units in the middle. B. Means more people living close to jobs and transit, with benefits for the region and the planet. C. Incorporate IZ units which more directly impact lower rent tiers D. Provide tax revenues that help fund other affordable housing, as well as services. E. Directly benefit the people who move into them, whose well being is of just as much merit as someone who just does not want multifamily in the neighborhood.

[Anonymous]

Anonymous wrote:
She's trying to kowtow to the GGW crowd, which goes out of its way to paint all Ward 3 residents as NIMBY boogeymen.

There are in fact Ward 3 residents who are active supporters of GGWash.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let me explain how expanding the housing supply will reduce prices.

A developer buys a rowhouse in Petworth for $600,000. He levels it, and in its place, puts up five condos, each costing between $600,000 and $1.2 million.

No, that is not affordable housing by any stretch of the imagination.

But the people who buy them trade up from other places. And they leave behind places that other people trade up to. And those people leave behind places that other people trade up to. And so on. And so on. And so on. And so on. And so on. And so on. And so on.

The last area in that chain, the place where people least want to live -- housing prices go down there, because there, finally, supply exceeds demand.

Voila! Increasing the housing supply in Petworth leads to lower housing prices in Hagerstown, Maryland.

Don't let anyone tell you that increasing the housing supply won't reduce housing prices.

That's a super squishy and nice theory, but that's not how it works.

I already have, several times on this thread. I am the public finance lawyer. I have my MBA as well. I’ve been practicing 25+ years. Your theory doesn’t equate to reality. I do not agree that changing zoning laws will equate to an increase in affordable housing in this area. I do not believe in the “food pyramid” theory of upward mobility. You are first assuming all those people at the bottom on the pyramid are only there because the supply of something a little more expensive and to them more desirable. You are assuming that if D is built, someone from C will move into D, B will then upgrade into C, A into B and then someone who didn’t have housing before (homeless?, co-sharing?) will then become the new A. Even if you mix it up with rentals, the answer is still no. You are also assuming the market will self correct and rents/home prices automatically go down with an increase in supply.

1) developers are in the business to make a profit. There exist very few true nonprofit developers. People are not in the business of building an real property and selling/ renting it below cost. Period. This is why we have HUD, to subsidize rentals and home ownership programs.

2). Municipalities (local and state) have their own programs (in conjunction with HUD) to own and operate multi family housing. These are your Section 8. Operating a section 8 building is an insane amount of work. Besides the daily upkeep and maintenance of the building, there are additional requirements that must be met and certified every single year by HUD and the IRS. It is just too hard and expensive to have supply meet demand, anywhere, hence HAP vouchers exist but landlords really don’t want the hassle.

3). Single family affordable housing is super tricky. I worked on a deal in DC where the developer was strong armed by the DC government to allocate and donate 1/3 of the townhomes in the development they were building to be given under a special program where an owner would only need to pay $30,000 over a 20 year period, no down payment and they would own fee simple the property at the end of the mortgage. The towns homes at the time were worth over $450,000. It was a special home ownership program. People had to meet certain requirements (be employed, already be a resident of the ward, no gun charge convictions). A third party was brought in to be neutral and review applications and establish a lottery. Then the special requests started (a councilmember wanted his niece at the top of the list, the city only wanted unions who lived in that ward to work on the construction crew, the city asked for proffers for the police, hospital and schools, etc). After 18 months on the deal, the developer walked. It never was built.

4). There are just too many A and Bs in this area. Too many lower and lower middle class people who aren’t moving, they can’t. They won’t suddenly move up the pyramid if luxury condos are built and some people move up. When luxury condos are built, empty nested, DINKs, and very wealthy new comers move in. If it’s an empty nester, who moves into their old house? A family who needed more space when they had a second kid. Who moved into their old house? DINK. Who moved into their old apartment? A BIGLAW first year associate. The As and Bs are staying right where they are. No increase in affordable housing has been created.

A true increase in affordable housing will occur with a city/county builds more multi family. Period.

I'm the person who wrote the post about building condos in Petworth leading to lower housing prices in Hagerstown, and I actually agree with you. This business about how loosening zoning laws will lead to affordable house, in my opinion, is a bunch of hokum. No one can even explain how it would work. Sometimes people in favor of loosening zoning laws will say, "yes, the condos being built are for the well-to-do, but those people leave behind old places for someone else, and everyone will trade up." That seems like wishful thinking to me, and I was trying to make fun of that logic by suggesting the chain of people trading up would be extremely long, and that the real beneficiaries of building condos in Petworth would be people who live an hour and a half away in Hagerstown. Clearly the sarcasm didn't come through.

I used to be a pure supply and demand guy on housing problem is housing is a much more complex good

This article finally let me see the light

https://shelterforce.org/2019/02/19/why-voters-havent-been-buying-the-case-for-building/

Cliff notes version housing is segmented and building high end housing doesn't help anyone besides those close to the high-end.

"If housing markets are segmented, then when we build more luxury housing, the price of luxury housing falls (Econ 101). But if each new luxury unit does not correspond to one less household in the next market down (the ‘high-cost’ submarket), then the prices in the high-cost market will move less noticeably than the luxury prices.

Why wouldn’t there be a 1-1 change? For every new luxury unit, doesn’t someone vacate a less expensive unit down market? Not exactly. There are many reasons why the submarket units are imperfect substitutes. For one thing, as prices fall, households in the luxury segment of the market may consume more housing. This can happen when someone buys a second home or even when two roommates respond to lower prices by each renting their own place. But also, some luxury units may be taken off the market when prices fall, while others may be downgraded to lower-quality buildings because the lower rents may no longer be enough to support luxury amenities and services. There are a great many possible permutations, but at each stage in the process, adding one unit or removing one household from one tier does not automatically mean that one additional household will step up into that tier.

I think it is clear from this that we can’t expect new luxury development to have the same impact on rents at the bottom of the market as it does at the top. But how much less impact is not clear. In technical terms, there is no good recent data on the cross-price elasticity of demand between luxury housing and lower-cost housing. A large group of urbanists have taken to talking about the housing market as if these elasticities were close to 1 (increases in luxury supply have a big impact on the low-end rent). But it’s just as likely that the elasticity is closer to 0 (the rent at the bottom of the market is very insensitive to the level of supply at the top of the market)."

Then it seems like preserving rent control rather than tossing up lots of high end/dense housing in ward 3 should be a goal of this Mayor? Notice no one in Ward 3 has an issue with rent control. Everyone has an objection with building on every inch of land.

But no one is proposing building on every inch of land in Ward 3. Allowing townhouses or small apartment buildings on what’s currently zoned for SFH wouldn’t mean “building on every inch.” You need to increase supply and also affirmatively work to make sure some of the new supply is affordable. I suppose you’ve won the argument here against the straw man you’ve decided to defeat, which is that people think ONLY changing zoning laws will automatically lead to more affordable housing, but in reality that isn’t what the city is proposing to do.

If you travel wisonsin and conn ave in ward 3 there are tons of apartment buildings. Behind them is a neighborhood characteristic of single family homes and duplexes. There was some talk of allowing folks to convert garages to small dwellings, which was interesting. Beyond that, not sure why these low density neighborhoods are so provocative to the Mayor, esp as there are ample rent controlled units in the apartments on the main corridors.

I am aware of what Ward 3 looks like, as I live in Ward 3 right near Wisconsin Avenue. There obviously isn’t ample rent-controlled housing in the city overall, nor enough housing, period. If it were up to me, the city would be buying available land and building good-quality public housing on those corridors, and would also ease zoning so that there could be higher density on blocks like mine. Part of the reason houses in our neighborhood are so expensive is that the only way you can buy or rent there is to buy or rent a whole SFH lot.

I'm not sure why that is a bad thing. We have a good variety of housing $ in DC. Why is no one looking at SE? It's very attractive, rolling hills. The Mayor could coax in a supermarket or two (which she should do anyway, supermarket deserts are a terrible thing) but addressing their concerns about security and loss prevention.

[Anonymous]

It about adding housing in “high opportunity” areas, meaning high profit areas for decelopers. If neighborhoods like Cleveland Park and Kent are upzoned (as is proposed), developers will positively salivate at the chance to build $2m condos in 14 story buildings. How “affordable”

#Bowserdeveloperhoe

[Anonymous]

Anonymous wrote:

Anonymous wrote:
If you travel wisonsin and conn ave in ward 3 there are tons of apartment buildings. Behind them is a neighborhood characteristic of single family homes and duplexes. There was some talk of allowing folks to convert garages to small dwellings, which was interesting. Beyond that, not sure why these low density neighborhoods are so provocative to the Mayor, esp as there are ample rent controlled units in the apartments on the main corridors.

If you look at the entire ward there are not enough units affordable to low income people, there are not that many apts (though they are almost all on the arterials people travel on a lot - thankfully we have something called google maps you can get a better picture of the whole ward). There is an absurdly high number of SFHs for someplace at practically the center of the region. And even so, there all that is being asked, in terms of upzoning, is to make it easier to build other things.

There are lots of SFHs blocks from the Dupont Metro, too, but I don't see David Alpert at al clamoring for more density there. Wonder if that's because David Alpert lives in a SFH two blocks from the Dupont Metro? It's simply a horribly wasteful, elitist use of that space, but I guess he gets a pass. Funny how that works.

[Anonymous]

Anonymous wrote:It about adding housing in “high opportunity” areas, meaning high profit areas for decelopers. If neighborhoods like Cleveland Park and Kent are upzoned (as is proposed), developers will positively salivate at the chance to build $2m condos in 14 story buildings. How “affordable”

#Bowserdeveloperhoe

The more I hear about this, the more disgusting it seems.

[Anonymous]

Then make your voice heard. The Office of Planning is trying to rush the process for a Council vote this spring. In fact the short public comment period on OP’s changes closed yesterday but there is still time to weigh in with your local ANC (bit quickly) and with your wars and at-large Council members.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let me explain how expanding the housing supply will reduce prices.

A developer buys a rowhouse in Petworth for $600,000. He levels it, and in its place, puts up five condos, each costing between $600,000 and $1.2 million.

No, that is not affordable housing by any stretch of the imagination.

But the people who buy them trade up from other places. And they leave behind places that other people trade up to. And those people leave behind places that other people trade up to. And so on. And so on. And so on. And so on. And so on. And so on. And so on.

The last area in that chain, the place where people least want to live -- housing prices go down there, because there, finally, supply exceeds demand.

Voila! Increasing the housing supply in Petworth leads to lower housing prices in Hagerstown, Maryland.

Don't let anyone tell you that increasing the housing supply won't reduce housing prices.

That's a super squishy and nice theory, but that's not how it works.

I already have, several times on this thread. I am the public finance lawyer. I have my MBA as well. I’ve been practicing 25+ years. Your theory doesn’t equate to reality. I do not agree that changing zoning laws will equate to an increase in affordable housing in this area. I do not believe in the “food pyramid” theory of upward mobility. You are first assuming all those people at the bottom on the pyramid are only there because the supply of something a little more expensive and to them more desirable. You are assuming that if D is built, someone from C will move into D, B will then upgrade into C, A into B and then someone who didn’t have housing before (homeless?, co-sharing?) will then become the new A. Even if you mix it up with rentals, the answer is still no. You are also assuming the market will self correct and rents/home prices automatically go down with an increase in supply.

1) developers are in the business to make a profit. There exist very few true nonprofit developers. People are not in the business of building an real property and selling/ renting it below cost. Period. This is why we have HUD, to subsidize rentals and home ownership programs.

2). Municipalities (local and state) have their own programs (in conjunction with HUD) to own and operate multi family housing. These are your Section 8. Operating a section 8 building is an insane amount of work. Besides the daily upkeep and maintenance of the building, there are additional requirements that must be met and certified every single year by HUD and the IRS. It is just too hard and expensive to have supply meet demand, anywhere, hence HAP vouchers exist but landlords really don’t want the hassle.

3). Single family affordable housing is super tricky. I worked on a deal in DC where the developer was strong armed by the DC government to allocate and donate 1/3 of the townhomes in the development they were building to be given under a special program where an owner would only need to pay $30,000 over a 20 year period, no down payment and they would own fee simple the property at the end of the mortgage. The towns homes at the time were worth over $450,000. It was a special home ownership program. People had to meet certain requirements (be employed, already be a resident of the ward, no gun charge convictions). A third party was brought in to be neutral and review applications and establish a lottery. Then the special requests started (a councilmember wanted his niece at the top of the list, the city only wanted unions who lived in that ward to work on the construction crew, the city asked for proffers for the police, hospital and schools, etc). After 18 months on the deal, the developer walked. It never was built.

4). There are just too many A and Bs in this area. Too many lower and lower middle class people who aren’t moving, they can’t. They won’t suddenly move up the pyramid if luxury condos are built and some people move up. When luxury condos are built, empty nested, DINKs, and very wealthy new comers move in. If it’s an empty nester, who moves into their old house? A family who needed more space when they had a second kid. Who moved into their old house? DINK. Who moved into their old apartment? A BIGLAW first year associate. The As and Bs are staying right where they are. No increase in affordable housing has been created.

A true increase in affordable housing will occur with a city/county builds more multi family. Period.

I'm the person who wrote the post about building condos in Petworth leading to lower housing prices in Hagerstown, and I actually agree with you. This business about how loosening zoning laws will lead to affordable house, in my opinion, is a bunch of hokum. No one can even explain how it would work. Sometimes people in favor of loosening zoning laws will say, "yes, the condos being built are for the well-to-do, but those people leave behind old places for someone else, and everyone will trade up." That seems like wishful thinking to me, and I was trying to make fun of that logic by suggesting the chain of people trading up would be extremely long, and that the real beneficiaries of building condos in Petworth would be people who live an hour and a half away in Hagerstown. Clearly the sarcasm didn't come through.

I used to be a pure supply and demand guy on housing problem is housing is a much more complex good

This article finally let me see the light

https://shelterforce.org/2019/02/19/why-voters-havent-been-buying-the-case-for-building/

Cliff notes version housing is segmented and building high end housing doesn't help anyone besides those close to the high-end.

"If housing markets are segmented, then when we build more luxury housing, the price of luxury housing falls (Econ 101). But if each new luxury unit does not correspond to one less household in the next market down (the ‘high-cost’ submarket), then the prices in the high-cost market will move less noticeably than the luxury prices.

Why wouldn’t there be a 1-1 change? For every new luxury unit, doesn’t someone vacate a less expensive unit down market? Not exactly. There are many reasons why the submarket units are imperfect substitutes. For one thing, as prices fall, households in the luxury segment of the market may consume more housing. This can happen when someone buys a second home or even when two roommates respond to lower prices by each renting their own place. But also, some luxury units may be taken off the market when prices fall, while others may be downgraded to lower-quality buildings because the lower rents may no longer be enough to support luxury amenities and services. There are a great many possible permutations, but at each stage in the process, adding one unit or removing one household from one tier does not automatically mean that one additional household will step up into that tier.

I think it is clear from this that we can’t expect new luxury development to have the same impact on rents at the bottom of the market as it does at the top. But how much less impact is not clear. In technical terms, there is no good recent data on the cross-price elasticity of demand between luxury housing and lower-cost housing. A large group of urbanists have taken to talking about the housing market as if these elasticities were close to 1 (increases in luxury supply have a big impact on the low-end rent). But it’s just as likely that the elasticity is closer to 0 (the rent at the bottom of the market is very insensitive to the level of supply at the top of the market)."

Then it seems like preserving rent control rather than tossing up lots of high end/dense housing in ward 3 should be a goal of this Mayor? Notice no one in Ward 3 has an issue with rent control. Everyone has an objection with building on every inch of land.

But no one is proposing building on every inch of land in Ward 3. Allowing townhouses or small apartment buildings on what’s currently zoned for SFH wouldn’t mean “building on every inch.” You need to increase supply and also affirmatively work to make sure some of the new supply is affordable. I suppose you’ve won the argument here against the straw man you’ve decided to defeat, which is that people think ONLY changing zoning laws will automatically lead to more affordable housing, but in reality that isn’t what the city is proposing to do.

If you travel wisonsin and conn ave in ward 3 there are tons of apartment buildings. Behind them is a neighborhood characteristic of single family homes and duplexes. There was some talk of allowing folks to convert garages to small dwellings, which was interesting. Beyond that, not sure why these low density neighborhoods are so provocative to the Mayor, esp as there are ample rent controlled units in the apartments on the main corridors.

I am aware of what Ward 3 looks like, as I live in Ward 3 right near Wisconsin Avenue. There obviously isn’t ample rent-controlled housing in the city overall, nor enough housing, period. If it were up to me, the city would be buying available land and building good-quality public housing on those corridors, and would also ease zoning so that there could be higher density on blocks like mine. Part of the reason houses in our neighborhood are so expensive is that the only way you can buy or rent there is to buy or rent a whole SFH lot.

I'm not sure why that is a bad thing. We have a good variety of housing $ in DC. Why is no one looking at SE? It's very attractive, rolling hills. The Mayor could coax in a supermarket or two (which she should do anyway, supermarket deserts are a terrible thing) but addressing their concerns about security and loss prevention.

Yes, that is also an area city planners have been focusing on trying to get development and commerce into for years. But we in Ward 3 also have plenty of room to accommodate more housing and, specifically, more affordable housing.

[Anonymous]

Anonymous wrote:Then make your voice heard. The Office of Planning is trying to rush the process for a Council vote this spring. In fact the short public comment period on OP’s changes closed yesterday but there is still time to weigh in with your local ANC (bit quickly) and with your wars and at-large Council members.

What mechanism do you suggest for weighing in?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
If you travel wisonsin and conn ave in ward 3 there are tons of apartment buildings. Behind them is a neighborhood characteristic of single family homes and duplexes. There was some talk of allowing folks to convert garages to small dwellings, which was interesting. Beyond that, not sure why these low density neighborhoods are so provocative to the Mayor, esp as there are ample rent controlled units in the apartments on the main corridors.

If you look at the entire ward there are not enough units affordable to low income people, there are not that many apts (though they are almost all on the arterials people travel on a lot - thankfully we have something called google maps you can get a better picture of the whole ward). There is an absurdly high number of SFHs for someplace at practically the center of the region. And even so, there all that is being asked, in terms of upzoning, is to make it easier to build other things.

There are lots of SFHs blocks from the Dupont Metro, too, but I don't see David Alpert at al clamoring for more density there. Wonder if that's because David Alpert lives in a SFH two blocks from the Dupont Metro? It's simply a horribly wasteful, elitist use of that space, but I guess he gets a pass. Funny how that works.

When I lived in Dupont Circle 15 years ago, I was in a one-bedroom apartment with two other one bedrooms in my building. My next door neighbor and most of the houses across the street were single family rowhomes. At the corner of the block, there was a five-story apartment building. The SFHs there are mostly rowhomes, not detached SFHs, which means that area is already WAY denser than upper Ward 3 is, and there’s no need to advocate density there. No one is seriously suggesting banning single family homes, just suggesting that areas not be zoned ONLY for that or not be zoned in a way that requires large, expensive lots with one house on each one.