# Housing Roundup #10

There’s more campaign talk about housing. The talk of needing more housing is highly welcome, as one prominent person after another (including Jerome Powell!) talking like a YIMBY.

A lot of the concrete proposals are of course terrible, but not all of them. I’ll start off covering all that along with everyone’s favorite awful policy, which is rent control, then the other proposals. Then I’ll cover other general happenings.

#### Table of Contents

1.  [Rent Control.](https://thezvi.substack.com/i/149121012/rent-control)
2.  [The Administration Has a Plan.](https://thezvi.substack.com/i/149121012/the-administration-has-a-plan)
3.  [Trump Has a Plan.](https://thezvi.substack.com/i/149121012/trump-has-a-plan)
4.  [Build More Houses Where People Want to Live.](https://thezvi.substack.com/i/149121012/build-more-houses-where-people-want-to-live)
5.  [Prices.](https://thezvi.substack.com/i/149121012/prices)
6.  [Average Value.](https://thezvi.substack.com/i/149121012/average-value)
7.  [Zoning Rules.](https://thezvi.substack.com/i/149121012/zoning-rules)
8.  [Zoning Reveals Value.](https://thezvi.substack.com/i/149121012/zoning-reveals-value)
9.  [High Rise.](https://thezvi.substack.com/i/149121012/high-rise)
10.  [“Historic Preservation”.](https://thezvi.substack.com/i/149121012/historic-preservation)
11.  [Speed Kills.](https://thezvi.substack.com/i/149121012/speed-kills)
12.  [Procedure.](https://thezvi.substack.com/i/149121012/procedure)
13.  [San Francisco.](https://thezvi.substack.com/i/149121012/san-francisco)
14.  [California.](https://thezvi.substack.com/i/149121012/california)
15.  [Seattle.](https://thezvi.substack.com/i/149121012/seattle)
16.  [Philadelphia.](https://thezvi.substack.com/i/149121012/philadelphia)
17.  [Boston.](https://thezvi.substack.com/i/149121012/boston)
18.  [New York City.](https://thezvi.substack.com/i/149121012/new-york-city)
19.  [St. Paul.](https://thezvi.substack.com/i/149121012/st-paul)
20.  [Florida.](https://thezvi.substack.com/i/149121012/florida)
21.  [Michigan.](https://thezvi.substack.com/i/149121012/michigan)
22.  [The UK.](https://thezvi.substack.com/i/149121012/the-uk)
23.  [Underutilization.](https://thezvi.substack.com/i/149121012/underutilization)
24.  [Get on the Bus.](https://thezvi.substack.com/i/149121012/get-on-the-bus)
25.  [Title Insurance.](https://thezvi.substack.com/i/149121012/title-insurance)
26.  [Perspective.](https://thezvi.substack.com/i/149121012/perspective)

#### Rent Control

[Matt Yglesias reminds us rent control is not the answer](https://www.slowboring.com/p/rent-control-is-not-the-answer), unless the question is how to destroy the housing stock of a city without resorting to aerial bombing. He also reminds us that Biden’s actual rent control proposal is in and of itself a nothingburger, but the act of proposing or enacting it carries expectations issues.

> Matt Yglesias: The tired, old, neoliberal conventional wisdom is that rent control is a bad idea but if you delve into the most up-to-date research on the subject you’ll see that … yeah, it’s still a bad idea.
> 
> [Iron Economist](https://x.com/IronEconomist/status/1815370410931765613): The funny thing about rent control advocates is that their argument that it’s different this time always boils down to a version of ‘rent control can’t hurt supply because we already made supply illegal’ and it’s like yes, you have identified the problem there.
> 
> …
> 
> Unmanaged Reality (being unusually honest about the alternative perspective): yes, the problem is population growth well done!

Oh, it’s worse.

Rent control does not only impact future building, where if you already made all future building irreversibly illegal then I suppose you can’t do any more damage.

It also impacts the current supply.

What, you say? How could that be? Several ways.

1.  Rent control directly means landlords will not maintain the current housing stock. It will be allowed to decay, or be actively sabotaged, eventually abandoned. Why invest if the price will remain fixed no matter what?
2.  Rent control means that you withdraw housing from the rental market every chance you can get. If you rent out the property, you have effectively sold it. How do you think people are going to react to that?
3.  Rent control begets more rent control. Landlords rightfully presume that they should anticipate further restrictions and unreasonable rules, so even if they are not directly impacted, why put yourself into such a position?
4.  Remember your functional decision theory. If you choose to be the type of person or government that imposes rent control because the buildings already exist, then that is correlated with a lot of things. One of those things is the past decisions of people deciding whether to build on the basis of what government might do in the future.
5.  That generalizes beyond housing. If we establish we are willing to confiscate private property retroactively because we feel like it, people will notice. And indeed, people likely have also already noticed in the past, and are adjusting.

It would be a world of hurt on renters if there was a common expectation of a high chance of future meaningful rent controls being imposed.

[In other remarkably terrible rent schemes](https://x.com/StefanFSchubert/status/1819109828171862070), [here’s Vienna’s.](https://t.co/ZYu350epaJ)

[People believe such bizarre things around rent control.](https://x.com/micsolana/status/1823703337558270283)

> Jay Martin: Today, I discovered that some actual human adults believe:
> 
> 1.  The majority of a rent check is profit to a building owner.
> 2.  That you can renovate an apartment after 42 years in NYC for a few thousand dollars.
> 3.  That an apartment in a 98 year old building, lived in for 4 decades, doesn’t need to be renovated if it’s “taken care of.”
> 4.  That rent laws implemented in 2019 enacting vacancy control should have been anticipated by any “savvy businessperson” who owned their property before the law was changed.
> 5.  That all property owners get a tax break for providing rent stabilized housing so it evens out.
> 6.  That an owner can always “just sell” a building that losses money every month. ( big pool of buyers for people who like to lose money apparently)
> 
> 0 of these things are true.
> 
> Mike Solana: Partly the problem of rent in most of our cities is subsidized housing (enormous fraction of supply gifted to a lucky few, either randomly or for political connections), partly we can’t build, partly we can’t rent. but one hundred percent of the problem is our government.

Several of these claims are rather absurd, but yes, this does help explain public support for rent control. Hallucinations all over the place.

The government still is not entirely responsible. Even the properly built versions of NYC and SF and so on would be rather expensive. Not anything like today, but living where the action is would remain valuable.

[Also, yes, the latest results are in for rent control](https://www.bloomberg.com/news/articles/2024-08-28/netherlands-rent-controls-deepen-housing-crisis?srnd=homepage-americas). But it might work for us:

> Cagan Koc and Sarah Jacob (Bloomberg): How Rent Controls Are Deepening the Dutch Housing Crisis: A law designed to make homes more affordable ended up aggravating an apartment shortage.
> 
> …
> 
> Moraal is among the growing number of Dutch people struggling to find a rental property after a new law designed to make homes more affordable ended up aggravating a housing shortage. Aiming to protect low-income tenants, the government in July imposed rent controls on thousands of homes, introducing a [system of rating properties](https://www.housing2030.org/project/points-system-for-rent-setting-in-the-netherlands/) based on factors such as condition, size and energy efficiency. The Affordable Rent Act introduced rent controls on 300,000 units, moving them out of the unregulated market.
> 
> …
> 
> The government, in office since July, has no plans to change the legislation, which had been championed by the previous cabinet.
> 
> …
> 
> One provision of the law bars short-term leases, instead requiring all contracts to be open-ended.
> 
> De Starter: The law applies to new contracts. Simply untrue the person would have to move out due to that. Lobbyists crying for attention of the new government.

From the post, what is happening is that because no new contracts can be signed that do not effectively sign over the property permanently at a well below-market cost, landlords are withdrawing properties from the rental market en masse, and selling them instead.

[A proposal to coin the term Rangel effect](https://x.com/diviacaroline/status/1839048681846399117), for when people like second longest serving member of the house Charlie Rangel end up with multiple rent controlled apartments.

[The UK may soon be effectively bringing back rent control](https://x.com/s8mb/status/1834316519548842015), in case you were worried they hadn’t sufficiently destroyed their housing stock. It is rather amazing that rental markets function at all when the renter kind of gets a permanent option to keep your property.

Despite everything, rent control remains absurdly popular. Increasingly, as I understand how the public thinks about economics, it is remarkable how we even get to have a civilization at all.

[This is what rent control looks like in practice, even aside from incentive effects. Rather than property one can sell, you get a connected heritable landed gentry](https://x.com/razibkhan/status/1840555633814507796) unable to move. The apartments in question are stolen from their owners, the new gentry on average get only a small portion of the value of what they extract from us, and those without such connections are worse off. Also this ‘can I see your rent controlled apartment’ seems like a great new dating strategy?

#### The Administration Has a Plan

> [Kamala Harris](https://x.com/KamalaHarris/status/1842329018017718628): We need to build more housing in America.
> 
> We will cut the red tape and work with the private sector to build 3 million new homes, and we’ll provide first-time homebuyers $25,000 in down payment assistance so they can get their foot in the door.

The plan is a mix of things. The headline proposals like the $25k are not great. If you dig into proposals and details, there’s other things that are a lot better.

[Harris is talking the talk on the stump](https://x.com/cafedujord/status/1824523780775088202), also for some reason [on a podcast called Call Her Daddy](https://x.com/mattyglesias/status/1843067706146279643). She’s being clear that what we have is a shortage of housing. She’s talking about the need to ‘build more housing.’ Three million new homes. Not ‘affordable’ housing (although she says ‘for the middle class’). Housing. She’s talking about cutting red tape, including local red tape.

There’s also Obama’s now-famous YIMBY endorsement, which is quite good, although if I never hear the preamble used (‘we can’t rely on ideas of the past’ etc) that would be awesome.

> [Barack Obama (at the convention):](https://x.com/mattyglesias/status/1826211701517176974) If we want to make it easier for young people to buy a home, we have to build more units. And clear out some of the outdated laws and regulations that make it harder to build homes for working people in this country, and she’s put out a bold new plan to do just that.

Matt Yglesias notes this is great, [but worries about this making the issue too partisan,](https://www.slowboring.com/p/the-promise-and-peril-of-obamas-yimby) noting how Democrats trying to get housing built led Trump to go on his absurd ‘abolish the suburbs’ tirates.

Yes, the headline actions proposing imposing ‘temporary’ rent controls are terrible, and the proposals to subsidize demand via handing out public funds to homebuyers are if anything even stupider than they sound, [but they also have some other ideas](https://www.whitehouse.gov/briefing-room/statements-releases/2024/08/13/fact-sheet-biden-harris-administration-takes-new-actions-to-lower-housing-costs-by-cutting-red-tape-to-build-more-housing/).

They are spending $100 million in grants to help [overcome barriers to building affordable housing](https://www.hud.gov/program_offices/comm_planning/pro_housing). As always the better plan is simply build more housing, and if desired also doing redistribution in more efficient ways, but if this is how we remove barriers to building housing, then it is helpful.

[Providing interest rate predictability](https://www.hud.gov/press/press_releases_media_advisories/HUD_No_24_204) for federal financing makes a lot of sense. Uncertainty is a killer, so you’d rather charge slightly more as a base while providing insurance against higher rates. Thumbs up.

[Streamlining requirements for transit-oriented development](https://www.whitehouse.gov/briefing-room/statements-releases/2024/08/13/fact-sheet-biden-harris-administration-takes-new-actions-to-lower-housing-costs-by-cutting-red-tape-to-build-more-housing/) is excellent, they had me at streamlining requirements.

[Accelerating historic preservation reviews](https://www.achp.gov/news/achp-announces-draft-program-comment-accessible-climate-resilient-connected-communities) for federal housing projects also seems obviously good. The details seem like obvious common sense, in a ‘how is this even necessary’ kind of way, even if you are high on the need for historical preservation.

Offering another $250 million in Section 108 loan guarantees for retooling and complementary infrastructure (e.g. water and sewer pipes). Small, but sure, why not.

[Enable more housing types to be built under HUD code](https://x.com/aarmlovi/status/1824642127063621700), in particular manufactured homes, which as noted can offer big cost savings. We need to talk with Fannie and Freddie about how they handle manufactured housing, that would go a long way. Why do we actively prevent homes from being manufactured, when that is obviously the way the future was supposed to go in baseline situations?

As Alex Armlovich notes, the spending elsewhere doesn’t much matter, that’s more vibe markers, but changing HUD codes like this could be a really big positive deal.

Expediting housing permitting, again you’d have had me at expediting permitting, and mostly had me at expediting.

The central theme is ‘we cannot talk about building more housing, only more affordable housing’ despite the fact that what makes housing affordable is not ‘we set aside some of it to have an artificially low price and be allocated by favoritism’ but rather ‘build enough housing to force down market prices.’ The good news is a lot of this should indeed spill over into more housing in general.

[As noted above, many announced Harris campaign plans are less great](https://www.cnn.com/2024/08/15/politics/kamala-harris-plan-housing-costs/index.html). You’ve got the terrible $25k down payment subsidy plus $10k tax credit. You’ve got banning algorithmic pricing because people have it in their heads that this is some sort of conspiracy to raise prices. Would I accept both of those to get 3 million new homes constructed as well via good policies? If the good policies actually happened and worked, and the housing was where people want to live, then yes. It’s hard to tell what to take seriously or literally, when such economic illiteracy is being spouted everywhere, by both sides.

In addition to correctly pointing out the obviously good parts of the Harris housing plan, [Noah Smith tries to defend the Harris subsidies for first time home buyers](https://www.noahpinion.blog/p/harris-has-the-right-idea-on-housing), as a good form of redistribution. If we agree that’s all this is doing, a transfer of wealth, then what does it do? Let’s see.

1.  Let’s you provide a subsidy of $35k.
2.  Let’s say the price rises by $35k, since everyone is either collecting the $35k subsidy or selling their own home for an additional $35k when they buy a new one.
3.  So the initial wealth effect is a flat $35k to everyone who owns a home and everyone who has never owned a home, on a per-household basis.
4.  Homeowners and home buyers get richer, those who still can’t afford to buy, or who bought previously and then sold to rent again, get poorer. Not great.
5.  This is on a per-household basis, so the bigger your household the worse off you are. Discourages marriage until you’ve both used your credits, effectively taxes kids, and so on. Not great.
6.  It is a flat size transfer, so it is progressive redistribution in that sense, if a highly inefficient way of doing that.

So no, I don’t think that works at all. It’s not a good version of this.

If I had to make a case for it, I would make this case instead:

7.  The main barrier to buying your first home is often the down payment.
8.  The down payment has to be a fixed percentage of the value of the house, to ensure you do not walk away too easily, you have skin in the game.
9.  By letting you stake your $35k subsidy, you can far more easily get a down payment that lets you buy, or lets you get a lower interest rate.
10.  The net money it costs to buy stays the same otherwise, but that’s fine.

I mean, I guess, a little, maybe? The government pays so that the payment can be staked back to the government so the government can (through a bank) issue you the subsidized mortgage to buy the house, and you have something to lose.

That also raises the danger that this tempts people to buy a house they cannot afford. If you use the $35k to buy a house you could not have otherwise bought, and then you can’t pay your mortgage and you lose the house, you are completely screwed. Your $35k credit is used up permanently, and all houses cost an extra $35k.

[On Harris’s headline housing plan of national rent caps](https://www.kentclarkcenter.org/us-economic-experts-panel/), what fascinates me is not that all the economists say it is terrible – so far so obvious – but that so many do not ‘strongly’ say so. Economists really do have too many arms.

![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F58609242-11b3-4a2e-8c2f-22ea270a9817_562x1234.png)

![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fbe921e7b-2ed5-404d-b0fc-09ef29b6a00d_513x615.png)

#### Trump Has a Plan

Trump has gone full NIMBY regarding hallucinated plans to ‘destroy the suburbs,’ similar to how Project 2025 says localities must have final say in zoning laws and regulations, and a conservative Administration should oppose any efforts to weaken single-family zoning. Which is one of the low-key most destructive ‘normal’ policies available.

[But he does have an interesting counterproposal](https://x.com/BehizyTweets/status/1824268649911189702), from a while back, in theory.

> Donald Trump: Almost one-third of the landmass of the United States is owned by the federal government, with just a very, very small portion of that land… we should hold a contest to charter up to ten new cities and award them to the best proposals for development. In other words, we’ll actually build new cities in our country again.

Yes, this is indeed a great idea. We should do that. If we do it at sufficient scale, and think truly big, then that can make up for quite a lot. You’d have to put in a lot of effort on many levels to make it impactful rather than a marginal win, but we should do that too.

[He then affirmed this plan recently in a speech in Nevada](https://x.com/BehizyTweets/status/1834807051643461928). It’s a real shame that the chance of any of that happening is essentially zero.

#### Build More Houses Where People Want to Live

[Why yes, I do remember how my grandparents bought a home for 7 raspberries](https://x.com/ArthurB/status/1823812699794599942).

> Elizabeth Warren: You ever wonder how your grandparents bought a home for 7 raspberries, but you can’t afford a one bedroom apartment? It’s not you.
> 
> We’re facing a national housing shortage. The government needs to tackle this crisis head on.
> 
> Arthur B: Very much a “stopped clock” type of situation, but yep, there is a housing shortage and a bill to reduce land use restrictions is a good thing. It’s both funny and sad to see the knee jerk fuming in the replies when, for once, Warren gets the economics right and proposes deregulation…

Only on one policy would she dare give us the rasberry.

[Indeed, yes, building more supply works, edition number a lot](https://x.com/mnolangray/status/1823372929553559994).

![Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F008a53e6-9d82-44cd-bf8f-903e6465577a_1655x1107.png "Image")

#### Prices

[No, seriously, a majority of people do want home prices in general to go down not up.](https://x.com/mattyglesias/status/1818637409543733750)

![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8ad81123-1d87-4f9f-b8d2-00ad246e9b2b_798x819.png)

Obviously, they want their particular home to go up in price (if they own it), but they want lower prices everywhere else. Let’s do this.

[Noah Smith sees it differently](https://www.noahpinion.blog/p/harris-has-the-right-idea-on-housing), that homes are both a consumption good and an asset class, and we need to finely balance the need for high prices with the need for low prices. We thus need what one might call a goldilocks housing market (not his term).

I do see that prices crashing too low too fast might in theory cause real issues, but mostly I think this is a confusion of prices and paper wealth with actual wealth. You will always need a place to live. If all home prices go up, yes you are ‘wealthier’ but if you sell then you need to buy or at least pay rent going forward. And it is more common to want to step up to a bigger house, than step down to a smaller one.

Most people are either short housing because they rent, are short housing because they want to upgrade, or are about flat housing. Only a handful who have active real estate investments, or are looking to step down in order to retire or to go into elder care, are in any real sense long. Yes, you can borrow against the house, but that’s liquidity not solvency, and mostly gets people into trouble.

People mostly understand that. They’ll fight for higher local house prices, but not higher house prices overall. So you can have a grand bargain if you act big.

#### Average Value

[Tyler Cowen notes that net migration is out of cities towards suburbs](https://marginalrevolution.com/marginalrevolution/2024/08/sometimes-people-overrate-marginal-value-and-underrate-average-value.html?utm_source=rss&utm_medium=rss&utm_campaign=sometimes-people-overrate-marginal-value-and-underrate-average-value), and thus claims this implies average value is higher in the suburbs, even if externalities are better in the cities.

I say no, this is a civilizational skill issue, as in NIMBY, full stop. The outflow is a mechanical result of there not being sufficient houses where people want to live. If the cities worth living in, like NYC and SF but also other majors, had more housing, people would move to that housing. They can’t build them, so people bid up housing and price people out. Simple story.

Tyler similarly speaks of the surplus from cars, and yes most people get large surplus from their car, of course they do, but exactly because they lack alternatives. They are priced out of places cars are unneeded and we don’t supply mass transit. If you can’t go anywhere without a car, because the suburb was designed that way, you need a car.

#### Zoning Rules

[Your periodic reminder](https://x.com/maxdubler/status/1824153479767875776) that our most beloved neighborhoods would mostly be illegal under modern zoning rules, and that the rules are typically arbitrary, destructive and stupid. Meanwhile we have ‘historic preservation’ as a priority, and not only for a handful of iconic buildings were it makes at least some sense.

> Cary Westerbeck: I deal with “non-conforming” structures frequently. The irony is the non-conforming areas of our city and n’hoods are usually the most BELOVED! “Conforming” means adhering to our absolute worst zoning ideas ever conceived, like giant setbacks, parking mandates, huge lots.
> 
> This was prompted by a single family residential new house project where there is an existing 70 y.o. garage on the property that is non-conforming bc it’s over 5% of the lot area. WHAT A DUMB RULE. So it’s: make it smaller, demo it, or connect to the new house. ARBITRARY & LAME.
> 
> I am connecting house and old garage via a breezeway with a foundation and roof, so that it’s “attached” and not detached. But wow is this convoluted, silly, unnecessary and totally ARBITRARY. Who decided 5% was max. This seems born of exclusion, classism, and NIMBYism. Period.
> 
> What I’ve gathered after this post, & in my years of observation, is most people who design, build, & work in placemaking & creating our built environment hate “non-conforming” zoning rules & agree they hold us back from making lovable places. So how’d we get them? NIMBYism
> 
> Jonathan Berk: All of these, and most of Downtown, is existing nonconforming in Salem. We have intense historic protections on all of these buildings… you just couldn’t build anything like them today.
> 
> ![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F3228830a-6bde-405d-ab21-b430e0f17f99_786x451.png)
> 
> Max Dubler: Basically all of America’s best-loved neighborhoods were built before zoning and the overwhelming majority of them would be illegal to build today.
> 
> [40 Percent of the Buildings in Manhattan Could Not Be Built Today](https://t.co/BvZn8s47rW).
> 
> Will: Before a rezoning a few years all but 3 lots in the entire city of Somerville were non conforming. Recently one city councilors house burned down and he wasn’t allowed to rebuild it without a zoning variance as he didn’t have enough parking.
> 
> Richard Morrison: Old structures: Historic and valuable, can never be changed. Identical structure proposed as new construction: 100% illegal, don’t even think about it.

[Alex Contreras rants about floor area ratio and 20 foot setbacks and facade rules in particular](https://x.com/contrerasforca/status/1825575580982763833), as it can render projects impossible for no good reason. There are indeed supposedly good reasons, people talk about shade and about how it feels imposing to have buildings go too close to the sidewalk or whatever. I am not buying it. These things matter, but we are using stupidly crude and high power tools to solve relatively small problems, and as always if you see a cost to something you should tax it not ban it. That way, if this really does kill a valuable project outright you can pay up.

#### Zoning Reveals Value

Every so often we see someone [use the prices of different lots that have different zoning rules](https://x.com/Afinetheorem/status/1835504968440168550) to illustrate that the market can and does place a price on zoning.

In this first case, we learn it in Toronto. A house costs what it costs to buy the land with permission to build, plus the cost of building. Solve for the cost of permission.

I do think this is a tad too harsh, because land and location would still cost money no matter the zoning requirements, but:

> Kevin Bryan: Building isn’t expensive: in Toronto, for 2000 sq ft house, 500k for builder grade, 800k for quite fancy, 1.4m for literally top builders. At \*Bridle Path\* land costs, that’s 900k for a new 4br family house! Everything more than that is planning regs and tax screwing you.
> 
> Urban economists measure regulatory distortion in housing in both these ways: markup over build costs, and cost of land w/ right to build vs. land w/o right to build. Gaps on either are a “tax”. In Toronto, back of the envelope this tax doubles housing costs.
> 
> It really ticks me off when people (and politicians!) blame “greedy developers” “the rich” or “boomers” for high housing costs. It’s regulation! And my numbers above are inflated by other regs I didn’t mention: those build costs are crazy by Texas or France standards.

In a second more fun case, Scott Sumner shows us the auction for The Chet Holifield Federal Building, also known as the Ziggurat.

![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0753d32e-2cce-44ae-88a1-2274da9e3969_733x400.png)

> Scott Sumner: The [**OC Register**](https://www.ocregister.com/2024/08/31/extra-bidding-for-laguna-niguels-ziggurat-adds-17-4-million-to-price/?utm_email=E5A325A36585946D74AEB4B5AB&active=yesD&lctg=E5A325A36585946D74AEB4B5AB&utm_source=listrak&utm_medium=email&utm_term=https%3a%2f%2fwww.ocregister.com%2f2024%2f08%2f31%2fextra-bidding-for-laguna-niguels-ziggurat-adds-17-4-million-to-price%2f&utm_campaign=scng-ocr-localist&utm_content=curated) has had a series of news stories on the auction, where feverish bidding has pushed the price to a much higher than expected level.  This is presumably because the property includes not just the office building, but also 89 acres of land in one of California’s most desirable communities, just a few miles from Laguna Beach.  The article contains this graph \[of the auction going from $125 million up to so far $154 million\].
> 
> Note that the original asking price was only $70 million.  One reason why people were caught off guard is that this is actually the GSA’s second attempt to sell the building:
> 
> OC Register: By the way, this is the second auction for the 53-year-old Ziggurat, The first, which required the buyer to preserve the Ziggurat structure, [**drew no bids**](https://www.ocregister.com/2023/04/12/feds-get-no-interest-in-auction-of-iconic-ziggurat-building-in-laguna-niguel/). The lengthy response to the latest auction – without that restriction on development – suggests the buyer [**will likely demolish the structure designed by the late famed architect William Pereira.**](https://www.ocregister.com/2023/11/30/laguna-niguels-ziggurat-could-be-demolished-if-2nd-auction-succeeds/)
> 
> Not a single developer was willing to bid even $70 million for this highly desirable property at a time when there was requirement that the building be saved.  Once that restriction was lifted, at least two developers were willing to pay more than $150 million (and the auction is still ongoing.)
> 
> From this information, we can infer that the economic cost of this particular regulatory barrier was at least $84 million, the difference between the current auction price and the previous auction’s reserve price.
> 
> But even that figure is a gross underestimate of the cost of regulation for this property.  Although the new owner will be allowed to remove this eyesore, they will continue to face a Byzantine thicket of regulations and lawsuits, from all sorts of interest groups that hope to minimize the amount of development.  After all, this is California.
> 
> While I cannot be certain, I suspect that a developer would be willing to pay many hundreds of millions of dollars for this property if given a completely free hand to develop it any way they wished.  I also suspect that the resulting development would be extremely impressive—the sort of grand project that the US used to be good at doing, but that has somehow become beyond our ability.

Can you imagine what would happen if we auctioned off, with actual no zoning restrictions you can build however you want, a large plot of land in New York or San Francisco? We should try it.

#### High Rise

[Who is building high rises these days?](https://x.com/mnolangray/status/1816911545210929655?cn=ZmxleGlibGVfcmVjcw%3D%3D&refsrc=email)

> Nolan Gray: Canadian suburbs are building more high-rises than the typical major US city.
> 
> Aaron Green: There are currently only nine high-rises under construction in Los Angeles. In Austin, 23. In Atlanta, 51. And we wonder why housing is so expensive.

Who is building them? Toronto, New York City, Vancouver and Miami.

![Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F142effb8-a064-44c7-9274-8bdf060b81c0_4000x3000.jpeg "Image")

New York is large enough that its 207 are not impressive on a per capita basis. It is still in sharp contrast to places like San Francisco.

#### “Historic Preservation”

The very concept increasingly fills one with rage.

I get the original concept. Yes, there are a handful of buildings that are indeed historical landmarks, that we don’t want people tearing down willy-nilly.

But let’s face it. There aren’t that many.

Also, zero of them are parking lots people want to turn into food banks.

> [Adriana Porter Felt](https://x.com/__apf__/status/1836439909999190236): [only in California](https://t.co/eAnkLiaRz2)… someone is suing to stop a food bank from opening a new location because of a “historic parking lot”
> 
> Tod Hickman: The location they want… It violates the law, violates CEQA. The main problem is the City of Alameda did not do proper review, environmental review of the project. They circumvented the law. This location is a historic parking lot,” he said.
> 
> James Medlock: We’re all entitled to our opinions but the moment you invoke the idea of a “historic parking lot” to prevent a food bank you should be given about as much credence as a person raving about lizard people

I prefer the line that you should be transformed into a pillar of salt, but I lost that link. Also this illustrates how we obviously need to get rid of CEQA, a building replacing a Berkley parking lot does not require ‘environmental review.’

Rather than ban on tearing down landmarks, of course, we should tax doing so – attach a price to each building that represents how much we care.

We could even do it organically, where anyone can contribute money to the city to put that money towards preservation of a potential landmark, then if the developer values it more than that they can match the funds. Whereas if no one cares enough to put down a deposit, then why should we?

#### Speed Kills

[Delays really do matter a lot.](https://marginalrevolution.com/marginalrevolution/2024/08/approval-timelines-really-matter-for-housing.html?utm_source=rss&utm_medium=rss&utm_campaign=approval-timelines-really-matter-for-housing) [A new research paper](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4872147) estimates that a 25% reduction in approval times would increase the rate of housing production by 33% (!), of which 11.9% is purely pulling current projects forward (!) and the rest is starting more projects.

So yes, even if the ultimate decisions don’t change, this is a huge deal. And if housing supply is this elastic purely in the face of less delays, that means that other changes should also have huge impacts on supply.

Or at least, that such changes would do that up to the limit of the supply chain. At some point, if we accelerated construction enough in enough places at once, we would start to run out of various components including construction labor, until we adjusted.

#### Procedure

> [Brad Hargreaves](https://x.com/bhargreaves/status/1823759983600665082): The resurrection of Robert Moses was inevitable as it becomes increasingly clear that the reaction against him – handicapping our government’s ability to do anything meaningful – was worse than anything he did.
> 
> [Jason Crawford](https://x.com/jasoncrawford/status/1824017429116158104): We desperately need a third alternative to:
> 
> 1\. Authoritarian leader can build anything he decides on, over all objections from anyone affected
> 
> 2\. No one can build anything because it is stuck in years of permitting and approvals
> 
> Neither of those are viable.

For ordinary projects like an apartment building, the answer is simple. You build the building. It is none of anyone’s business.

For things that would involve demolishing neighborhoods or planets to build bypasses, well, I do agree you have to build bypasses but yes you need to do a proper cost-benefit analysis. That continues to be my proposal – mandatory developer-pays third party audit of costs to stakeholders, followed by a proposal including distributional effects, and a panel that makes a go or no go decision. You can sue for damages, but not for an injunction.  
Mandating Minimum Housing Sizes is War on the Poor

Why would you force people to buy more space (or other features), [especially more space in configurations they do not want or don’t much value](https://x.com/KelseyTuoc/status/1823118905503600848)?

> Kelsey Piper: A formative moment for me was when I was living in a not-up-to-code tiny bedroom, it was fine and I was very happy, and I mentioned online that I thought the bedroom size requirements were too strict and was immediately accused of wanting to reinvent slums.
> 
> People were absolutely furious that I was willing to call for smaller bedrooms and insisted I wanted to subject poor people to presumed enormous misery. And I couldn’t explain that I lived in a tiny bedroom and it was fine because you shouldn’t confess on the internet to crimes.
> 
> I sat there in my tiny illegal bedroom reading person after person insist that any building code that allowed it amounted to a declaration that the poor deserved to suffer and that we should bring back slums. It was a perfectly fine room. I still think it should be legal.
> 
> Zac: I lived in a studio that was less than 300 sq ft in order to live in the Chicago neighborhood I wanted on a budget and it was totally fine for me as a single person.

Quite the contrary. When you tell the poor that they must spend their money on something they do not want, you are declaring that you know better than them, and that they should instead give up other things and work harder. You are taking away their ability to live, and waging war on them.

Location and price often matter far more than size. The best way to be upwardly mobile is to move to where opportunity knocks, and not spend your money.

I’ve lived in studio apartments. It was totally fine. If they had been substantially smaller, it would have impacted my life very little.

I also lived in college dorms, and that too was totally fine. The main problem with even a very tiny dorm room is you don’t have a (private) kitchen, but with the rent savings you can eat out (and go out) every day and still come out way ahead, at least in places like New York City. Renting that space 24/7 makes very little economic sense.

[Ultimately, it should be this simple](https://x.com/mattyglesias/status/1839617233397449130):

> Matthew Yglesias: It should be legal to build buildings in in-demand areas of American cities \*without\* needing to persuade specific officials to back you on a case-by-case basis.
> 
> Many advantages to this idea, including less bribery!

#### San Francisco

[The first proposal to take advantage of San Francisco’s newfound inability](https://x.com/YIMBYLAND/status/1810473344589856972) to veto all new housing construction after SB 423 triggered is a modest 200 apartment units, 28 of which will be dedicated low income housing, on 1965 Market Street. So of course The San Francisco Standard reports it this way, to be clear it is not the project that they say is controversial here:

![Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F81a9fa19-a80c-437a-b6bf-53557ee334bb_1284x1596.jpeg "Image")

I always find it curious why projects proposed in such spots are so modest. The people opposed to you are going to oppose you the same amount either way.

[Here we have plans for Outer Sunset](https://x.com/sfstandard/status/1821381852831113579), [with a proposed apartment complex doubling in height](https://sfstandard.com/2024/07/17/outer-sunset-tallest-apartments-plan/?utm_campaign=owned_social&utm_content=automated&utm_medium=trueanthem&utm_source=facebook_owned)… to eight stories. Headline says it ‘just might get built.’ The building has been stalled for nearly a decade, so seems more than fair to double the proposed fun. Again, if you are face people who are going to oppose anything you do equally strongly no matter what, why not go for the brass ring? The objections quoted are things like ‘I don’t like it’ and ‘they’re taking away one of our gas stations’ which the article notes is not a real concern in this context.

[Mostly, we still have planning department meetings like this one](https://x.com/arram/status/1816311085265478055) – click through for an extended play-by-play. SB 423 notwithstanding, these people are in it to win it, so I am very much in the ‘I will believe it when I see the cranes’ camp.

[Berkeley was slated to vote on a very important upzoning proposal](https://darrellowens.substack.com/p/the-big-zoning-battle-of-berkeley) for the ‘missing middle,’ both a big deal there and potentially an example for other places. They’ve been working on this for five years. It is a compromise where there are silly restrictions on density but not to the full insane previous extent. So of course [they postponed the vote](https://darrellowens.substack.com/p/the-big-zoning-battle-of-berkeley) to work on the proposal more. Sure, why not.

[Berkeley did approve its new tallest building. 27 stories, 456 units, 14.4k sq ft retail](https://x.com/KenjiCapital/status/1841523212141654371), right next to the UC Berkeley BART so great location. No doubt these will be very expensive and profitable, since this is a tiny fraction of surplus demand. Need more.

[San Francisco has instead moved its focus to banning](https://x.com/eshear/status/1819055661281694056) ‘a controversial form of software that is widely used by large property owners to set rents.’ This software used various information to figure out the proper rent to charge. The argument is that the software was effectively a form of soft collusion. There certainly is some danger of that effect to a small degree, but mostly this ensures that the market functions more efficiently.

By default, rental markets are highly inefficient. Some places set prices too low, and get snapped up or find many applicants quickly. Others overcharge without realizing, and sit empty for months until people realize. That means that renters need to be active and do their homework, constantly refreshing for new deals and going to place after place that stuck on the market with a rent that is too damn high. Otherwise research and search costs go up, vacancy times increase reducing effective supply and matches are relatively poor. As usual, I’d prefer to let better information and more efficient markets work their magic.

A story in remarkably many acts: [The last building permit appeal, at least of a sort](https://twitter.com/_fruchtose/status/1828955081821302897), by the condo a block away from a proposed 100% affordable housing project. AB 1114 prohibited this hearing, but the city pretended there could be one last one. What will be their next excuse?

[San Francisco home, listed for $2.495m, sells for $1.65m straight up](https://x.com/rohindhar/status/1828555711221244104).

Oh, right, they do have Golden Gate Park, a bigger park than NYC’s central park, except they put it in a place where there’s no one near it and there’s no BART that gets you there either.

![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F6d0295d6-7ed5-4ef4-9ed4-bcef28b929c3_887x1578.png)

[Here’s a fun case of ‘good idea to stop doing that but wait you do what?’](https://www.sfexaminer.com/news/business/sf-plan-would-cut-millions-in-yearly-small-business-fees/article_d26cc64a-7b7f-11ef-b3f3-4383929df0e2.html?utm_medium=social&utm_source=twitter_sfexaminer)

> Patrick Hoge (SF Examiner): The legislation would waive 49 license fees that include charges for varied items, including having outdoor seating, billiard tables, extended operating hours and even a cash register or candles. Such fees are among roughly 100 charged by individual departments that are combined on a unified license bill, Fried said.
> 
> Laurie Thomas, owner and operator of Nice Ventures, which runs two restaurants in the Cow Hollow neighborhood, said she recently paid license fees totalling $8,182, including table and chair fees of $3,313 for Rose’s Café and $1,366 for Terzo. That is in addition to the gross-receipts taxes the restaurants pay to The City, she said.

Then again, better to tax something than to restrict it. I wouldn’t be taxing candles or cash registers or tables and chairs, but if those are things the city wants to see less of, or at least doesn’t care about enough to mind if that is the result, there are certainly worse taxes.

#### California

Density bonuses sound like invitations to game the system, because they are. And That’s Good, mostly, [also well played, everyone](https://x.com/CohenSite/status/1827022934122303551).

> Joe Cohen: This is fascinating:
> 
> One of the unanswered questions about the State Density Bonus is if you can “ask the genie for more wishes”
> 
> The idea: because it lowers costs per-unit, in theory a dev can use an incentive to request additional density beyond what they’re normally entitled to.
> 
> By the letter of the law, this should be legal, but it seems like there’s no way this would actually be allowed.
> 
> Well, a project was just approved in unincorporated LA county that used an incentive to get an extra 1287% density bonus!

I am of course all in favor of this. There should not be a cap on density in most cases, if the project makes economic sense. If the costs per unit are indeed much lower with higher density, presumably because it reduces land costs plus some economies of scale, then sure, why not? Yes, first best would be something more consistent and straightforward, but I’ll take it.

[Gavin Newsom signs five YIMBY-backed bills.](https://x.com/cayimby/status/1836850506611687553)

[California requires condo home builders to cover latent ‘construction defects’ for 10 years](https://x.com/fawfulfan/status/1845844397822226916), which Claude estimates increases sale prices by 2%-7%, o1-preview said 4%-10% and Gemini estimated 10%-15%. So it’s not a prohibition, but it’s a big deal. The law also applies to single family homes but the impact there is estimated as modestly less.

California also in 2020 had environmental review lawsuits [brought to block almost half of all proposed housing units](https://x.com/AlecStapp/status/1846015409532592275).

#### Seattle

[Seattle relaxes many rules for office-to-residential conversions](https://x.com/pushtheneedle/status/1811079078495277343), [including affordable housing taxes, design review and various land use rules](https://www.seattletimes.com/business/real-estate/seattle-oks-incentives-for-developers-turning-offices-into-housing/). The obvious question is indeed why not apply (most of) these changes everywhere?

#### Philadelphia

Don’t threaten me with a good time: [Looks like another case of](https://x.com/AlecStapp/status/1820966057181376720) ‘we built a lot more multifamily housing and now we have a rental glut and prices are falling.’

Which of course is being reported as bad news.

![Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F71449e57-4bfd-47f6-9186-5b4f4f7c4a21_1179x1283.jpeg "Image")

#### Boston

The first step in getting more housing is to [stop actively sabotaging housing construction](https://x.com/CSElmendorf/status/1811057560633626672), [including sabotage in the name of a concern](https://www.smartcitiesdive.com/news/boston-fair-housing-zoning-affh-hows-it-going/720479/) that someone, somewhere might earn a profit. In Boston this was named ‘fair’ housing, meaning it is on the building of a new large building to investigate ‘possible impact’ on the area and then offer various bribes to locals in a ‘negotiation process.’ Since the area often is fine with no deal, that means they will often demand all or more than all your forward looking profits, ignoring sunk costs. Given that, there is no reason to start trying to build something.

The rule triggers on 50k square feet of floor space, has been in place for three years, and only been triggered three times.

> Chris Elmendorf: Similarly, Detroit mandates “community benefit agreements” for large projects. And S.F. does so as a matter of policy for projects in “priority equity geographies” (again, justified on AFFH grounds).
> 
> Nationally, the Democrats’ “consensus” permitting reform bill would institutionalize similar equity-impact-analysis requirements & invite anyone to sue and hold up a project if they think the equity analysis was inadequate.

That is essentially damn near a proposal to ban large housing projects outright.

#### New York City

[There is a big fight over the ‘City of Yes’ proposal ongoing.](https://www.thecity.nyc/2024/07/10/housing-zoning-city-of-yes-support/) The local boards hate it, because local boards hate housing and freedom, but that has been overridden before. It sounds like momentum is building. There’s still a lot of room to be more ambitious. It’s so absurd that New York City itself still has parking requirements, and all this talk of various ‘density bonuses’ makes one wonder why you need to be negotiating on that at all. This is New York City. It’s time to build. Your limiting factors here should be economics and technology, full stop.

[The City of Yes proposal is super popular](https://x.com/mattyglesias/status/1838918125749719265).

> Matt Yglesias: Never take a poll at total face value but this seems like a fair wording of the question.
> 
> Ben Furnas: [New poll](https://apietrzak.org/wp-content/uploads/2024/09/topline_city_of_yes-1.pdf) shows overwhelming approval among NYC registered voters for the City of Yes housing proposal:
> 
> +50% overall
> 
> +55% among renters
> 
> +63% among under 45
> 
> +67% among independents

![Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F2e9100ef-0ac9-48f7-90f8-6e9c68281417_1070x817.jpeg "Image")

![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F3ce52fe2-227a-4c34-9a1f-5c6cc392bf5b_1109x337.png)

The shared housing mandate is slightly underwater at -7%, parking mandate elimination is ‘only’ +15%, complex expansion only +18%. Office conversations are +70% (!). Other provisions are around +50%.

It seems New Yorkers are broadly highly supportive of building new housing, and would be up for going substantially beyond even this proposal.

[Mayor Eric Adams has called for 500k new housing units in the next decade](https://x.com/reihan/status/1831061660137861129). The current baseline is approximately 3.6 million. If this happened, would it indeed result in ‘abundant and affordable housing for anyone who wants to live in the city?’

I mean, lol, no. That would require there to be enough housing units for everyone who wants to live in the city. Otherwise, you need to price some people out, also known as being unaffordable to those people. Claude estimates that if NYC was truly ‘affordable,’ as in its housing prices declined to the national average, then about 10 million Americans would want to move here. I think that’s way low.

Whereas if you add 500k units, you’d likely get a price decline on the order of 10%. Which is a lot, and would help a lot, but no NYC and especially Manhattan is not suddenly going to have abundant affordable housing unless we build The Cube.

[The Manhattan Institute analysis](https://manhattan.institute/article/what-would-new-york-citys-housing-moonshot-look-like?utm_source=twitter&utm_medium=social) of what it would take to get to 500k new units seems sensible. We’d need far more permissive zoning and ability to get zoning changes, a credible lack of rent controls, consistent rational taxation policies that no longer disfavor building new rental apartment buildings, and a series of additional reforms. There is plenty of good land available in Brooklyn and Queens, if we gave it reasonable zoning. Whereas instead of facilitating this, we have new rules like requiring zoning changes to submit a ‘racial equity report’ which is Obvious Nonsense, and continuing to require environmental review for NYC housing, which is also Obvious Nonsense – moving people to NYC is strictly positive for the environment versus not doing that.

Reading a document like that one makes clear that we have so many needless barriers to new construction. Making things dramatically easier would, in turn, be rather easy.

[New York City also](https://marginalrevolution.com/marginalrevolution/2024/09/banning-airbnb-in-nyc.html?utm_source=rss&utm_medium=rss&utm_campaign=banning-airbnb-in-nyc) [recently banned AirBnB](https://news.airbnb.com/nyc-rules-higher-prices-for-travelers-no-impact-on-housing/). [AirBnB put out a blog post one year later to essentially thumb its nose at the city](https://news.airbnb.com/nyc-rules-higher-prices-for-travelers-no-impact-on-housing/), as covered by Tyler Cowen.

Then they say that NYC rents have also continued to outpace the national average, with rent up 2.4% versus a decline of -0.8% nationwide and above ‘other major cities,’ although this is still below inflation.

They say NYC hotel rates have risen 7.4% versus 2.1% nationwide. That’s actually not a big deal? It instead shows that AirBnB wasn’t doing that much to lower prices. And if you consider that rents are +3% compared to nationwide, that could explain the majority of the disparity. Also a lot of it could be that NYC has been legally forced to use a substantial percentage of its hotel rooms to house immigrants, reducing supply.

They say NYC vacancy rates are unchanged, but they were already very low at 3.3%, and some of those ‘occupied’ apartments were de facto hotel rooms and thus it is likely the true vacancy rate did decline.

I do understand that AirBnB was highly useful as a form of regulatory arbitrage, and now this is unavailable. And yes, I would prefer to allow AirBnB to come back. But I don’t think losing it did all that much damage.

Another Pete Buttigieg project is a new rapid transit rail line for NYC… in Brooklyn and Queens?

![Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8e54fa32-d2f9-4bad-8abf-f5d3ba4607a5_726x940.jpeg "Image")

> Mayor Pete: In NYC, [we’re helping plan the Interborough Express project](https://t.co/QU77NZFmLC) to bring better light rail to Brooklyn and Queens. Better transit means more options for riders, and with funding from the Bipartisan Infrastructure Law, we’re helping NYC plan for the future.
> 
> Ben Furnas: “If the IBX is built with street running, it will be chronically delayed and overcrowded from day one…But if the IBX is entirely grade-separated, it could run at far higher frequencies, use longer and larger trains, and potentially even be automated.”

Turns out this is nothing, only $20 million for planning, which is chump change compared to the cost of actually building anything like this. It’s certainly worth building, almost any new rail line in NYC is worth building. My guess is this is still a lot less valuable than expanding capacity to existing lines especially within Manhattan, or facilitating the Second Avenue Subway for real. On the plus side, Let’s Go Mets with a much better route to the game from Brooklyn?

#### St. Paul

> [Nathaniel Hood](https://x.com/natehoodstp/status/1819011382886511058): While it’s been detrimental to new housing production, housing affordability, expanding our tax base, and improving our downtown through residential conversions …
> 
> On the plus side, we have provided the rest of the country with a great Case Study in “What Not To Do”
> 
> Nick Erickson: Any policy that adds costs or serves as a production roadblock should be a non-starter.
> 
> “After \[St. Paul MN\] voters approved rent control, applications for new multifamily buildings plummeted by 82 percent.”

Seems rather conclusive to me. That’s not a coincidence.

#### Florida

[A full 20% of Florida homeowners are going without insurance](https://x.com/anothercohen/status/1811160032010195025). That seems eminently reasonable. If you have insurance, you lose value in the ‘Fed put’ that the government might pick up the slack, and adverse selection issues plus profits plus administrative costs plus fighting the insurance company means you would prefer to avoid that. So if you own your home outright and can afford to replace or repair it, why pay for insurance?

I consider it a substantial cost when various things like mortgages require one to buy such insurance. What you get is worth a lot less than the amount you pay for it.

#### Michigan

[Homeowners associations lose veto power over rooftop solar](https://x.com/AlecStapp/status/1811160780823494857), also various other home upgrades like EV charging stations. I do not love the idea of the government invalidating private contracts like this. Also, it does not seem wise to brazenly break the rules of your HOA, even if they cannot enforce that particular rule against you. What do you think happens next?

#### The UK

Watch out, Labour’s forces are out there with a dastardly plan to build houses.

[The Mail tells readers](https://x.com/AlexGodofsky/status/1813558088755990575) how to ‘become a green belt SUPER NIMBY’ and warns them to ‘watch out for officials turning up with binoculars,’ but provides comfort that ‘but don’t despair – some areas could see house prices rise 20%.’

> “be alert if you live near an old golf course or disused car park” ![😵‍💫](https://s0.wp.com/wp-content/mu-plugins/wpcom-smileys/twemoji/2/72x72/1f635-200d-1f4ab.png)

![Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0e1a8c72-48d6-41ad-8849-758302f5d6f6_769x1024.jpeg "Image")

![Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fb2806934-b77e-4aa5-8430-df0b66969f66_1024x576.jpeg "Image")

#### Underutilization

[What causes it? What should we do about it?](https://x.com/mattparlmer/status/1814823949513207932)

> Matt Palmer: Around a third of the commercial buildings in my neighborhood are straight up vacant, more like half if you count the ones being parked as a “gallery” or similar unproductive function.
> 
> At this point I think govt needs to force landlords to sell properties that they won’t fill.
> 
> This has been a problem everywhere I’ve ever lived, it’s wild how far below capacity we actually run the real economy.
> 
> Systematic misuse/disuse of this sort of asset is not smart irrespective of your ideological position (I hope lol) and ought to be corrected proactively.
> 
> Tedks: If you think this is a San Francisco issue, you should know it’s very common in New York also, even in the very gentrified parts where San Francisco style homelessness isn’t tolerated.
> 
> Humble 3rd Print Farmer: Can also confirm this is a Las Vegas issue, a lot of vacant commercial property with for rent signs that are not necessarily listed online in places like Loopnet.

My understanding is that [Hinkle is right about this as a major cause](https://x.com/Drachs1978/status/1814826257542226405):

> David Hinkle: My understanding is they can’t lower the rents because it will trigger a loan re-collateralization they can’t pay. Commercial real estate is always valued as a multiple of rent prices. These contracts don’t work in a market going down. It’s only designed to go up.
> 
> They just ignore unoccupied units. It’s bullshit and maybe this is the change that needs to be made. In many cases, the bank doesn’t even require you to pay the portion of the mortgage for unoccupied units because it’s in their best interest to keep the property value high.

Thus, in order to maintain the fiction – with the knowledge and approval of the bank as well – that the building hasn’t lost value, prices become massively sticky downwards, and large amounts of space stay vacant.

This is rather flagrant bad design. A contract was designed that predictably does a very stupid thing if the market clearing rent goes down. The bank either would like to ‘extend and pretend’ and let the owner muddle through as best they can, or else would want to take the property now before things get worse. Now it doesn’t get to do either.

Perhaps we can fix the banking regulations so that they choose better terms?

The alternative is to tax extended vacancy. Or it might be sufficient merely to end the tax benefits of staying vacant. A lot of the attraction of staying vacant is that you effectively get to bank the loss.

There would be massive lobbying against this, but what if the rule was that if a commercial property was vacant longer than 6 months or a year, that the profits of the building would be taxed as if the property was occupied at the last known rental price, or at a market value assessment, or similar? I bet they start filling up a lot faster.

#### Get on the Bus

[The bus did not exist sufficiently well so it was necessary to (re) invent it](https://x.com/meatballtimes/status/1843760572497834162).

> [Morning Brew](https://x.com/MorningBrew/status/1843669346788249699): [Uber’s launching shuttles in NYC to take people from Manhattan to LaGuardia](https://www.wsj.com/tech/personal-tech/uber-will-now-take-you-from-manhattan-to-laguardia-for-18-65e55247?st=RV1GEx)
> 
> • 14-passenger vans
> 
> • Trips every 30 minutes
> 
> • $18 to and from the airport
> 
> • Three pick up/drop off locations (Port Authority, Grand Central, Penn Station)
> 
> It makes a lot of sense, 15% of bookings last year came from airport trips.
> 
> Meatball Times: “Lmao they reinvented the bus” Ok but consider if they can profitably run this route that means \*buses are failing to serve a brain dead obvious route that everyone uses\* and something has gone horribly wrong with bus transit.
> 
> Daniel Eth: \*a new coffee shop opens up in my town\*
> 
> People on Twitter: “omg they reinvented the coffee shop ![💀](https://s0.wp.com/wp-content/mu-plugins/wpcom-smileys/twemoji/2/72x72/1f480.png) “
> 
> Caesararum: the bus that goes from GCT->Penn->EWR is so often so delayed that there’s a cottage industry in ubers and black cabs that poach people from the queue
> 
> the M60 (by far the most common bus to LGA) is not as bad but similar.
> 
> Laboratory for Social Minds: LGA bus works extremely well — free, then to E or F train; often faster than Uber to Manhattan given traffic. Meanwhile Uber from NYC airport often more expensive than Yellow Cab. Uber is targeting low-information tourists and business travelers (ease of receipts).

Or at least it was seen as a business opportunity. Why not integrate the shuttle with the app? Yes, the Q70 exists to get you to the subway, but a lot of people don’t know that, or they want to go one place and stop worrying about it rather than transfer into the subway system.

Indeed, for some reason I’ve never taken the Q70, even though it is a clear win once the route is pointed out. Now we need to do something about JFK – yes you have trains available, and I do take them, but they’re both terribly slow.

#### Title Insurance

As an aside, your periodic reminder that the whole Title Insurance Industry is a scam.

Yes, they technically provide a service, but they pay out pennies on the dollar. Somehow you have to buy it, and they manage to price fix by a factor of about five to ten. So it is no surprise that [real estate agents often take kickbacks to steer customers to a particular provider](https://x.com/mattyglesias/status/1829175871061798985). Indeed, what surprised Matt Yglesias was that this is illegal, and companies in the DC area are being fined $3.3 million for doing it.

> [Jeremiah Johnson:](https://x.com/JeremiahDJohns/status/1833909302622626221) I recently bought an apartment, and one of my big takeaways is that the entire “Title insurance” process is one of the biggest scams on the planet.
> 
> These parasites get 0.5%-1% of every real estate transaction in New York. For what? Keeping a big ole list of who owns what?
> 
> SaaS CTO, PhD: The loss ratio for title insurance is around 4-5%, vs ~80% for property/medical insurance.
> 
> Jeremiah Johnson: Jesus this must be the greatest business model of all time:
> 
> Sell an insurance product where claims are only 3% of revenue, and it’s also legally mandated on every transaction, and you also have a cartel to fix prices.

How do we get a politics where ‘end title insurance’ is a good part of someone’s platform? Have the state take over tracking titles.

#### Perspective

> Matthew Lewis: You know what aren’t scarce in the United States? Cars.
> 
> You know why cars aren’t scarce? Because we build 16 million of them per year.
> 
> You know how many homes we build per year? About 1.4 million.
> 
> Don’t tell me the United States is a country. We’re a car company.
> 
> We don’t even need that many homes. Maybe ~ 5 million STAT, and then a steady stream of 2-4 million per year after.
> 
> But nope!!! We don’t build homes in the USA, we build cars. Thanks to the electoral college, car jobs are the single most important part of our economy.
> 
> [Logan Bowers](https://x.com/loganb/status/1841564997962629284): Imagine how expensive cars would be if every city and town in the country had a distinct 2,000 manual detailing exactly how each type of car has to be uniquely built to match the other cars in the neighborhood, but also the existing models of cars are illegal to build too.

Five million homes plus 2-4 million per year would indeed be more than enough… if and only if we put those units where people want to live, largely in the top cities.