US Cities Try Changing Their Zoning Rules to Allow More Housing - Slashdot
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US Cities Try Changing Their Zoning Rules to Allow More Housing
US Cities Try Changing Their Zoning Rules to Allow More Housing (npr.org) 133
Posted by EditorDavid
on Sunday February 18, 2024 @07:34AM from the home-improvements dept.Tech workers are accused of driving up rents in America's major cities — but in fact, the problem may be everywhere. Half of America's renters "are paying more than a third of their salary in housing costs," reports NPR's Weekend Edition, "and for those looking to buy, scant few homes on the market are affordable for a typical household.
"To ramp up supply, cities are taking a fresh look at their zoning rules and the regulations that spell out what can be built where and what can't."
And many are finding that their old rules are too rigid, making it too hard and too expensive to build many new homes. So these cities, as well as some states, are undertaking a process called zoning reform. They're crafting new rules that do things like allow multifamily homes in more neighborhoods, encourage more density near transit and streamline permitting processes for those trying to build... Minneapolis was ahead of the pack as it made a series of changes to its zoning rules in recent years: allowing more density downtown and along transit corridors, getting rid of parking requirements, permitting construction of accessory dwelling units, which are secondary dwellings on the same lot. And one change in particular made national news: The city ended single-family zoning, allowing two- and three-unit homes to be built in every neighborhood.
Researchers at The Pew Charitable Trusts examined the effects of the changes between 2017 and 2022, as many of the city's most significant zoning reforms came into effect. They found what they call a "blueprint for housing affordability." "We saw Minneapolis add 12% to its housing stock in just that five-year period, far more than other cities," Alex Horowitz, director of housing policy initiatives at Pew, told NPR... "The zoning reforms made apartments feasible. They made them less expensive to build. And they were saying yes when builders submitted applications to build apartment buildings. So they got a lot of new housing in a short period of time," says Horowitz. That supply increase appears to have helped keep rents down too. Rents in Minneapolis rose just 1% during this time, while they increased 14% in the rest of Minnesota.
Horowitz says cities such as Minneapolis, Houston and Tysons, Va., have built a lot of housing in the last few years and, accordingly, have seen rents stabilize while wages continue to rise, in contrast with much of the country... Now, these sorts of changes are happening in cities and towns around the country. Researchers at the University of California, Berkeley built a zoning reform tracker and identified zoning reform efforts in more than 100 municipal jurisdictions in the U.S. in recent years.
Other cities reforming their codes include Milwaukee, Columbus, New York City, Walla Walla, and South Bend, Indiana, according to the article — which also includes this quote from Nolan Gray, the urban planner who wrote the book Arbitrary Lines: How Zoning Broke the American City and How to Fix It.
"Most American cities and most American states have rules on the books that make it really, really hard to build more infill housing. So if you want a California-style housing crisis, don't do anything. But if you want to avoid the fate of states like California, learn some of the lessons of what we've been doing over the last few years and allow for more of that infill, mixed-income housing."
Although interestingly, the article points out that California in recent years has been pushing zoning reform at the state level, "passing lots of legislation to address the state's housing crisis, including a law that requires cities and counties to permit accessory dwelling units. Now, construction of ADUs is booming, with more than 28,000 of the units permitted in California in 2022."
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by quonset ( 4839537 ) on Sunday February 18, 2024 @07:46AM (#64248876)
If corporations weren't allowed to buy up housing stock and keep it off the market, a large portion of this problem would go away.
Not to mention if there were fewer people this also wouldn't be a problem.
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Fixed for accuracy.
Translation: After working hard your whole life to have a nice home, you end up living next to shitty apartments filled with illegal Mexicans, with 20 families in a building intended for 5.
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You seriously over-estimate the percentage of housing units that are being bought and kept off the rental market. Do you have any idea how expensive it is to buy a housing unit and not collect any income from it? There's the cost of the unit, the interest on the loan used to purchase it, the property taxes & upkeep/security costs to 'protect' your investment, all so that your other investment properties can be rented out for a bit more money?
Only a person that's never owned rental properties can believe
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This. My in-laws recently passed away. We'd have loved to hold on to their home and rent it out. Property taxes and mortgage payments would have been roughly double what we could collect in rent so we could not. There's absolutely no way anyone is buying properties in San Jose, CA without doing something with them.
It's eerie. As prices go up, entities holding properties are guided, as by an invisible hand, to bring properties they were holding back to the market.
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Did you ever hear of a landlord reducing the rent when the loan was paid off?
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All goods/services are sold at the market rate. To do otherwise would distort the pricing mechanisms that normally would encourage more supply, and thereby arrive at the appropriate price for any good/service. Of course in the case of housing in these localities, the real distortion of supply was purposeful and intentional by the elected officials who legislated/ruled on local and state laws and regulations...
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not *really* answering the question... Once the loan/mortgage has been paid off, the landlords costs drop significantly. Shouldn't the market rate for the rent on a fully paid off home be lower than one which was still being paid off?
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Actually, no. The rent should be comparable to the rents being paid for similar properties in a similar location, I.e. market rates. The owner has an asset, and that asset should provide a comparable rate of return.
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But seriously, you have no idea what you're talking about. That's why the bank would laugh at you.
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Hold on there now, are you honestly implying that the ~7m illegals who've invaded in the past 3 years (they aren't all mexican anymore for what it's worth, pretty much the entire 3rd world has figured out that with biden in office, if you can get to the border, you'll get in) would have any impact on housing costs at all? what kind of bigot are you?!
>yeah but without all of those illegals, who'd pick your fruit or work for shitty wages, i'm very clever.
i love flaccid "GOTCHA" arguments so much, they're g
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Asset acquisition is a side effect of ultra-low interest rates. People borrow money cheaply, use it to buy assets, and then borrow against the assets as they appreciate to buy more assets.
https://fortune.com/2023/05/05... [fortune.com]
"...But it isn't just about home prices: Interest rates on âoefloatingâ loans offered to firms like Yieldstreet are still in the 7% to 8% range, Joshi says. Those high interest rates, coupled with frothy home prices, mean that buying new single-family rentals doesnâ(TM)t make a lot of sense right now for some institutional investors.
Joshi says Yieldstreet is waiting for either house prices to take another leg down or interest rates to come back down. Or both.
âoeIf short-term [interest] rates came down around 4%, and if home prices were about 15% lower than the peak last year, that is a valuation that supports the equity return that investors need to make,â Joshi tells Fortune...."
I mean, you could specifically come out and say, it is against the best interests of public policy for hedge funds to purchase starter homes, and build in penalties/subsidies to help re-balance the distribution of homes. However, you'd probably get push back from existing homeowners who want to sell for a higher price, if such policies dampened investor demand, and thus real estate appreciation. You'd also probably get push back from states and local governments who want the higher property assessments so they can collect more in property taxes...
I mean, seriously, there's a reason that real estate traditionally turned a blind eye to dirty money and the use of real estate for money laundering. If the criminals stop buying real estate... the prices don't rise as fast, and realtors/brokers stop getting fat commission checks.
https://www.reuters.com/world/... [reuters.com]
"If finalized, the new rule would replace a patchwork system that anti-corruption advocates have said has allowed bad actors to hide the proceeds of illicit activity by buying homes through legal entities or trusts, without financing.
Last year, Treasury Secretary Janet Yellen said that criminals for decades have anonymously hidden such ill-gotten gains in real estate, estimating $2.3 billion was laundered through U.S. real estate between 2015 and 2020.
Financial institutions have long been expected to flag suspicious activity to regulators, but cash real estate transactions generally have not been subject to such rules. The new requirements would demand real estate professionals involved in such transactions collect and report data to FinCEN about the property being sold, the seller and the beneficial owner of any legal entity receiving the property."-
Interesting links, but...
The first link [fortune.com] you give says that institutional buying of homes is stopping: "It's all over now. Institutional homebuyers are pulling back-- fast."
The second link [reuters.com] you give says criminals laundered "$2.3 billion in U.S. real estate from 2015 to 2020." That's 400 million dollars a year. Real estate spending is 3 trillion [corelogic.com] dollars a year. The amount spent by criminals is too small to have any effect on real estate prices.
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Correct. Institutional buyers use leverage. If rates are high, they can't use the cheap money conveyor belt to leverage up.
I suspect that criminals (like institutional buyers) buy where the return is higher. Instead of spreading their money out across the US, they're going to purchase in areas of high demand to make sure their "investment" doesn't go down. While I cannot give specific examples in the US real estate market, a similar market across the border in Vancouver gives one indication:
https://news [gov.bc.ca]
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In some cities here, they put a tax on empty flats. Don't want to rent? Fine but you've got to compensate them for the loss of local tax revenue from whoever would be living there otherwise.
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We already have that.
It's called property tax. The rate is based on the original purchase cost plus increases over time, regardless of occupancy.
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Actually no. Rental property tax is based on asset value, and if occupancy is down, the value goes down. A friend has a couple buildings. the other thing about prop tax is the big guys (like the hedge funds) have lawyers that can outgun the appraisal board lawyers, so they can and often do get reductions in valuations that I as a mere homeowner and tax payer can dream about. I've often said as a homeowner the rule should be simple. If I think the valuation is too high, I should be able to tell the appraisal
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An LVT would fix that
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Then your wife is almost certainly lying to your taxing authority. I'm not aware of any jurisdiction that does not give a deduction in value for the owner occupying the property. So when she moved out and started renting it, that deduction should have gone and her taxes should have increased. And in TX, the homeowner exemption limits the annual tax increase to no more than 10%. I don't remember anymore for sure, but I thought prop 13 limits were voided when the property goes to a rental. And I talked to my
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This depends on state laws. I live in Illinois, and rental properties can still claim the "homestead exemption" of $6,000 because of a loophole in the state property tax laws. All landlords need to do is put a clause in their rental contract that states "the tenant is liable for the payment of real estate taxes and the tenant's liability for the taxes is paid through their monthly rent payments." By the letter of the law, if the current resident is liable for payment of real estate taxes the owner can claim
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Oof. The "homestead exemption" in California worth about $77 off your property tax bill each year (1.1% * the exempted value of $7000). I guess it is worth doing if you plan on staying in your place for a long time... you can save $770 after 10 years?
https://www.boe.ca.gov/proptax... [ca.gov]
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What a horrible idea.
Will they start charging taxes on cars that aren't used for unpaid gasoline taxes for miles not driven in a year?
A vacant dwelling still generates property tax revenue, that's the only tax burden a homeowner/landlord owes on a housing unit.
Curious if they will extend this collection scheme to collect extra funds from low income housing, since they don't pay sufficient local income and sales taxes compared to wealthier tenants?
Just such a horrible idea.
It's very expensive to carry a vaca
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Have you got any more non-arguments, straw-men, & slippery slopes?
It perfectly normal for govts to introduce financial incentives to alleviate crises.
Additionally, leaving dwellings empty leaves them vulnerable to squatters, illegal renting, etc., which is an additional cost for legal enforcement. You want the courts to process your claim of illegal occupancy & for the police to supervise their eviction? Sure, pay the f**king taxes.
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That penalizes someone for replacing a house with a 10-unit apartment building and then only renting out 8 units, when they've done far more to relieve the housing crisis than the neighbor with just 1 housing unit on the same size plot of land.
So a better idea is to tax just the land [wikipedia.org], to encourage people to use it more efficiently, instead of taxing by the number of floors.
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Just Tax Land
(And remove zoning restrictions)
Free men, Free land, Free Markets -
No, it doesn't. They're still making way more money & it's just an incentive to rent out the remaining 2 apartments.
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The issue, as pointed out by the article, is *over* regulating the housing market. Adding more regulations doesn't make things more affordable, it makes them more expensive.
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If corporations weren't allowed to buy up housing stock and keep it off the market, a large portion of this problem would go away.
Vacancy rates are near historic lows [managecasa.com].
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Would be interested in seeing numbers here. What fraction of housing stock is "bought up and kept off the market" by corporations?
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No. A small portion of the problem would go away. To be clear it still is a problem, but the amount that corporate ownership of realestate is distorting the market is a small fraction of the problem. Sure you'll hear big statistics like there being more housing units owned by corporations than are currently listed on the market, but that ignores that this ownership has always existed - largely driven by construction of large apartment complexes. But what has contributed to the housing problem in the past fe
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by PsychoSlashDot ( 207849 ) on Sunday February 18, 2024 @08:25AM (#64248914)
Not to mention if there were fewer people this also wouldn't be a problem.
US population would be slowly declining, if the borders weren't wide open.
You get what you vote for.
Know what declining population looks like? Detroit.
Pretending any of this is simple is silly. Housing costs have skyrocketed in the last fifteen years, and some of it has purely been self-inflicted. Where I live, home prices have (more than) doubled. The population has grown maybe 10% in that time. It's not solely the influx of new people here. Some of it is that buyers started flinging larger and larger offers at sellers, competing with one another and driving average prices way up. Sure, there aren't enough houses, but the actual price tag on them is nuts.
I don't have the answers, but being insular isn't one of them.-
The problem is one of centralization. We need people to move out of cities and into smaller towns or even go start new ones. The birth rate in those more rural areas is still above replacement, but it's not surprising that people living in ever more crowded cities don't want to have kids. Prices keep going up because more and more people are bidding against each other for a limited resource.
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Housing supply is extremely inelastic. So when occupancy is 5%, it's fine. When occupancy hits 0%, prices might shoot up 5X, 10x... because people gotta have a place to live, and they are bidding on not being homeless. And those with the means will win the bids and many will be homeless.
Housing demand is also inelastic. Better than housing supply, because people are mobile and housing is not. But just "move to another city" isn't exactly like picking a different brand of cereal.
The actual solution is to mak-
That's essentially the point of TFA. We've made the supply inelastic through zoning rules. If we relax the rules, the supply ought to increase to match demand. But to your point, it's a long term process. The supply will take years to adjust, not weeks.
I've got two canonical examples. First is rent control in New York City. Apparently there are a number of rent controlled apartments where the renter moves out but keeps the apartment vacant so as to not lose the rent controlled rate. Second is myself. I'm an
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"I'd be very interested in downsizing but even if I buy a smaller house, my property tax is likely to go up so I'm not going anywhere."
So three assumptions I could infer from that under the old Prop 60/90 rules:
1. Not old enough to bring your current property tax with you. (https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm)
2. Doesn't matter if you bring your current property tax with you, a smaller place would cost more than your current place, thereby negating some (all?) of the benefits of retainin
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public high schools have been graduating millions of such individuals each year,
So those are kids and not potential homeowners, where are they living now?
And more important to the whole question, people are coming to America to work, so where are they working? Are there jobs available for people or not? Despite what the perception is there's actually not really a welfare state in the US, if you come here the state really isn't really going to give you much and chances are you're gonna pay in taxes you won't get services for. People come here for work and the work is available.
Are you good with massive employer crackdowns on the places that hire the people? I am talking jailtime and big fines for small and medium business owner. You support this right? You have to create a deterrent right and why do they get off the hook?
even small communities can struggle to accommodate just a couple dozen new families with existing housing inventory.
Why do we conflate these issues as if they are actually related. If this is the reality of your town then something systemically has failed in your town and what the point of this article is, it's usually zoning. This is America where we have nothing but space, ability and materials and we can't just build homes? And we just accept this reality and say "no more people, countries full" even when we keep knocking against full employment numbers? What happened to any American pride? Are we just a bunch of lazy cowards now?
housing got more expensive as current homeowners are reluctant to move due to inflated borrowing cost.
If the rates didn't go up everyone would be hopping mad about inflation also. Do you want the current administration to produce pink unicorns as well, I think you would blame them for the outcome no matter what, neverminded that interest rates as a standard were higher than today just a mere 30 years ago or so, check what the mortgage rates were in the 70's and 80's. Wages and home prices due to lack of stock are the primary issues here.
Also why are you blaming the admin for interest rates? That's up to the fed right? Are you advocating for the President to be able to set interest rates unilaterally? Are you a monarchist?
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I find this is a stupid comparison to make. We can't look to the past for interest rates without also looking to the past about housing affordability. Based on the few things I've read about the USA the average family income would need to be 60% higher to break even with housing affordability 30 years ago, and if we had that much more money we wouldn't be complaining about higher interest rates.
The median house now requires close to 40% of the household income to go into mortgage repayments. That is a start
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That sorta exactly my point? Interest rates are not the primary driver of housing affordability issues and focusing on them is not addressing the real problems and really rates should ideally be somewhere in the 3-6% range during non-recession times. Before the 2008 crisis rates were still around 5-7%, the days of super low rates is a historical anomaly.
I think back to my anecdote of my parents house, they purchased I believe in 1975 in NYC. The interest rates then were around 9% but they paid in 1975 dol
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>housing got more expensive as current homeowners are reluctant to move due to inflated borrowing cost.
As apposed to the scheme that caused the money crash in the first place?
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by PsychoSlashDot ( 207849 ) on Sunday February 18, 2024 @11:58AM (#64249176)
Of course, with mortgage rates more than doubling since this administration came into office...
Ah yes, "everything bad that happens is because of the political party I don't like".
You're thinking maybe that if the other guys had been in power interest rates wouldn't've been raised to combat worldwide crippling inflation? I mean, maybe the price of everything in America would have stayed low despite almost every other country charging more for the components required to make the everything, right?
Some problems are beyond the blue/red divide that has turned American politics into a Stupidbowl rivalry. -
What does it say on the Statue of Liberty? Do you need those tired, poor, huddled masses yearning to breathe free for anything at all?
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Along with declining pop., the America First crowd will be among the first to get their SS and Medicare cut. Mind you they will eventually get cut regardless because the budgets are unsustainable, but they will get cut sooner now. Reasonable reform of those programs will never pass muster with the AF crowd who view anyone taking their money as part of the "Deep State" of the former alleged president's dreams...although he got that idea from the Turkey of Turkey, Erdogan.
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Anyone that wants to reform SS or Medicaid/medicare is vilified by the opposing party as trying to "throw grandma over a cliff" or "deny you the benefits you paid for."
I think SS has about 10-15 years of solvency left, when we can still draw down the SS "lockbox" (a big drawer full of IOUs from the gov't that make up a significant share of our $34T in national debt), and once that's depleted SS will start requiring government to borrow money to supplement SS to be able to meet its obligations. Right now, an
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Wrong, wrong and wrong.
The SS *Trust Fund* which is separate from the *General Fund* is set to go empty in the next 15 years which means likely a cut in benefits by around 15-20%. Now this isn't good but it's far from SS going "insolvent"
It's also an issue that can be solved completely for many decades by simply lifting the SS contribution caps.
Social Security is probably the most successful example of a government service, it accomplishes it's goal very well which is keeping old people from being broke an
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by quonset ( 4839537 ) on Sunday February 18, 2024 @12:55PM (#64249276)
Not to mention if there were fewer people this also wouldn't be a problem.
US population would be slowly declining, if the borders weren't wide open.
You get what you vote for.
And yet, in the weak state of Texas, they don't bother enforcing existing laws [texastribune.org] which make it illegal to hire illegal immigrants. In fact, Republicans in Texas have gone full big-government by preventing local governments for having stricter laws [forbes.com] regarding hiring criminals.
Sure, if they catch you you'll get arrested, but if you hire an illegal, eh, so what. It's what keeps businesses running.
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Interesting where are the borders open? Also, even if you excluded illegal immigration, our population would still be growing on legal immigration alone. You do know that we effectively have decades of legal immigration more or less baked in, because for many visas, that's how long the backlog is? If even a quarter of those visa applicants are approved, that's several years of legal immigration still coming in.
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