In honor of San Francisco failing its housing target and becoming subject to SB 423, this special edition of housing deals with various state and local developments.
Thanks for the roundup! In the last week I had a "fun" professional interaction with a planner that is very on trend for this. Client is a small business trying desperately to break even in an odd situation (great facility, grounds, but many locals would prefer client slowly go broke vs generate revenue from what they view as a park). calls me up.
Client has a letter allegation a zoning violation, plus work done without a permit, plus miscellaneous other violations related to this for an illegal structure. Proof is a picture so blurry it's hard to make anything out, but hey we know what it's talking about. The weird thing is the project in the picture was fully permitted when built, but OK I've gotta dig.
Reach out to local gov planner, check the records, check the files. Client had all appropriate permits, even pulled before the work was done. Inspections all done and posted, everything squared away. What the heck planner.
6 emails and 2 days later (~5 billable hours) planner agrees the entire project was appropriately permitted correctly the first time around and apologizes profusely on phone and in writing.
What happened was a citizen (apparently from their moving car) snapped the world's crappiest cell phone picture of the structure and sent it to him alleging a permit violation. Planner checked fbook (seeing us hosting a "grand opening" for this structure in 2024)/2024 permits and (seeing nothing b/c the work was done in 2023) sent a "file your post-work permits/fees NOW" letter.
No call, no email, no analysis of the pre-2024 records (which include drawings showing this exact structure is what is permitted). Just a whiny NIMBY and BAM THREATENING LETTER.
This is what it's like out there on the ground trying to do SIMPLE things. I can't imagine the friction of trying to do something hard like housing.
I have a question about rent control: is a mild form of rent control not desirable? Toronto, where I live, have rent control of this shape:
- When you sign a place you negotiate a price and thus get market rent. There is not rent history capping prices between successive tenants or anything like that.
- Every year rent can go up a certain amount determined by some agency.
- Landlords can only kick you out for renovations, personal use or being a bad tenant.
In practice the problem was that leg number 2 was often too small, but otherwise it seems like it would do a fine job keeping actual rents in line with market rents.
Then, between 2018 and 2022, buildings built in 2018 did not have rent control. This led to, well, landlords being able to just change rent in whichever way they wanted each 12 month period. This seems bad though, as in a hot market you can abuse the fact that tenants have large (financial and non-financial) switching costs to extort higher-than-market rent after a year and generally leads to an unstable, adversarial relationship.
How does this play out in other places? I'll leave a few news links about Toronto at that time:
In theory, there is a scenario where the landlord can 'hold up' the tenant, because there are large costs to moving, and extort above-market rent for a renewal.
In practice, this does sometimes happen in sufficiently hot markets, where the cost to the landlord of the tenant leaving would not be too high. But it's still substantial.
It is plausible that to prevent this some form of very light rent control would be first best, that ruled out giant increases - say limit it to 10%/year above CPI changes.
Notice these two linked stories are VERY VERY different from each other.
The second one is false outrage. It is an 8% increase in rent, in a hot market, or a 5% real increase. The 'outrage' about that is exactly why rent control leads to steadily lower rents and destroys the housing stock (e.g. 2.5% rent increase, versus 2.9% Canada inflation, in a hot market). This landlord is not doing anything even a little bit wrong.
The first one is different. The landlord did a full "F you" of a >200% increase to force the sisters out, after they complained, although we don't know if the first offer of $3500 was reasonable (or if they could still get it if they asked nicely). Note that $3500 is above median for a 2BR in Toronto, but not that much above it (e.g. Google's average rent answer is $3353/month).
But again, doesn't seem like the landlord trying to take advantage of them! He knows no one would ever pay that.
I completely agree the first case is the same as at will eviction every 12 months with an extra step. I can also see why that is undesirable. Is it normal that you can be asked to leave with little notice in the US essentially at will? If so, I understand why renting gets such a bad rap compared to Canada and Europe, which I'm more familiar with.
I agree the second one is only shocking to the presumed audience because of the environment prior to 2018.
In most places in the US there is essentially no right to continue renting after your lease term. You sign a 1 year lease, and fully renegotiate sometime during year 1 new terms for year 2. If you can't agree to terms the landlord still has to evict you (but there are massive negative consequences for being evicted so most people move out). If you can't agree to terms and the landlord doesn't want to evict you then month 13 you automatically go month-to-month with the same monthly rent as the previous year (many local variations on this in the fine details).
Long term contracts are fairly rare, and auto-renewal contracts are highly locality dependent.
My understanding is that in Canada/Europe there are a lot more standard protections making it so that when you rent to someone, the expectation is they stay at least a few years with nominal or capped yearly increases. This is very much different from the US.
That's rough. I didn't realize. In Canada all leases are similar: one year fixed then month to month after that, though only the tenant can terminate the lease at will with a months notice. The expectation from the landlord is that they should be happy with anyone paying rent so they can't (though they try) to end it if they are going to lease it again immediately.
- But if you raise it by more than inflation + 3% in a given year, you have to let the tenant spend the last 6 weeks in the unit for free to recuperate their moving costs
- Same would apply if the landlord refuses to extend the lease altogether
I don't get why people don't just negotiate longer leases? You want security to stay there for 5 years, makes sense you give up the ability to move out at the drop of a hat - a longer lease is a perfectly symmetric here
In the case of Toronto you can't do this. Residential leases have a fixed structure (one year then month to month, eviction only for enumerated reasons, capped rent increases).
I mean, I'm saying there seems to be a decent way that markets could provide that stability - commercial leases are usually on 5 or 10 year terms with options, for example - and you're saying that part of the government regulations nominally about stability have made that option illegal. I don't think that's an argument in favour of those government regulations
I'm a random red-state conservative who started reading slate star codex long ago and made her way here from an astral codex ten link. Can I just share that this is absolutely, mind-blowingly, shocking?
My lovely, tourist-attracting rural area has some housing issues, exacerbated by the following problems that are probably not unique to my area: long-term population growth that wasn't well planned for, big population spike during 2020-2021, big salary difference between those working remotely out of state and those working locally, landlords switching long term rentals to more lucrative short term rentals, and property values (and taxes!) rapidly rising.
This has caused a lot of anger in the area, as normal people making a normal wage for the region aren't able to find housing they can afford, although it's gotten better since a peak about 2021. Hilariously, people are also angry about the housing springing up everywhere.
There's still a homelessness problem, and there's still a high rents problem. But reading this, I feel like I'm living in low-regulation utopia over here, never mind if the neighbors whine about the mid-rise complex going in nearby, or the endless suburban sprawl that's occuring, or the new triplexes slowly crowding a former wheat field on a state highway.
Do Bay Area residents/Californians realize how not normal this problem is? Are they all kind of in a state of learned helplessness at this point? Or are rural areas the odd ones out here, and every city has a bureaucratic disaster when it comes to trying to build more places for people to live?
I live in Seattle which has the same issues as the Bay Area. I think the general mentality is 'I gots mine, f*ck you'. Most voters own their property and while some percent of weirdos might be YIMBY, the majority hates any new construction or any disturbance to their daily routine.
So many of these reforms look good in headlines. Legalizing up to eight units! Then you read the details and it's actually legalize up to eight units as long as all units are rented for free to "substance-use-enthusiasts", the building is built entirely from solar panels, and the design is approved by the newly created liveable cities community planning board and the UN security council.
Then when the reforms do nothing, erybody be like "we tried upzoning, it didn't work"
Mary Lyne Vellinga writes for Sacto Mayor's Office: "Sacramento will become the first jurisdiction in the nation to eliminate caps on the number of units that can be built in a single-family zone." Seems to me to be a "backdoor re-zone" which seeks to increase density and could then easily depress prices in "SFH" neighborhoods, retarding current/ future equity of many single-family owners. How were homeowners invited into the process for comment? Can (will?) local neighborhoods enact blocking measures to preserve homeowner equity against such stealth "taking" actions?
Seems perverse to call up zoning a “taking”. If anything, it’s the existence of zoning at all that is a taking, as it limits what one can do with one’s property.
> Wall Street Journal notices Austin’s rents are down 7%, frames this as bad news. Then we have this, saying rents declined 12.5% in Austin in December, describing this great news as a ‘nosedive.’
My sense is that the target audience for these sorts of articles is homeowners and those who work in the real estate industry, for whom lower housing prices really are bad news. Of course the impact on the rest is always unstated.
It's even worse in the UK (and especially London) than it looks; not only is housing expensive, it's also very small and shockingly low quality. People who have lived here all their lives don't understand how much worse it is than even much poorer countries, like Portugal or Poland.
Thanks for the roundup! In the last week I had a "fun" professional interaction with a planner that is very on trend for this. Client is a small business trying desperately to break even in an odd situation (great facility, grounds, but many locals would prefer client slowly go broke vs generate revenue from what they view as a park). calls me up.
Client has a letter allegation a zoning violation, plus work done without a permit, plus miscellaneous other violations related to this for an illegal structure. Proof is a picture so blurry it's hard to make anything out, but hey we know what it's talking about. The weird thing is the project in the picture was fully permitted when built, but OK I've gotta dig.
Reach out to local gov planner, check the records, check the files. Client had all appropriate permits, even pulled before the work was done. Inspections all done and posted, everything squared away. What the heck planner.
6 emails and 2 days later (~5 billable hours) planner agrees the entire project was appropriately permitted correctly the first time around and apologizes profusely on phone and in writing.
What happened was a citizen (apparently from their moving car) snapped the world's crappiest cell phone picture of the structure and sent it to him alleging a permit violation. Planner checked fbook (seeing us hosting a "grand opening" for this structure in 2024)/2024 permits and (seeing nothing b/c the work was done in 2023) sent a "file your post-work permits/fees NOW" letter.
No call, no email, no analysis of the pre-2024 records (which include drawings showing this exact structure is what is permitted). Just a whiny NIMBY and BAM THREATENING LETTER.
This is what it's like out there on the ground trying to do SIMPLE things. I can't imagine the friction of trying to do something hard like housing.
I have a question about rent control: is a mild form of rent control not desirable? Toronto, where I live, have rent control of this shape:
- When you sign a place you negotiate a price and thus get market rent. There is not rent history capping prices between successive tenants or anything like that.
- Every year rent can go up a certain amount determined by some agency.
- Landlords can only kick you out for renovations, personal use or being a bad tenant.
In practice the problem was that leg number 2 was often too small, but otherwise it seems like it would do a fine job keeping actual rents in line with market rents.
Then, between 2018 and 2022, buildings built in 2018 did not have rent control. This led to, well, landlords being able to just change rent in whichever way they wanted each 12 month period. This seems bad though, as in a hot market you can abuse the fact that tenants have large (financial and non-financial) switching costs to extort higher-than-market rent after a year and generally leads to an unstable, adversarial relationship.
How does this play out in other places? I'll leave a few news links about Toronto at that time:
- https://toronto.ctvnews.ca/this-is-egregious-sisters-shocked-when-toronto-landlord-raises-rent-to-9-500-a-month-1.6548845
- https://www.blogto.com/real-estate-toronto/2022/09/residents-toronto-building-outraged-over-massive-rent-increases/
In theory, there is a scenario where the landlord can 'hold up' the tenant, because there are large costs to moving, and extort above-market rent for a renewal.
In practice, this does sometimes happen in sufficiently hot markets, where the cost to the landlord of the tenant leaving would not be too high. But it's still substantial.
It is plausible that to prevent this some form of very light rent control would be first best, that ruled out giant increases - say limit it to 10%/year above CPI changes.
Notice these two linked stories are VERY VERY different from each other.
The second one is false outrage. It is an 8% increase in rent, in a hot market, or a 5% real increase. The 'outrage' about that is exactly why rent control leads to steadily lower rents and destroys the housing stock (e.g. 2.5% rent increase, versus 2.9% Canada inflation, in a hot market). This landlord is not doing anything even a little bit wrong.
The first one is different. The landlord did a full "F you" of a >200% increase to force the sisters out, after they complained, although we don't know if the first offer of $3500 was reasonable (or if they could still get it if they asked nicely). Note that $3500 is above median for a 2BR in Toronto, but not that much above it (e.g. Google's average rent answer is $3353/month).
But again, doesn't seem like the landlord trying to take advantage of them! He knows no one would ever pay that.
I completely agree the first case is the same as at will eviction every 12 months with an extra step. I can also see why that is undesirable. Is it normal that you can be asked to leave with little notice in the US essentially at will? If so, I understand why renting gets such a bad rap compared to Canada and Europe, which I'm more familiar with.
I agree the second one is only shocking to the presumed audience because of the environment prior to 2018.
In most places in the US there is essentially no right to continue renting after your lease term. You sign a 1 year lease, and fully renegotiate sometime during year 1 new terms for year 2. If you can't agree to terms the landlord still has to evict you (but there are massive negative consequences for being evicted so most people move out). If you can't agree to terms and the landlord doesn't want to evict you then month 13 you automatically go month-to-month with the same monthly rent as the previous year (many local variations on this in the fine details).
Long term contracts are fairly rare, and auto-renewal contracts are highly locality dependent.
My understanding is that in Canada/Europe there are a lot more standard protections making it so that when you rent to someone, the expectation is they stay at least a few years with nominal or capped yearly increases. This is very much different from the US.
That's rough. I didn't realize. In Canada all leases are similar: one year fixed then month to month after that, though only the tenant can terminate the lease at will with a months notice. The expectation from the landlord is that they should be happy with anyone paying rent so they can't (though they try) to end it if they are going to lease it again immediately.
This makes US rental culture make more sense.
I think a reasonable suggestion would be:
- You can raise rent by whatever amount you want
- But if you raise it by more than inflation + 3% in a given year, you have to let the tenant spend the last 6 weeks in the unit for free to recuperate their moving costs
- Same would apply if the landlord refuses to extend the lease altogether
I don't get why people don't just negotiate longer leases? You want security to stay there for 5 years, makes sense you give up the ability to move out at the drop of a hat - a longer lease is a perfectly symmetric here
In the case of Toronto you can't do this. Residential leases have a fixed structure (one year then month to month, eviction only for enumerated reasons, capped rent increases).
I mean, I'm saying there seems to be a decent way that markets could provide that stability - commercial leases are usually on 5 or 10 year terms with options, for example - and you're saying that part of the government regulations nominally about stability have made that option illegal. I don't think that's an argument in favour of those government regulations
I'm a random red-state conservative who started reading slate star codex long ago and made her way here from an astral codex ten link. Can I just share that this is absolutely, mind-blowingly, shocking?
My lovely, tourist-attracting rural area has some housing issues, exacerbated by the following problems that are probably not unique to my area: long-term population growth that wasn't well planned for, big population spike during 2020-2021, big salary difference between those working remotely out of state and those working locally, landlords switching long term rentals to more lucrative short term rentals, and property values (and taxes!) rapidly rising.
This has caused a lot of anger in the area, as normal people making a normal wage for the region aren't able to find housing they can afford, although it's gotten better since a peak about 2021. Hilariously, people are also angry about the housing springing up everywhere.
There's still a homelessness problem, and there's still a high rents problem. But reading this, I feel like I'm living in low-regulation utopia over here, never mind if the neighbors whine about the mid-rise complex going in nearby, or the endless suburban sprawl that's occuring, or the new triplexes slowly crowding a former wheat field on a state highway.
Do Bay Area residents/Californians realize how not normal this problem is? Are they all kind of in a state of learned helplessness at this point? Or are rural areas the odd ones out here, and every city has a bureaucratic disaster when it comes to trying to build more places for people to live?
I live in Seattle which has the same issues as the Bay Area. I think the general mentality is 'I gots mine, f*ck you'. Most voters own their property and while some percent of weirdos might be YIMBY, the majority hates any new construction or any disturbance to their daily routine.
So many of these reforms look good in headlines. Legalizing up to eight units! Then you read the details and it's actually legalize up to eight units as long as all units are rented for free to "substance-use-enthusiasts", the building is built entirely from solar panels, and the design is approved by the newly created liveable cities community planning board and the UN security council.
Then when the reforms do nothing, erybody be like "we tried upzoning, it didn't work"
Mary Lyne Vellinga writes for Sacto Mayor's Office: "Sacramento will become the first jurisdiction in the nation to eliminate caps on the number of units that can be built in a single-family zone." Seems to me to be a "backdoor re-zone" which seeks to increase density and could then easily depress prices in "SFH" neighborhoods, retarding current/ future equity of many single-family owners. How were homeowners invited into the process for comment? Can (will?) local neighborhoods enact blocking measures to preserve homeowner equity against such stealth "taking" actions?
Seems perverse to call up zoning a “taking”. If anything, it’s the existence of zoning at all that is a taking, as it limits what one can do with one’s property.
Podcast episode for this post:
https://open.substack.com/pub/askwhocastsai/p/housing-roundup-8-your-local-area
> Wall Street Journal notices Austin’s rents are down 7%, frames this as bad news. Then we have this, saying rents declined 12.5% in Austin in December, describing this great news as a ‘nosedive.’
My sense is that the target audience for these sorts of articles is homeowners and those who work in the real estate industry, for whom lower housing prices really are bad news. Of course the impact on the rest is always unstated.
It's even worse in the UK (and especially London) than it looks; not only is housing expensive, it's also very small and shockingly low quality. People who have lived here all their lives don't understand how much worse it is than even much poorer countries, like Portugal or Poland.