2026-05-28

THE IMPACT OF ZONING ON HOUSING AFFORDABILITY (2002)
- thesis: in most of america, housing cost is close to actual cost to build
- only in california are regulatory costs widening this gap

I like how they frame the problem:

In general, housing advocates have confused the role of housing prices with the role of poverty. Both housing costs and poverty matter for the well-being of American citizens, but only one of these two factors is a housing issue. Certainly, the country should pursue sensible anti-poverty policies, but if housing is not unusually expensive, these policies should not be put forward as a response to a housing crisis. To us, a housing affordability crisis means that housing is expensive relative to its fundamental costs of production, not that people are poor. As such, empirically we will focus entirely on housing prices, not on the distribution of income... However, if housing does not cost appreciably more than the cost of new construction, then it is hard to think why policies oriented towards housing supply would be the right response to this problem.

Outside of high reg. tax cities, housing can be a scapegoat to avoid tackling more complex and systemic problems around unfair wages and low-quality job creation.

But in high reg. tax cities, inflated housing costs may be a root cause. California homes are >1.4x over construction cost. Most other cities are less than this.

Their modeling of measuring the actual regulatory tax for different cities seems strange though. If you can model demand well, seems better to just look at construction vs final cost. Can economists model demand well?

Rebuttal: Dr Cameron K. Murray

• but this guy thinks there's no zoning tax just because they're modeling is wrong, which also seems silly.

A better approach would be to hear out actual complaints of specific regulations and processes instead of trying to estimate burdens in a detached and abstract way.

Looks like one of the authors of the 2002 paper went on to take a more empirical estimate in 2021: THE IMPACT OF LOCAL RESIDENTIAL LAND USE RESTRICTIONS ON LAND VALUES ACROSS AND WITHIN SINGLE FAMILY HOUSING MARKETS

• their method: follow actual vacant land through the process of building and sales, then note the costs and final sales price
  and landed on 400k reg tax in sf...

CEQA reform (sounds ai generated...)

• labor unions were using environmental review appeals (like California's CEQA) as a bargaining tool
• AB 130 streamlines judicial review for certain housing projects and sets clearer timelines for resolution.
• AB 609 creates clean CEQA exemptions for environmentally beneficial infill housing in areas already zoned for residential use. Together, they reinforce a simple principle: if a project complies with local and state housing law, and if it’s in an urbanized area near transit, it shouldn’t be stopped by procedural tricks.

lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.pdf

• the california legislative office report doesn't mention a regulatory tax at all. they just say california is nice and in high demand (true). and local communities don't want a bunch of high density housing in coastal areas.
• but then why are non-coastal area housing prices high?
• also, when they say "coastal" they just mean the bay area, LA, and san diego. not the north west coast or central coast. it's a strange analysis.
• "A 2012 national survey found that the average development fee levied by California local governments (excluding water-related fees) was just over $22,000 per singlefamily home compared with about $6,000 per single-family home in the rest of the country"

On the Race for California Governor: An Abundance of Pro-Housing Candidates - California YIMBY

• still feeling katie porter. growsf endorses matt mahan

Naively, I think SOMA should be turned cyberpunk / tokyo: house all the tech people who are mainly moving there for work or startups and are just trying to grind. Then focus on beautiful, solarpunk, affordable housing / permanent housing shelters should go up in all other denser (that already have apt buildings) districts (hayes, mission, etc). Have employers of non-high-wage service work (hospitals, teachers, government employees) give their workers kind of subsidy to avoid long commutes. Let barbers and restaurants charge high prices. Then focus on new middle class single family homes in places outside major cities where it makes sense (Tracy / Mountain House is a great example). But don't just build more squidward suburbs (ala Mountain House, though it is ensouled by its community). Make them so beautiful and attractive talent spreads out. Get creative with it. Hire Devon Zuegel (I hope Esmeralda works out) and the miyazaki forest guy. Gotta find / support the people / institutions / think tanks / politicians approach that.

2023 independent audit of homelessness programs in california
Demystifying Development Math: Interactive Resource - private california residential housing projects are unprofitable

What kinds of profits do developers and investors need to consider a project 'worth it'? Surely developers must always be building something, somewhere, and they are attracted to the highest profits. Where are these profits?

Buying an existing apt complex in oakland gives 5% return. Investors will invest if you can show them a 6% or higher return on your new development.

Brief claims high inflation has disproportionately impacted residential construction. 2020 to 2021 showed a 11.5% increase in costs, 2022 was 14.1%.

Interest rate increase from 5 -> 8.5%. Usually 55% of the project is financed with bank loans.

Impact fees are 40k/unit.

How do costs of building (land, hard, soft) compare to other areas of the US? Other countries? What drives these differences?

from Construction Costs Around the World: How Does the US Compare?

Chicago $1600/square meter, SF $3000/square meter

What makes SF specifically so high? And does the differential matter? It would definitely matter for the builder maximizing profit.

He says Phoenix, Houston, and Atlanta do well price-wise, but, naively, it seems much harder to build in Paris or Amsterdam than Houston since they're denser.

• almost no relationship between construction cost per sq m and labor or material costs
• besides labor and material, what's there? he pins it down to government administrative and regulatory overhead

for transportation, the analysis seems to be that:

• government in-housing of construction is much cheaper than the US private sector
• the US hollowed out government capacity and rents it back from consultants at a high premium and with high admin burden / coordination burden / trust issues.
• trust is an immensely important ingredient to any large project that seems to be very mis-priced.