10.23.2018

The Relationship Between Density and Affordability, and the Impulse to Push Back

Where I grew up, in the heart of Silicon Valley, is an extreme case of housing unaffordability wrought from high demand combined with extreme opposition to new supply.  The high demand comes from proximity to tech jobs and access to great schools.  The extreme opposition to new supply comes from, well, a lot of places, and more on that in a sec.




Housing behaves just like any other good, in that as you learn in Econ 101, if demand goes up for something, only one of two things can happen: either supply goes up to meet that demand, or price goes up if supply isn't added.  This is why (and I realize there are many more nuances and complexities in play here, but bear with me) any solution to gentrification must necessarily include allowing more units to be built to relieve upward price pressure on housing in a particular area. 

Again, I am aware that there are other dynamics in play when it comes to addressing a lower-house-value area starting to rise in value, and therefore the need for other solutions besides just "add supply."  But neither can one remedy the problems wrought by gentrification and displacement without including some "add supply" in the mix.

But the issues facing Silicon Valley are of a different sort, which is that of addressing hyper-unaffordability in a higher-house-value area.  Here existing homeowners have applied sufficient political pressure on their local elected officials to oppose new developments on the grounds of environment, traffic, or aesthetics.  But fundamentally, it is about self-preservation of one's house value.  Here are two quite brazen quotes from recent articles that articulate what most people think but may be unwilling to say:

“Taking away two fantastic neighborhood schools to bring in low income housing is absolutely ridiculous … This would devalue home prices in the area significantly. This isn’t really a consideration, is it?”


“The idea of Cupertino is to have people living here that are educated with degrees. Bringing this in would bring a lot of probably lower income people, and that would definitely bring down our median average household income.”

The first quote is from a CityLab article that discusses local opposition to the school district's plan to address the teacher shortage wrought by rampant unaffordability.  Some schools slated for closure or major renovation would be developed into affordable housing for teachers, with students allocated to other schools.  So this is quite a doozy, combining the threat to one's house value with the uncertainty of one's kids being shuffled around. But the district clearly feels that it is at a breaking point in being able to attract and retain teachers in light of high housing costs.

The second quote is from a Curbed article that discusses my hometown mall being demolished for apartments.  A recently passed state law is attempting to address local opposition to new housing supply by forcing localities suffering housing unaffordability to fast-track projects that add housing, especially those who include a certain percentage of affordable units.  The developers of the mall site are invoking that by proposing that 50 percent of the units on the site will be affordable, an the locals are gearing up to oppose the plan.  

These are fascinating dynamics to follow, and we haven't even gotten into matters of race or history or zoning or transit infrastructure.  I will surely be keeping an eye out, and not just because these are places that are dear to me from my childhood.


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