a crank's progress

“[Daniel] Boone’s early, temporary excursions into the “Land of Tomorrow” [Kentucky] gave him a sense of the beauty and unknown dangers he could expect… The trips also led to property claims on the land by the travelers, in turn prompting a demand for surveyors to record those claims. One such team of surveyors put their lives on the line to parcel off two thousand acres below the Elk River for George Washington, then a representative to the Virginia legislature, and in two other spots recorded seven thousand acres for another legislator, Patrick Henry, who was ready to carve out a large piece of property in a place unknown to him. Washington and Henry, like other influential politicos, believed they could get rich from pushing into the territory.
“Years earlier, the British had forbidden private purchase of lands from American Indians such as the one Henderson engineered, having cited ‘the great dissatisfaction of the said Indians’ involved in such transactions.” [ — emphasis added] — excerpt from Chapter 1 of The Taking of Jemima Boone: Colonial Settlers, Tribal Nations, and the Kidnap that Shaped America, by Matthew Pearl (HarperCollins, 2021).

“said Indians” didn’t think anyone could own land…how could anyone own something they never made? Next thing, someone might think they could own people…

A couple of quotes…

“We knew it was coming,” said Francisco Nuñez, who for nearly two decades lived at the Cactus Rose Mobile Home Park until it was sold to a developer to make way for amenity-rich apartments that now fetch more than double what he once paid in rent.

“This has become the tale of two Austins,” said Susana Almanza, a longtime activist. “The rich keep building in our neighborhoods and the poor keep getting displaced. It doesn’t end.”

It’s worth reading in full…plus the pictures tell a story

Two professors/researchers wrote a piece headed thusly:
Why building more homes won’t solve the affordable housing problem
The problem isn’t the supply of housing; it’s that millions of people lack the income to afford what’s on the market.

So I sent them a response…

I just read this —
https://www.inquirer.com/real-estate/housing/affordable-housing-supply-new-construction-20211127.html — and had hoped for more analysis of the problem. To argue that affordable housing won’t fix anything because people can’t afford it seems tautological. Why can’t they afford it?

What I was hoping for was an explanation of why affordable housing is impossible to build, why wages and the cost of housing are so divergent. Even that would not do more than admire the problem: the real issue is not housing but land, the scarcity-driven cost to acquire land to develop in dynamic economies (the pressure cookers of the west coast, for example). A developer who buys an expensive parcel to develop will be limited by zoning (height limits, parking minimums, etc) that will make affordable unit too expensive for those who need a place to live near their work. They will make great investments, though, as happens all too often. Vancouver discovered this, and other cities are seeing it as well.

Some cities in Pennsylvania have a history of split-rate taxation, where land and improvements are taxed at rates to maximize the use of idle land, but that idea seems to have fallen out of favor. Land is not a productive asset: it has been transmuted into a speculative asset, through scarcity and the increasing financialization of the economy. When automakers make more revenue from loans that on the cars themselves — and it would be bad form to wonder why the prices being financed are so high — there is something amiss. Likewise, land that sits idle as parking lots or brownfields in cities with high rents and rising homeless populations is a sign of a deep problem. This article didn’t do much to address it.

The simplest example I can come up is to look at the population in 1970 and 2020 — 50 years apart — and note that the population increased by right around 50% — 220M to 330M — over that span. The land available for development didn’t increase by anything like that so what had to happen to the price? Seattle, where I live, is 85 square miles and has increased in population by about 25% in the past 20 years with a steep rise in rents and housing prices, exacerbated by the fact that many of the newcomers are high-wage workers and rents always follow rising wages. The lack of density is a big piece of the problem, as much of the city is zoned for single family homes, 20% of which are rentals.

Adding a large number of high wage workers without building housing for the varied incomes needed to support them — someone has to make the coffee and clean those luxe high rise apartments and drive the Ubers — skews the housing market. It’s too easy to argue that developers are greedy: they need to make sure the development pencils out. If greed is an issue, it stems from the speculator/investors who make money while working people sleep, as the quote runs. A tax on land or a split-rate tax that recoups that speculative wealth and drives more dense development would be good policy. Looking at the time needed in years to afford a home would also be useful. It was right around 10 years in the 60s through 70s — 10 years of wages would equate to a home price, so a 30 year mortgage would be a good risk. Now? A minimum wage worker would be at almost 27:1 and no one is underwriting a 81 year mortgage to someone in that position.

And if employers understood that land speculation was hitting their wage bill (driving up wages as rents go up) and office rents, they might support something like a land tax/ground rent. But Neo-classical economics either ignores land or assumes it to be capital. So we suffer at the hands of speculators, from Main Street to Wall Street (see: BlackRock et al).

I call Seattle a city for cars, not people: I wonder what percentage of the city budget that $7 million represents or what percentage it is as a shortfall?

In total, the latest revenue forecasts predict a $15 million decrease in general fund revenue, driven largely by lower-than-expected payroll tax and parking ticket revenue—both consequences of the slow return to in-person work. A shortage of parking enforcement officers, forcing the city to suspend the collections of parking fines, also explains the parking ticket revenue decline. Parking revenue shortfalls totaled more than $7 million.

As noted previously, downtown Seattle commands an annual rental value of about $1 million/acre. At 500 acres, per the city’s own land use plan, this $7 million shouldn’t be a big deal. But here we are, enslaved to cars and what they need — roads and parking — vs what people need — housing and productive spaces.

Interesting…

The Crown has made payments to 23 First Nations of the Robinson-Huron Treaty territory since 1850, in exchange for a territory roughly the size of France.

In 1874, the payment was increased to C$4 per person per year. It has not changed since then.

On Friday, Ontario’s court of appeal ruled unanimously that the meagre payments were a violation of the spirit of the treaty: to share the wealth generated from the territory.

4 loonies per person per year since 1874? I hope the First Nations south of the 49th parallel are keeping an eye on this.

At least we’re open about it: home-buying is no longer a simple matter of a buyer making an offer on a listed property. Low inventory and high demand have transformed the housing market into an auction and these sharps are hoping to make bank. A pinch of Zillow and Redfin, a soupçon of eBay…

Doorsey, an online real estate platform founded by a group of Spokane entrepreneurs, launched this week and secured $4.1 million in a seed funding round.

Founded by Jordan Allen, Nick McLain and Matt Melville, Doorsey is an online bidding platform they say takes the guesswork out of buying a home by providing real estate agents with real-time home prices and upfront sales terms and disclosures.

“Today’s home-buying offer process is rife with frustrations for all parties,” Allen said in a statement. “Buyers and their agents want to know whether their offer can win. Sellers and their agents want to know they’re getting the best offers. And agents want to close more deals in less time.

“Doorsey solves this by allowing sellers to define upfront what it takes to win, so that buyers can compete on a level playing field and sellers can find the right buyers.”

Translation: prices go up in a sellers market and we are selling a service to sellers, not buyers. Anyone who doesn’t sell through us might not get the best price — so long as our slice doesn’t have them making less, we’re golden. Selberg’s Law in operation…”anyone who says they are trying to reduce the friction in some transaction is actually trying to become the friction.”

Imagine building a transportation network that links homes and businesses and then giving away the land closest to it

Every debate about housing or development in Seattle will eventually come down to one question — “but where am I supposed to park?!” It’s as predictable as Godwin’s Law. The disastrous soon to-be former Mayor of Seattle could have created some car-free areas — the pandemic helped show the value of public streets for the use of all of the public — but declined. The incoming Mayor seems unlikely to do anything along those lines…the election was clearly revanchist, pushback against the small gains made by progressivism.

Street parking and surface lots — unimproved parcels on valuable sites with pay boxes to remit rents out of town — should be among the first things to go but this city has to transform itself from a city built for cars to one built for people. The removal of the “ugly as a mud fence” Viaduct was a start. Could a lid over the livid scar that is I-5 through downtown be next?

The debate over the free parking in West Seattle, on lots owned by a local business group, could be instructive. The value of the lots — the property tax — has risen past where it makes sense to hold on to it so they were considering selling to a local housing non-profit. The reaction was predictable: people actually said out loud that if the local hardware store was going to make them pay for street parking, they would take their business to the suburban big box store. Like the Bradley effect, one never knows if people will do what they say they will do, but the public display of car/parking dependency is real. It will take decades to undo what car-dependent land use planning has done. The combination of low density — because land was cheap — and distance — because gas was cheap and roads/parking were “free” — has created a tangled knot that will have to unpicked carefully. But the sooner we start, the better. Getting rid of street parking, reclaiming parking lots on high-value land will both remove distance by filling in housing and businesses and make them more accessible, ie more valuable to those who live there.

Some will see the prices of the new infill development as proof that this won’t work, that density doesn’t lower prices. But that’s premature. Of course, prices will go up in the short term, as people move to these new more desirable areas. The obvious lesson seems to be that we need more of them, not less.

I had to read all the way to the end to find it but there it is:

Key parcels of land near the Rainier Beach station are boarded up and underused. Absentee property owners are waiting until neighborhood demographics change, incomes rise and rents increase. In other words, he surmised, developers are waiting for the area to become more white.

I think the color involved here is actually green.

[Residential real estate broker Jonathan] Nicoli recently negotiated with a nonprofit to sell a property along South Henderson Street for about $1.25 million. About 400 feet from the Rainier Beach light-rail station, the land is currently a single family home, a rental property. He has permits to build a 30-unit apartment with ground floor commercial space.

Transforming parcels that house one family (or none, if it has been abandoned) to house 30 is where we need to be heading. We have seen single family homes sitting on land valued at 7 figures before. How many of those are out there? Or to put it another way, how much housing do we need? How many parcels/how any acres would need to be found? Not that anything can be done in the face of the land cartel but if all the busy arterials were up zoned and assessed land taxes that reflect a higher and better use, we could lower rents/shelter costs, revitalize moribund neighborhoods, and reclaim our public spaces from the unfortunates who have been forced out of private housing options.

But as last week’s election showed, property rights and private wealth accumulation are more important that human rights or community. Will the next four years yield any change in how Seattle manages its wealth? Can you have progress without change? It’s not at all clear Seattle wants progress. There have been a lot of changes, to be sure, but so many of them are keenly resented, it’s no wonder Bellevue is flexing to welcome new investment. Who next, Renton or Tacoma?

The headline reads “How one of California’s cheapest cities became unaffordable: ‘the housing market is broken’”

There are so many quotes to excerpt:

Locals attribute the surge to people seeking to escape the high cost of living in Los Angeles and the Bay Area. But even as life returns to pre-pandemic norms, those who live here say the situation isn’t getting any better. Rents, which had been steadily climbing for years before the pandemic, are still rising and, coupled with a shortage of homes, that’s hitting low-income residents hardest.

“During Covid, Fresno and Central Valley rents just kept increasing,” said Jovana Morales-Tilgren, a housing policy coordinator with the Leadership Counsel for Justice and Accountability. “Many people were struggling and are still struggling. Landlords keep raising rents and people have nowhere to go.” — emphasis added

[…]

“The labor market in Fresno is not catching up to the price of housing.”

Translation: rents/housing costs are rising faster than wages: newcomers can pay more than the local residents. The value of land compared to the value of people’s lives means people who can’t pay what the landlords want have to find something else.

“Fresno is becoming a very popular place,” said Karla Martinez, a policy advocate with the Leadership Counsel for Justice and Accountability who works with Fresno residents. “People see how cheap the housing market is here.” California’s high-speed rail project, which will connect Los Angeles to San Francisco via the Central Valley, is also a selling point, Martinez said.

Translation: the state is investing in a high speed rail link that makes the land in Fresno more valuable. Landlords are cashing in on investments they didn’t make. The workers for whom that rail link was built will be gone.

Francisca Alba lives in a tidy two-bedroom apartment with her husband and four children. They can afford the monthly rent of $710, but the unit has been deteriorating for years and the property manager has done little to help. The carpet hasn’t been replaced, or even cleaned, in the 15 years she’s lived there, nor has the unit received a fresh coat of paint.

6 people in two bedrooms…think about that. Because as the value of land rises and wages stay static, landlords cut costs and what were once acceptable properties become derelict. Not to defend landlords/slumlords but they keep the value of the land, even if the “improvements” crumble into the ground: that’s the landlord’s game. They can sell or redevelop and keep on keeping on.

Fresno county is short more than 36,000 affordable housing units, according to the California Housing Partnership, a trend echoed throughout the state. It’s a crisis driven by a demand that far exceeds the supply and a lack of subsidies to build affordable housing.

36,000 units. The land supply is fixed. California is no bigger or smaller than it was 100 years ago. So what needs to happen? How does Fresno pay for 36,000 housing units? Why are rents in Fresno rising? Why isn’t housing being built to meet demand? Because land is too expensive to buy for new affordable housing and the existing housing is scarce enough to allow landlords to hike their rents.

Tax the land, confiscate the unearned wealth and — more important — keep wages and costs from spiraling out of control. Right now we see wages for fast food employees that are more than triple the federal minimum wage. The market for labor — for wages that will cover rising rents — is pushing wages up which will push rents up: rents chase the ability to pay, which is why cities with an influx of high wage workers, either in the old fields of North Dakota or the cube farms of Seattle and San Francisco, will see rents rise to meet those wages.