Comment by watwut
3 hours ago
Silicon Valley is also the place of serious homeless problem. "The economy" as an abstractions is not what matters - the economy here is some people being super rich while others increasingly outside of good options.
3 hours ago
Silicon Valley is also the place of serious homeless problem. "The economy" as an abstractions is not what matters - the economy here is some people being super rich while others increasingly outside of good options.
That's due to unrelated intentional mismanagement by state and local governments.
Just build enough market rate housing to house the local population, and the issue will solve itself.
"Affordable housing" is a trap for buyers, builders, and policy makers:
- If you buy an affordable housing unit, then when you sell it, you have to charge based on a formula that will be way below the normal appreciation in your area. Basically, the money you put into the house was a sunk investment that's guaranteed to under-perform anything else you could have put it into. You're much better off getting a fixer-upper condo, or just renting + putting the money in an ETF.)
- If you build an affordable housing unit, then the rest of your development project becomes less profitable. Once the project is approved, you're foolishly tying up capital that could have been used to fund additional developments in other states. Also, the affordable housing approval process is slow and politically fraught. While that happens, you're holding a piece of land (and paying interest on it) that might turn out to be worthless, depending on the outcome of local politics. (If you don't believe me, next time you're driving around Silicon Valley, count "proposed development" signs, and categorize them by "badly weathered" or "brand new". "Badly weathered" means someone has been paying a mortgage on the (probably $10's-100's M) field behind the sign for at least a year. They're not paying home mortgage rates for that. It's probably 7-10% interest. That $700K-10M that could have been used to actually build houses.
- If your local government is subsidizing affordable housing, then they're misallocating resources. They could have used that money to expedite permit applications, improve public transit, add bike trails, build parks, increase freeway access or invest in other public goods that make the area more attractive to residents. Those things have a much higher payoff per dollar. Also, the local government has a monopoly on them. By opting to not do them, they are causing economic damage that cannot be routed around by the private sector. Of course, there's also the question of deciding who gets the public funds, and all the corruption and backroom dealing inherent in that process.