If increasing density in a populated area has some costs to current residents but is worthwhile overall, it should be possible to pay off the existing residents to allow it. What I see instead is that developers consider that too expensive to make development profitable, but can bribe politicians/officials for less, and YIMBYs are useful patsies for this.
When I’ve mentioned this to YIMBY people, the response I’ve gotten was basically: “Those people in high-value suburban areas don’t deserve to live there the way they do.” But it’s the existing residents who made areas valuable.
This is worth considering, but I don’t (currently) share your conclusion. In many cases, the (often past, not current) residents made the areas valuable by doing things they’ve since disallowed, things which would in fact continue to make the area (including their own property) more valuable. One of the key questions is: who gets to determine the cost or benefit to current residents of new development?
If a developer is asking to buy my property, then I do, that’s easy.
Otherwise, if we’re talking about compensating property owners for externalities caused by actions to develop land they don’t own, then how far do we push the reasoning? If developers need to compensate nearby property owners for negative externalities imposed on them, then who compensates the developer for the positive externalities they cause on properties the developer doesn’t own? Because if the answer is “no one” then this is a pure disincentive on development, even development that would net-benefit every single person in the community and surrounding communities.
Right now builders face an enormous number of veto points in any construction process. Of course, so do current homeowners looking to improve their own property. I once looked into converting a half bath in my home to a full bath. I was told 1) You’re not allowed to have a full bath on any level that doesn’t contain a legally- recognized bedroom, because someone once decided that this makes it possible to be used as an illegal apartment, and 2) You won’t be allowed to get any room on a walkout basement level recognized as a bedroom regardless of code definitions, for the same reason. So an action that imposes no cost on any residents, and in fact would likely drive up home values nearby, is disallowed, and overcoming the restrictions was far more costly than the value to me.
residents made the areas valuable by doing things they’ve since disallowed
It’s not mainly the buildings that make an area valuable, it’s who lives there. If there’s a problem in how appreciation is distributed I’d say it’s that non-resident property owners capture some value that they don’t deserve to.
If developers need to compensate nearby property owners for negative externalities imposed on them, then who compensates the developer for the positive externalities they cause on properties the developer doesn’t own? Because if the answer is “no one” then this is a pure disincentive on development
...governments do? It’s common for big commercial/industrial projects to get big incentives from city and state governments.
Right now builders face an enormous number of veto points in any construction process
someone once decided that this makes it possible to be used as an illegal apartment
People vote for ideological anti-development hardasses because other people kept getting bribed to look the other way while developers got special permission for an apartment next to your house, or because houses in the area got split by 10 guys.
If increasing density in a populated area has some costs to current residents but is worthwhile overall, it should be possible to pay off the existing residents to allow it.
What does the first part (until the comma) have to do with whether it “should be possible” to pay off the existing residents? The latter is an empirical question that should be analyzed on its own merits.
Let’s do some quick, back-of-the-napkin math here. Imagine a developer trying to build a house somewhere in the United States. The average cost of doing so is around $300k. Now take a popular area and say that the developer needs to pay off the residents to be allowed to build. Since the average price of a house in the US is around $350k, it is highly likely that the residents would require, on average, at least around $10k/house in order to give permission for this (even higher if they expect the values of their houses to go down due to the construction or because they have a particular emotional attachment to the character of the neighborhood, etc.). After all, they are the ones who own the houses, and they are presumably perfectly fine with keeping the environment as-is, so they have all the bargaining power and can require ~ everything they want, threatening to walk away from the negotiating table if the developer disagrees (imagine there is a group of residents that refuses to allow you to build unless you give them $500k each; what do you do?).
With these assumptions, even paying off a single HOA becomes prohibitively expensive: since HOAs often number in the hundreds of members (and sometimes even thousands), you can get to the point of having to pay millions of dollars just to be able to build that one house. Even if you build a batch of houses instead (and you go on the absolute low end of all of the estimates I gave in my paragraph above), you end up spending more money to pay off existing rent-seekers than you do actually building the physical entity that’s the house. Now recall that in a really dense neighborhood, you have to deal with way more than one HOA, and also with tons of people who aren’t members of any such association...
More-than-doubling the cost of construction in this manner will massively reduce the new supply of houses, particularly any kind of house that’s meant to be in any way affordable to anyone but the very rich (after all, developers will pay this cost only if they expect a considerable reward in the future from people willing to buy the house, so they will target rich want-to-be-residents much more). Overall, this seems like a truly terrible policy outcome that not only fails to achieve its initial target (allowing for the construction of more houses to reduce homeownership and rent prices, to make living more affordable), but also has particularly perverse and regressive effects.
You only need a majority of voters, who would then vote for local government that would negotiate a mutually-beneficial deal. Not every single person.
People can already build a single normal house on a normal lot well enough. The people who want to massively increase density want big apartment complexes built. Big projects.
If increasing density in a populated area has some costs to current residents but is worthwhile overall, it should be possible to pay off the existing residents to allow it. What I see instead is that developers consider that too expensive to make development profitable, but can bribe politicians/officials for less, and YIMBYs are useful patsies for this.
When I’ve mentioned this to YIMBY people, the response I’ve gotten was basically: “Those people in high-value suburban areas don’t deserve to live there the way they do.” But it’s the existing residents who made areas valuable.
This is worth considering, but I don’t (currently) share your conclusion. In many cases, the (often past, not current) residents made the areas valuable by doing things they’ve since disallowed, things which would in fact continue to make the area (including their own property) more valuable. One of the key questions is: who gets to determine the cost or benefit to current residents of new development?
If a developer is asking to buy my property, then I do, that’s easy.
Otherwise, if we’re talking about compensating property owners for externalities caused by actions to develop land they don’t own, then how far do we push the reasoning? If developers need to compensate nearby property owners for negative externalities imposed on them, then who compensates the developer for the positive externalities they cause on properties the developer doesn’t own? Because if the answer is “no one” then this is a pure disincentive on development, even development that would net-benefit every single person in the community and surrounding communities.
Right now builders face an enormous number of veto points in any construction process. Of course, so do current homeowners looking to improve their own property. I once looked into converting a half bath in my home to a full bath. I was told 1) You’re not allowed to have a full bath on any level that doesn’t contain a legally- recognized bedroom, because someone once decided that this makes it possible to be used as an illegal apartment, and 2) You won’t be allowed to get any room on a walkout basement level recognized as a bedroom regardless of code definitions, for the same reason. So an action that imposes no cost on any residents, and in fact would likely drive up home values nearby, is disallowed, and overcoming the restrictions was far more costly than the value to me.
It’s not mainly the buildings that make an area valuable, it’s who lives there. If there’s a problem in how appreciation is distributed I’d say it’s that non-resident property owners capture some value that they don’t deserve to.
...governments do? It’s common for big commercial/industrial projects to get big incentives from city and state governments.
People vote for ideological anti-development hardasses because other people kept getting bribed to look the other way while developers got special permission for an apartment next to your house, or because houses in the area got split by 10 guys.
What does the first part (until the comma) have to do with whether it “should be possible” to pay off the existing residents? The latter is an empirical question that should be analyzed on its own merits.
Let’s do some quick, back-of-the-napkin math here. Imagine a developer trying to build a house somewhere in the United States. The average cost of doing so is around $300k. Now take a popular area and say that the developer needs to pay off the residents to be allowed to build. Since the average price of a house in the US is around $350k, it is highly likely that the residents would require, on average, at least around $10k/house in order to give permission for this (even higher if they expect the values of their houses to go down due to the construction or because they have a particular emotional attachment to the character of the neighborhood, etc.). After all, they are the ones who own the houses, and they are presumably perfectly fine with keeping the environment as-is, so they have all the bargaining power and can require ~ everything they want, threatening to walk away from the negotiating table if the developer disagrees (imagine there is a group of residents that refuses to allow you to build unless you give them $500k each; what do you do?).
With these assumptions, even paying off a single HOA becomes prohibitively expensive: since HOAs often number in the hundreds of members (and sometimes even thousands), you can get to the point of having to pay millions of dollars just to be able to build that one house. Even if you build a batch of houses instead (and you go on the absolute low end of all of the estimates I gave in my paragraph above), you end up spending more money to pay off existing rent-seekers than you do actually building the physical entity that’s the house. Now recall that in a really dense neighborhood, you have to deal with way more than one HOA, and also with tons of people who aren’t members of any such association...
More-than-doubling the cost of construction in this manner will massively reduce the new supply of houses, particularly any kind of house that’s meant to be in any way affordable to anyone but the very rich (after all, developers will pay this cost only if they expect a considerable reward in the future from people willing to buy the house, so they will target rich want-to-be-residents much more). Overall, this seems like a truly terrible policy outcome that not only fails to achieve its initial target (allowing for the construction of more houses to reduce homeownership and rent prices, to make living more affordable), but also has particularly perverse and regressive effects.
You only need a majority of voters, who would then vote for local government that would negotiate a mutually-beneficial deal. Not every single person.
People can already build a single normal house on a normal lot well enough. The people who want to massively increase density want big apartment complexes built. Big projects.