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It's going to be hard to break even, much less turn a profit, with the costs of real estate in a major city if you can only charge what a flipper can afford.
Exactly. And a relaxation of zoning won't change that. While high housing demand in urban cores does result in developers building more rental units, the cost of those units also rises making rentals even less affordable for burger flippers. What some seem to not get is that developers are building for those who can afford the high rent and are uninterested in building for those who cannot. That's not about zoning, that's simply Econ 101.
While a developer could get permission from the city to build 500 cheap apartments, why would any developer buy expensive land to build 500 cheap apartments when they can build 500 upscale ones where the rent collected pays more quickly for the cost of the land and the building?
This isn't really accurate. Of course no developer would build 500 units for cheap when they could build 500 for wealthy, but change the model to 1000 cheap or 500 wealthy, and the math shifts. The reason they don't do that is because of limitations on units set the local government.
To put it another way, if the local government set max amounts for things like hamburgers in a single zone, then McDonalds wouldn't be able to exist in that zone, or at least wouldn't have a dollar menu if there was hamburger demand.
To put it another way, if the local government set max amounts for things like hamburgers in a single zone, then McDonalds wouldn't be able to exist in that zone, or at least wouldn't have a dollar menu if there was hamburger demand.
LOL! There are no McDonald's in the actual town closest to me. Restaurants with more than a certain number of seats cannot be in stand-alone buildings there. They have no car dealerships either. The town is all the better for it.
This isn't really accurate. Of course no developer would build 500 units for cheap when they could build 500 for wealthy, but change the model to 1000 cheap or 500 wealthy, and the math shifts. The reason they don't do that is because of limitations on units set the local government.
To put it another way, if the local government set max amounts for things like hamburgers in a single zone, then McDonalds wouldn't be able to exist in that zone, or at least wouldn't have a dollar menu if there was hamburger demand.
The math doesn't actually shift at all unless you're talking about building something versus building nothing. Building 500 luxury units is still better in the long run because even if cost to build is equal and rents collected on day one are equal, subsequent rent increases for higher rental units will always outpace those for lower.
Your example of McDonald's doesn't really hold up either. In the absence of the ability to build a McDonald's in a specific zone, burger eaters and flippers just won't have access to burgers (or burger flippin' jobs) in that zone. While zoning can encourage other businesses to move in over McDonald's, they won't unless they perceive that doing so would be a money making enterprise.
If what you suggest would work, food deserts wouldn't exist because Whole Food would be willing to build wherever they could get permission to do so regardless of the ability of the surrounding areas to support a store. In reality, if they couldn't build in an area where people can afford to shop there, they just wouldn't build at all. Zoning them out of areas that can isn't going to change that.
This isn't really accurate.
Of course no developer would build 500 units for cheap when they could build 500 for wealthy...
That isn't accurate either.
The limited space allows for 500 cheap 800sf (@ 1x) or 200 wealthy 2000sf (@ 2.5x).
Of course the wealthy option doesn't really have the fixed price limit shown here... so they would be 4x or more.
So where's the motivation to manage 500 transactions vs just 200?
Aside from finish materials there's really no cost differential in the buildings.
While Prop 13 does help people who have owned their homes for a long time, it does nothing for someone currently trying to buy to make the house more affordable. If a similar measure passed in Portland it would help current homeowners in the future, but would do nothing for current affordability. Again, without a time machine it won't help your situation. That horse has left the barn.
And to suggest that Prop 13 or rent control has made houses or rent more affordable in California is absurd. Let's just compare rental cost of a 1 bedroom apartment in Portland to both LA and San Francisco:
1 Bedroom City Center: Portland ------- 1,541.15 ------- LA 2,001.30 ------- Diff +29.86%
What about when you become one of those that have owned for a long time?
I pay the highest tax for the smallest and oldest home on my block... I fully intend to be the one with the lower taxes in 35 to 40 years too...
Thing is Prop 13 is benefit to me from day one... it provides predictability in future property taxes by limiting annual increases to a max of 2% and requiring voter approval for new taxes.
As for renters I can only speak to mine... I simply would not be able to go years without raising rent if it was not for Prop 13...
What about when you become one of those that have owned for a long time?
I pay the highest tax for the smallest and oldest home on my block... I fully intend to be the one with the lower taxes in 35 to 40 years too...
Thing is Prop 13 is benefit to me from day one... it provides predictability in future property taxes by limiting annual increases to a max of 2% and requiring voter approval for new taxes.
As for renters I can only speak to mine... I simply would not be able to go years without raising rent if it was not for Prop 13...
In complete agreement and I addressed this in another post. My point to Freemkt was that in his specific case, none of these measures would be of help. There are things he can do to better his lot, but he complains instead of doing any of them. He can't afford to rent in a conventional way much less buy so Prop 13 and the like aren't going to improve his life right now and aren't worth the 31,000+ posts he's devoted to them.
The math doesn't actually shift at all unless you're talking about building something versus building nothing. Building 500 luxury units is still better in the long run because even if cost to build is equal and rents collected on day one are equal, subsequent rent increases for higher rental units will always outpace those for lower.
It's a good thing there's no economic reason for them to be equal then. There is no reason to assume that.
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So where's the motivation to manage 500 transactions vs just 200?
What? I'm not sure I follow. I don't think most buildings are developed based on the number of transactions as though that number gets harder to manage. In fact there are these things called 'economies of scale' that directly refute it. There are tons of hotels with more than 500 rooms (more than 1000) and they seem to manage the number of resident transactions (far above a residential location) just fine.
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LOL! There are no McDonald's in the actual town closest to me. Restaurants with more than a certain number of seats cannot be in stand-alone buildings there. They have no car dealerships either. The town is all the better for it.
So I'm assuming that no one in your community drives then? Or it's completely irrelevant, as you push the economic costs on some other place and go there to buy your cars. Bully for you. You can't run an entire country like that.
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If what you suggest would work, food deserts wouldn't exist because Whole Food would be willing to build wherever they could get permission to do so regardless of the ability of the surrounding areas to support a store.
No. Whole Foods may not be able to build a store *anywhere*, but certainly a bodega could build or a sidewalk fruit stand, and any area would have the lesser equivalent of a grocery store. You seem to think I'm implying something like communism - no I'm implying that zoning removes opportunities at the lower end that many companies would take if they weren't removed. I'm not saying every neighborhood would have fancy things. BTW, the definition of a food desert is" one mile from a supermarket or large grocery store (for rural census tracts, the distance is more than 10 miles)." so the term food desert itself implies that smaller stores to serve poorer areas don't count.
Last edited by TheOverdog; 08-10-2017 at 08:47 AM..
So I'm assuming that no one in your community drives then?
No, you aren't. You're just shucking and jiving.
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Originally Posted by TheOverdog
Or it's completely irrelevant, as you push the economic costs on some other place and go there to buy your cars. Bully for you. You can't run an entire country like that.
Let's review: zoning laws are creatures of location. And the simple facts are that in some of those locations, McDonalds is indeed unable to exist, whether they offer a Dollar Menu or not.
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