Manipulate the housing market with this one neat trick

Regulations often result in unintended consequences. Money flows to find any crack in the system, after all, and often those cracks are in very odd places. Zoning and building codes are no different, and they can manipulate not just how people do business but how we built our cities.

In Marin, towns regulate density through a few different rules. Most prominent is units per acre, sometimes around 20 to 30 units per acre, but Marin’s various codes use other measures: floor-area ratio, parking minimums, minimum lot sizes, height limits, and minimum amount of open space.

Last month, the blog Urban Kchoze looked at this panoply of regulatory systems to illustrate how they alter the built environment, and found that they often don’t do a very good job of limiting traffic or population density. About Marin’s favorite regulation, units per acre, the author writes:

An interesting point to consider is what happens to the single individuals in North America that seek cheap housing options, since they are largely deprived of the small 1-Bedroom apartments due to regulations restricting the number of units that can be built per area? Well, they share apartments with roommates. Indeed, becoming roommates is the way consumers have devised to go around the excessive parking and density limitations imposed by North American planners. It is not a desirable situation, but when in a pinch, people will do it.

So North American regulations that limit the density of units but are less restrictive on FAR will result in bigger housing units as developers will build big units to maximize profits.

Policies that do the opposite, meaning limit FAR but are favorable to subdividing buildings in many units thanks to a lack of minimum lot size and low or no minimum parking regulation will have the opposite effect: tend to increase housing density but reduce the size of units.

Our current system doesn’t work very well. Rents are spiking, people are aging, traffic is growing, and the poor are crowding into tiny spaces, especially in The Canal.

As Marin continues to wrestle with the future of its town centers, especially in downtown San Rafael, leaders should figure out what exactly they want to limit. If it’s traffic, they should limit parking. If it’s kids for the school system, they should limit height but lift density caps. (Small homes don’t accommodate families well, after all.)

Marin needs to chart a way forward, but the only way to do that is to understand where we want to go, and what tools we need to get there.

About David Edmondson
A native Marinite working in Washington, DC, I am fascinated by how one might apply smart-growth and urbanist thinking to the low-density towns of my home.

6 Responses to Manipulate the housing market with this one neat trick

  1. rihallix says:

    Living in a shared house or apartment is a reality many graduates in European cities face without surprise everyday. I would turn the premise on its head and challenge why Americans feel entitled to their own, unshared apartment?

    I lived in shared housing in the early 90s in London.

    What’s occurring in Marin is affordable housing advocates are effectively the vanguard of luxury apartment builders. The same is occurring in the South Bay. New laws and planning presume far greater use of public transport – but the residents continue to drive and park.

    This leads to an imbalance. I would be for smaller 20-30 unit affordable complexes. But not 50+ unit monsters that cause traffic and parking hardships. Just look at the streets behind Safeway in Terra Linda and the parking issues created are self evident.

    • Often, roommates aren’t merely a fact of life for graduates but also for adults, and sometimes even families. It’s behind the massive overcrowding in The Canal, and also why people often have roommates well into their 30s.

      Now, you have a specific outcome: 20-30 unit buildings, without traffic and parking hardships. What is the regulatory structure we could use to encourage this kind of development and discourage or prevent the larger buildings?

  2. Franz Listen says:

    Basically, everyone involved in the housing conversation is too focused on units as a metric.

    Take ABAG for example. They make population projections for the region. Then they divide that projection by a generic average household size. The resulting total is the number of units that must be produced for the market in the Bay Area to “balance”. Except…markets don’t work that way.

    If fewer units are developed, then prices may be higher. In the face of those higher prices, fewer people may choose to move to the Bay Area or to stay here, reducing demand. Moreover, average household size is not fixed, as people can share spaces, so supply is flexible too. There is never a “shortage” in the true sense of the word. Supply and demand always meet, albeit at potentially very high prices.

    Understanding this reality shifts the conversation. Instead of asking how many units need to be produced, we are more realistically asking what the optimal price is that we are trying to achieve, or the the average amount of square footage per person we are aiming for. This is where Richard has a bit of a point. There’s nothing sacrosanct about any particular numbers that we might choose. The housing market is more dynamic and complex than many housing advocates are willing to admit.

    At the same time, housing opponents are also overly fixated on units as well. A building with 20, 2bdrm units sounds a lot more appealing to them than a building with 40, 1 bdrm units. It suggests fewer impacts. And yet, with people sharing spaces, there could end up being the exact same number of people in each building, placing the same demands on water, schools, traffic, etc.

    In fact, if the 40 unit building has 0.75 parking spaces per unit and the 20 unit building has 2 spaces per unit, the building with fewer units could have more parking, more cars, and a greater traffic impact.

    Some development opponents don’t accept the idea that people will do something other than drive cars to get around. However, if developers and investors (whose risk huge amounts of capital) agree with that skepticism and think that a building with too little parking is not viable in the market, it simply wont get built. They won’t take the chance.

    Consequently, you would think that anti-development activists would embrace parking limits, since it has a powerful potential to reduce development at the margins. If they were smart, the MAD crowd could use green transportation as a weapon. They could insist on tough parking maximums for the sake of the environment. The result would be fewer developments altogether, developments with minimized traffic impacts, or some combination of both.

    Interestingly, anti-development activists end up with the exact opposite strategy. It starts when they convince themselves that the pressure for development comes from the state and not the market. The state and regional orgs in California do enough meddling and advocacy to help create that appearance. In addition, pro-development actors often sell density (not walkability, mind you, but purely density) on the grounds that it will reduce greenhouse gases through the higher use of alternative transportation. They often oversimplify in the process.

    Development opponents then reason that if they can puncture the idea that new residents will use transit, they will kill a dense development’s raison d’etre (which they think is to solve global warming based on the rhetoric they hear). How do you puncture? By arguing that everyone just wants to drive their cars and that alternative transportation is a pipe dream. That argument doesn’t necessarily work to stop development, but the underlying idea about driving hardens into a totem. Then, when a housing development project is proposed, the anti-development crowd fights it, but will often insist that if it gets built it should be mandated to have MORE parking, not less.

    • rihallix says:

      Totally agree that bedrooms, not units, is the better measure as it reflects resident numbers and likely water, car parking and traffic impact. But that ship sailed and converting to that term will be like speaking in tongues – pointless.

      Any argument about building our way to affordability – where supply is increased to make any noticeable difference to affordability is also naive. Luxury developers could have a field day of unregulated development in eastern Marin and pricing would barely differ.

      I dislike the parking limits strategy – but I recognize it’s merits. Ultimately a ruthless developer could build anyway and create a major parking overflow issue – the pressure to build is sufficiently strong. Plus right now given PBA, PDAs trust in enforcement is at an all time low.

      Indeed the pressure to build is market driven and overwhelming , but the restraints are applied by government – local, sadly regional which has very poor accountability and state which can be even worse.

      The “driving totem” seems polarizing – but it’s far closer to reality and born out by stats in Marin.

      Then there’s the transportation cloud – autonomous shared cars on demand. Rumors are reaching me that Apple is getting very close. They won’t sell you a car – instead they or someone else will operate the fleet. Like Uber Pool youll just summon one. This model is very well set up to address issues of congestion and parking.

      And Elon Musk just announced a firmware upgrade transmitted wirelessly to all Teslas made since last October will make them autonomous on freeways. Futures accelerating – keep up!

      • Maybe we could keep up by forcing developers to have full build-out plans for when they no longer need their parking lots and garages?

      • Franz Listen says:

        There are people who don’t want to own cars. That is a real market segment. And there are developers who recognize that market. Plus, as David alludes, predictions about a future of vastly expanded car sharing just make the point even stronger. Car sharing is an alternative from the convention of people owning a vehicle and needing to store it in a parking stall at their home.

        The “totem” I was referring to is the insistence by some that every adult in a new residential building will want to own a vehicle and that high parking requirements (which drive up the cost of housing) should be mandated as a result. Let’s give the market more freedom to minimize parking.

        In the parlance of microeconomics, parking is an “excludible” good. Therefore, there is no basis for treating it like a common pool resource. Spillover parking can be managed in a host of ways, including through residential parking permits. Technology is also making enforcement easier. It’s nearly impossible to be a “ruthless” developer and expect somebody else’s parking to serve your new buyers/tenants if the somebody elses are actually taking responsibility for their parking.

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