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That’s the general idea on how Prop 13 works - what you miss is that it can simultaneously make any new development attractive relative to a frozen parcel and m

That’s the general idea on how Prop 13 works - what you miss is that it can simultaneously make any new development attractive relative to a frozen parcel and make dense residential development less attractive than competing land uses. Why build apartments when you can build a hotel? That’s if the incumbent wants to sell in the first place, which they historically don’t since there’s little to no economic pressure to do so. Your parking spaces point is somewhat circular. Southern California is not uniformly dense. The major reason for why there’s so much parking is because it was mandated by the government. I think we’re on the same path to reasoning though: status quo zoning in expensive US metropolitan areas generally sucks, Reagan-era housing tax policy also sucks.

AnthonyMouse 1mo ago
> Why build apartments when you can build a hotel? That one's easy. Because if you stop inhibiting people from building things when there is more demand than supply for hotels then they build some hotels. Then some local demand for hotels gets satisfied, at which point building more hotels becomes less profitable than building more apartments and so they build apartments. > That’s if the incumbent wants to sell in the first place, which they historically don’t since there’s little to no economic pressure to do so. "You're receiving $1M worth of net present value in rent but they're offering you $2M" is a pretty good economic incentive. Meanwhile they want to do that because once they add more units the additional units would generate $10M worth of net present value to whoever they sell them to, and therefore they can sell them for $10M. > Reagan-era housing tax policy also sucks. It seems to be a common mistake that people think raising property taxes would lower rents. The theory is supposed to be that less productive (i.e. low density) use would be disfavored, but that's pretty suspicious considering that higher density use is already dramatically more profitable per unit land wherever it isn't prohibited by zoning. On top of that, whenever the property tax applies to buildings and not just land (as is the case approximately everywhere in the US), it does completely the opposite because then constructing new units increases the amount of property tax paid and then rents need to increase by that amount before new construction is profitable. Prop 13 is uniquely ridiculous not because it caps property taxes for existing owners but because the exceptions to it (i.e. the tax resets to a higher rate on sales and new construction) create perverse incentives. But if you replaced it with something like "max property tax is $1/sq ft/year" it would create a pretty strong incentive to build housing, by reducing the property tax component of rent required to justify doing so.

AnthonyMouse 1mo ago

> Why build apartments when you can build a hotel? That one's easy. Because if you stop inhibiting people from building things when there is more demand than supply for hotels then they build some hotels. Then some local demand for hotels gets satisfied, at which point building more hotels becomes less profitable than building more apartments and so they build apartments. > That’s if the incumbent wants to sell in the first place, which they historically don’t since there’s little to no economic pressure to do so. "You're receiving $1M worth of net present value in rent but they're offering you $2M" is a pretty good economic incentive. Meanwhile they want to do that because once they add more units the additional units would generate $10M worth of net present value to whoever they sell them to, and therefore they can sell them for $10M. > Reagan-era housing tax policy also sucks. It seems to be a common mistake that people think raising property taxes would lower rents. The theory is supposed to be that less productive (i.e. low density) use would be disfavored, but that's pretty suspicious considering that higher density use is already dramatically more profitable per unit land wherever it isn't prohibited by zoning. On top of that, whenever the property tax applies to buildings and not just land (as is the case approximately everywhere in the US), it does completely the opposite because then constructing new units increases the amount of property tax paid and then rents need to increase by that amount before new construction is profitable. Prop 13 is uniquely ridiculous not because it caps property taxes for existing owners but because the exceptions to it (i.e. the tax resets to a higher rate on sales and new construction) create perverse incentives. But if you replaced it with something like "max property tax is $1/sq ft/year" it would create a pretty strong incentive to build housing, by reducing the property tax component of rent required to justify doing so.