California's Love of Cars Is Fueling its Housing Crisis - Allegedly.

Emailed in by Mombers from Bloomberg:

In Los Angeles, it’s perfectly legal to build a new apartment without a refrigerator, a balcony, or air conditioning. But you can’t build one without plenty of parking. In most cases, in fact, you have to build at least two spaces per unit — and no fudging with tandem or compact spaces. That makes housing much more expensive. Removing parking requirements would be one of the simplest ways to ease California’s housing crisis…

Scott Wiener, a San Francisco Democrat, has introduced a bill whose provisions include exempting new residential buildings from parking requirements if they’re within half mile of a major transit station or a quarter mile from a frequent bus stop. The bill would certainly ease California’s housing shortage. But, especially in the era of ride-sharing, there’s no need to tie parking deregulation to transit — or to wait for the state government to act.

Mombers adds: Question is whether this has any impact on rents – someone without a car will, ceteris paribus, pay more than someone with one – public transport and/or Uber much cheaper, leaving more income for the landlord/ bank to tuck into. And of course Manhattan has much fewer parking spaces per dwelling and much higher rents…

Ho hum.

1. As we know, construction costs add nothing to the selling price of homes (for a given ‘quality’) -  that is limited by what people can afford. Higher construction costs just depress residual land values.

2. As we know, any sort of planning regulation (like making each unit have two parking spaces – or indeed not allowing a new block of flats to have parking spaces to encourage people to use public transport) must depress the value of the land. The developer works out what is ‘best’ by looking at what’s sold for how much in the surrounding area and works backwards from that. If the regulations stipulate something different, then the value must be depressed, by definition. You wouldn’t need regulations to encourage developers to make the best use of a site.

For example, It might be the case that people like having one parking space but aren’t bothered about the second, in which case the second parking space adds nothing to the value or the selling price. Or it might be that they do value the second space, in which the developer would provide it anyway (unless the planning rules limited the number of spaces per unit etc).

3. Using more land for parking reduces the amount available for housing. By and large, denser populations lead to higher prices and hence disproportionately higher land values – see Mombers’ Manhattan example. San Francisco has the highest prices and land values in California because it has the highest densities, being squeezed into a small geographically restricted area (like Manhattan). Assuming always that there’s more public transport to take up the strain.

4. There is no housing shortage in California and prices are not particularly high, it’s only expensive on the coast because continental USA has so little coastline, and even less nice coastline that the coastal premium is gigantic. By definition, there will never be ‘enough’ homes in the best areas (i.e. near the coast) if you define ‘enough’ as ‘one for every household which would like one’.

So I am not convinced.