Why No High-Density Housing In Silicon Valley

Mathew Yglesias frets that the enormous wealth spilling into Silicon Valley isn’t trickling down to the proletariat. That they are getting squeezed out of the area by skyrocketing home prices and that shouldn’t be happening.

What should be happening in Silicon Valley is an enormous construction boom. There should be oodles of blue-collar jobs knocking down suburban-style single-family detached homes and replacing them with attached townhouses. Right by Caltrain stations, there should be huge apartment towers going up. Some people might get dispaced out of the individual house they live in, but generally should be able to afford to stay in the area. And more broadly, individual instances of displacement should be swamped by the kind of localized population boom. If you look at a community like Williston, N.D., or the Odessa/Midland area in Texas, that’s what’s happening. An influx of money into the oil industry is fueling an influx of people and a surge in construction.

He lays the blame for this state of affairs on zoning and regulation.

But not Silicon Valley. In the technology capital of the world, we’re making very scant use of the technologies of steel frame construction and elevators. Land is scarce in the corridor running between I-280 and US-101 from San Jose up to San Francisco, but it’s not all that scarce. It’s just not being used very intensively. Because zoning generally mandates low-density uses and because the California Environmental Quality Act perversely hyper-empowers NIMBYs to block projects even though California’s pleasant climate makes it one of the most ecologically sustainable places for new housing to go. There is no housing boom there, but the region—and the country as a whole—would be a much better place if there were.

This makes a certain amount of sense except that Joel Kotkin pointed out some time ago, the California technocratic establishment has essentially decreed war on suburban development, and the Bay Area in particular has enlisted in the effort in a big way.

But who needs facts when you have religion? Take the Association of Bay Area Governments (ABAG) and Metropolitan Transit Commission’s (MTC) new “sustainable communities strategy,” a document designed to meet the requirements of the state’s draconian anti-greenhouse gas legislation.

This “strategy” seeks to all but reduce growth in the region’s lower-density outer fringe – eastern Contra Costa County as well as the Napa, Vallejo and Santa Rosa metropolitan areas — which grew more than twice as fast as the core and inner suburbs. Instead the ABAG-MTC projects a soaring increase in demand for high-density housing and its latest “vision” report calls for 97% of all the region’s future housing be built in urban areas, virtually all of it multi-family apartments, to accommodate an estimated 2 million residents

There would appear to be a contradiction here. Official policy driven by anti-greenhouse gas legislation requires that future development tilt overwhelmingly towards high-density but that same legislation is being used to thwart high-density development. Have we reached the point here where regulation has become self-cancelling and people just go their merry way.

I have no idea but it is intriguing. Feel free to advance your own thoughts.

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About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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