Jun 27, 2022·edited Jun 27, 2022Liked by Cameron Murray
The first thing that jumps out to me when they say "The developer can comfortably outbid the homebuyer at that price, and there’s no reason to pay more." is why would you assume the market is made up of a single developer and many homebuyers?
Developers aren't competing/bidding against just homebuyers, they are also competing/bidding against multiple developers who would all progressively bid up the price to the highest and best use i.e. the residual captures the full value of additional development rights irrespective what rights the sites surrounding it currently have.
Your argument that increasing "zoned capacity" doesn't increase development is based on a total misunderstanding of California housing law. A compliant housing element, especially pre-2022 cycle, doesn't increase zoned capacity. It just studies sites where a city _could_ increase capacity. Many didn't. Many others were just non-compliant without consequence. Most others found other ways to prevent development or make it otherwise financially infeasible (FAR, parking minimums, uncertainty around timeframe and approval), as the authors in the papers you cite all point out. Did you read their papers?
The first thing that jumps out to me when they say "The developer can comfortably outbid the homebuyer at that price, and there’s no reason to pay more." is why would you assume the market is made up of a single developer and many homebuyers?
Developers aren't competing/bidding against just homebuyers, they are also competing/bidding against multiple developers who would all progressively bid up the price to the highest and best use i.e. the residual captures the full value of additional development rights irrespective what rights the sites surrounding it currently have.
Your argument that increasing "zoned capacity" doesn't increase development is based on a total misunderstanding of California housing law. A compliant housing element, especially pre-2022 cycle, doesn't increase zoned capacity. It just studies sites where a city _could_ increase capacity. Many didn't. Many others were just non-compliant without consequence. Most others found other ways to prevent development or make it otherwise financially infeasible (FAR, parking minimums, uncertainty around timeframe and approval), as the authors in the papers you cite all point out. Did you read their papers?