For dense market-rate multifamily housing the major development costs are roughly:

Material, labor, and other construction costs: 69%
Financing: 9%
Water, sewer, transportation, parkland, etc. impact fees: 5-10%
Profit: 6.5%

These numbers come from the San Jose residential construction feasibility study, which is updated every October. You can find a summary of the 2023 one here: https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fsanjose.legistar.com%2FView.ashx%3FM%3DF%26amp;ID=12388874&GUID=B352980F-6030-4E2C-B917-37DDD625A6CC

The bottom line is that *even before including land costs*, new market-rate multifamily housing is financially infeasible in most of the city. Zoning is not a factor here; high-density housing is already a by-right use in large areas because the City and the State are actively promoting its construction. Market rental rates are very much a factor; even though they're unaffordably high to much of the population, they're too low to make most projects profitable.

Just a misunderstanding. What I meant by "parking reductions are being forced in a number of other areas" is that the State mandates reductions in minimum parking requirements in other cases besides areas within 1/2 mile of transit. (SB9 and auxiliary dwelling units, for example.) There are proposals to limit the maximum amount of parking a developer can provide; I'm not personally aware of any places where the State has implemented this, but I'll look.

What you're describing in Tokyo is related to what's known as "unbundled" parking around here (Bay Area). In both cases the idea is to move the parking cost from the developer onto the resident. The consequence here has been to move parking onto the streets (where it's often free overnight). Whether it makes sense in the long run depends in part on whether you believe most of the economic costs of growth should be borne by the same people who receive most of the economic benefits.

"...it's just going to get easier and easier."

In California, the State government has a policy of eliminating local control over zoning requirements for new construction. Parking is one of those. New projects in urban areas within a half-mile of "transit" (loosely defined) are not allowed to require parking at all (AB 2097), and parking reductions are being forced in a number of other areas. Since most people still need to drive, parking is moving onto the streets. As a consequence, for residents of many new multifamily buildings there simply will be no place at home for a charger.

Just received an Android update, and now 7287 works.

My Pixel 7 Pro apparently requires the number 4636 rather than 7287.

Blaming jobs/housing imbalance on NIMBYism is one of those "clear, simple, and wrong" explanations.

Cities don't build housing; investors and developers do that. California cities are REQUIRED to zone for enough housing to meet the State's population-growth estimates. There is nothing NIMBYism can do stop developers from building housing in those areas that are zoned for it.

Construction costs in California are outrageously high, so it isn't possible for developers to make a profit on housing priced at a level that the majority of people can afford. Investment money flows to the most-profitable projects, wherever they are. The consequence is that we get modest amounts of housing for the high-end portion of the market in any given area, and then most of the development money goes elsewhere.

There are other factors specific to certain areas. For example, in the Bay Area it's roughly 50% more profitable per square foot to build offices rather than housing (even high-end housing), so as long as local governments don't prevent it, that's what happens. For example, Redwood City is currently increasing its per-capita office/housing imbalance at a rate of more than 8 to 1. I haven't seen the numbers for San Jose, but judging from the projects that are getting big press, it's probably similar.

This is a good start, but incomplete.

Real-estate investors and developers put their money into projects that yield the highest return. Sometimes (as in the SF Bay Area) that's offices rather than housing. Oftentimes that's high-end housing rather than affordable housing. Increasingly, as the market has become globally financialized, it's a project "somewhere else". The result is that developers aren't interested in building enough housing to drive the price down in any given place.

Here's a recent example: https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fwww.mercurynews.com%2F2021%2F12%2F27%2Fredwood-city-sequoia-station-shopping-center-to-be-turned-into-transit-oriented-mixed-use-project%2F This is a proposed mixed-use project in Redwood City, CA. It could contain essentially any amount of housing; there are no restrictions standing in the way. However, it contains 1.2M sq ft of office space and 631 housing units. At roughly 150 sq ft per employee, that's about 8000 employees. Working Partnerships USA says one housing unit is needed for each 1.5 jobs, so this office space generates a need for 5333 housing units. The project falls short by 4700 units.

In California, there are State laws that *require* cities to zone for housing. Nearly everywhere in the State there are ample sites where reasonably-priced housing could be built today, if developers wanted to. They don't because they can make more profit in other ways.

Previously foo hiring was concentrated in the region of Bazzle. Recently, foo hiring has expanded nationwide. Preparations for more foo hiring in Bazzle are going way, way up. Q: Is there a significant long-term trend to reduce the concentration of foos in Bazzle? I think Bayes would say your confidence in the existence of such a dispersal trend should be reduced. That's the critical thinking that you might have missed.

They are tearing down old buildings (not all of them offices), but they're also building enormous amounts of new office space. Last time I checked, Redwood City had a net increase of 5.5M sq ft. Google alone is adding multiple millions of square feet of new offices to San Jose.

I'd welcome this trend if it's for real, but a lot of investor money is betting otherwise. Tens of millions of square feet of new offices are being built across the Bay Area, and recently Silicon Valley office lease rates hit a new record high: https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fwww.mercurynews.com%2F2021%2F10%2F08%2Fcovid-real-estate-silicon-valley-office-rent-record-heights-tech%2F

For every complicated problem, there's a solution that's clear, simple, and wrong. Building taller buildings is one of those.

It's easy to see that dense, tall cities are not automatically affordable. For example, a recent article in Bloomberg https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fwww.bloomberg.com%2Fnews%2Farticles%2F2021-03-15%2Fthe-housing-sales-boom-that-never-ends-already-wiped-out-all-the-short-sellers identified Hong Kong as having the least-affordable housing on the planet. And building tall is more expensive, per square foot of housing delivered, than building mid-rise. Build, baby, build only makes housing more affordable when you can convince people to accept greatly reduced amounts of space.

I highly recommend "Sick City", a recent book by Patrick Condon, a Vancouver planner and urban design professor. https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fuploads-ssl.webflow.com%2F5efd1c1c4e2740c1bb1bfb69%2F60001a4f82797d502d088dcf_Sick%2520City%25202021.pdf He writes: "We have incrementally quadrupled the density of Vancouver, but we haven’t seen any decrease in per square foot [housing] costs. That evidence is indisputable.We can conclude there is a problem beyond restrictive zoning.... No amount of opening zoning or allowing for development will cause prices to go down. We’ve seen no evidence of that at all.It’s not the NIMBYs that are the problem – it’s the global increase in land value in urban areas that is the problem."

Condon's basic argument is that housing is now financialized and global. The investment money flows to where it delivers the highest return, particularly in the form of increased land values. Unfortunately, affordable housing is one of the least-profitable options for development; luxury housing and offices are vastly more profitable, which explains much of the situation in the Bay Area. But read the book; it delivers a lot more insight.

It's also worth spending some time thinking about the costs of increasing supply and increasing demand. In general, corporations don't hire a new employee unless the expected gain in revenue more than offsets the cost of that employee. *Increasing demand for housing has negative cost.* On the other hand, providing housing that a new employee can afford is not always profitable, or as discussed above has opportunity costs, or imposes societal costs for things like infrastructure. *Increasing supply of housing has positive cost.* Until corporations reach growth limits or until friction is imposed by taxes or other regulations, supply can never overtake demand; the economics prevent it.

The concept of multiple reversals to move things around shows up in other contexts. (The first place I encountered it was in the text editor described in "Software Tools in Pascal", and if I remember correctly, it was credited to Ken Thompson.) So the idea is more general and valuable than the interview question might suggest.

You're assuming that zoning is the problem. In fact, all Bay Area local governments are assigned new-housing targets and are *required* to zone for them. Typically developers request and are given entitlements to build new housing, they simply choose not to build it.

The main reason for this is that it's enormously more profitable to build office space than housing, so that's what the finance people are willing to fund. A second issue is that building in the Bay Area is extremely expensive (by some accounts, building costs here are the highest in the world), which means that only luxury housing is profitable at all. This leads to a shortage of housing that most people can afford even if more housing is built.

Ironically, eliminating single-family zoning tends to increase property values, because higher-density housing on the same property generates more revenue. The usual argument that it's all about preserving property values doesn't seem to be valid. And people often argue that the solution is simply to build taller, but the sweet spot for cost per square foot is roughly 5 stories; taller buildings have higher costs and you're back to the issues in the previous paragraph.

There are other problems, of course. The road system is pretty much at capacity, and most transit systems are ineffective in areas like the South Bay where density isn't concentrated. There are shortages of water. And so on. But these are secondary to the economic issues mentioned above.

People seem to understand now that building more highways doesn't decrease traffic in the long run. Building more housing doesn't eliminate housing shortages in the long run, for the same reason: It does nothing to limit demand. Real solutions here are going to involve fixing the economic imbalances in ways that limit demand, for example, by requiring housing to be built within transit distance *before* office space can be added.

Tech companies are driving unmeetable (for now) demand for new office space. As a result, lease rates are about 56% higher (last time I checked) per sq ft for offices than for Peninsula-area rental housing. You can see why financiers and developers prefer to build offices rather than housing.

It's fashionable in some circles to blame the jobs/housing imbalance on zoning restrictions, but that doesn't seem to be consistent with the ground truth. There are many millions of square feet of new development going on right now, and in many cases these are mixed-use projects with the freedom to build lots more housing, but the mix is overwhelmingly dominated by offices because of the difference in rates of return.

Construction costs are also a factor. Land is expensive and in short supply, of course, but high-rise construction is also expensive. High-rise flats are about 2.8 times as expensive as row houses for equivalent units, and therefore likely to be expensive to lease and not as likely to be profitable for the developers. They're surprisingly candid about this problem; for example, see https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fwww.mercurynews.com%2F2018%2F05%2F01%2Fconstruction-costs-could-limit-where-san-jose-homes-are-built-google-adobe-diridon%2F "Construction expenses have pressured developers severely enough that new market-rate apartments are profitable in no more than two districts in San Jose... Even worse, downtown San Jose — seen as a cornerstone of the city’s economy — is one of the sections where development of new housing is unlikely to produce profits for developers..."

Transportation is arguably more important than housing, but it's received little attention so far. The road network is saturated now at enough times and places that additional housing wouldn't always be viable in those places. The population distribution makes rail systems unusable in much of the Peninsula.

If the occasional Marxist analysis doesn't bother you, or if you can put it aside temporarily, chapters 5 through 7 of Richard Walker's "Pictures of a Gone City" offer a tremendous amount of useful data on the situation.

Silicon Valley arose in part because of conscious decisions to distribute strategic industries geographically. (See Margaret O'Mara's "Cities of Knowledge" for a good synopsis.) Silicon Valley is hyper-expensive, earthquake-prone, water-poor, transportation-poor, and at risk from sea-level rise. Learning from past experience and distributing some of the growth elsewhere might be a smart move.

With a TV Typewriter II. 4KB SRAM. Audio tape storage. MIKBUG monitor.

Gradually upgraded to a 6809 with 16KB DRAM. Multitasking OS implemented in a homebrew Algol-68-based programming language.

Still have the thing in a box in the basement.