Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1016

I was out for drinks recently with a friend of mine who is a developer in California and she mentioned a few things to me that I thought were really interesting. 

First, she talked about how virtually nothing gets built in the Bay Area “as of right.” And so the market is hugely supply constrained. She said, you’re lucky if you can get your entitlements in 2 years. It’s starting to take longer. I immediately said: “That’s Toronto.”

Second, we talked about Proposition 13, which was timely given this recent post . One of the consequences of Prop 13, beyond helping golf clubs survive, is that longtime homeowners seem to be highly incentivized not to move. 

Their property taxes are so below market that it can be more cost effective for them to stay put as opposed to downsize – even if they have too much house. This means far less turnover in the housing market.

Third, there really does seem to be a feeling in the Bay Area that it’s at a breaking point in terms of affordability. When a successful software engineer making $200,000 a year can’t afford housing, people naturally start to look to other cities.

We hear this refrain all the time in the media, but because I’m not active in that market, it was far more impactful hearing it from a friend.

The City of London Corporation recently published a report called “The City as a Place for People ”, which talks primarily about itself and how great London is as a magnet for talent. 

But as self-serving as it may be – the report is timed to be ahead of this year’s  MIPIM – there appears to be some data and interviews backing up the claims.

58% of “institutional investors” said that London is the best European city for business. Dublin was next at 22%. 

A separate survey of 2,568 “corporate decision makers” in Europe revealed that 21% of respondents felt that London was the best European city for business, followed by Paris (13%) and Frankfurt (7%). When asked which city had the best talent pool, the responses were fairly similar.

Also included in the report is a rendering of the City’s skyline by 2026. These are always fun to see. Here is a screen grab:

It is showing all towers under construction and all towers with their planning permissions in place. If you’d like to download the full report, you can do that here .

Joel Kotkin and Wendell Cox recently published a piece in the Orange County Register called, “ California’s housing crisis and the density delusion .” I’m sure you can guess where this is going, even if you don’t follow the work of Joel Kotkin . But if you do, you will know that he is an ardent supporter of suburbia and the single-family home.

Here is an excerpt from the article:

In reality, the YIMBY’s suggestion that new, dense housing will improve affordability for all is patently absurd. Decades of densification in Los Angeles has seen ever higher rents, displacing low-income, especially minority households. Many former transit customers have been driven to lower-rent areas with less transit service, precipitating a massive decline in ridership, even as billions continue to be spent building new rail lines. The Wiener Bill  [my link, not theirs] could exacerbate this trend, and likely increase the need for low-income housing, already well beyond the capability of public coffers.

I fully appreciate the argument that high-density housing isn’t for everyone and that we shouldn’t be “forcing everyone back to the ‘glory’ days of the city of tenements.” But I disagree with many of their points, including the argument that density doesn’t encourage transit ridership. Density isn’t everything, but it’s an important something.

The article is definitely worth a read, particularly if you disagree with their positions. That’s how you avoid confirmation bias . I was trying to keep that in mind as I read it. Maybe it worked.