Sandy

My vision for Los Angeles is a future where nobody needs to own a car But many Angelenos are dependent on their car today We need policy that leads us to our car-light future, while still improving life for those who currently have no choice but to drive

Harvard economics professor Ed Glaeser: VP Harris housing plan is "too small and too poorly targeted." To solve the housing crisis, Dr. Glaeser says we must borrow from The National Minimum Drinking Age Act of 1984. What does booze have to do with housing? Glad you asked: -- Like housing, drinking ages were highly local issue. The federal government couldn't change it directly, but they could incentivize states to change it. -- The law "demanded states raise the minimum age to buy or publicly possess alcohol to 21 — or face a reduction in federal highway funds. The threat of losing such funds is a big stick," Dr. Glaeser writes. Why should housing be a federal issue? -- "And while the merits of any battle over a particular project are debatable, the overall cost to our country is beyond doubt. We are just not building enough homes, especially in the coastal markets where there is the most demand. Per capita, there was less than half as much permitting in 2023 as in 2003 or 1973." -- "Residents have made it particularly difficult to build in the most productive parts of America, such as Silicon Valley, which means that America’s G.D.P. is much lower than it would be if people could move to where the jobs pay the most. Areas with the most upward mobility limit building the most, which makes America more permanently unequal." How could such a proposal be structured? -- Target problematic offenders with high housing costs AND low construction. "The legislation could establish minimum construction levels over three years for all counties with median housing values above $500,000. States with high-price, low-construction counties would have to figure out how to overrule local zoning codes themselves or lose federal transportation funding." In closing: "America’s housing crisis is a deep, self-inflicted wound. Ms. Harris is right to want to do something, but it is hard for the federal government to engineer change at the hyperlocal level. Tying federal transportation spending to building activity may be the best way to induce change."

KKR put out a paper last month with a strong pitch for multifamily investing, concluding: "The once-in-a-decade opportunity for real estate equity investors is complex, but also exciting." Watch for moves... Appears KKR is thinking like Blackstone signaled before announcing acquisition of AIR. Note that KKR recently announced acquisition of a student housing portfolio from (ironically) Blackstone, but this KKR report appears directed at conventional apartments. Some notables from report: - Report notes current challenges of maturing debt and peaking supply are "cyclical rather than secular." "The secular trend is toward more demand, not less." - "Performance has traditionally remained stable through economic cycles." "As owners come under more pressure to sell assets, we see an exciting opportunity coming to buy high-quality properties below replacement cost while achieving attractive long-term yields." - "A temporary period of oversupply may provide more attractive entry points." - "Owners who can carry their investments through the next two years are poised to benefit from sustained structural demand and a pronounced shortage of new supply starting in 2026." - "Scaled players will see opportunities first and have the freedom to deploy without much leverage, an essential component to success in this environment." Link to report below...

One of my clients shared this with me. Sticker shock. Not surprised also given how scarce equity capital is for new apartment development. The good news - Should cause construction costs and also new inventory to decline meaningfully! multifamilydive.com/news/mul…

The project would replace single-family homes just north of the 10 la.urbanize.city/post/72-apa…

People will interpret this as real estate having a lot of power. In fact, it's a symptom of an incredibly weak industry Nobody likes paying lobbyists - but it's necessary when EVERYTHING you do is at the whim of local electeds

Join us at tomorrow at 10am for a press event to introduce the Minnesota People Over Parking Act! This is a bill that would make Minnesota a leader on climate action and housing affordability by eliminating minimum parking mandates statewide.

Run that back -- 41 from AD to set a season high 🎥

A lot of people think LA has limited transit, because they only think of trains In reality, @metrolosangeles buses are clean, safe, and convenient A big part of making LA less car dependent is just getting people to try riding buses

🚨 BREAKING: Sacramento City Council just voted to enact the most ambitious pro-housing zoning reform in California history. What does this mean? A thread:

What every voter should know about housing policy 1. Rents reflect the balance of supply of apartments and demand for those apartments in a given area. That’s it; there’s no magic. If you want lower rents, you can hope for a recession that destroys jobs and, therefore, demand. Or you can add supply. 2. There is no amount of money that any big city government could feasibly spend that would add materially to supply. This is because, depending on the location, new apartments cost $250,000-1,000,000 to develop… building even a few hundred of those starts to stress any city budget, and many big cities need tens or hundreds of thousands. 3. On the other hand, investors (including pension funds and endowments, insurance companies, rich families, etc.) can collectively **easily** provide enough capital to build as much housing as we need **so long as they are confident they can get a reasonable return**. To get those investors to fund the creation of the housing our society so desperately needs, we must do two things: 1. Dramatically reduce the time & complexity associated with securing governmental permission to develop housing. This means reviewing and simplifying the overlapping regulations that constrain housing production: zoning codes, building codes, parking, ADA, etc. But it also means changing the cultures within the relevant governmental agencies from “default no” to “how can we help you?”. 2. Provide certainty around on-going regulation of apartment operations. The way investors get a return from building rentals is as follows: They hire managers to lease the apartments, collect the rents, pay operating expenses and any mortgage payments, and then send the investors the cashflow that remains. But city governments all over the country have been restricting the manner in which apartment buildings can be operated in all kinds of ways. For example: Cities have been making it harder to screen tenants, while also making it much harder to evict tenants who don’t pay. You can see why both of those measures are politically popular. After all, who doesn’t want people to get second chances? And who wants anyone to get evicted? But, as a manager, the combination of those two regulations makes it much harder to predict, with any certainty, that the rent will get paid… and that makes it very difficult to get investors to provide capital to create more housing. Another example: Rent control. Again, I understand why renters love rent control and why politicians want to give it to them. But, if, as has been the case in NY, LA and San Francisco, city governments hold annual rent increases below the rate of growth in the operating expenses of the buildings, the cashflow payable to the investors shrinks… making them much less likely to invest capital in building more apartments. In conclusion: For ~every other good or service in the economy, we allow the market to function, and the result is that we have a surplus of choice at all price points (think of food or clothes or cars), which is spectacular for the consumer. If we want a surplus of choice at all price points in housing, we need to get comfortable with the idea of allowing the market to provide it. And that means allowing investors to build rental apartments *and* allowing them to operate those apartments in a manner consistent with making a reasonable profit.