On Atherton's Property Values

Many of you have probably seen the news that basketball demigod Steph Curry and his wife Ayesha Curry recently came out in opposition to multifamily housing development in their backyard. At first glance, the whole affair looks like a classic case of hardcore NIMBYism: a rich and famous family, residing in one of California’s priciest zip codes, throwing their weight around to keep out any members of the 99.9 percent.

But as I wrote in an op-ed for MSNBC, the story is a bit more complicated than that:

You can read the full op-ed here. As I say in the piece, the real problem here isn’t that Steph and Ayesha Curry wrote a letter. The problem with Atherton is structural, and it goes much deeper than the actions of any individual homeowner.

Having said that, some homeowners serve as particularly good illustrations of the real problem. I namecheck one of them in the piece: billionaire venture capitalist and crypto huckster Marc Andreessen.

Like their fellow Athertonians the Currys, Andreessen and his wife, Laura Arrillaga-Andreessen, have written to the city about their opposition to new multifamily housing. But unlike the Currys—who expressed discomfort with a particular project—the Andreessens don’t want any multifamily housing anywhere in the city.

Here’s what the Andreessens wrote to the city, as first reported by Jerusalem Demsas:

There’s a lot going on here. For example, one could observe that when Marc Andreessen wrote “It’s Time to Build,” he must have meant that it’s time to build somewhere else. Or one could note that better public transit would alleviate any road congestion resulting from a population increase in Atherton—something the city council might have considered before it voted to shutter its lone CalTrain station.

But let’s talk property values.

Building multifamily housing does not decrease property values in the surrounding area. This is true even when the new buildings contain deed-restricted affordable housing. If building affordable housing has any impact at all on the value of surrounding homes, in fact, the effect appears to be very slightly positive.

Rezoning a lot that contains a single-family home to allow for multifamily construction, meanwhile, has the potential to significantly raise the value of the land beneath an existing structure. That’s because upzoning drastically changes the range of development possibilities for a given piece of land: somewhere a developer could previously build only one home might now be able to hold two, or three, or ten (or more).

When a small handful of lots get upzoned, this sudden surge in land prices can have perverse consequences for housing affordability. But if you upzone broadly—allowing apartments on a significant chunk of city territory with one fell swoop—you can avoid those consequences. Developers will have more places to build, and so they won’t bid up the price of a handful of lots.

While simply making it legal to build apartments won’t drive down home values, building enough apartments will drive down home price inflation. And that’s a good thing! If home prices are practically doubling every ten years or so, that’s going to shut a lot of families out of homeownership and plunge a lot of others into chronic housing insecurity or homelessness. But reducing home price inflation is not the same as cutting home prices themselves.

And even with millions more additional homes, existing houses in California would continue to appreciate in value; they’d just do so at the rate of other low-risk investments, like mutual funds. Good for building up a bit of family equity, less good for generating extravagant (and unsustainable) returns.

Maybe that’s what the Andreessens are objecting to. This randomly selected home in Atherton seems to have nearly quintupled in value over the past ten years. If YIMBYs get their way, that will no longer be the norm in rich enclaves.

Or maybe the Andreessens simply haven’t consulted the relevant literature on zoning and housing prices, and they’re genuinely concerned about the value of their home evaporating. But I find even that a little difficult to believe. Unlike most homeowning families, the Andreessens don’t have most of their wealth embedded in the value of their house. Marc Andreessen is worth an estimated $1.8 billion; how much of that could possibly be tied up in their Atherton residence? Maybe $50 million? $100 million?

In short, I don’t think the Andreessens have much reason to be worried about the price of their house. Same goes for the vast majority of rich NIMBYs who you hear gripe about apartments going up in their neighborhood.

So why all the agita? What explains the intensity of opposition to a few multifamily buildings? I’ll let you make your own inferences, but let’s just say I think there are some other anxieties at play here.