[HN Gopher] The housing theory of everything (2021)
___________________________________________________________________
The housing theory of everything (2021)
Author : lifeisstillgood
Score : 248 points
Date : 2025-03-01 00:59 UTC (22 hours ago)
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(TXT) w3m dump (worksinprogress.co)
| klipt wrote:
| Henry George wrote about this a hundred years ago in Progress and
| Poverty! His solution: a tax on land (not buildings) to encourage
| building up. Economists say it's one of the most efficient taxes
| possible.
| amazingamazing wrote:
| Developers already want to build. The problem is the law.
| tptacek wrote:
| The Georgists agree!
| analog31 wrote:
| Indeed, my state's constitution severely restricts how cities
| can tax themselves.
| majormajor wrote:
| Developers want to build because building will increase the
| value of property.
|
| If the value of property is constantly increasing through
| development, how are you solving the affordability problem?
| The development is attracting and facilitating activity that
| drives more demand.
|
| What dense city with a thriving commercial and
| business/industrial base is _cheaper_ to live in than a less-
| developed rural small town?
| sooheon wrote:
| > What dense city with a thriving commercial and
| business/industrial base is cheaper to live in than a less-
| developed rural small town?
|
| Wrong question; dense cities with thriving economies are
| more valuable, so they _should_ be more expensive. The
| question is who collects the rent? Land title holders, or
| builders and value creators?
| Qwertious wrote:
| >What dense city with a thriving commercial and
| business/industrial base is cheaper to live in than a less-
| developed rural small town?
|
| Um, any city whose residents want services? Does your rural
| small town need a plumber? That plumber can offer lower
| costs if there's a wider, more predictable userbase for him
| than in the small town.
|
| This applies to any store selling specialist goods, too -
| if the small town only has a single store, which stocks
| something that's only bought once a decade, then the buyer
| pays the cost of the good plus an entire decade's worth of
| interest. If the city can have a specialist good that sells
| that stuff one a month, then it'll be cheaper.
| sarchertech wrote:
| If you aren't buying something frequently, you drive to
| the big city when you need it, or you order it. Most
| specialist goods just aren't available in a small town
| same day at any price.
|
| Plumbers and other non niche service providers are also
| generally cheaper in small towns because cost of living
| is higher for the plumber too, all potential customers
| have less disposable income, and because the market isn't
| perfectly efficient.
|
| Housing and basic necessities like groceries are so much
| more expensive in thriving dense cities than in rural
| small towns, that they swamp out any costs for the vast
| majority of people.
| mperham wrote:
| Correct. Zoning code prevents building density and building
| codes force building crappy multi-family housing with tons of
| parking everywhere. Sprawl and car-dependency are bankrupting
| America.
| adverbly wrote:
| Nope.
|
| The law is sometimes a large barrier, but there are plenty of
| places in the world with high housing costs which have
| minimal regulations.
|
| The problem is the cost of land.
|
| Developers are severely capital constrained. They take
| massive loans from Banks. Most of those loans go to paying
| for the land.
|
| Additionally, a large portion of their profits come from the
| increase in land value that they create from building. Land
| prices per unit area are higher in a new subdivision than
| they are in an undeveloped lot(Obviously the majority of the
| property price increase comes from the building, but the land
| also increases is my point). It doesn't cost anything to
| squat on the empty lots while building, so developers
| purchase multiple undeveloped lots near each other to capture
| this increase and minimize their purchase cost.
| Unfortunately, a side effect to this is that the developer
| basically becomes a monopoly on that area and no other
| developers or builders can compete with them. This lack of
| competition is one of the reasons that quality of new build
| construction has been on decline.
|
| In a world with a land value tax, the acquisition cost of
| land is significantly lower, but holding it is significantly
| more expensive. This means that a builder is incentivized to
| purchase smaller tranches, and hold each lot for less time
| before starting construction. They will be able to invest
| more into larger teams because they did not need to loan as
| much to pay for the land. This will speed up development and
| also improve efficiency by allowing for more competition.
| greenie_beans wrote:
| how does that work with agriculture or other land uses that
| don't build? do those people get taxed higher because they
| don't build?
| xvedejas wrote:
| Land that is far away from developed land will tend to have
| lower land values, so farmland would not be so highly taxed
| under LVT. It's mostly land that benefits from being close to
| development that would be taxed higher.
| hibikir wrote:
| Agricultural land is far from large population centers, so
| the value is relatively constrained. The real losers on an
| LVT is not those owning rural land, but the operators of a
| surface lot near a stadium, or people living in mansions in
| the innermost suburb ring.
| fknorangesite wrote:
| i.e., people for whom my violin is _very_ tiny.
| greenie_beans wrote:
| what about urban agriculture and public parks etc?
| buildings are not thing only valuable land use in an urban
| center.
| AlexandrB wrote:
| I don't imagine the government is going to collect taxes
| _from itself_ for public parks. There is the opportunity
| cost of lost revenue of course.
| greenie_beans wrote:
| what about privately owned parks or nature centers? i
| lived in an urban area with a privately held non-profit
| nature center nearby and it was an important component in
| my quality of life.
| aqueueaqueue wrote:
| Australia values every single lot of land for rates (aka
| council tax). So it is possible with some good stats nerds to
| figure it out.
|
| But these values take into consideration zoning. So if you
| are ona residential block it is valued as such. But it would
| not be hard to figure out what it would be worth as high
| density. So the valuation problem is easily doable.
|
| Also in Australia each state does it independently.
| dmoy wrote:
| > Also in Australia each state does it independently.
|
| In the US this is typically done at the county level (3000+
| individual counties, all doing it independently)
| 01HNNWZ0MV43FF wrote:
| No, but they're also not punished if they do build
| sooheon wrote:
| They get taxed less, because instead of taxing their produce
| and income, their land is taxed, and agro land is very cheap.
| On a quick google, I can find a 140 acre alfalfa farm in
| Idaho for $1.4MM ($100k/acre), and a 0.07 acre empty
| residential dirt lot in NY for $4MM ($54MM/acre).
| ProllyInfamous wrote:
| That Idaho farmland ($10,000/acre!!!) is still quite
| expensive... for farmland.
|
| Family just bought 20+ acres, forested, for about
| $15,000/acre... within 15 minutes of a MSA500k+population's
| downtown area.
| scythe wrote:
| I thought of a slightly milder version of the tax, which I call
| a land wealth tax. Fix a certain maximum value of land owned by
| a single person which would not be taxed. In theory this might
| be some quantile, like the 80th percentile of land value owned
| per person. (I'm pretty sure you would still be taxing the
| majority of land using this threshold! At least at first.) Then
| everything owned above that is taxed by value. This avoids a
| rebellion of the most vulnerable and sympathetic homeowners. Of
| course land owned through opaque ownership structures must be
| assumed to be above the limit. Corporations with transparent
| ownership structures might see their land divided up (a likely
| intractable math problem if you included publicly traded
| companies) or some approximation applied, or the land simply
| taxed.
|
| One advantage of taxing land wealth versus wealth in general (a
| la Piketty) is that land -- "real" property -- is much harder
| to hide in offshore corporate holdings than general wealth. It
| is all documented by necessity.
|
| I have no expectation, unlike George, that taxes on land could
| fully satisfy the general fund. But they could certainly play a
| significant part. A significant difficulty with land value
| taxes in general is the assessment of land value, which is a
| difficult problem and has caused controversy in the past due to
| fluctuations and apparent inconsistencies. My preferred
| approach in the United States would be a Constitutional
| Amendment, which would allow centralizing the necessary
| expertise with the resources of the federal government.
| sooheon wrote:
| This is called means testing, and it's a poor way to design
| policy because it creates step functions and breakpoints,
| distorting the market.
| scythe wrote:
| The tax I described is not a step function. It is a ramp
| function. By your definition, the progressive income tax
| would also be "means testing".
| sooheon wrote:
| What you described ("minimum value that is not taxed...")
| is the definition of a step function. But yes, binned
| income brackets is also a form of means testing, and a
| poor way to design taxes.
| BrenBarn wrote:
| You seem to be getting downvoted but I agree that this is a
| good idea.
| adverbly wrote:
| I like your creativity here but there have been actual
| calculations done around this and carving out provisions for
| tax exemptions is not necessary.
|
| Pragmatically speaking, a land value tax would be rolled out
| first by replacing property taxes with land value taxes, and
| the majority of people come out far ahead at this stage
| because people live on lots that have been developed. It is
| underdeveloped lots that are losers in this phase.
|
| A true georgist would not stop here though, and they would
| slowly continue to ramp up land value taxes, but rather than
| replacing property taxes, they would start lowering other
| taxes on productive activities such as sales taxes or income
| taxes. But this would be a slow transition.
|
| Additionally, you would include provisions during this phase
| where tax payments could be deferred until the sale of the
| property in order to protect individuals who happened to
| purchase a home that has dramatically increased in value.
| This prevents situations where an older person might be
| forced out of their home due to higher taxes. The goal here
| would be to transition over the long term and protect people
| who invested significant amounts into their property. The
| rates would stay relatively low for quite some time. Having
| lower rates also solves issues that you mention around
| accuracy of assessments. If you only tax up to 33% of the
| rental potential of a property, then you can be off by
| literally a factor of 3 in an assessment and the land will
| still be profitable to utilize.
| hliyan wrote:
| Thought experiment: if all habitable land on the planet is
| surveyed and transferred to private ownership, all subsequent
| generations that are born from that point on, will be doomed to
| rent-based servitude. Forgetting all political theory, it seems
| that planet-bound species with a positive population growth
| rate must not rely on socioeconomic systems that exclusively
| (or heavily) favour private ownership of land.
| sooheon wrote:
| > Give me the private ownership of all the land, and will I
| move the earth? No; but I will do more. I will undertake to
| make slaves of all the human beings on the face of it.
|
| From "Archimedes", by Mark Twain, 1889
| klipt wrote:
| Georgism stipulates that it doesn't matter who owns the land
| so long as they pay a tax on it that goes back to the people.
|
| You could say that the people really own the land and call it
| "land rent" instead of "land tax" but mathematically its the
| same thing.
| tmnvix wrote:
| What I appreciate about Georgism is that it can neatly
| avoid the difficult issue of justifying exclusive use of
| land without resorting to ideas like 'First Occupation' or
| vindicating violent acquisition.
|
| Essentially, you could say that all land starts out as -
| and remains - common property (because nobody created it)
| but a land value tax allows an individual to 'purchase' the
| exclusive rights to a natural resource by compensating the
| owners (i.e. everyone else) for their exclusion.
|
| In George's terminology 'land' effectively includes all
| natural resources. This gives us a good analogy that most
| people might not consider when thinking about private
| ownership of land. The radio spectrum. We generally do not
| allow private ownership of a portion of the radio spectrum
| but instead ask for payment for exclusive use of the
| resource for a determined amount of time. To allow
| ownership in perpetuity based on a one-off payment seems
| simply wrong in this case. Land, water, etc are similar.
| bloppe wrote:
| If the land is taxed then you must find a renter willing to
| pay more than your tax, otherwise you would sell. Meanwhile
| renters will search for the lowest rent, which is naturally
| found in high density areas. So cities would still form, and
| the vast tracts of unoccupied land would be money-losing
| assets that must be abandoned, at least until population
| growth makes some of those plots profitable. The market would
| fluctuate with supply and demand, just as it does today.
| euroderf wrote:
| Abolish land "ownership", and limit leases to 99 years.
| Existing ownership relations can be grandfathered in, but
| they will of course eventually disappear, in much the same
| way as how scientific revolutions eventually succeed: via the
| biological demise of the preceding hegemony.
| bagacrap wrote:
| I don't think we're projected to have positive population
| growth for much longer. Also what does rent based servitude
| even mean? I own a house but still have to pay taxes and
| upkeep. It's really not much different from rent. The tax
| supposedly goes to pay for services that the govt provides
| back to the people. If I were to pay rent instead, at least
| the service I receive in return is provided back to me
| specifically, and the cost of switching if I don't like the
| deal being offered is much lower.
|
| Rent, healthcare, and the price of eggs are very popular
| things to complain about for some reason...
| davem8 wrote:
| Property is Theft!
| master_crab wrote:
| It's called land use taxes. It's probably one of the best ways
| to change the most negative behaviors that brought about this
| situation (if combined with less regulated zoning)
| gknapp wrote:
| I don't have a great sense as to how this works across the
| world, but where I'm at (Seattle) your property tax is a factor
| of both the improved and unimproved aspects of your parcel. The
| improved ones being the value of the buildings and the
| unimproved being the value of the land itself.
|
| If you had a massive plot in an urban area, undeveloped,
| presumably the unimproved portion of your property tax would be
| quite high! But, the issue is that restrictive zoning means
| that typically the unimproved value of your tax assessment are
| pretty low.
|
| For example, if you live on 2 acres, but zoning says that you
| can only put 1 dwelling unit per 5 acres, then you can't really
| do much with the remaining acres. As a result, the remaining
| land has little value, and the tax on it is low. This is
| especially true in areas of little industry, where the same
| zoning regulations might also prohibit industrial or
| agriculture uses on that same plot of land!
|
| This is all to say that the structure you're looking for may
| already exist, but the issue is still in zoning.
| adverbly wrote:
| I don't think you disagree here... Zoning changes and land
| value tax are both beneficial. In some cases like the example
| you gave where you can only build one dwelling per 5 acres,
| zoning would be a more significant problem. That's an extreme
| hypothetical though. In other cases, taxation incentives are
| more significant.
|
| We absolutely need to push for BOTH zoning reform and
| taxation reform. They will work really well together :)
| ty6853 wrote:
| Trades licensing, tightening codes, inspections,zoning,
| inspection, planning, environmental regulation, and water/well
| shenanigans are the reason for unaffordable housing. Plenty of
| cheap land near jobs, land not a meaningful constraint.
|
| By bypassing most all these and DIYing a house I was able to
| build a house for well under 100/sqft.
| tptacek wrote:
| There is not in fact plenty of cheap land near jobs in major
| urban centers.
| kasey_junk wrote:
| I can show you a fair bit in Chicago if you want.
| tptacek wrote:
| Say more (here, or next time I see you).
| pchristensen wrote:
| There's plenty of inexpensive, buildable land in Chicago.
| It just might not be in the neighborhoods where there's
| housing demand.
| kasey_junk wrote:
| https://chiblockbuilder.com/city-owned-lots/?
|
| We also have liberal zoning around multi flat residential
| and it's trending more liberal.
|
| Chicagos housing price problem, if there is one, is
| mostly a school and safety disparity problem.
| ty6853 wrote:
| It's generally cheaper to buy land in someplace with shit
| schools then pay for a nice private school, especially
| somewhere like Chicago.
| tptacek wrote:
| Sure. I get that. Last year, a group of activists bussed
| about 100 Venezuelan migrants into Oak Park, and we
| allocated a bunch of money towards housing and services
| for them. The math worked out such that we could have
| instead bought most of the families a free-and-clear
| house in a neighborhood like Dolton.
|
| The problem as I see it is intensely localized to the
| inner-ring suburbs, which exist pretty much entirely to
| siphon money out of the Chicago school systems. Those
| suburbs are engines of middle-class opportunity, and
| they're deliberately designed to lock out the kind of
| people who would consider buying affordable houses in
| Chicago proper.
| kasey_junk wrote:
| My only point in this is that, to the extent it exists,
| the housing affordability problem in Chicagoland is not
| primarily driven by availability of land. If it was we'd
| just do what we did in the past and make more.
|
| It's driven far more by history and public policy and the
| ugly confluence of those 2 things.
| tptacek wrote:
| I'm knee-jerk about this because "the availability of
| land" is really the kernel of the housing affordability
| problem in Oak Park.
| ok_dad wrote:
| Where I live, land is a very meaningful constraint, there's no
| cheap land near anything meaningful. We're about at our limit
| in terms of transportation infrastructure, too, so additional
| housing has to be apartments right in town or our horrible
| traffic will become even worse. Unfortunately, everything they
| are building is tight single family homes.
| ty6853 wrote:
| Many of our immigrant families crossed the Darien Gap by foot
| for new opportunities. Fortunately there are roads to flyover
| country. If you have a thumb, escape is possible. Much of my
| family did it with far less resources and as many familial
| responsibilities as you probably have
| ok_dad wrote:
| I live on an overloaded island thousands of miles from
| anywhere else metropolitan, so no I cannot just hook my
| thumb and hitch a ride with a trucker across the vastness
| of some flyover states to get to new opportunities.
| ty6853 wrote:
| Go to the docks, eventually someone might need a hand on
| a yacht/sailboat, even if it takes awhile.
| __float wrote:
| How many of those can you realistically bypass by DIYing? I
| understand it saves a bit on taxes and you don't need a license
| yourself, but the rest?
| trollbridge wrote:
| I'm wondering the same; I have friends who build houses in
| areas with virtually no zoning and the cost per square foot
| is $190. (They sell for $200, so on a modest 2,00 sq ft
| house, he's putting up $400,000 in capital to build it and
| earns a $20,000 profit after the 3-6 months it takes to
| build).
|
| If I did all the work myself, I might be able to cut the
| price down to $150 a square foot, because materials alone are
| expensive, and it would take me at least a year of working on
| it do so. Now I'm "only" spending $300,000, and effectively
| paid myself $100,000 to build the house.
|
| None of this includes the cost of land.
| ty6853 wrote:
| I bypassed codes under an owner/builder exception. No
| inspections no building plans basically no regulatory
| costs. I found ultra cheap land with an unproven poorly
| documented but already drilled well share that turned out
| to be good (high risk but high reward) so nearly zero for
| water connection and well. I took some high risks proving
| electric and water and septic but after almost a year of
| footwork I proved them -- massively increasing land value
| for basically free.
|
| Only graded the footing, no excavation under footprint of
| house, so one day rental backhoe, under $1k for entire dirt
| work. Poured concrete (300 bags) by hand one bag at a time
| without concrete truck. Transported blocks and built block
| crawlspace wall then ran dimensional lumber across, no
| engineered lumber or piers.
|
| Frame light wood structure to minimum code following irc so
| no engineering nor architect. Plumbing almost all on single
| wall with only toilet/tub/sink/sink. All electric
| appliances, I diy connected to power grid running my own
| secondary mains.
|
| These last year's prices I think if you exclude utilities
| I'm at about 70/sqft, you could probably do 50 with
| reclaimed material and a flatter roof. I double timed after
| work a couple years but took off maybe 3 months so well
| under 100k lost wages.
| tptacek wrote:
| These are the macro effects of housing. I buy all of them. I'm a
| housing activist involved in local politics in Oak Park, IL (one
| of Chicago's two equivalents of Berkeley or Brooklyn, the suburb
| of Evanston being the other). Some micro/local impacts of housing
| restriction:
|
| * Retail business stagnation; retail is dependent on foot
| traffic, and SFZ residents do not understand what it takes to
| support the kinds of businesses (yoga studies, coffee shops, art
| galleries, bookshops) that they actually want to see sited near
| them. The result is that city plans for commercial corridors
| create near-blighted streets with gas stations, vacant lots, and
| the occasional nail salon or Domino's Pizza.
|
| * Public safety issues; those same underutilized commercial drags
| are _dead_ once the sun goes down; without people walking on the
| streets, nobody 's watching, and you can see on a map clearly
| where crime gravitates.
|
| * Escalating property taxes; lots of people want to retire in the
| same community they spent their adult lives in, but in an
| overwhelmingly SFZ muni with good schools, the top bidder on any
| residential lot is a family with school-aged children. Schools
| make up over half (in our case, 2/3) of the property tax burden,
| and it gets worse as the demographics shift more and more to
| school-aged families who move out when their kids graduate high
| school; housing diversity could give retirees an economically
| rational place to move (and remain in the tax base), but we
| outlaw it.
|
| The problem with all this stuff is you start to sound like a
| crank, because almost every problem a typical urban muni faces
| will probably stem from many generations of outlawing housing.
| allturtles wrote:
| What does SFZ mean?
| tptacek wrote:
| Single family zoning. A residential lot can only be used for
| a single, freestanding house; not a 2-flat.
| pixl97 wrote:
| Probably single family housing zone
| jaqalopes wrote:
| Tangential question: Is housing activist your occupation? And
| if so how did you get into that line of work?
| tptacek wrote:
| I work at Fly.io as our Chief Housing Activist.
| BenFranklin100 wrote:
| Even worse, our housing policy is corrosive to the fundamental
| social contract. When I was young, I was taught that if you
| worked hard and kept your head down, you could have a
| comfortable life. You may not be Bill Gates, but you could have
| a successful middle class existence.
|
| Our housing policies have broken this social contract. Many
| younger people cannot afford to live in high opportunity but
| high priced cities. Those that can, often only do so because of
| help from family. [1]
|
| NIMBYs dominate both sides of the political spectrum,
| especially among older people. It will take younger people
| getting involved in the YIMBY movement to effect change.
|
| [1] https://news.ycombinator.com/item?id=43213546
| tptacek wrote:
| I think YIMBYs really like to cast NIMBYs as their evil
| adversaries, but the problem is systemic. Any policy change,
| be it "what can be built on this lot", or "what social
| services do we fund", or, in particular for my muni, "how do
| we deal with leaf collection in Autumn" will generate three
| cohorts of people:
|
| (i) People who don't like the change
|
| (ii) People who don't care about the change (most people)
|
| (iii) People who do like the change
|
| People who don't like the change (i), _regardless of the
| amplitude of their dislike_ , will turn out and give public
| comment and put up yard signs.
|
| People who like the change (iii) will turn out and give
| public comment only if they are weirdos like me, with off-
| the-charts amplitude for their feelings.
|
| The net result is that the only public opinion that is
| _legible_ to staff and electeds is opposite. Again:
| regardless of what the change is.
| floodfx wrote:
| Insightful!
|
| Makes me think a bit about how negative content engages
| more people. Is this the same with people who don't like
| change? Not liking change activates people more than people
| who do like change?
| do_not_redeem wrote:
| Sounds like loss aversion to me.
| https://en.wikipedia.org/wiki/Loss_aversion
| BenFranklin100 wrote:
| I don't know what YIMBYs like to cast people who oppose
| housing. I am pointing out an effect of the lack of new
| housing.
|
| I reccommend you read, if you haven't already, Katherine
| Einstein's book 'Neighborhood Defenders.' It accurately
| describes the housing politics in Massachusetts.
|
| Any housing analysis is incomplete without taking into the
| geographical effect: The only people who care strongly one
| way or the other about new homes are the people who live
| near the proposed construction. Almost invariably, people
| who live nearby are against the change. Those who live far
| away are actually fine with new construction, at least in
| the abstract. The very same people who show up to protest
| nearby construction are also typically fine with housing on
| other side of the city. People just don't want new housing
| in their neighborhood.
|
| This has a practical lesson: control of housing policy,
| particularly, density, must be ripped from local city
| councils, where it now rests. Local city councils are
| beholden to their NIMBY homeowners, as homeowners are the
| only one who typically vote in city elections. The states
| thus need to reclaim their legal right to set housing a
| policy, a right they have ceded to municipalities.
| freen wrote:
| The difference here is whether or not folks are actually
| pro-social.
|
| Do you care about other people's wellbeing or not?
|
| Most folks who are "against" things are against them
| because they perceive change as "bad for them", and perhaps
| "good for people I dislike for historical and tribal
| reasons"
|
| Civilization is a an endless series of Tradeoffs.
| Compromises. Loss of something in the short term in
| exchange for something better in the long term. If you
| aren't willing to suffer in any meaningful way for your
| fellow human, eventually the entire bargain falls apart.
| tptacek wrote:
| No! This is more about economies of attention, and about
| cognitive availability, than it is about deontology ---
| ethics are a trap here.
| I-M-S wrote:
| Both can be true at the same time.
| jldl805 wrote:
| Speak for yourself. I am 38, live in one of the top fastest
| growing cities in America for like 5 years running now (with
| a booming housing market), and own my own house outright as a
| result of my hard work.
|
| Just because someone taught you something doesn't make it so.
| And even then, it might be true but your own choices (and
| failures) may be the reason you have not met your goals -
| rather than "housing policy".
|
| Try on some personal accountability for size - it'll probably
| help you achieve those unachievable milestones you are
| yearning for, also.
| tptacek wrote:
| I've read this a couple times and still don't see what it
| has to do with the comment that it responds to.
| jldl805 wrote:
| It's a counterpoint to :
|
| "Our housing policies have broken this social contract.
| Many younger people cannot afford to live in high
| opportunity but high priced cities. Those that can, often
| only do so because of help from family"
| BenFranklin100 wrote:
| No, your post was an emotional reaction based on some
| who-knows-what chip on your shoulder that propelled you
| to launch a strawman attacking an anonymous commentator.
| You know nothing of my personal situation. Nor, it seems,
| do you know much about the personal situations of younger
| people of modest backgrounds and modest means who simply
| want to live in the high priced city they were raised.
|
| I suggest more emotional reflection.
| mixmastamyk wrote:
| Condos built and decorated in the 1970s are approaching a
| million dollars in our neighborhood. New ones are two
| million. Do tell.
| mperham wrote:
| The housing equivalent of "works on my machine!". Glad it
| worked for you but it's not working for millions of others.
| Your experience does not invalidate other's experiences.
| BeFlatXIII wrote:
| Why'd you bother typing this?
| rufus_foreman wrote:
| >> I was taught that if you worked hard and kept your head
| down, you could have a comfortable life
|
| I didn't even work that hard and I have a comfortable life. I
| learned to code, and that was it.
|
| Your mileage may vary.
|
| If you move to one of the most expensive cities in the world,
| one of the things you can do is complain that it is really
| expensive to live in one of the most expensive cities in the
| world.
|
| You can do that. I don't recommend it, but it is one of the
| things that you can do.
|
| The number of YIMBYs who own property is approximately zero.
| "Yes, I would prefer that you make my life worse", said no
| property owner ever.
|
| I am a bad person. I want my life to be better, not worse.
| acdha wrote:
| I live in a very similar neighborhood with exactly the same
| problems (DC railroad suburb) and completely agree with your
| assessment.
|
| Your observation that you start to sound like a crank really
| rings true, and it's exacerbated by the stark generational gap
| where every interaction is painted as an attack on long-time
| residents, especially ones who don't want to recognize that,
| say, taxes need to go up because infrastructure costs more to
| maintain or that traffic is worse because they, a retiree
| sitting on a $2M house, haven't been able to downsize into an
| apartment and so the people who actually need to commute to
| work have to drive from a further out suburb and transit isn't
| an option because guess who reliably votes against it? We had a
| positively surreal debate when the "preservationists" demanded
| that an apartment building literally next to a metro station
| have a huge parking garage even though the developer thought it
| was overkill. That made fewer, more expensive units and then
| they ended up renting out unused parking spaces as storage
| units because the people who choose to live next to transit are
| often trying not to pay for a car. Actuarially, most of the
| people who showed up at those meetings are probably dead by now
| but their decisions will still be visible in 2050.
| hibikir wrote:
| It is a very typical problem in the US, but it's not really the
| only issue. Go look at Spain, a country that has, historically,
| had little issue building housing: Very dense housing too by
| most standards.
|
| After you liberalize housing, you still run into the trouble of
| economic forces trying to turn housing into a sensible
| investment: Buy an apartment, pay your mortgage for 20 years,
| and then you have a pile of leveraged money on top of the basic
| savings! But then you run into current housing in Spain: Said
| primary housing has huge tax savings over anything else. Taxes
| at sale time overwhelm property taxes (which are very good, yet
| seen as unfair by owners, so they stay low), so it's also
| better to keep the housing underused. So ultimately you end up
| with a situation where the building that before had an average
| of 5 or 6 occupants per flat in the 1980s, is now sitting at
| one and a half. So you end up having to massively overbuild, as
| to make sure nobody that bought in a good location does
| anything but make money on their "investment"
|
| The US could build more, thanks to so many inner suburbs that
| should really be filled to the brim and 8 stories tall, but
| ultimately it's just kicking the can down the road until
| residential investment is not so important, and the price of
| housing lines up with its utility, not the ever-growing value
| of the land it sits on top of.
|
| The Georgists that want to just LVT as the one tax in the world
| are going too far, but I don't see long term solutions to all
| the problems downstream from housing if, along of making it
| easy to build, we don't make sure that speculating on the value
| of the land is actually risky.
| csomar wrote:
| Spain (since it's in Europe, though you could say the same
| about ME countries) is an example that housing does not drive
| growth. Growth can drive housing and housing shortages can
| hamper growth but housing on its own does not drive growth.
| smallmancontrov wrote:
| Yep. Housing can be affordable or it can be a good
| investment. Not both. Not for long.
|
| Home owners are heavily incentivized to "not understand"
| this, so the cycle of abuse continues.
| kiba wrote:
| It's also true that people are also economically
| illiterate.
|
| I don't think I am economically literate. I have only taken
| one semester of macroeconomic in high school.
| kurthr wrote:
| See also China, which has seen massive overbuilding (50M
| empty units and 20M paid for but unbuilt), many empty
| buildings, and now the beginnings of a crash. Why? Because
| everything was financialized. Houses became an investment
| rather than a place to live. "If you move in, it loses
| value!"
|
| One thing there, though is that even though a 100m2 in
| Beijing/Shanghai/Shenzhen may cost $1M (30x urban educated
| middleclass income), the monthly rent will be under $1k
| (<30% income). That's still horribly expensive, but nothing
| compared to Spain or US. Maintenance suffers and there's
| even less reason for owners to fill "pristine" apartments,
| but it's a less bad form of malinvestment.
| AnthonyMouse wrote:
| > Housing can be affordable or it can be a good investment.
| Not both. Not for long.
|
| This isn't really true.
|
| Suppose that housing is _extremely_ affordable. Cost is
| only the construction cost, no scarcity component, and
| construction costs haven 't been bureaucratically inflated.
| You get a house for $25,000. Then local rents are low, but
| they're not zero, because they'd still have to yield a
| return consistent with a $25,000 investment.
|
| Rents in that case are a lot lower than they would be if
| they had to yield a return consistent with a $500,000
| investment, but the ROI is the same. It's just that if you
| invest $500,000 in housing you'd get 20 units and then e.g.
| rent them each for $250 (so $5000 in total) instead of
| paying the same amount for one unit and renting the one
| unit out for $5000.
|
| And it's not different if you live in it because living in
| it is an opportunity cost. In fact, the higher price is
| _worse_ for you if you live in it, because then you 're
| losing the much higher value of the imputed rent. Suppose
| you can get a loan for $500,000 and you want to invest that
| in housing. If that's the price of one unit and you live in
| it, you have to pay the whole mortgage out of your pocket
| and get $0 in rental income. If that's the price of 20
| units, you live in one (which costs you $250/mo in
| opportunity cost) and then rent out the other 19 and get
| $4750 in rent every month you get to stick in your pocket.
| anonymoushn wrote:
| "Housing is a good investment" means the price of the
| land and house increases over time compared to SPX or
| treasuries or whatever.
| AnthonyMouse wrote:
| "Housing is a good investment" means that the _total
| returns_ from investing in housing are competitive with
| the risk-adjusted returns of the overall market.
|
| The returns from an investment include both capital gains
| and dividends. For example, there are stocks that never
| pay dividends, but might still be a good investment if
| the stock price increases. There are other stocks that
| only hold their value, but pay higher dividends, and
| those could have the exact same total returns.
|
| In the case of housing, rent or imputed rent is a
| dividend. If you get $250/mo in [imputed] rent on a
| $25,000 investment, or $5000/mo on a $500,000 investment,
| that's 12% annually. That's a good investment even if the
| sale value of the property remains flat.
| BirdieNZ wrote:
| The sale value won't stay flat unless you tax land (or
| use leasehold like Singapore), because typically incomes
| rise, and in most places the rate of building new housing
| has an equilibrium lower than the rate of demand, because
| profit is needed for private developments to go ahead.
|
| This results in a) higher incomes, and b) higher rents,
| because landlords can extract some of the increase in
| income, because tenants don't have enough alternatives to
| keep the rents low.
|
| Capital value of property is a function of rents, so
| increases in rents result in increases in sale value of
| the property.
| AnthonyMouse wrote:
| > The sale value won't stay flat unless you tax land (or
| use leasehold like Singapore), because typically incomes
| rise, and in most places the rate of building new housing
| has an equilibrium lower than the rate of demand, because
| profit is needed for private developments to go ahead.
|
| Developments can be profitable without the price per unit
| significantly increasing.
|
| Suppose that an existing unit is $50,000 and it costs
| $150,000 in construction costs including profit to
| replace one unit with four. Then you have a stable
| equilibrium; a construction company could buy one unit
| for $50,000, convert it into four, sell them for $50,000
| each and net $150,000 which covers their costs and
| profit. They'll stop doing this if the price per unit
| falls to $45,000. They'll start doing it again if the
| price per unit rises to $60,000 and keep doing it until
| it gets back down below $50,000. Therefore, the price per
| unit remains stable at ~$50,000, even if demand
| increases, because that just triggers more construction
| as the price temporarily gets slightly above the
| breakeven point.
|
| This is why zoning restrictions cause housing costs to
| increase. If you declare that 95% of the land is zoned
| exclusively for single-family homes, you can't replace
| one unit with four or even two in any of those areas.
| Then the remaining 5% of the land already has a 20-unit
| complex on it and in order to add units, you have to
| replace it with a 30-unit complex. Taller buildings
| require more expensive materials, you've had to demolish
| 20 units instead of one and only increased the number of
| units by 50% instead of 300% and land on which you can
| even do this at all is now more scarce so you're paying
| even more per unit for the ones you're going to demolish.
| Now the breakeven price for new construction is
| $500,000/unit and if growth continues it has to rise to
| the level that can cover the cost of demolishing a
| 30-unit building to build a 40-unit one, even though 95%
| of the local land is still single family homes.
| rocqua wrote:
| Housing as an investment here references the idea of
| owning the home you live in being a great source of
| capital gains. This depends wholely on appreciating
| value, which is orthogonal to affordability.
|
| The reason people care about this type of 'housing as an
| investment' is that it helps sell people on high
| mortgages, so more people can own rather than rent. It
| doesn't quite work out well, except for the banks and
| pre-existing home owners. And it's a plausible enough
| story. They might believe it themselves.
| AnthonyMouse wrote:
| > Housing as an investment here references the idea of
| owning the home you live in being a great source of
| capital gains.
|
| But why would you even _want_ that?
|
| Possibility 1: You want to invest $500k in housing, and
| live in one unit. You get one unit, pay the entire $500k
| plus interest yourself, receive no rent other than
| imputed rent, and then can't sell at the end because even
| if your property is now with $1M if you sell you get a
| huge capital gains tax bill while still needing somewhere
| to live, so your "investment" has left you stuck in a
| place where you can't afford to move because the capital
| gains tax would prevent you from selling your house and
| buying an equivalent one, or even selling it for a
| smaller one at a profit because the difference in their
| values is lost to tax.
|
| Possibility 2: You invest $500k in housing, get multiple
| units for that price, live in one of them, receive rents
| from other tenants that compensate for a lack of capital
| gains while holding an asset with a stable value, can
| easily move out of your own unit because you're not
| trapped by capital gains tax.
|
| Possibility 3: You have $500k to invest, put $25k into a
| house for yourself and receive the small imputed rent,
| put the other $475k into an ordinary investment fund
| because you don't actually like investing all your assets
| solely in real estate. You now have a more diversified
| investment portfolio that isn't heavily exposed to
| volatility in the local housing market, are still getting
| the market rate of return, are getting actual returns
| from the ordinary market instead of paying a huge amount
| in imputed rent and once again aren't trapped by capital
| gains tax if you ever want to move house.
|
| The first one is clearly the worst one.
|
| > The reason people care about this type of 'housing as
| an investment' is that it helps sell people on high
| mortgages, so more people can own rather than rent.
|
| High mortgages are the _counterargument_. If you were
| taking out a $25,000 mortgage, that could be a good
| investment even if the value never goes up, because you
| get a place to live, and are insulated from (and indeed
| benefit from) potential increases in local real estate if
| there were any. If you 're taking out a $500,000 mortgage
| for one unit, the imputed rent could be the same
| percentage of the investment if local rents are high, but
| now the potential upside is blunted and replaced with
| risk of value loss because you're buying high instead of
| buying low. That's a _bad_ investment -- you 're getting
| the same percentage ROI in terms of imputed rent while
| exposing yourself to the risk of a housing crash with a
| disproportionate share of your net worth in an
| undiversified investment, and further increases in value
| are long-term unsupportable by local wages.
|
| And if you're talking about a matter of policy (we want
| to encourage home ownership) then there are obviously
| more people who would qualify for a $25,000 or $100,000
| mortgage than a $500,000 one. Even for the smaller number
| of people who could make the payments on $500k, you don't
| _have to_ convince them to take out a huge mortgage if
| you can supply them with the same house with a smaller
| mortgage.
| bobthepanda wrote:
| People who are trying to buy a house may or may not want
| it, but people who currently own who are beneficiaries of
| this stand to lose a lot if their house lost its value,
| which they have undoubtedly financially planned around.
|
| It doesn't help that the move to 401ks from pensions was
| generally not good for beneficiaries and Social Security
| is facing a shortfall even before you consider current
| shenanigans.
| AnthonyMouse wrote:
| > People who are trying to buy a house may or may not
| want it, but people who currently own who are
| beneficiaries of this stand to lose a lot if their house
| lost its value, which they have undoubtedly financially
| planned around.
|
| So you've given the actual reason here, but now the
| original description is wrong.
|
| It's not that people want housing to be an investment,
| it's that people want the housing they _already own_ to
| _remain expensive_ instead of _becoming_ affordable.
|
| That is, of course, directly in opposition to housing
| being affordable. But the problem isn't that you need the
| number to go up, it's that people don't want it to go
| _down_. Which isn 't a problem if it starts off low and
| stays there, but is currently a problem because the price
| is already unsustainably high and _needs_ to go down.
|
| That problem only has one solution and the existing
| homeowners aren't going to love it.
|
| > It doesn't help that the move to 401ks from pensions
| was generally not good for beneficiaries and Social
| Security is facing a shortfall even before you consider
| current shenanigans.
|
| People have _not_ been better off for having invested in
| real estate rather than e.g. stocks:
|
| https://www.investopedia.com/ask/answers/052015/which-
| has-pe...
|
| The Social Security "shortfall" is also entirely
| fictional in the sense that it has already happened. The
| Social Security Administration, today, is already paying
| out more in benefits than it collects in social security
| taxes. It used to do the opposite, so it gave the extra
| money to Congress to immediately spend. As a result the
| government has government bonds on its own books, which
| is a no-op. Today Social Security sells those bonds to
| cover the existing shortfall, which is equivalent to
| deficit spending. Social Security started out by paying
| benefits to people who never paid in, which is why it
| will "run out" but is also why the "trust fund" is a sham
| and nothing magic happens when the bonds run out except
| that Congress has to pass a law that says "no that's not
| any good" and change how the accounting works to not be
| so ridiculous. What they _should_ do is eliminate both
| the "trust fund" and the social security tax and just
| fold the program into the general budget with a
| corresponding adjustment to the general income tax.
| thfuran wrote:
| It's not orthogonal to affordability, it's in opposition
| to it.
| smallmancontrov wrote:
| Housing services aren't the problem, capital gains are.
| You know this. You are nitpicking. But if you ever find a
| portal to the alternate dimension you describe, please
| give me a ping, I'd love to live there.
| AnthonyMouse wrote:
| > Housing services aren't the problem, capital gains are.
| You know this. You are nitpicking.
|
| Rents and imputed rents are definitely part of investment
| returns, and you can have a "good investment" where the
| returns are entirely in the form of [imputed]
| rents/dividends and not at all in the form of capital
| gains.
| financetechbro wrote:
| Your example is nonsensical. This is not how the real
| world works, living in hypotheticals doesn't help
| anybody.
|
| Also quite literally the meaning of a good investment is
| "it goes up and to the right" and anything that goes up
| and to the right in perpetuity is bound to become
| unaffordable if the wages or wealth of the buyers doesn't
| increase at the same rate as the asset.
|
| The housing market is a Ponzi scheme propped up by
| governments. But that's a topic for another conversation.
| AnthonyMouse wrote:
| > Also quite literally the meaning of a good investment
| is "it goes up and to the right" and anything that goes
| up and to the right in perpetuity is bound to become
| unaffordable if the wages or wealth of the buyers doesn't
| increase at the same rate as the asset.
|
| I feel like you're just not understanding the math.
|
| Suppose you want to invest in real estate, but property
| values are low and stable, zero capital gains. You invest
| $500,000 in twenty $25,000 units, rent them out and
| receive $250/mo each in net profit, $3000/year in
| gains/unit, 20 units, $60,000/year in total gains. Then
| you invest the $60,000 back into real estate, so now you
| have $560,000 in housing and next year you collect
| $67,200/year in gains from renting them, which you invest
| back into real estate, so then you have $627k in assets.
|
| Number chart goes up and to the right, even though the
| price per unit hasn't moved.
|
| It's not different for homeowners. If you buy a house --
| it doesn't matter if it's $25,000 or $500,000 -- you no
| longer have to pay rent to somebody else. Whatever you
| used to be paying in rent, now you get to keep. You can
| invest that in more real estate or in stocks or whatever
| you want, but by buying a house to live in, you have a
| return in terms of imputed rent regardless of whether the
| value of the house goes up.
| ForTheKidz wrote:
| Putting aside rent (which should be illegal IMO outside
| of rent to own--it just makes no sense as a social
| construct if you want to fight poverty instead of create
| it) the idea of an affordable investment is just bonkers.
| Any investment market necessarily precludes the idea of
| affordable entry or they wouldn't make good investments--
| the longer term you look at, the more this is true.
|
| We also can't force developers to build. This is a major
| problem in cities: they budget for housing that's
| supposed to come online but there's no (general, broad,
| accepted) way to penalize developers for failing to
| follow through.
|
| Public housing or bust, IMO. The housing market has
| failed this country for too many decades to trust it to
| suddenly start irrationally acting in our best collective
| interests with older generations selflessly sacrificing
| their retirements to not fuck over their grandchildren.
| worik wrote:
| > Putting aside rent (which should be illegal IMO outside
| of rent to own--it just makes no sense as a social
| construct
|
| I understand the sentiment.
|
| But many people at many stages of their lives do not want
| to be owning g property, so some rental properties make
| plenty of sense as a social construct
|
| But. The current situation where the poorest third give
| most of their income to the richest third of the
| population is manifestly unjust and is a blight on our
| society
|
| It is enough to give capitalism a bad name
| ForTheKidz wrote:
| Hell, I don't want to own property right now as I'm in a
| transitional form in my life. I pay too much for what I
| get out of my current apartment and I'm looking to
| downsize/chuck amenities away. Trust me, I'm happy to not
| have to maintain my plumbing or HVAC and while the ikea-
| quality hardware is ugly and cheap feeling, it's not my
| problem. It hurts, but I know that I'm not up to the task
| of maintaining a house and it would cost me more than
| rent to hire someone else to do it for me + property
| taxes + mortgage + actual material costs of maintenance.
|
| But if you want to solve homelessness, like actually try
| to remove it as a necessary reality of modern life (as
| many other capitalist AND socialist countries have
| successfully achieved), we fundamentally can't get there
| through mortgages and rents. I'm happy that people are
| more literate about housing policy than ever, but I think
| we can aim for more than marginally more affordable
| housing--we can completely defeat homelessness _if we
| have the will to do so_ and don 't have a dogmatic fear
| of subsidized housing destroying the value of the asset
| you'll leverage to retire on (if you're lucky).
|
| Sadly, I suspect we'll see a lot more homelessness before
| people who legitimately have any of their interests at
| heart enter power.
| worik wrote:
| We cannot solve homelessness with market mechanisms, I
| believe
|
| We are in agreement, I think.
|
| > Hell, I don't want to own property right now
|
| You need some place to live where the organisation of the
| capital is somebody else's problem.
|
| You need to rent.
|
| That does not mean you need to be exploited to the limits
| of your vulnerabilities. Which is the market model
| AnthonyMouse wrote:
| > Putting aside rent (which should be illegal IMO outside
| of rent to own--it just makes no sense as a social
| construct if you want to fight poverty instead of create
| it)
|
| Suppose housing is less than it is now, but a house is
| still e.g. $100,000. There will obviously be people who
| can't get a $100,000 loan, so where are they supposed to
| live? "Rent to own" is just another name for a mortgage,
| except that you have to pay _more_ for the right to give
| back the property at any time instead of needing to find
| another buyer yourself.
|
| Suppose you take a two year contract job in a city where
| you're only going to live for the term of the contract.
| Should you be required to buy a house there? Why?
|
| > the idea of an affordable investment is just bonkers.
| Any investment market necessarily precludes the idea of
| affordable entry or they wouldn't make good investments--
| the longer term you look at, the more this is true.
|
| You can go to a brokerage right now and buy a share of
| stock for $10. This is clearly affordable, so now explain
| why it is inherently a bad investment.
|
| > We also can't force developers to build.
|
| Developers want to build. It's how they make money. The
| problem is we keep _prohibiting_ them from building
| through single family zoning etc.
| ForTheKidz wrote:
| > Rent to own" is just another name for a mortgage,
| except that you have to pay more for the right to give
| back the property at any time instead of needing to find
| another buyer yourself.
|
| That's not necessarily a bad thing. You can leverage
| whatever you're mortgagibg as an asset (or in this case,
| whatever portion of the property you now own). You can't
| leverage your rental property despite almost certainly
| paying more than the equivalent mortgage.
|
| As you point out, rent makes sense for transitional or
| temporary living. I just think you should get ownership
| over some portion of the assets you are de-facto paying
| for.
|
| > Developers want to build
|
| Well, stalled developments are a problem across basically
| every metro market in the country. They don't make their
| money by building, they make their money by waiting for
| the labor & materials market to make an eventual sale
| profitable. In some metro areas with labor-this may be
| sufficient for some markets, but others (like the bay
| area) it's clearly not going to provide the housing
| people expect yimby zoning policy to deliver. Like yes
| zoning is a major issue in the city, but it's only one of
| many, and it's not sufficient to explain dysfunction
| where development was already zoned and approved years
| ago.
|
| One really great way to encourage developers to perform
| the role they're allegedly already serving is by having
| public-sector competition (zero- or negative-margin
| development/property management) to give them an
| incentive to be realistic about costs and timeframe. Or
| just straight fine them for wasting city property on
| zero-or-arguably-negative-value use.
| AnthonyMouse wrote:
| > That's not necessarily a bad thing. You can leverage
| whatever you're mortgagibg as an asset (or in this case,
| whatever portion of the property you now own).
|
| "Not necessarily a bad thing" is the argument that it
| could have benefits under some circumstances. It's the
| argument that it should be allowed, not that its
| alternative should be prohibited.
|
| The obvious cost is that you're paying more per month.
| Essentially, if you want a place to live, you're required
| to pay _more_ in order to invest in real estate, even if
| you don 't have any surplus to invest or you would rather
| invest in something else.
|
| > I just think you should get ownership over some portion
| of the assets you are de-facto paying for.
|
| When you rent, the landlord is covering the interest on
| the mortgage loan, property tax, maintenance, etc. The
| rent covers their costs and some profit to make it worth
| their trouble, which they often use to start paying off
| the mortgage. If there is no profit, there is no landlord
| to pay to build the building and either you can afford to
| buy it outright or you're homeless. So if you want to
| build capital, the money that goes to that capital is
| _additional money_ on top of the rent, i.e. you 'd be
| paying more per month because you'd be getting something
| you don't get when you rent. You're basically saying you
| think poor people should have higher expenses so the
| extra money can be used to force them to invest in real
| estate.
|
| > Well, stalled developments are a problem across
| basically every metro market in the country. They don't
| make their money by building, they make their money by
| waiting for the labor market to make an eventual sale
| profitable.
|
| They still make their money by building, you've just
| passed regulations that make building so expensive that
| it isn't profitable until rents are unreasonably high,
| e.g. by requiring them to knock down an existing multi-
| story building in order to add housing because most of
| the land is zoned exclusively for single family homes.
| jjav wrote:
| "Housing can be affordable or it can be a good investment.
| Not both."
|
| This is a cut&paste response predictably in every housing
| thread.
|
| Can we dig deeper and do some analysis?
| steveBK123 wrote:
| It is a simple mathematical fact of nature.
|
| If something goes up more than inflation - it is a good
| investment, but also less affordable over time (it costs
| you more labor hours to purchase over time). Think - tech
| stocks, housing, etc.
|
| If something goes up same/less than inflation - it
| remains affordable. Think - basic consumer goods we
| mostly import like laptops, t-shirts, etc.
| jwarden wrote:
| > If something goes up more than inflation - it is a good
| investment
|
| It's not that simple. First, risk is a also factor. But a
| real estate investor is not just looking for capital
| gains. They are looking at rent yields against costs
| (taxes, insurance, maintenance, interest).
|
| Real estate can be a good investment even without
| appreciation in real terms. And that is a good thing.
|
| Real estate investors play an important role in society.
| Without landlords, it would be impossible to rent a home.
| So anyone without the ability to purchase a home would
| have to rely on friends and family or charity, or sleep
| in the street.
| steveBK123 wrote:
| Sure but if you make the tax incentives TOO good for
| landlords, owner occupied housing % goes down as those
| with capital amass larger portfolios to lease out.
|
| Further if you made building housing easier there would
| be more available, with less price pressure from excess
| demand pushing prices and rents up.
|
| I'm more interested in enticing developers to build than
| I am encouraging more landlords.
| jwarden wrote:
| Okay but I think we've lost the thread of the argument.
|
| I am arguing against the claim "Housing can be affordable
| or it can be a good investment. Not both."
|
| You support this claim with the argument that "If
| something goes up more than inflation - it is a good
| investment" and therefore it can't be affordable.
|
| I am saying real estate can be a good investment even if
| it doesn't go up more than inflation. Do you disagree?
|
| Further, for landlords to make homes available to rent,
| housing must be a good investment. Do you disagree?
| ItsMonkk wrote:
| Note that a Georgist tax on 100% of land rental value
| does not stop the landlord from earning a return on their
| improvement values. The land tax of a property with a
| 100% land tax will decrease the land price down to $0,
| and thus instead of for instance putting $500k into
| buying land and $500k buying apartments, they could
| instead buy 2 $500k apartments for the same capital cost.
| The end result of this will be more apartments, which
| will bring down rents, but this will yield a higher ROI
| than they currently achieve, since they have to pay less
| rents to the banks.
| steveBK123 wrote:
| > I am saying real estate can be a good investment even
| if it doesn't go up more than inflation. Do you disagree?
|
| Yes I think so. You need rents to escalate faster than
| maintenance costs (which are tied to inflation closely)
| for this to be a good trade. So again - for rent to
| become relatively less affordable over time.
| jwarden wrote:
| It sounds like you are not considering rental income (the
| argument I made in my original comment). You only need
| growth of rental income to exceed growth of cost for it
| to be profitable to be a landlord. Am I incorrect?
| Marsymars wrote:
| I find inflation is a bit of a red herring. I like to
| think in inflation adjusted dollars with price relative
| to GDP.
|
| If something goes up faster than GDP, it's a good
| investment, but less affordable over time, etc.
| steveBK123 wrote:
| GDP / inflation / labor hours all loosely correlated
| though, so we aren't too far off.
|
| Really I think of things in two main buckets-
|
| Stuff that's going up faster than income and therefore
| the sooner you buy it and lock in a level, the better.
| This is also something that you can invest in, because it
| means when you sell in 10-40 years at retirement, it will
| have appreciated.
|
| Stuff that's going up slower than income, and I'll buy it
| as needed.
|
| For example on the face of it - cars and houses should
| both depreciate. They cost money to maintain, that
| maintenance cost goes up over time (it is labor), and
| newer ones get nicer and nicer. However it is only cars
| that depreciate. And I don't just mean a used car. A 2000
| Honda Civic started at $13k new. A 2025 Honda Civic
| starts at $24k new, and you now have good reliable
| Hyundai Elantra at $22k, which weren't as prevalent and
| reliable 25 years ago.
|
| The fact that we underbuild is why houses refuse to
| depreciate though.
| amluto wrote:
| It sounds like both Spain and the US have tax systems that
| cause it to be expensive to sell a house and buy a less
| expensive house.
|
| In the US, this takes the form of a nonsensical capital gains
| tax system: personal residences are not eligible for 1031
| exchanges, so taxes on gains are due immediately, those taxes
| are not indexed to inflation, the exemption is too small to
| make much difference in any high-property-value area, and the
| basis step-up at death strongly incentivizes children to
| encourage their parents to keep their house until they die.
| California puts icing on the cake with Prop 13, so you can
| trade for a cheaper house and your property taxes increase.
| At least some recent changes in CA take baby steps toward
| improving this.
| AnthonyMouse wrote:
| > property taxes (which are very good, yet seen as unfair by
| owners, so they stay low)
|
| Property taxes aren't actually good. Consider the economics
| of new construction: If the net present cost of building new
| housing is less than its net present value, it gets built.
|
| Net present value is the value of future rents (or rents
| avoided if you live in it yourself) minus future costs, each
| discounted by the time value of money. Property tax is a
| future cost, so it reduces net present value, so you get less
| construction until rents increase to cover the cost of the
| property tax.
|
| If you don't like high rents, you don't like property tax.
|
| > Taxes at sale time
|
| This too is a problem if you want people to downsize once
| they no longer need a piece of property, but e.g. raising the
| exemption amount so that approximately nobody is paying this
| tax would then not cost a lot in terms of revenue because as
| it is the _problem_ is that people are already avoiding the
| tax by not selling.
|
| If you tax something you get less of it. It's not different
| when you tax housing.
| amadeuspagel wrote:
| Property tax are mostly taxes on the land. If you want to
| build housing, you get the necessary land cheaper, thanks
| to the property tax. I agree that the sales tax is bad
| though.
| AnthonyMouse wrote:
| Land value tax would be on the land. Property tax
| includes the buildings, which is naturally the issue. If
| you want to replace a single family home with a 6-unit
| structure that each provide as much housing as the
| original unit, your property tax is going up, providing a
| corresponding deterrent to anybody doing that until the
| rent or market price of the building has gone up by the
| same amount.
| fc417fc802 wrote:
| The observations about effects of tax seem fair enough, but
| perhaps miss the point of taxes. The local government
| presumably needs to balance the budget somehow. The income
| has to come from _somewhere_ , and that's presumably going
| to be a tax of some sort. Whatever is taxed, there are
| going to be drawbacks and market distortions as a result.
|
| The issue shouldn't be "property tax raises rent" but
| rather "is the current structure the least bad option".
| Assessing the latter is going to include a lot more than
| just real estate.
| AnthonyMouse wrote:
| > Whatever is taxed, there are going to be drawbacks and
| market distortions as a result.
|
| That still leaves the question of what you want to do.
| Moreover, that doesn't mean that all of the distortions
| are _equal_. Land value tax has fewer distortions than
| property tax[1], and property tax is _differently_
| distorting than various other taxes.
|
| Meanwhile a lot of the taxes are going to social
| assistance programs, but if you're using taxes that tax
| the people who are the recipients of those benefits,
| that's entirely counterproductive. You'd be better off
| removing those taxes and not having those programs than
| setting up a huge bureaucracy that just takes money from
| the same people it gives it back to with strings and
| paperwork attached.
|
| Property tax is one of the more regressive taxes because
| everyone needs a place to live.
|
| [1] The proponents like to claim that it doesn't distort
| at all, but you still need the government to accurately
| value the land, which it can't do perfectly, and if it
| doesn't then you'll have e.g. land being abandoned
| because the tax is set too high and exceeds its value.
| This also creates a perverse government incentive if
| "abandoned" land goes to the government. Of course,
| property tax has a different perverse incentive: The
| local government wants to make housing more expensive so
| they get more property tax revenue.
| autobodie wrote:
| > _After you liberalize housing, you still run into the
| trouble of economic forces trying to turn housing into a
| sensible investment._
|
| Karl Marx made this crystal clear 150 years ago. You have to
| socialize housing, not "liberalize" it, whatever that means.
| And the Georgist solution will face a similar problem - the
| political one. The rich will always undermine mere tax law.
| You have to get rid of the rich, plain and simple.
| Telemakhos wrote:
| If taxes at sales time (capital gains on real estate) are
| keeping people from selling houses, why not eliminate those
| taxes to free up the frozen housing market?
| andrepd wrote:
| I don't think slapping a Georgist LVT will magically solve
| _everything_ , but it will point market forces towards a
| desirable path, which is already a huge huge help compared to
| the state of things now.
| goosejuice wrote:
| Business stagnation and crime are particularly bad for Oak Park
| and Evanston. For the walkable areas increased density seems
| worse for local businesses. It prices out the mom and pop
| shops. I suspect there's a happy median.
|
| I too am in a western Chicago burb. All this tearing down of
| $400k houses and replacing them with hideous cookie cutter
| $1.8M new builds drives me crazy. They're 5-6 bed 5-6 bath. One
| in particular is a $500k to $2.5M flip. That's criminal.
| davidw wrote:
| > I'm a housing activist
|
| Having seen you here ... well, forever basically, that's kind
| of awesome to see you describe yourself that way. High fives!
|
| Myself, I'm off to Salem, Oregon on Monday to testify in favor
| of Governor Kotek's big housing bill this year, HB 2138.
| tptacek wrote:
| Good luck!
| anal_reactor wrote:
| > Public safety issues
|
| Everyone believes in the myth of "dark, dangerous alleways",
| but when you look at the crime distribution of almost any city,
| it's usually actually concentrated in the city centre. Which
| makes sense. Imagine you want to mug someone - would you stand
| in a place where you're alone and wait entire night for someone
| to pass by, or would you go in front of a bar, and wait ten
| minutes for someone who's too drunk to resist. I absolutely
| love walking around at night and I strongly prefer dark places
| without any people around me, and I feel much safer than when
| surrounded by people. Can't get robbed if there are no robbers
| around. Simple as that.
|
| So far, I have had only one dangerous situation when being out
| in the city alone at night. There's a place I pass by where
| groups of people hang out - drinking, talking, listening to the
| music. Seemed like a lovely spot that lightened up the
| neighborhood, until one evening they decided to start shooting
| each other right when I was passing by.
|
| BTW I really wish my city ran out of money for street lamps,
| because the fact that we need to keep everything lit 24/7 like
| a carnival is driving me crazy, and I can't wait to move to the
| countryside for this reason alone.
| tptacek wrote:
| Maybe my data doesn't generalize, but it's true for my muni.
| steveBK123 wrote:
| There's another housing problem which maybe sounds ironic but I
| would argue that due to land costs, and tastes.. new housing in
| general is "too nice" compared to old housing. That is - the
| size, materials, appliances and finishes of housing have all
| got dramatically better in my 40~ year lifetime. No one builds
| utility housing anymore, its all aspirational.
|
| So for example, my parents & in-laws live in SFHs worth like
| 300k built in 1970-1990 era. The problem is that anything of
| comparable size built in the same town or neighborhood since is
| now going for 800k (literally across the street even). There is
| no cash-out downgrade for them to move to a townhouse and put
| there underused homes on the market. They weren't building said
| townhouses 30-50 years ago, so all available ones are newer and
| thus .. too nice. Why would you move to a smaller place for
| same/more money which also has some monthly HOA/condo fees?
|
| My first NYC apartment didn't even have a dishwasher or full
| sized fridge. I didn't have an in-unit washer/dryer until I was
| 35, and it was small/bad. Meanwhile it's interesting seeing the
| expectations of GenZ moving into apartments with their first
| job that are finished like the nicest apartment I ever lived
| in. Then they complain about cost? I can still find my old
| crappy apartment on street easy, and its rent is only up 50% in
| 20 years which given wages seems fine. Kids are moving to shiny
| finishes new rentals in Bed-Stuy for more money rather than
| enduring the indignity of living north of 96th street in a 2nd
| floor walk up.
| cjaackie wrote:
| This is an interesting point that I've seen play out as you
| described. It was the parents of an acquaintance of mine, and
| they did choose the downsize option because they were getting
| too old for the upkeep of a whole house and niceties it
| brings such as having the hotel like amenities of a doorman.
| Then there's the point of choosing new vs. old stock, agreed
| there is a higher demand, thus it demands higher cost.
| steveBK123 wrote:
| Further - because it's easy & cheap to stay in a paid off
| SFH indefinitely, a lot of retirees do so.
|
| Part of it is inertia and part of it is stuff like "where
| will the grandkids stay if I moved to a condo".
|
| Which sure if your monthly costs are near $0 then having
| 2-3 spare bedrooms sit empty 360 days per year seems
| sensible.
|
| If they could cash out 50% of their homes value and have
| same/lower monthlies, then losing some spare bedrooms
| wouldn't matter.
|
| Downgrading has to be both easy and cost saving for
| retirees to do it.
|
| Between my dad and his 3 siblings only 1 has done the
| downgrade-after-70 thing. And even then that aunt only did
| so as a gift to her son selling them the family home below
| market ...
| VHRanger wrote:
| I mean, if there's restricted supply/excess demand then the
| ones at the margin moving the point where supply and demand
| cross will the ones willing to pay high prices.
|
| It shouldn't surprise anyone who took econ 101 that new
| builds are appealing to the ones at the margin of buying or
| not buying, and that those people are way above the median
| income right now.
| steveBK123 wrote:
| Fair point
| mixmastamyk wrote:
| Yes, as long as there's a shortage of housing no one is
| going to build "utility" (read low-profit) housing when
| you could build high-profit "luxury" housing.
|
| Imagine you have a development company that is restricted
| to building one building a year instead of five--what
| would you build? The kind that makes you money. People
| forget each project is risky for the builder.
|
| Even mid-profit is selected against in an intense
| shortage.
| steveBK123 wrote:
| Right so the core of the problem is not enough new
| development, a lot of which is nimbyism.
| UncleOxidant wrote:
| > Retail business stagnation
|
| This is maybe a bit tangential, but I live in a very walkable
| neighborhood (by US standards, anyway). But as commercial rents
| are rising (even faster than rent for housing) it's driven
| several small businesses out of our walkable core - a bookstore
| faced a 30% rent increase and couldn't make it work, a donut
| shop shut down for similar reasons, several other small
| businesses facing this. It kind of seems like commercial
| landlords saw that it was becoming more walkable because many
| high-density housing projects have come in over the last 7
| years and they decided to gouge their tenants. Their tenants
| (small businesses) can no longer make the numbers pencil out
| with the high rent and shut down leaving empty storefronts - or
| large chains move in destroying the local character. And then
| there's less to walk to.
| SoftTalker wrote:
| Raising rents so high that tenants leave seems
| counterproductive. Now you have no income from the property.
| So why do landlords do it?
| mouse_ wrote:
| line must go up forever or infinite free money scam stops
| working
| UncleOxidant wrote:
| It's a good question. I suspect that some of these will
| remain empty for several months, at least.
| germinalphrase wrote:
| I have heard it said that landlords are willing to take
| losses on some properties (leaving them vacant) if it means
| they can continue to justify their other property
| valuations. If they drop rents, that lowers the valuation
| of that property - and others like it - which can have a
| cascading effect of their entire portfolio. Would love to
| be corrected here if someone has a more detailed
| understanding.
| AnthonyMouse wrote:
| This one has legs because it plays into the "landlords
| are evil" vibe, but it makes zero sense. There are
| thousands of landlords in any given city, if not
| _millions_. It 's not uncommon for a local landlord to
| only own a single building, and even the ones that own
| multiple properties will almost never exceed a single
| digit percentage of local real estate. The exceptions are
| things like company towns which is just not what anybody
| is talking about here. But if you own 0.3% of the units
| in a city, withdrawing some of your units from the market
| is not going to materially affect the city-wide rental
| price for the other units.
|
| The evil thing the landlords do is go to the planning and
| zoning boards and lobby to prevent _anyone else_ from
| increasing the supply of local rental units.
| wcunning wrote:
| I actually think this one is pretty accurate _for
| commercial real estate in particular_. I'm in Metro
| Detroit and either a building is a totally dilapidated
| wreck in an area that has theft problems, or it's going
| for $1~3 per square foot per month on triple net terms
| (leasee must do all upkeep, pay utilities, etc), which
| comes out to $100000 /year in rent _before_ utilities and
| such for an empty concrete shell. Worse than that, none
| of the places anyone lives are anywhere near anything
| available, so I can't rent something for a nice big
| woodshop. At the same time, I can't build a decent thing
| as a "garage" on my 2.1 acres due to zoning in my
| municipality from 25 years after my house was built. At
| the same time, there's a bunch of buildings sitting empty
| with no rent paid. This means that landlord cost
| structure for light industrial is completely different
| than you seem to suppose or there would be competition
| and prices would come down...
| AnthonyMouse wrote:
| I'm not entirely sure what you're even arguing here:
|
| > I'm in Metro Detroit and either a building is a totally
| dilapidated wreck in an area that has theft problems, or
| it's going for $1~3 per square foot per month on triple
| net terms
|
| That makes a certain amount of sense. If a building is
| completely wrecked then the landlord would have to spend
| a lot of money to improve it, but isn't going to do that
| if it's in a bad area that couldn't command higher rents
| even if it was in better condition.
|
| > Worse than that, none of the places anyone lives are
| anywhere near anything available
|
| Again what you would expect to happen if they _weren 't_
| purposely withholding units; units in higher demand areas
| are all rented out and the vacant units are vacant
| because nobody wants to be there.
|
| > At the same time, I can't build a decent thing as a
| "garage" on my 2.1 acres due to zoning in my municipality
| from 25 years after my house was built
|
| Again consistent with the evil thing landlords do being
| to lobby the government to prevent competition, rather
| than not renting out units they could profitably rent
| out.
|
| > At the same time, there's a bunch of buildings sitting
| empty with no rent paid.
|
| But you have yet to establish why. Are they units nobody
| wants for some reason? Are they "empty" but actually
| rented out, because some company signed a long-term lease
| before COVID and now they're WFH so nobody is there, but
| the lease doesn't allow subletting?
|
| The inverse of the latter could also explain a lot of it
| for commercial real estate. Companies typically use long-
| term leases with defined terms because if they move in
| they're going to have significant expenses to install
| office furniture, wire up all their computers and cameras
| and things, put up walls where they want them etc.
| They're not going to do that in a place that could jack
| up their rent a year after they move in, so they demand a
| long-term lease with a defined rent.
|
| Now the landlord has a problem. WFH is still a thing and
| it's harder to find commercial tenants, but they don't
| want to provide a new tenant with a huge discount in a
| long-term lease if they're predicting WFH will go away
| and they'll be able to demand higher rents in a year or
| two. And maybe that's cope, but it could still be why
| they're doing it, at least until they've sacrificed
| enough income to realize that WFH isn't going away.
|
| Or it could be something else, but "landlord with twenty
| buildings thinks they can significantly increase city-
| wide rent by not renting out some of their units" is
| still nonsense. If it's happening at all it's only
| because those landlords are the proverbial fool and their
| money, not because they've devised an evil plan to profit
| from screwing people, because that evil plan screws the
| landlord doing it more than it screws the tenants.
|
| Again, their actual evil plan is to prevent _other
| people_ from putting more units on the market, by
| lobbying for zoning restrictions that inhibit new
| construction. Not by foregoing their own profits on their
| existing units.
| germinalphrase wrote:
| I'm not calling them evil. I'm just trying to come up
| with a rationale answer for why storefronts would be left
| vacant for extended periods of time.
| AnthonyMouse wrote:
| There could be honest but non-obvious reasons. Maybe they
| need multiple renovations before they can get a
| certificate of occupancy but the local permitting office
| is Kafkaesque, or the site needs environmental
| remediation before it could be rented but the owner
| doesn't want to deal with it so they're trying to find a
| buyer instead of a tenant, or they have to finish suing
| the previous tenant who messed up the unit before they
| have the money to fix it, or the landlord took out an
| adjustable-rate mortgage right before interest rates went
| up and WFH started and is now bleeding cash and waiting
| to see if rates come back down to decide whether they
| want to invest new money in finding tenants or just file
| for bankruptcy.
|
| One of the serious possibilities is that they're dumb.
| Lots of idiots exist, some of them buy real estate.
| They're asking for more because they erroneously think
| they can get it and then they're wrong so the unit is
| empty. They eventually either figure this out and lower
| the price or they run out of money to pay the mortgage
| and the bank comes for them, but either of those could
| take an arbitrarily long period of time.
| AnthonyMouse wrote:
| Bookstores and things are desirable to local residents but
| are less profitable than other prospective tenants once the
| area has high traffic. The bookstore can't afford the
| higher rent but a Starbucks or something can. The landlord
| is willing to take a short-term vacancy for a long-term
| higher paying tenant.
|
| Therefore, if you want local bookstores you need enough
| supply of commercial real estate to keep the rents at a
| level the bookstore can afford, or they'll get replaced by
| chains.
| afuchs wrote:
| Louis Rossmann has a video series of his rants about
| commercial real estate and the refusal of landlords to rent
| spaces to him which have been vacant for multiple years.
|
| One of his videos speculates that real estate is being used
| to store money and the building owners don't want to rent
| out anything:
|
| https://www.youtube.com/watch?v=Yavgfk0IjdM
|
| Another video speculates that the owners of some buildings
| have made claims to banks and investors that their
| buildings are worth more than these buildings are actually
| worth. In this situation, if the buildings' owners lowered
| rents they would be admitting that the building is not
| worth as much as they claim. This could trigger contractual
| obligations they have with their mortgages and investors:
|
| https://www.youtube.com/watch?v=NdfmMB1E_qk
| derlvative wrote:
| This is empty speculation. And it can be trivially
| refuted by noticing that vacancy rates are at record
| lows.
| afuchs wrote:
| > This is empty speculation. And it can be trivially
| refuted by noticing that vacancy rates are at record
| lows.
|
| His rants were prompted by his failed attempts to rent
| out specific vacant storefronts in NYC and that those
| exact storefronts have sat vacant for more than 10 years
| at the time he made his videos.
|
| This is similar to my experience living in a smaller city
| where there are similar vacant and rundown properties a
| short walk away from where I live. Notably, these vacant
| properties are owned by commercial landlords who have a
| reputation for refusing to sign leases, or quoting "fuck
| off" prices, with small businesses.
| derlvative wrote:
| Bro you don't have any statistics.
| enragedcacti wrote:
| A theory that I've seen is that as an area increases in
| value redevelopment will offer the highest ROI for a strip
| mall owner, but local zoning and town council approvals are
| a huge barrier. Empty stores are inefficient short term but
| the blight can help to push through rezoning or council
| approvals for redevelopmemts that will pay off in the long
| term.
| Apreche wrote:
| I would tell the same story, but the root issue is cars. Housing
| density would have remained high if not for car dominance.
| tptacek wrote:
| By necessity, perhaps. But really, cars enabled communities to
| more cost-effectively express preferences that would have been
| too expensive without them; cars are an indirect driver of this
| problem.
| tmnvix wrote:
| I think you could replace 'cars' here with a lot of
| technological innovations that have made certain aspects of
| our lifestyles attainable at a potentially greater
| externalised cost. Much of it is simply making things more
| convenient - not necessarily better.
|
| There are two things that I am becoming more and more willing
| to believe:
|
| 1. We live in an age of entitlement (I can afford it, it is
| possible, it is legal, I want it, therefore I will do it).
| There is a good chance that this is how we will be
| remembered.
|
| 2. Convenience is killing us and robbing us of the activities
| that actually provide satisfaction. We fall for this because
| we think we desire happiness and that hedonism will provide
| it, when in reality satisfaction/contentment is what we truly
| desire.
| willis936 wrote:
| Are you suggesting that railway megaprojects are being done to
| service communities with no people? I have a hard time finding
| dense communities with good rail systems.
| raziel2p wrote:
| where have you looked? I could name almost every European
| city as an example...
| willis936 wrote:
| I do think this is a uniquely US problem. I know many
| places in Europe and Asia don't have this issue, yet nearly
| every city in the US faces it.
| occz wrote:
| While I agree with the general anti-car sentiment, we have
| expensive housing in less car-dependent areas as well (case in
| point: various cities in Europe), leading to a broad range of
| social issues. Hence, I have to disagree with this point in
| particular.
| mperham wrote:
| Tokyo proves that dense cities can maintain access to
| reasonably priced housing.
| Tade0 wrote:
| Tokyo of today. During the Japanese asset bubble that
| wasn't the case.
|
| Also properties in Japan generally depreciate like cars
| because it's a seismic area and newer buildings are
| typically better equipped to deal with that, so it makes
| sense to tear it all down every 30 years or so.
| mlsu wrote:
| The key is to not focus on the money. The money flows in one
| direction, but the economy (things that people choose to do;
| where they spend their time, how they get around, etc) flows in
| the other direction. In some sense, money is a symbol which
| represents real economic activity.
|
| From there. Looking at just the real life things that are
| happening and deliberately leaving out any mention of money:
|
| - there aren't enough places for people to live near jobs.
| Employers have a hard time finding workers, because workers can't
| afford to live nearby. Productivity suffers.
|
| - people have to spend a long time commuting to their job, which
| means they spend a lot of time in their cars. Big waste of time!
|
| - the housing that is out there, is very old and not suitable for
| many people. People who should be living alone in a small studio
| take roommates and live in a single family home, because there is
| no inventory of studios for them. People's lives are worse
| because of this, their built environment isn't what they want it
| to be.
|
| - people who want to start a family and live in a small house on
| their own, can't. the only houses they build are too large for
| what new families need. So people delay starting a family,
| because the housing that should be there isn't there for them.
| Fewer kids.
|
| - because it's hard to find places to live, people are less
| mobile. when they find a place, they hold onto it longer, even if
| it's suboptimal for their situation. So people stick around even
| if it sucks, because there's nothing better out there.
|
| - places that have prestige jobs see the bottom % pushed out
| because there's only room for top % employees. Those places get
| "hollowed out" with the bottom % taking long commutes or living
| in suboptimal conditions to be near the top %. Social
| segregation, which leads to cultural disconnects.
|
| - parents don't have a place to go once their children are grown
| up and have moved out. Our built infrastructure doesn't suit
| them. So they stay put and get lonely.
|
| - because everyone has to drive to work and can't walk, small
| businesses that depend on foot traffic don't work any more. Big
| businesses with office parks and the money to build parking lots
| in suburbs have the commercial advantage, so they prevail.
|
| etc etc.
|
| Completely removing the whole concept of "money" from the
| conversation, makes it abundantly clear that we are making bad
| choices about our built infrastructure, over and over again, to
| all society's detriment.
| 4fterd4rk wrote:
| The NIMBY people know what they're doing. They know that
| restricting the supply of housing is bad for society. They don't
| care because it is good for their own personal financial
| position.
|
| I'm sick of these posts thinking that these people are stupid and
| if we could just explain to them the consequences of their
| actions this would all be fixed. No. They KNOW. It is
| intentional.
| ty6853 wrote:
| This is exactly it. Notice for instance how homeowners will
| vote to allow ADUs but not to allow splitting off the ADU as a
| separate deed that would allow someone else a piece of
| competing ownership. They want all the upside of additional
| landlord opportunities but not the filthy peasant to own the
| Adu they live in.
| loeg wrote:
| Maybe? There are also just a ton of really stupid, or not
| especially conscientious people.
| J_Shelby_J wrote:
| But that would mean that west coast liberals aren't actually
| liberal! Inconceivable!
| freen wrote:
| The "screw you, I got mine" culture is killing us.
|
| People who bought houses enabled by zoning changes refuse to
| allow zoning changes that will increase the price of their own
| home because why?
|
| Racism and a fundamental failure to understand economics.
| raziel2p wrote:
| I think it's more projection - assuming anything that benefits
| you benefits society as a whole.
|
| House owners assume everyone else is also a house owner, so
| increasing values will benefit everyone.
| dmonitor wrote:
| I'd posit that it's the inverse belief: anything that
| benefits other people indirectly hurts you. This zero-sum
| worldview is becoming popular in national politics as well.
| freen wrote:
| This.
| notepad0x90 wrote:
| There is no shortage of land, there is a shortage of efficient
| transportation. All this talk of building up and creative ideas
| around housing is great but the ultimate problem is
| transportation. To solve the problem of housing in LA, a person
| should be able to live in Reno,Nevada and work somewhere in Santa
| Monica, CA. I'm not saying I have a solution, I'm just pointing
| out the problem domain.
|
| The US does not have modern transportation infrastructure like
| similarly sized countries like China. Generally speaking, housing
| is built near bodies of water or alongside transportation towards
| bodies of water. Even issues like NIMBYism can be resolved by
| constructing underground bullet trains that won't affect
| appearances. This is a hard problem, but not an unsolvable
| problem. It isn't just economies of scale, government investment,
| clever economic strategies,etc.. that are needed but actual
| revolutions in construction technology and transportation.
| Timelines for construction that are only few years not decades.
| But alas, I fear the politics of these days would not allow for
| this.
| CalRobert wrote:
| LA has good public transport but then builds low density around
| it
| tokioyoyo wrote:
| Good coverage, but it's absolutely abysmal in terms of
| reliability, convenience, speed and cleanliness. I tried to
| survive a week without Uber/driving in LA, and gave up after
| 3rd day.
|
| If your public transport is mostly used by low income
| residents, you've already failed. It just shows that it's not
| good enough for anyone else and alternative methods are
| superior if you have money.
| 01HNNWZ0MV43FF wrote:
| Subways are too expensive per mile for a lot of cities. Density
| makes transit cheaper
| notepad0x90 wrote:
| I agree, so let's make it cheaper. Other countries build
| subways cheaper over longer distances. It isn't a practical
| limitation but one of politics and policy.
| resonantjacket5 wrote:
| Or allow building higher than one story? Like most cities
| around the world
| supertrope wrote:
| It would be much more efficient to legalize apartments in LA
| than to run high speed trains to bedroom communities. Digging
| tunnels would blow out the cost by itself.
|
| Dropping infinite resources into stretching commutes across
| vast distances is not realistic. Taken to its logical extreme
| everyone should commute by private jet. The larger the
| transportion network, the more it costs, or at the same cost
| the less convenient it becomes because intervals between
| vehicles increases.
|
| The most efficient form of transportation is avoiding the trip
| in the first place through telecommuting. Then walking or
| biking. Then mass transit which works best with areas with lots
| of riders (dense cities). https://humantransit.org/basics/the-
| transit-ridership-recipe.
|
| Think of train service like a pancake. For a given amount of
| batter you can make a normal pancake, or you can spread it
| thinly over a large area, or you could make a small and thick
| pancake. If you want great service over a huge area you must
| massively increase resource expenditure.
| janalsncm wrote:
| Buses aren't that sexy but they are probably a good
| compromise for cities like LA. They don't require a ton of
| infrastructure and can still remove lots of cars from the
| road. Make them convenient (better bus stop UX, wait time no
| more than 10 minutes, GPS track them, modernize them) and
| people will consider buses.
|
| Send surveys to all the biggest companies in the city to
| figure out specifically the routes that need to be created.
| supertrope wrote:
| Buses are usually the cheaper inferior option. While bus
| service doesn't inherently suck, buses are usually chosen
| because of cost not because they want to run a good
| service. This results in cost cutting of every portion of a
| bus network until the experience suffers. Dedicated lanes
| are not provided so buses get stuck in traffic. Bus stops
| without rain shelters or even a bench (versus full
| stations). Operating budgets get cut and then the interval
| between buses goes to 30 min. Service after 10 p.m. gets
| cut. The bus networks that don't suck are usually called
| "shuttles" and are underwritten by tourism districts,
| airports, and theme park operators.
| mperham wrote:
| Yes, and every LA arterial should have a dedicated lane for
| bikes and buses.
| Qwertious wrote:
| Buses are terrible because they get stuck in the traffic
| they're competing with. If the bus is the same speed as the
| cars, people are more likely to take a car.
|
| This can be fixed - dedicated bus lanes mitigate this
| nicely - but doing so is politically unpopular. And
| frankly, if you have the political will then you should
| just build trains. They're more reliable, cheaper in the
| long run, and have higher capacity.
|
| The main advantage of buses is that they're a great
| stopgap, and are good for niche/dynamic routes.
| acdha wrote:
| Los Angeles has been doing this and the BRT lines are a
| great way to get started since they're so much cheaper to
| build. The last time I was visiting family they looked
| busy and outpaced the car traffic handily.
|
| One game-changing technology is the way cameras are cheap
| now. You can put them on every bus and change drivers'
| calculation of the risks of suffering consequences from
| blocking bus lanes or stops from "less likely than being
| struck by lightning" to "every time". That requires
| political will but the technology makes the cost not only
| low but self-funding.
| Karrot_Kream wrote:
| This is exactly what LA is doing btw. LA has a few light
| rail networks but by far most of its network is buses and
| most of its riders use its buses. The problems that the LA
| Metro Bus network echo the problems with fixing housing
| costs in general:
|
| * Lack of political will to create separate lanes. City
| council members are drivers and empathize with their auto
| driving constituents and would rather have driving lanes
| available to auto drivers than exclusive to buses
|
| * Better bus stops require better funding which requires
| raising taxes. Nicer bus stops also tend to attract the
| homeless. The US has been funding auto driver amenities for
| almost a century via taxes but only started funding transit
| in a consistent way federally from the BBB act, and even
| then only at a fraction of auto improvements.
|
| * A bus route that serves many stops is slow. A bus route
| that serves few stops is inconvenient for anyone not near
| those stops. You can run multiple buses along a route with
| differing levels of service to service both modes, but that
| requires running more buses, which requires purchasing more
| buses and hiring more drivers which costs more money.
|
| Most of this comes down to a lack of political will and
| funding. Most politicians still see driving as the main way
| to move around and are loathe to fund transit as anything
| more than an equity initiative to help with the sad folks
| who cannot drive a car. Until this changes, progress is
| going to be slow. Likewise most politicians benefit from
| high housing costs because they themselves live in more
| expensive, exclusive areas with exclusionary zoning and are
| more sympathetic to that viewpoint and view housing
| accessibility as largely an equity initiative.
| notepad0x90 wrote:
| But who wants to live in apartments? It's better than being
| homeless but it's hardly a solution. People want single-
| family housing, and it is possible to build tens of millions
| of houses within practical commute distances of big cities.
| Also, we can build new cities!
| weeksie wrote:
| What a weird argument. There are many, many apartments in
| New York that people want to live in so badly that they'll
| pay millions upon millions of dollars to do so.
| janalsncm wrote:
| Absolutely. Or put another way, if you can imagine a map of a
| metro area distorted in terms of commute times between places
| rather than physical distance, the goal is to maximize the
| density of the city, putting as many people as possible within
| reasonable commute times.
|
| This is possible via either dense housing or efficient
| transportation or both.
| acdha wrote:
| > There is no shortage of land, there is a shortage of
| efficient transportation. All this talk of building up and
| creative ideas around housing is great but the ultimate problem
| is transportation. To solve the problem of housing in LA, a
| person should be able to live in Reno,Nevada and work somewhere
| in Santa Monica, CA.
|
| Trying to present this in such absolute terms makes it wrong.
| There's no feasible way that a 600 mile one-way commute is
| going to be desirable short of magic teleportation booths. Even
| if you have a personal jet and priority air traffic control
| that commute sucks and people want to be enjoy the areas where
| they live, not spend all of their time traveling somewhere
| else.
|
| Transportation really is a big problem, but it works the other
| way around: we need transit and enough density so people don't
| need to use cars on a daily basis, freeing up close to half of
| the land usage in American cities and making housing cheaper.
| What would help would be if there was a way to live in Burbank
| or Chatsworth and not need to spend an hour driving to go to
| Santa Monica, or paying many thousands of dollars per year for
| the privilege of doing so.
| notepad0x90 wrote:
| People don't like to live in dense environments. Apartments
| and condos suck, people want their back yard.
|
| I presented it in absolute terms because we're talking high-
| level here. The possibility to commute from reno to santa
| monica and having lots of people actually doing that are
| different things. My point was, if that was a 1-2 hour
| commute, then housing along side that commute would make
| economic sense, as will many other economic activities. If it
| is a train, I personally won't mind a 2-3 hour total daily
| commute, since I can catch up with books,entertainment,etc..
| but if it is a drive, that would be too much, and that in
| essence is one of the critical issues on how this is being
| thought about. Cars (EV or not) are one of the root causes of
| the housing problem.
| acdha wrote:
| Some people don't, but many people do - for example, older
| people don't want to do yard work - and everyone has to
| choose between a number of different related things. If you
| want to live somewhere with culture, interesting local
| businesses, a healthy walkable lifestyle, etc. the suburban
| model isn't economically sustainable. If you want a
| detached single family house and a large yard, you might
| trade those amenities for the house you want but it's
| definitely a choice with significant costs. The fact that
| America's walkable neighborhoods have such price
| competition suggests that there is a significant
| underserved market for that even if the preference isn't
| universal.
|
| As for that scenario, 1-2 hour commutes are still misery
| class. Doing it on a train is better, but countless studies
| have found that a shorter commute increases happiness more
| than a big house (the amenities don't matter, you don't
| have time to use them!).
| J_Shelby_J wrote:
| Just because you don't yet understand why people are
| prioritizing walkable communities over anything else,
| doesn't mean reality reflects that. The opposite is true;
| walkable neighborhoods are expensive because they are in
| demand. People live in single family housing in the suburbs
| because they can't afford to live like Ted lasso.
| HDThoreaun wrote:
| Can you imagine that some people feel differently than you?
| There are in fact many people who enjoy living in
| apartments.
| peterbecich wrote:
| If the https://en.wikipedia.org/wiki/California_High-Speed_Rail
| is completed, it would be reasonably convenient to live in the
| Central Valley and commute to San Francisco
| (https://en.wikipedia.org/wiki/The_Portal_(San_Francisco)).
|
| Unfortunately, the High-Speed Rail has become exorbitantly
| expensive, all publicly funded a.f.a.i.k. On the other hand,
| housing in general and the existing 19th-century railroad
| network were built with private money. As an aside, this is why
| the internet backbones from coast-to-coast are privately owned;
| these are on railroad land.
| matt3210 wrote:
| Those holding the homes have an interest in making the problem
| worse. Those buying homes make the assumption of the problem
| getting worse. Those who complain about the cost will reverse
| their position when they buy.
|
| The issue is that everyone involved wants the problem to get
| worse.
| sooheon wrote:
| This is why historically land reform occurred via revolution,
| not policy.
| J_Shelby_J wrote:
| Turns out the housing theory of everything applies to youth
| support for trump in 2024.
| loeg wrote:
| Too cynical. There exist homeowners who don't want the problem
| to get worse, because, like, we live in a society. Rampant
| homelessness and nosediving birth rates are not to my benefit.
| My friends and kids will need to be able to afford housing.
| Schiendelman wrote:
| It doesn't really matter if a few of the homeowners want
| things to be better. It's a tiny percentage of the homeowners
| who want prices to continue going up who push all of the
| policy effectively.
| onlyrealcuzzo wrote:
| > There exist homeowners who don't want the problem to get
| worse, because, like, we live in a society.
|
| There's hundreds of millions of homeowners.
|
| Obviously some exist that support basically every opinion
| imaginable.
|
| The vast majority of home owners want the "problem" to get
| worse, because it isn't really a "problem" for them - at
| least immediately and obviously.
| loeg wrote:
| > The vast majority of home owners want the "problem" to
| get worse
|
| No; I am rejecting that claim.
| onlyrealcuzzo wrote:
| We can rely on voting evidence instead of claims.
| onlyrealcuzzo wrote:
| The solution to most of our problems is even bigger problems.
| bbor wrote:
| `I.i` the San Francisco Bay Area - probably the most productive
| place in the Western world
|
| That is absurd. Beyond absurd -- insulting. Every day I only feel
| more shame for being associated with Silicon Valley, because of
| how arrogant the culture has become... `I.ii` In
| the 1960s, it was commonplace that a middle class single-earner
| American or British family would be able to afford a comfortable
| home.
|
| This is such a common fallacious belief the author doesn't even
| think to cite it. That's very relatable, but regardless it should
| be called out: home ownership was rarer in 1965[1].
| `I.iii` These prices range from about twice to four times the
| cost of building new homes of equivalent specification. This
| wedge, between build costs and house prices, is a rough proxy for
| how much extra cost is being driven by restrictions on new
| building.
|
| I'm sure we can all agree that streamlining housing bureaucracy
| should've been a priority in the US, but this super-simple
| picture is misleading, IMO. Regulations are the first layer of
| friction, but they cover up real conflicts/costs/externalities;
| simply removing all regulations on housing production would
| destroy San Francisco's famous skyline and unique architecture,
| for one.
|
| Ultimately this quote represents the core of my problem with this
| (well written, relatable!) piece: it's discussing capitalism
| without mentioning capitalists. A huge part of housing costs are
| tied to corporate monopolization and rent-seeking, not just red
| tape. `I.iv` By contrast, almost every other
| household product has become better and less expensive since
| then.
|
| Housing is considered a service by the Fed (I guess because it
| requires construction workers?), so this is less surprising than
| it's framed here; services have all gotten more expensive as
| goods have gotten cheaper. See Section 3/Chart 4 here:
| https://www.newyorkfed.org/medialibrary/media/research/epr/0...
| `II.i` This means that many people are working in less productive
| jobs than they could if it was easier for them to move to more
| productive places.
|
| Very true -- as I said, the underlying impetus is very relatable!
| This is _exactly_ why we were in such desperate need for
| reliable, cheap mass transit outside of NYC and DC. Luckily, WFH
| is something of a hack here. `II.ii` Sheer size
| is not all that matters, because complementarity between workers
| matters even more - a skilled software engineer will likely
| increase her income more by moving to Berlin (population: 4.4
| million) than to Mexico City (population: 21 million).
|
| ...because Germany is richer, not because they're nerdier. I
| really want to like this article, but it almost seems to be
| _intentionally_ ignoring the inequalities created by capitalism +
| nationalism. `II.iii` By historical and global
| standards, today's most successful cities in America and other
| Western countries are astonishingly sparsely populated and
| sprawling... The main cause of this is regulations that ban
| buildings that make better use of the land.
|
| Again: c'mon. The fact that the word "automobile" doesn't appear
| in this paragraph isn't an omission, it's a fatal flaw to the
| entire point. We've known the effect of cars on urban density
| since 1939[2]. `II.iv` According to one
| study[3]... [if productivity of labor is vastly different across
| cities, output can in principle be increased by expanding
| employment in high productivity cities at the expense of low
| productivity cities]
|
| That is a very questionable hypothesis; AFAIU, they're saying
| that doubling the population of San Jose would double the GDP
| generated by the city. IMO That's a fundamental misunderstanding
| of what makes rich cities rich.
|
| I'll cut my rant here -- the inequality section is interesting
| (love a Henry George reference!), even if I don't buy the final
| "...because of regulations" point. And he does get around to
| mentioning cars in the obesity & climate change sections! And
| this is downright fascinating: _" radically localized democracy
| that allows individual streets to opt in to greater density by
| voting for it"_
|
| Sorry for clogging the thread a bit, I hope someone finds my
| rants a bit helpful. John (and Ben and Sam and Kade!!), if you're
| here: I love the writing, I share your goals, but I think you
| need to be a bit more careful when everything seems to be fitting
| together so neatly. If regulation is the core of inequality, I
| don't think this article will prove it to many people.
|
| [1] https://fred.stlouisfed.org/series/RHORUSQ156N
|
| [2] Lewis Mumford's _The City_ , 1939 -- start around 16:00 for
| the ~4min section on cars.
| https://youtu.be/7nuvcpnysjU?si=WJWmIGWxZ1fwIsi5&t=960
|
| [3] https://pubs.aeaweb.org/doi/pdfplus/10.1257/mac.20170388
| jmyeet wrote:
| These problems stem from _private property_. That is, we allow
| the hoarding of a basic necessity (ie shelter) and we treat
| housing as an investment vehicle. This incentivizes every aspect
| of society and government to do what they can to increase
| property prices. Homeowners think it 's good for them. Investors
| love it. How do we do that? By limiting supply.
|
| In most of the US it's illegal to build anything other than
| single-family houses. We build our cities around cars. We make it
| impossible to build any form of public transit because that might
| let undesirables into our nice clean neighborhoods.
|
| The single biggest factor in homelessness is being priced out of
| housing.
|
| Expensive housing is an input into everything. It means wages
| need to be higher. It makes everything you buy from a business
| more expensive. It's why that $2 coffee 30 years ago is $8 now.
|
| What's the alternatie? Personal property and social housing.
| Personal property (as distinct from private property) is that you
| can still own property you personally use. You simply can't hoard
| housing. Social housing means the government provides affordable
| quality housing to anyone who wants it. The poster child for this
| is Vienna, where over 60% of the housing is soial housing.
|
| If you buy a house for $300k and it goes up to $800k. You haven't
| made $500k. You think you have but you haven't. Why? Because what
| would you do if you sold it? You'd still have to live somewhere.
| And if every other house is also $800k, you still only have one
| housing unit of wealth.
|
| Expensive housing is simply stealing from the next generation.
| It's also a way to keep you in debt, to coerce you into working
| with the threat of violence (eviction is violence) hanging over
| you.
|
| Landlords are parasites.
| tptacek wrote:
| I couldn't have less bandwidth for people who want to
| villainize landlords. Want to reduce the influence of
| landlords? Let more people build multifamily housing. Who's
| keeping that from happening? It's not the landlords. It's the
| people who live in freestanding single-family housing.
|
| Social housing is what people who own houses say they want,
| because they know it's never going to happen. It's a safe way
| to genuflect to a totalizing class conflict without staking
| anything on it.
|
| Every landlord I've ever met is a lower-middle class Black
| person who owns an apartment building, that they also live in,
| in Lawndale or Austin. Miss me with this stuff.
| pessimizer wrote:
| > Every landlord I've ever met is a lower-middle class Black
| person who owns an apartment building
|
| Any black American that you know with wealth over $350K is in
| the top 5% of black Americans. Any black Americans that own a
| three-flat in Chicago are well into the black 1%, which to
| white people still looks poor.
|
| Black people _pay_ landlords far more than they _are paid_ as
| landlords, because rent is a reward for already being
| wealthy.
| BrenBarn wrote:
| > Want to reduce the influence of landlords? Let more people
| build multifamily housing. Who's keeping that from happening?
| It's not the landlords. It's the people who live in
| freestanding single-family housing.
|
| A lot of landlords live in freestanding single-family
| housing. Your description of every landlord you've ever met
| is quite at odds with my own. I know very few landlords who
| live in their properties. They have a nice big house for
| themselves and rent out apartments or additional houses.
| wolf550e wrote:
| If they own an apartment building, how can they be lower
| middle class? Even if it's not fully paid off, unless they
| are upside down on the mortgage, they have wealth. And even
| getting a bank to approve a mortgage means you're probably
| not lower middle class.
|
| Do you mean they look and act like lower middle class,
| because that's how they grew up?
|
| Or do you mean the margins are very bad so they have to do
| all the maintenance themselves and the profit is actually
| very low? Why is that?
| trollbridge wrote:
| I've seen 8 unit apartment buildings where each unit rents
| for $400 a month. A few of the units are chronically behind
| on rent. The building is in bad need of repairs, and the
| owner does as much of it as he can himself. The property
| taxes consume about half of the rents.
|
| In that example, the building was paid off, so the owner
| could use the rest of the rents on repairs and maintenance.
|
| Another 6 unit example recently sold around here for
| $40,000. If I recall correctly every tenant was delinquent,
| so the buyer was going to have to deal with that.
| tptacek wrote:
| That depends on how much equity they have and the economics
| of the building. My dad bought an apartment building and
| lost his shirt.
| trollbridge wrote:
| "Social housing" already exists; it just isn't very desirable
| and it seems many people who live in it aspire to get out of
| it.
| flyingaspi wrote:
| Quite a good article, I like the 'hyper local democracy'
| suggestion.
|
| But it's weird how every discussion of housing seems to jump to
| increase supply and density.
|
| Never a mention of: - immigration driven demand - historically
| low interest rates inflating all asset prices - occupancy per
| home
|
| The macro trends that have driven these for the last 50 years are
| now reversing, at least in places like the SF Bay Area which will
| have a huge impact.
|
| Also the population pyramid of the US will (sadly) drive down
| demand in the next couple of decades.
|
| Also I've read studies that suggest that dense housing is less
| likely to promote family formation e.g. Japan's high density and
| laissez-faire zoning hasn't helped with their fertility crisis.
| Klaus23 wrote:
| It seems paradoxical to me that the only "solution" to housing
| shortages, which exist because the area is too attractive in
| large part because of the availability of jobs, is to build more
| houses and thus make the area more attractive to businesses
| because of the increased availability of workers. It looks like a
| battle against windmills that is bound to get out of hand.
| Efforts to alleviate the problem only exacerbate it.
|
| It would be interesting to see if the shortage could be reduced
| by taking a different approach and making the area less
| attractive. For example, you could tax businesses much more if
| they are located in very dense areas, or even just limit the
| total revenue of all businesses in a certain area. Such things
| would have their own problems and challenges, of course, but
| there are few economic problems as bad as the housing crisis, and
| there is more than enough land to go around.
| juanjmanfredi wrote:
| That first scenario you portray is economic growth. Any city in
| the country would be thrilled to have to deal with the
| "problem" of being too attractive to both businesses and
| people.
| majormajor wrote:
| Yes. The _city_ is thrilled. Jobs! Tax dollars! Wooo!
|
| The people who live there? Maybe not so much.
|
| Is infinite growth desirable? Should we make policy decisions
| to distribute things more instead?
|
| Compare Dallas with LA. The denser one is much more
| expensive. Maybe get denser, like Manhattan? Oops, still
| expensive. Manhattan just needed to build that much more and
| get even denser? Where exactly is it believed it would stop?
| That the growth machine would say 'ok, that's enough, now we
| will just start lowering prices!'?
|
| Yet Dallas-the-city wants to get those businesses - and will
| crow for days about being more "business friendly" or brag
| about this or that company moving to Dallas - but Dallas-the-
| incumbent-residents don't like the influx of people who can
| out-spend them for housing.
|
| There are a few places that understand the less-direct effect
| of feeding the infinite-economic-growth-business-machine,
| that zone for overall stability, to prevent big
| industrial/corporate development, not just to prevent
| housing. But for that to work they generally need to have
| something well-established to rest their hat on instead, to
| avoid drying up and drying out.
| bloppe wrote:
| Cities are composed of people. Obviously, it doesn't make
| any sense to say that a city wants something that its
| people do not want.
|
| The people in a city want businesses because they want good
| jobs and services to be available to them. Homeowners (the
| majority of the residents in most American cities)
| especially want that influx because the newcomers drive up
| their property values.
|
| So yes, the people of Dallas, on average, really do want
| those businesses and newcomers
| cudgy wrote:
| > Obviously, it doesn't make any sense to say that a city
| wants something that its people do not want.
|
| Is it really so obvious? So many policies are implemented
| by government that people as a majority do not want like
| wars and tax cuts for the wealthy or not implemented by
| government that people as a majority do want like
| healthcare or rational immigration policy. The idea that
| the representatives of the people are acting in the
| people's interest is quite naive to be honest.
| electriclove wrote:
| Exactly, all the dense places that are desirable are the
| most expensive on the planet.
| J_Shelby_J wrote:
| Dallas is less expensive than LA. LA with amazing weather,
| little allergens, and beautiful geography. Dallas with heat
| and cold enough to be lethal, brutal allergens, and limited
| natural beauty. No one who knows better wants to live in
| Dallas- they have to live in Dallas because they can't
| afford it elsewhere. Which works out, because Dallas has
| infinite land to build single family homes. When people
| move to Dallas they aren't moving to Dallas; they're moving
| 30 miles from the urban core. Dallas's urban core is
| decaying from lack of housing - with no affordable housing
| for young people near the city center - downtown has become
| a ghost town as jobs follow the housing to the out rings.
| The smattering of housing that exists near downtown are
| apartments, very expensive town homes for the wealthy, or
| the original stock of single family homes from the 50s.
|
| When I lived in downtown Dallas, I would have loved more
| housing. Part of the reason we left was because it was a
| ghost town. Very little to walk and see. At night it was
| desolate and unsafe.
|
| LA has been maxed out for housing for decades. They're
| constrained by geography. They can only build up, but they
| haven't... only recently started loosening housing
| restrictions to allow for density at the state level, but
| even that is a half measure. They need to just swallow the
| pill and let density be built anywhere. Yeah, change sucks,
| but at least we'll stop forcing people to move to Dallas.
| Klaus23 wrote:
| The businesses wouldn't go away. They would just move to less
| densely populated areas.
|
| Businesses would perhaps take a small efficiency hit because
| of the reduced availability of labour in the region, but even
| this would probably be compensated for by better worker
| mobility, because businesses would be less crowded in the
| cities and there would be more labour available in the low-
| density areas.
|
| Businesses would probably also be able to pay a little less
| as less income is tied up in housing costs. A restructuring
| of business and population distribution would probably not
| have that much impact on overall productivity, but it could
| shift the available money between income levels
| significantly. If less money goes to rich property owners,
| then more money stays with the average person.
| jerlam wrote:
| Your assumption seems to be that the only reason for dense
| housing is to help businesses, but businesses are bad, so you
| want to artificially limit them, which doesn't make sense.
|
| People want to be in close proximity both to their jobs and to
| the businesses they want to patronize. Your suggestion would
| reduce or push away those businesses but retain the dense
| housing stock, but whose value would dramatically drop because
| those businesses are restricted or moved. You've created slums.
| Klaus23 wrote:
| No, that's not what I'm saying. At the moment, cities are too
| attractive, and this is largely due to the availability of
| jobs. What I am suggesting is incentives, in whatever form,
| to encourage companies to move to less populated areas.
|
| It is not necessary to obliterate the local business
| environment, only to limit it to the extent that the
| available jobs roughly match the available workers. Yes, it
| is true that house prices would fall to be more in line with
| construction costs, but that is the point, if you want
| cheaper housing, the housing must actually be cheap.
| cal_dent wrote:
| I do think there's truth to this. It's a big problem in the
| UK and a good illustration particularly as London has been
| the real source of economic growth for the country as a
| whole thereby resulting in that concentration you mention.
|
| This talks about it a little without fully committing to
| the actual problem
| https://blog.lgim.com/categories/investment-strategy/why-
| lon...
|
| Seems to me remote working and the improvement of "cheaper"
| areas, organically (as more people spend money in these
| areas and increase demand for services there) is the most
| viable solution but something governments can't seem to
| grasp or choose not to grasp
| Klaus23 wrote:
| Yes, there are a variety of methods that could work. It
| should be seriously studied to see what works best.
|
| I hadn't thought about remote work and you're right. It's
| an excellent solution, at least for the jobs that don't
| require presence. I don't think politicians necessarily
| need to do much for remote work to be successful, as long
| as they don't block it. It is very attractive to
| employees, because commuting is terrible, and I have seen
| a lot of pressure in companies to allow remote working.
| Hopefully it will be more widely adopted in the future.
| maxerickson wrote:
| You could also do things like have a government murder squad
| regularly kill people in the area. Or give away drugs. Maybe
| cut down all the trees and put in a pile of garbage.
|
| More seriously, if you are concerned the problem is the network
| effects of population density, the goal should probably be to
| replicate elsewhere rather than to disrupt.
| electriclove wrote:
| Didn't SF try all those things?
| J_Shelby_J wrote:
| On purpose, no. In practice, yes.
| Qwertious wrote:
| "Nobody drives in New York because there's too much traffic."
|
| Building more housing _does_ alleviate the problem. It both
| alleviates (for the newly housed) and exacerbates (makes more
| people want to move in). Even if the queue length stayed the
| same, the fact that the number of housed people goes up means
| that proportionally, more people are happy.
|
| But, let's be realistic here: Tokyo has more affordable rent
| than LA, despite having ~4x the population. And Japan invented
| the concept of the intergenerational mortgage!
| weeksie wrote:
| If a city could grow economically by simply building more
| housing that would be quite the discovery. A perpetual motion
| machine!
| flakiness wrote:
| [2021]
| 827a wrote:
| The pricing behavior of a modern economy is entirely dictated by
| the component prices of four things: Energy, Real Estate, Food,
| and Water. There's some interplay in how the pricing of one of
| these impacts the other (e.g. expensive energy makes transporting
| food more expensive, but expensive food makes harvesting energy
| more expensive). But there's nothing more "atomic" than these
| four things; the price of everything else is overwhelmed by price
| movements of Energy, Real Estate, Food, and Water.
|
| (in a competitive market, is the asterisk on this. If a market is
| not competitive, then Greed can be thought of as a 5th atomic
| economic input).
|
| The biggest challenge of the 21st century is: we aren't
| discovering much more of any of these things. The second
| derivative of "how many of these things are available on the
| market" is basically 0. Rights have been sold to everything in
| the ground; farmers know exactly how many cattle they'll have
| three years out; there's no surprises left. Companies need to
| show revenue growth, and Jerome wants 2% inflation, not 0%, not
| 6%. So, the price of these things can only go up; nothing is
| forcing them back down.
|
| The situation for Energy, Food, and Water isn't great, but they
| all have a pretty constant cost to their production; there's some
| sources of energy that are harder to get at, I've always heard
| fracking is one of these, but by-and-large they still have
| economics of scale on their side, once you adjust for inflation
| gas was $3.14 in 1975 and its $3.21 now, 50 years later. Its a
| similar story with food. Water has probably gotten cheaper,
| actually, but that's a rounding error.
|
| Real Estate is the opposite. We're making more people. We aren't
| discovering more land. Critically: We can increase our effective
| utilization of each square mile of land, but doing so raises the
| cost of each unit. Its cheap to just throw a homestead on a plot
| in the middle of nowhere, but once you put 200 people into an
| apartment building the same size you need to start thinking about
| parking, transportation, plumbing, electricity, crime, internet,
| it gets more and more expensive per-person as density goes up.
| This is part of the fallacy of thinking that the whole solution
| is density: Replacing a single family home with a 50 unit
| apartment complex usually results in an increase in cost per
| square foot, not a decrease.
|
| The other part is highlighted in Harris' plan to give first time
| homebuyers $10,000 toward a down payment. The reason why housing
| is expensive is not strictly density (read: supply); its also in
| demand. Demand does not decrease because you built more units.
| Due to induced demand, it oftentimes will increase, because those
| units might be mixed use, foot-traffic draws cool businesses,
| people want to live there, and thus your big plan to reduce the
| cost of housing by building more units actually just increased
| it.
|
| If you were the commissioner of some county with a growing
| population who wanted to reduce the cost of housing in the
| county, and you were also God and knew exactly how many people
| were going to move to the county in the next year, and you added
| precisely that number of units: The cost of housing will still go
| up. If you add more than exactly the needed number of units, the
| cost of housing might stagnate or go down, but its likely the
| vacancy rates will cause some level of financial strain on the
| property developers, and it might be hard to sustain such
| development; and in N years the cost will continue to rise.
|
| Developed Urban areas cannot escape this curse. Housing costs
| will always want to rise at a rate higher than inflation, over a
| long enough period of time. This shouldn't stop cities from
| increasing density, because what other option do they have, and
| it might be the difference between 4% and 8%. Underdeveloped
| cities (e.g. Austin TX), suburban, and rural areas in the United
| States can still underrun inflation, however, but shouldn't rush
| to significantly increase density more than demand on the area
| can support.
|
| The idea that any given county with a growing population can
| meaningfully and durably reduce the cost of housing within their
| borders is, mostly, a fallacy in the United States. The only way
| this can happen is in an environment with deflationary monetary
| policy, and the United States is extremely allergic to this.
| throwaway652368 wrote:
| Another factor everyone is missing because it's politically
| incorrect to talk about:
|
| There needs to be a way to avoid loud inconsiderate neighbors.
| Currently, this is done in practice by choosing an area where
| loud inconsiderate people are priced out. Until there's another
| way to do it, there will always be a demand for such areas.
|
| Increasing supply of housing is great on paper. But imagine
| you're a productive citizen who gets up early, works hard, and
| goes to bed early. Housing prices get reduced to where anyone can
| afford to live anywhere? By definition, suddenly ANYONE can
| become your neighbor, including folks who will play loud music at
| all hours of the night, keep loud dogs, etc. And sure, that might
| violate noise laws. Good luck getting those enforced, if the laws
| aren't changed to have teeth!!
|
| When dreaming up solutions to housing problems, ask yourself:
| "Would this solution allow a bum to move near to Bill Gates?" If
| the answer is yes, then your idea will not work. "Would this
| solution allow a bunch of high school dropouts to live alongside
| highly-paid software engineers doing work crucial for the
| economy?" If the answer is yes, your idea will have unforeseen
| bad consequences.
| bloppe wrote:
| Why do you assume only poor people are annoying neighbors? Rich
| people can afford bigger speakers, more booze, and to not have
| a job so they can stay up all night. I think wealth is
| positively correlated with the problems you describe.
| throwaway652368 wrote:
| Of course there are exceptions, but on average, wealthy
| people are way way better when it comes to these kinds of
| things. Especially wealthy people who get that way by keeping
| themselves busy with productive labor. The upstairs neighbor
| doesn't need a $5000 stereo system to make your life a living
| hell, they can do that perfectly efficiently with a $30
| subwoofer.
| loeg wrote:
| Why are most criminals men under 40? Some things just are,
| uncomfortable as they may feel.
| bloppe wrote:
| Well that's an easily verifiable fact, wheres "poor people
| are louder" is more of a belief
| throwaway652368 wrote:
| See, this is why the housing problem is so difficult to
| solve. You think you're being virtuous or something by
| sticking up for the poor oppressed. Why don't you be even
| more virtuous and move yourself to Skid Row since all
| those poor people are really so mild and quiet and
| misunderstood. All you're really doing is ensuring that
| this problem continues indefinitely. You're the same kind
| of person who insisted men should be allowed to use
| womens bathrooms and thus ushered in Trump 2.0, hope the
| good-boy-points you got for that were worth it.
| bloppe wrote:
| I'm not the one with a strong conviction based on little
| experience
| nathan_compton wrote:
| Somehow I doubt social justice warriors are the key thing
| holding up housing reform. That grants a few wokescolds
| more power than a huge number of other economic forces.
|
| This is kind of like blaming environmentalists when
| NIMBYs use environmental reviews to prevent new
| construction. They don't give a shit about the
| environment, really, but they know how to misuse the
| system to get what they want.
| loeg wrote:
| It seems like a hypothesis that is also verifiable ("...
| on average").
| trollbridge wrote:
| Some of us have actually lived in both cheap and expensive
| areas. Cheap areas tend to have unemployed people on them who
| decide to play loud music at all hours of the day and night.
|
| Expensive areas have people who are busy working jobs to pay
| for their expensive housing and go to sleep at night.
|
| Ergo, people who value peace and quiet gravitate towards
| expensive areas.
| rangestransform wrote:
| The solution is reinforced concrete walls and not any
| particular zoning law
| throwaway652368 wrote:
| Right, so that sort of thing needs to be part of whatever
| proposed solution to the housing problem. This will of course
| raise building costs etc., and the regulations will need to
| have teeth so people can't just build apartments out of
| cardboard and paint them concrete-color. Also, that concrete
| will need to be really thick to ward out subwoofer noises.
| Maybe you could get around this by banning subwoofers.
| trollbridge wrote:
| Reinforced concrete walls don't keep out noise on courtyards
| and also don't work as the decibels get higher and higher.
| Another major nuisance is the constant sound of sirens (often
| at night), or domestic disturbances spilling into hallways -
| the front door isn't a reinforced concrete door.
|
| People who value peace and quiet will select places to live
| where the neighbours don't engage in domestic violence or
| otherwise do things that result in the police coming out with
| sirens going.
| ziofill wrote:
| The thing I hate the most about not being able to afford a home
| is that rent is sky high and it makes it basically impossible to
| have another kid. Not without significant problems and risks at
| least.
| dang wrote:
| Discussed at the time:
|
| _The Housing Theory of Everything_ -
| https://news.ycombinator.com/item?id=28531025 - Sept 2021 (80
| comments)
| tippytippytango wrote:
| A big issue with all this housing wealth is that it's fake. If a
| good business goes up 10x in value, it accomplishes that by
| providing more valuable goods and services to people. If a house
| goes up 10x in value, that could only be achieved by ensuring
| supply grows slower than demand. The house didn't produce any net
| positive for society, actually the opposite. The owner is being
| rewarded for figuring out how to increase demand for their house
| while providing nothing in exchange to the broader world. It's a
| serious bug in capitalism that we call this "building wealth" it
| should be called "building scarcity". Might as well hoard
| bitcoins.
| chrisbrandow wrote:
| This and insufficient taxation of higher income brackets is
| basically my entire politics these days.
| Schiendelman wrote:
| I was like that, then as I learned more about modern monetary
| theory I realized not even the taxation matters, we can print
| all the money we want, we just do it for things that don't help
| the bottom.
| selimthegrim wrote:
| And how long will that last when Trump messes with dollar as
| reserve currency?
| BrenBarn wrote:
| I tend to think that housing shortages are more a result of
| inequality than a cause of it. The large disparities in wealth
| result in a situation where a disproportionate amount of land is
| controlled by a relatively small number of people. Those
| landowners may be fine with owning "trophy" properties that do
| not produce any income stream but take up a lot of land that
| could be used for housing a lot more people. Also in some areas
| an increasing amount of "housing" is not used as housing but
| rented out as AirBnBs.
|
| Simply allowing landowners to build more housing on their
| existing land, and thus increase the value of that land even
| more, will exacerbate this inequality. Again and again I see
| unaffordable housing built because the developers complain that
| they cannot make a profit otherwise. I am suspicious of
| "solutions" to housing that amount to "remove regulations to
| allow rich people to build in a way that increases their wealth".
| Instead of _allowing_ greater density, we need to _require_
| greater density, i.e., go to people who currently own a lot of
| land saying "Either you build a lot of housing on this land,
| even if it causes you to lose money, or you forfeit the land."
|
| The housing shortage should be reduced by _taking_ from those who
| already have a lot, not giving more to them.
| Tade0 wrote:
| My favourite example of this in my neighborhood is an apartment
| block of _only studios_ , which would be illegal to build
| today, as the law was updated to prevent ridiculously small
| apartments (18m2) from being built.
|
| It is, of course, half empty, but it doesn't matter. Those who
| bought those units never intended to live there anyway. To them
| it's just digital currency where proof of work is a physical
| object.
|
| People advocating for "just" building more housing have no idea
| who buys most of the properties.
| api wrote:
| If anything, I think this understates the problem.
|
| I've thought for years that in much of the developed world
| housing is the economic problem. The economic problem, singular.
| This is particularly true for the young, who are the future of
| the economy. The inability of young people to build wealth and
| find stability is almost entirely attributable to housing. If you
| look at cost and wages _minus housing_ young people are doing as
| well or even better than their parents.
|
| If you are talking about young peoples' struggles with the
| economy and housing prices are not the very first thing you
| mention, you are wrong. If you're talking about declining birth
| rates and family formation and you're not at least mentioning
| housing prices, you are wrong.
|
| Health care and college tuition are problems too, but housing is
| the most ubiquitous, unavoidable, and directly disruptive to
| peoples' lives. It prevents people from "launching."
|
| Edit: you know... if Donald Trump wanted to go down in history as
| the greatest president in the last 50 years, he could use all the
| power he has to reform zoning and open development and smash
| housing prices. Use the same funds withholding tactics against
| states and localities to pressure them to sideline NIMBYs and
| streamline permitting. Tax corporate and private equity purchases
| of residences, tax foreign purchases, and tax unoccupied
| properties. He'd be a hero even if his record was complete
| garbage on literally everything else, because he would have
| solved _the_ economic problem.
|
| Of course he'd never do that. He's a real estate mogul for f's
| sake.
| stephc_int13 wrote:
| There is one thing missing from this article.
|
| Yes housing cost has many secondary effects, including the
| fertility crisis, it is in fact by far the main driving factor,
| all other are either downstream cultural adjustments (cope) or
| correlations (highly educated are attracted to large cities,
| where the housing cost is the highest)
|
| But having said that, and looked at the financial and regulatory
| effects, the main driving factor is simply supply and demand,
| that is demographic density.
|
| For most goods, when demand increases, supply will follow, but
| housing is a peculiar kind of good because value is following a
| power law around a few hundreds attractive centers, meaning that
| supply is highly constrained, at least given current transport
| technology and cities structures.
|
| The solution is obvious: let the fertility crisis unfold, that
| will self correct the housing cost and the fertility crisis at
| the same time. But we'll have to build a different social
| redistribution system, we can't expect a pyramid scheme to work
| forever.
| swagasaurus-rex wrote:
| What about the (increasingly unpopular) strategy of population
| growth via immigration? Won't this just keep the demand for
| housing high?
| seydor wrote:
| europe has an aging population for decades, yet the inflated
| housing costs are even higher than america
| compiler_queen wrote:
| Typical misogynistic and biased opinions, and not to reference
| the struggles of neurodiverse women is also another totem of the
| male agenda.
| rwyinuse wrote:
| At least in my country I've seen so many young people move to
| cities to get a better education, only to end up unemployed or
| working a dead-end job, as they're competing with all other young
| grads who did the same in a stagnating economic environment.
|
| The winning play, at least over here, is to move to a city just
| for the education, and then moving back to the countryside /
| smaller city with cheaper housing and less competing job
| applicants. The salary difference isn't that bad, for some
| professions (doctors, psychologists etc) working in rural areas
| actually pays more, as employers are raising salaries to find
| applicants.
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