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Why affordable housing is scarce in progressive cities

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Re: Why affordable housing is scarce in progressive cities

#91

Post by AnthonyMouse »

tzs wrote: post #89
AnthonyMouse wrote: post #29

Earlier quoted context omitted.

> Why aren't there developers that are willing to make 17% margins instead of 20% margins? Because the margins in a different city are 19%, or some entirely different class of investment now has better risk-adjusted returns so the funding falls through.

Don't developers usually only operate in specific regions where they have experience and contacts and have established relations with suppliers and contractors? Can they easily enough move between cities that they could leave a 17% city to chase 19% margins?

Developers do, not investors. But the development still gets scrapped when the investors leave.

Re: Why affordable housing is scarce in progressive cities

#92

Post by conanbatt »

hristov wrote: post #16
AnthonyMouse wrote: post #3

> a shortage of new construction, a lack of tenant protection "Tenant protection" -- especially rent control -- is a nontrivial cause of the shortage of new construction. High rents are a signal to developers that there is money to be made constructing new housing. If it's not possible to make the money, they won't do the construction, which is what rent control causes. You get a population of existing residents with…

This is not how rent control works in any city in the US that I know of. Everywhere I know of rent control only applies to significantly older buildings. Which means that new buildings can charge much higher prices, which means that rent control actually encourages new buildings. The only time some type of rent control applies for new buildings is when they are specifically built as "affordable housing". This usually…

> Everywhere I know of rent control only applies to significantly older buildings. Which means that new buildings can charge much higher prices, which means that rent control actually encourages new buildings.

How do you replace old buildings with new buildings in this process?

Re: Why affordable housing is scarce in progressive cities

#93

Post by conanbatt »

jayd16 wrote: post #57
AnthonyMouse wrote: post #3

> a shortage of new construction, a lack of tenant protection "Tenant protection" -- especially rent control -- is a nontrivial cause of the shortage of new construction. High rents are a signal to developers that there is money to be made constructing new housing. If it's not possible to make the money, they won't do the construction, which is what rent control causes. You get a population of existing residents with…

>You get a population of existing residents with rent controlled apartments, who then have no incentive to fix the housing shortage or eliminate rent control, but insufficient construction going on and consequently even higher prices for people who didn't get a rent controlled apartment in 1975. You may not be in that population but you have to solve for them as well. Removing rent control is only going to price them…

> You may not be in that population but you have to solve for them as well. Removing rent control is only going to price them out.

A recipient of rent control has had enormous subsidies and economic appreciation, and even then it is not enough, you need to give them more.

There are multiple ways to bust this open. The first one is allowing rent controllees to sublet. If you want to maintain their status, at least let them profit by housing more people, making themselves richer and lowering rents for the whole market.

Re: Why affordable housing is scarce in progressive cities

#94

Post by conanbatt »

vkou wrote: post #32
doombolt wrote: post #10

Earlier quoted context omitted.

"Rent control" is the idea that people already living in a city have more rights to live there than people who are not. While it may sound socially just it is also one of most un-progressive (conservative) things you can imagine. It literally conserves the population of a given district.

And market rents are the idea that people with more money then you have the right to live in your apartment then you do. Neither is fair, but both are unfair in different ways. Your preference for market distribution, as opposed to lottery distribution (which is what rent control essentially is) is largely an ideological one.

> Your preference for market distribution, as opposed to lottery distribution (which is what rent control essentially is) is largely an ideological one.

Can't speak for him, but if you believe a free market has the same housing results are as a centrally planned market, well, damn.

Re: Why affordable housing is scarce in progressive cities

#95

Post by conanbatt »

js8 wrote: post #23
AnthonyMouse wrote: post #3

> a shortage of new construction, a lack of tenant protection "Tenant protection" -- especially rent control -- is a nontrivial cause of the shortage of new construction. High rents are a signal to developers that there is money to be made constructing new housing. If it's not possible to make the money, they won't do the construction, which is what rent control causes. You get a population of existing residents with…

I think you're wrong. In Prague, they started removing rent controls several years ago, and we have seen highest increase in property values in maybe three decades. Also, if I owned some property, I am not sure I would want to invest in building new one and have to decrease rent rather than enjoy the fact that the rent is high. All in all, I suspect that rent control might be quite insignificant factor in housing sca…

> In Prague, they started removing rent controls several years ago, and we have seen highest increase in property values in maybe three decades.

Cant speak for prague, but if you remove rent-controls, rent is going to go up, simlpy because suppressed rent values will go up.

If volume remained the same, you would expect to see a decrease in some properties and a high increase in the de-regulated ones.

Bear in mind that there is also elasticity: if more properties go on the market and prices go down, you could see a higher volume of people coming in. That's a much better metric of success than price.

Re: Why affordable housing is scarce in progressive cities

#98

Post by kokokokoko »

AnthonyMouse wrote: post #84
kokokokoko wrote: post #27

If it is bad policy, then can someone help explain why unaffordable housing is currently a world-wide issue?

> If it is bad policy, then can someone help explain why unaffordable housing is currently a world-wide issue? 1) Because the incentives for enacting the bad policies are widespread, so the bad policies are widespread, so the problem is widespread. 2) It isn't. See cities like Houston and Tokyo which have lower housing costs than San Francisco or NYC.

It does appear to also be a problem in Tokyo [1] Houston's economy is still recovering from a natural disaster [2]

Are we sure this is not simply the product of a global shift towards populations migrating to urban centers? And maybe we might want to look at what is causing this rapid migration? For example economic growth has almost always gone hand in hand with rapid urban migration.

"We know of no coun- tries that either achieved high incomes or rapid growth without substantial urbanization, often quite rapid." [3]

So it appears that your solution to reducing housing prices, caused by economic growth, is to increase construction, which causes economic growth, which causes urbanization, which then leads us back to rising housing prices.

What am I missing here?

[1] http://japanpropertycentral.com/2018/02/rent-in-tokyo-reache...

[2] http://cokinoslaw.com/flood-hurricane-harveys-180-billion-im...

[3] https://siteresources.worldbank.org/EXTPREMNET/Resources/489...

Re: Why affordable housing is scarce in progressive cities

#99

Post by jeffbax »

skewart wrote: post #74
jayd16 wrote: post #48

Earlier quoted context omitted.

The reason this subject is tough is because quantity and quality do not necessarily lead to affordability for the same population as rent control. Laissez Faire economics always works for the faceless theoretical self interested actor but how are rising prices and new builds going to help to someone from being priced out? It can't. If it did, the control would be benign anyway.

> quantity and quality do not necessarily lead to affordability for the same population as re t control. Rent control is not need-based. People across the wealth spectrum enjoy the personal benefits of rent control (in SF there is no shortage of housholds bringing home several hundred thousand dollars a year who pay way below market rents on their rent-controlled apartments). The problem with getting rid of it is tha…

This is all conjecture from your gut. We are watching what rent control does to a city like SF in real time -- it is a disaster. The only way out of it is to ramp up supply. To whatever degree Tokyo has priced anyone out, it is significantly less than the likes of most US cities because it does not purposefully retard investment with zoning and rent control.

"People across the wealth spectrum" do NOT enjoy rent control. It gets gamed and abused. The bulk of SF is rent controlled, resulting in more and more people cramming into places that don't get maintained and they're not able to move out of when situations like their job changes. This is a disaster, nobody can move to be closer to work. Only a tiny amount of market rate housing is available for new residents which is disproportionately high because the rest of the market is severely under-priced.

You will never stop everyone from getting priced out. That is just the nature of things, but you can save a lot more people that pain than we do now due to foolish policies like rent control and awful zoning.

Re: Why affordable housing is scarce in progressive cities

#100

Post by doombolt »

coldtea wrote: post #46
doombolt wrote: post #10

Earlier quoted context omitted.

"Rent control" is the idea that people already living in a city have more rights to live there than people who are not. While it may sound socially just it is also one of most un-progressive (conservative) things you can imagine. It literally conserves the population of a given district.

> While it may sound socially just it is also one of most un-progressive (conservative) things you can imagine. It literally conserves the population of a given district. Well, who said conservative is bad? It's about the interests of this or that group (e.g. given population vs people coming from outside). Arguments can be made for either, but if a given population is not protected, then those coming from outside wo…

> It's about the interests of this or that group (e.g. given population vs people coming from outside). Arguments can be made for either, but if a given population is not protected, then those coming from outside wont be protected (from people coming from outside later on) either.

> People build cities to be protected and prosper long time in them, not to give opportunities to third parties to come and displace them from the places they've built and helped grow.

Well you're basically repeating Donald Trump's words when he explains why he wants to build a wall, and last time I have checked nobody calls him progressive.

Just do s/cities/countries/ and you're all set.

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