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The anti-abundance critique on housing is wrong

derekthompson.org

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Re: The anti-abundance critique on housing is wrong

#541

Post by forgotoldacc »

ramchip wrote: post #516
podgorniy wrote: post #477

Earlier quoted context omitted.

> Excessive regulation is 90% of it. Housing crisis is observed in almost all what is called "first world" (europe, japan, usa). I believe that 90% of the issue is more global than a regulation.

Japan doesn't have a housing crisis. I'm in a great location in Tokyo, the rent is under $750/month, and it's been the same for the decade+ I've been in this specific place. If there's a problem, it's too many empty homes in aging rural areas. Cities are doing just fine, even with a growing population in Tokyo.

It didn't. But it's entering one now.

New apartment prices in Tokyo are double what they were a few years ago. [1] The reason is foreign investors buying up loads of properties and sitting on them or turning them into AirBNBs. Locals can't afford them because wages aren't increasing. The concept of buying a property to resell it also isn't a thing amongst locals, so it's clueless rich people and corporations buying up properties and thinking they can flip them, which won't be happening any time soon.

But after a few years of squeezing, locals may have no choice but to pay their entire paycheck to foreign investors. Though thankfully the government is planning to take steps to potentially outlaw foreign buyers. If we're lucky, and some parties get their way, they might just strip the properties from them. If you're not living here, you have no business owning dozens of homes.

[1] https://www.nikkei.com/article/DGXZQOUC183D80Y4A110C2000000/

Re: The anti-abundance critique on housing is wrong

#542

Post by AnthonyMouse »

didibus wrote: post #318
tptacek wrote: post #302

Earlier quoted context omitted.

It collapsed.

I assume I'm somewhat impartial, I don't know this author, it's the first time I hear of the "antitrust left" or of the argument that big monopoly builder purposely keep the market scarce to increase prices. And it's not an issue that I hold a strong opinion about. The way the piece reads to me is a "He said, She Said". And I have to choose whose word I trust. Two articles, both claim to have spoken to expert sources…

The crazy part about this is that it is fundamentally a competition problem, but they misidentified the perpetrators. It's not predominantly construction companies colluding with each other in the market, it's land owners colluding through regulatory capture of zoning boards to constrain construction.

Or, to the extent that it is construction companies, it's still regulatory capture rather than market collusion, but in their case it's capture of occupational licensing to artificially restrict people from entering into the trade labor market.

Re: The anti-abundance critique on housing is wrong

#543

Post by ndriscoll »

ImHereToVote wrote: post #508
imgabe wrote: post #463

Earlier quoted context omitted.

Renting it still increases the housing supply, someone can live there. I doubt there is any significant amount of housing that is just bought and left vacant. Why would you do that? It’s a stupid and expensive place to park money. You have to pay taxes, possibly condo/co-op/HOA fees, pay someone to do maintenance and keep out squatters, pay transaction costs both buying and selling, it can’t be sold quickly. Why woul…

Banks will not loan you money to put it into the S&P. The wealthy generate money by generating credit in part.

They definitely will. JP Morgan for example charges SOFR+1.85% for 10M+ accounts[0], which is better than the mortgage rate they offered me. Or depending on what you mean by wealthy, you might be able to afford having someone get you a better deal by trading on the markets (e.g. selling SPX box spreads) assuming you don't have the expertise to do that kind of thing yourself/aren't interested in doing your own wealth management.

[0] https://www.jpmorgan.com/wealth-management/wealth-partners/l...

Re: The anti-abundance critique on housing is wrong

#544

Post by sillyfluke »

gwd wrote: post #531
sillyfluke wrote: post #530

Earlier quoted context omitted.

> My sense is actually that the reason he talks that way is to make sure that people who consider themselves "on the left" don't mistake him for being someone "on the right" (and therefore in camp b), and immediately dismiss his claims. This is a tad naive I think. "antitrust left" is also to useful term to use to signal to the billionaire class of Democratic party that you are not their enemy. If the author actually…

Since the authors are arguing for removing a lot of current housing regulation, I have a hard time seeing how "the billionaire class of the Democratic Party" would consider them their enemy -- unless, of course they're mistaken for people in class b.

>Since the authors are arguing for removing a lot of current housing regulation

Human beings like to know if the person they're reading is on their side before they take the time to read a long ass article to make sure they are in fact on their side, especially if they're billionaires and think they don't have the time to read long ass articles about housing policy unless they think it's going to an extremely useful to them beforehand. That's the whole point of giving that signal literally in the intro paragraph.

Re: The anti-abundance critique on housing is wrong

#545

Post by littlestymaar »

mft_ wrote: post #529
littlestymaar wrote: post #481

Earlier quoted context omitted.

> Excessive regulation is 90% of it. If it was, then the housing price would be correlated with the level of regulation, but it's not (housing less dense places is always cheaper than housing in big cities, even if you compare the most heavily regulated place on earth with the least regulated big city in the world. > Here's how a rational market works. A rational market made from human is as realistic as “dry water”.…

> The key issue is that housing is treated as an asset, and the policies made to boost housing construction are designed around building a market in a way that gives housing the same kind of financial yields as stocks. But while stock prices can grow because productivity increase, housing value can only increase if housing becomes more expensive. I like your thesis, but can you give more information on the nature of…

Interest rates is the biggest one, but also most fiscal policies related to housing (fiscal exemptions on the revenues coming from rents, the possibility for an individual to deduce the interests of their mortgage from their income taxes, or the absence of taxes on the benefits you make from selling a house).

There are as many such policies as there are countries so not all the above examples necessarily exist in your country (my country — France — having the first and the last one above but not the one about mortgage interests for instance) but they all share the same underlying world model of housing being an “asset you invest on” instead of the “commodity that slowly but surely loses value over time” it really is.

Re: The anti-abundance critique on housing is wrong

#547

Post by pembrook »

__turbobrew__ wrote: post #192
simpaticoder wrote: post #56

What about wealth inequality as the root cause of housing shortage? Even if supply is eased, the wealthy (those who have enough capital to earn passive income) will buy the extra supply and rent to the poor. The Piketty effect takes over, they invest their profit in more housing, wealth inequality continues to get worse, and while more housing exists, it owned by an increasingly small cohort. Personally I'd like to s…

My gut feeling is that wealthy people buying up the housing stock to rent out is not actually as common just supply restrictions not meeting the demands of individuals. I used to live in Vancouver, and on my street almost all occupants were owners. But guess what, the number of houses on that street has not changes in 100 years, and the number of people who want to live in Vancouver has probably increased tenfold. Th…

> Anything short of taxing every residence which is not a primary residence AND banning foreign ownership AND reducing permitting toil AND raising interest rates, is going to fall short.

You forgot eliminating favorable taxation for real estate as well.

But actually if you kept all of those factors and simply just increased supply, it would still lower prices. It's not that complicated. It doesn't matter how many incentives you place on top of real estate. If you build more and prices decrease by 20%, it doesn't make demand shoot up by 20%.

The vast majority of people will never purchase more than one home, and will also never leave the metro-area they grew up in.

I think Vancouver people imagine the demand of Chinese real estate investors interested in their city is endless. It is not. Vancouver is the city that has the highest percentage of Chinese-owned real estate outside of China (globally) and its still at only 30%.

And the vast vast majority of cities do not have this dynamic or anything close to it. And the Chinese population is massively declining over the next 40 years, not growing.

Re: The anti-abundance critique on housing is wrong

#548

Post by tomrod »

__turbobrew__ wrote: post #489
tomrod wrote: post #341

Earlier quoted context omitted.

Yes, but every elected official will lose their job at that millage rate increase and you'll have riots.

Why? If the real estate prices half and the municipality doubles the tax rate, everyone pays the same amount of tax in dollars per year?

Because people don't enjoy paying taxes if they perceived they should go down.

Re: The anti-abundance critique on housing is wrong

#549

Post by steveBK123 »

tptacek wrote: post #5

So much of the journalism we read is heavily processed and barely-reported and it's startling to see how much of a superpower simple shoe-leather reporting actually is. Derek Thompson's an incredibly sharp writer, but not really a subject matter expert on housing economics; all he did here was read papers and call up the authorities they cited, and the narrative behind those papers collapsed. We're often so down on j…

Journalism has all the problems of being a shrinking high status low income industry. Living in NYC I know a few journalists, and if you scratch below the surface on many of their bios they are quite often from wealth of one form or another. At least enough wealth to subsidize them living in an expensive NYC zipcode on awful starting pay with low growth and ceiling.

So it really is quite a monoculture. 20 years ago they all lived in UWS, now it's somewhere between Park Slope and North Brooklyn. Ever noticed how many local color stories used to be UWS focussed and are now Brooklyn? A lot of trends pieces are "stuff I noticed in my friends group" type of depth, and they all have the same friends groups. They literally don't know what they don't know.

Re: The anti-abundance critique on housing is wrong

#550

Post by bearl »

grafmax wrote: post #503
dlcarrier wrote: post #484

Earlier quoted context omitted.

Yes, developers are incentivized to build whatever units are most profitable, but the price per square foot is much higher for small units than for large units, so without regulations prohibiting high-density projects, you'll end up with far more units for a given amount of resources. Instead of building 20 units of 2,000 sq ft, if allowed a developer could instead build 40 units of 1,000 sq ft, for a similar cost, a…

It’s more than just extra fixtures and interior walls but bathrooms, kitchens, plumbing, and HVAC - some of the most expensive parts of a build. For example if a developer has 4,000 square foot of land, and it costs $1.6 million to build 4 units selling at $2.4 million total - vs costing $1.2 million to build a luxury unit selling at $2.2 million, they will build the single luxury unit. The overall price for the cons…

This is exactly what the developers say. Low income housing, which is unaffordable even on middle class income, is only viable if heavily subsidized. So the tax payers have to pay the developer to take the guaranteed loss. And even then, 3000 rent on a low income studio apartment is only possible for low income people who have subsidies. So the tax payers pay the developers to build it, and then pay the tenants to rent, and people have the gall to refer to this as the “free market” solution.
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