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The anti-abundance critique on housing is wrong

derekthompson.org

751–760 of 817 posts

Re: The anti-abundance critique on housing is wrong

#751

Earlier quoted context omitted.

Musharbash left a meaty reply in the thread: In any event, my argument was also that three other factors — particularly financial policy changes starting in the 1980s that deprived small builders of bank capital, helped Wall Street to exert control over large builders and impose production discipline on them... https://xcancel.com/DKThomp/status/1951089471501508766#m

Musharbash's argument, however, is dependent on the exercise of oligopoly power (whether he admits that or not, and given that he's long argued that the oligopoly is present...), and there's no evidence of it! He tries to twist Lambert's words to say he's only saying there's no evidence of builders throttling at a national scale, thereby leaving room for his argument that it's happening in particular markets ( https:…

Please don't link to x.com, it is impossible to read a conversation there without an account.

Re: The anti-abundance critique on housing is wrong

#752
That builders can't construct housing in whatever form-factor they want and whatever part of a municipality they want might be a problem. But the analysis of why these kinds of restrictions exist, to my mind, is not correct.

Do niche interest groups have influence on housing policy? Sure. But these niche interest groups don't usually have a monetary interest in the outcomes they're promoting. But individual homeowners (who often band into interest groups of their own) and large real estate conglomerates do have such a monetary interest. They consider certain types of housing built in a certain way to have *more value* and be worth more. So they promote politicians who introduce zoning and other rules to protect that value.

For someone looking to make a profit off of housing (or even to invest in housing), what is more appealing? A traditional U.S. suburb? Or a Kowloon walled city? One is denser, cheaper per capita, and (if you're not careful) unappealing to look at. In other words, it's worth less. So there is a great monetary pressure from people who already own homes to prevent "mixing" this type of housing into existing planned communities. People who need homes, on the other hand, are a little bit less discerning (to say the least). They don't have a monetary interest necessarily. They're primarily looking for a permanent residence.

So I just don't buy this "abundance" stuff in general. If you remove all of these restrictions, will some companies start building housing? Some will. But my guess is most will say the juice is not worth the squeeze -- the profit margins and the long-term values of these properties will make it unappealing. Just like it's unappealing for grocery stores to set up in big urban areas. Or for hospital providers to set up in rural areas. Food deserts don't exist because of too much government intervention. A lack of rural hospitals is not a problem because of too much government intervention. It's because those things are not profitable.

So in my opinion, if you want to reform zoning rules or things of that nature, it's only really going to be effective if you *force* (or if you want to be politically correct, "incentivize") housing companies to build in these areas too.

I don't really consider this an "anti-trust" argument. It can be equally true if there's a lot of competition in the housing market and if there's next to no competition. It's more of an incentives argument. This is an argument that, like with medical care, we're treating something that is a fundamental need of every living human to have a stable and peaceful and fruitful life as if it were a standard market commodity. And when you do that, you get poor outcomes. We need to support the building of housing *even if* it's unaffordable or has low (or even non-existent) profit margins

Re: The anti-abundance critique on housing is wrong

#753

Earlier quoted context omitted.

> Supply destruction to put a floor on prices is not an unknown phenomenon. The business model of construction companies is to buy a piece of property, develop it and then sell it for something more than the cost of buying it plus the cost of developing it. Constraining supply increases the cost of property which they then have to pay in order to acquire properties to develop. It isn't really in their interest to inc…

> The business model of construction companies is to buy a piece of property, develop it and then sell it for something more than the cost of buying it plus the cost of developing it. Constraining supply increases the cost of property which they then have to pay in order to acquire properties to develop. It isn't really in their interest to increase their own costs. Let's say for a moment that this is close but not q…

At that point you've ceased to describe construction companies and are now describing real estate speculators while calling them construction companies.

Moreover, notice how little sense that business model makes. To do that you would be sinking capital into vacant lots that you're neither developing nor receiving rents from while paying both property taxes and opportunity costs. You're paying interest on the loan or could have been getting ~10%/year by putting your money into the stock market. A real construction company would be trying to minimize the period they're holding an unproductive property.

And even if you wanted to be a real estate speculator, how does that make you more money than investing in rental properties and then actually renting them out so you receive rental income on top of any price appreciation?

Meanwhile, what, if not for zoning rules and other regulations, is preventing anyone else from undoing your attempt to constrain supply by opening up a new construction company which is actually a construction company?

Re: The anti-abundance critique on housing is wrong

#754

It's always pretty suspect when you first hear about the opposition to something in its rebuttal. I've heard lots of critiques of the abundance movement and this is my first time hearing anything about housing cartels. Maybe someone had this critique but it isn't the dominant strain of criticism of the abundance people. It feels like Thompson picked the weakest argument to debunk rather than one of the many stronger…

What are some of the many other, stronger criticisms of the abundance agenda? Maybe Thompson has replied to some of those, too.

Re: The anti-abundance critique on housing is wrong

#755

A contributing factor to housing costs I don't often see mentioned is urbanization. In the 21st century, population density has increased faster in major cities than rural areas. The picture is probably more nuanced in the last half decade (post COVID), with many people moving to the countryside.

Another factor is smaller households. People are staying single longer and waiting longer to move in with partners, creating more demand for housing even without population growth.

Re: The anti-abundance critique on housing is wrong

#756

The housing crisis is a cultural problem. We don't want to build density, and we don't want to build transportation, because this all lowers housing values, and besides the millions of homeowners you'll piss off, you'll destabilize an economy primarily built on the mortgage. Not a good reelection plan. The places you're seeing growth are places where we could buy the land for cheap: suburbs and exurbs. We build huge…

> Jane Jacobs veto As an aside, puts on Jane Jacobs defender hat I just want to point out that Jane Jacobs was on the record with the assertion that an ideal urban fabric was effectively small apartment buildings at densities well beyond what your typical North American city and suburb currently has. It's deeply sad that Boomers took her ideas and distorted her message to preserve an ultra low density single family d…

Hey I think she was basically right (I think her ideas on local control are applicable way beyond building neighborhoods). But we have to admit the ability to get up at some board meeting and veto stuff was her idea. It wasn't perverted by people who came after. Jacob's herself used these veto points in her time in Toronto. I'm not saying she was wrong to oppose the stuff she opposed, but the ability to obstruct in this way was her idea.

Re: The anti-abundance critique on housing is wrong

#757
post #191

> So, Dallas doesn’t meet Quintero’s oligopoly threshold. Now let’s consider the rest of the country. I tracked down a complete listing of the country’s 50 largest homebuilding markets, from #1 Dallas to #50 Cincinnati. How many meet Quintero’s first oligopoly threshold (two companies = 90 percent of the market)? Zero out of 50. And how many meet his second threshold (six companies = 90 percent of the market)? One: C…

>spends entire article cherry picking evidence in an attempt to discredit one article specifically to advance a competing narrative. Worse than that. He's lying about what the article claims. Straw-man is too generous of a term, he's blatantly just making shit up.

Do you have an example?

Re: The anti-abundance critique on housing is wrong

#758

There is an incredibly large lobby group who is fully invested in house prices rising or at least not falling, namely homeowners. and since most politicians at a high level usually own one or more houses, they are fully invested in it as well.

If we can keep the price of homes flat for 10 years then homeowners won't get hosed (still increasing equity by paying off principle) and homes get more affordable (assuming steady inflation and wage growth)

Re: The anti-abundance critique on housing is wrong

#759
post #649

Earlier quoted context omitted.

These are ironically the weakest counterarguments to abundance housing. Rich people don't move to a city because of their love of 5 over 1 buildings. Otherwise, developers could just build them in rural Kansas and everyone would be happy. They move the jobs and culture, which doesn't change regardless of any new housing built. Making it easier to build privately owned housing also makes it easier to build publicly ow…

Jobs and culture are indeed reasons for people to move to the city, but it’s odd to claim that housing types don’t factor into consumer demand. Because housing types do, developers are incentivized to build housing that is the most profitable (such as less dense and luxury housing) not housing that best serves the needs of low income people (as more expensive units make more money). At best we can only expect minor e…

What YIMBY deregulation do you view as problematic? YIMBYs aren't calling for more billionaire row towers and multifamily to single family townhouse conversions. They are calling for more apartment complexes, ADUs, and other utilitarian forms of housing.

New housing developments only gets branded as "luxury" because that's the way that housing is priced right now. It costs the city of San Francisco over $1 million to build a single affordable housing unit. Blindly throwing more money at the problem doesn't help. SF is spending $846 million on housing, over $1000 per resident. Despite this, homelessness is actually increasing. Increasing funding is something that should be prioritized after you made development as frictionless as possible. If public housing is cheaper and faster to build, more voters would be willing to support funding it.

I gave SF a lot of shit, but to be clear, they're the least problematic city in the Bay Area, as they at least allow some denser development.

Re: The anti-abundance critique on housing is wrong

#760

Earlier quoted context omitted.

I'm all for building more housing, as long as it comes with the necessary infrastructure - schools, roads, parking, public transportation, etc. Where I live, developers seem to get government approval to build in locations where they can rake in a lot of money at high prices without having to worry about such things. (In fact, my local government is actually closing roads near new housing because "f#ck cars" is appar…

Your own example seems to show that the culprit lies with local governance, not developers, wouldn’t you agree?

Money is politics, at least since Citizens United. Depending on your locality, for much longer.
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