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A lot more market-rate construction helps low-income renters more than subsidies
31–40 of 82 posts
Re: A lot more market-rate construction helps low-income renters more than subsidies
#32Earlier quoted context omitted.
Yes, if you believe that the political process is controlled by the wealthy and you oppose the wealthy, then allowing more construction is your best bet. My concern with the political process is the exact opposite - it doesn't favor the wealthy but it should. In either case, eliminating the malthusian constraints on housing are a solution to the problem. See also this article on moreright illustrating how your view a…
How would San Francisco be better with 2 million people than with 1 million? Should it grow until it is as crowded as the cities people are fleeing in order to come to SF? What will happen is not that increased supply will have any effect but demand from talented people will drop as SF becomes as characterless as any other cheaper US city. As crowding rises the value of labor relative to land will fall, something ver…
Lets look at a list of megacities.
https://en.wikipedia.org/wiki/List_of_cities_proper_by_popul...
Bangalore, Istanbul, London, Mumbai, NYC and Pune are all wonderful places and I'd be happy to live in any of them. Mumbai in particular is a place I actively plan to spend at least a year in. (I've already lived in NYC, London and Pune.) I can't say I love Delhi or Hyderabad, but you could certainly do worse.
By the standards of the west, Mumbai or Delhi certainly are "paragons of failure". That's the problem with living in a developing country. It's not a failure of density, the low density regions of India are vastly worse.
Re: A lot more market-rate construction helps low-income renters more than subsidies
#33Earlier quoted context omitted.
Yes, if you believe that the political process is controlled by the wealthy and you oppose the wealthy, then allowing more construction is your best bet. My concern with the political process is the exact opposite - it doesn't favor the wealthy but it should. In either case, eliminating the malthusian constraints on housing are a solution to the problem. See also this article on moreright illustrating how your view a…
"it doesn't favor the wealthy but it should" Wtf? How do you get to that conclusion when inequality has been growing for the last 40 years?
A wealthy software developer produces a lot of value in an hour, whereas a poor barista does not. If the developer lives 10 minutes from work while the barista commutes for 1 hour, the developer has more time to spend on productive activities. The world is then better off.
This is of course completely tangential to the main point, namely that they both can live in SF if we build more housing.
Re: A lot more market-rate construction helps low-income renters more than subsidies
#34Earlier quoted context omitted.
And in SF I bet most of this market rate construction would be snapped up by overseas buyers from China looking for a save haven should the Chinese economy go really pear-shaped - just like London
then their payment would justify more houses being built, until the day they decide that they are overpaying for property, and stop the investment. This means they will sell, and thus, cause a drop in prices (and also cause a feedback loop). The existing residents would "lose value" if they chose not to sell, but new entrants to the market, looking to buy a place to utilize (not invest) will be happy.
There is a limited amount of land in desirable places - which is the flaw in your argument
Re: A lot more market-rate construction helps low-income renters more than subsidies
#35Earlier quoted context omitted.
How would San Francisco be better with 2 million people than with 1 million? Should it grow until it is as crowded as the cities people are fleeing in order to come to SF? What will happen is not that increased supply will have any effect but demand from talented people will drop as SF becomes as characterless as any other cheaper US city. As crowding rises the value of labor relative to land will fall, something ver…
As crowding rises the value of labor relative to land will fall, something very beneficial to the wealthy and harmful to the employed. It's also beneficial to the un employed who want to go to SF. Saying it's generally harmful to the workers is only true if you ignore those left out by the restrictions.
Very true. But the unemployed and their (inevitably reduced wages) are the result of a larger failed system. Effectively the market considers them excess population for their area.
And as business expenses rise to cover the inflated cost of living (eg rent) there will be fewer and fewer jobs available (eg no unemployed teacher looks to San Francisco). And cost of living will rise with population density while wages fall. Also there are plenty of unemployed people in SF too namely the huge homeless population. As the real value of wages drop their numbers increase. Since calls here for justice and opportunities seems strangely focused on middle class people, I should ask how that new person's arrival would affect these other equally unemployed people.
If you believe in "market forces" then unemployment and low wages are not solved by adding more people. Indeed individuals would be happier and communities stronger if they were not often up rooted by market whims. Especially in old age. So the ideal solution for employment, wages and quality of life would not assume people are infinitely portable human resources.
Re: A lot more market-rate construction helps low-income renters more than subsidies
#36Of course, rent control and zoning/adjusting regulations for higher rates of construction are not mutually exclusive.
Re: A lot more market-rate construction helps low-income renters more than subsidies
#37Earlier quoted context omitted.
In an unrestricted free market, someone would just buy up all the property in a constrained space to corner the market. That has definitely happened before in robber baron days. And honestly, if I wanted to live in a cess pool like Houston, I would move there. Houses are cheap enough (comparatively) but it is a huge icky sprawl.
That has definitely happened before in robber baron days. I'm curious, has it really happened at a city level? Seems to me that it would get prohibitively expensive, since other owners would see the massive demand and push up the prices, but that's really just a supposition.
You do it when no when is looking (hence robber baron).
Best to start when the land is cheap, and when you are going to build infrastructure to increase the value of the property. So the railroads with tracks and stations, amusement park operators (Disney World...), or it could be a factory with lots of jobs in a depressed area.
Re: A lot more market-rate construction helps low-income renters more than subsidies
#38It's not only a problem in SF, exploding rents is a problem all over the world. But is "barriers to new construction" the problem? No one ever explains those, just blames politicians. But for a property owning corporation it is obviously a poor idea to invest in new apartments because that would reduce the value of the ones they already got. It's not much different from OPEC not wanting to flood the market with oil.
Ed Glaeser has done a lot of work looking at the costs of the "right to build". His research is worth looking at, but this 2007 Virginia Postrel article which relies on his data contains a good explanation of how these costs can vary between cities.
http://m.theatlantic.com/magazine/archive/2007/11/a-tale-of-...
Re: A lot more market-rate construction helps low-income renters more than subsidies
#39As a result of its high housing costs, California has the highest real poverty rate in the country.
California ranks 35th in terms of poverty rate. [1] The graph that follows the statement shows that California's poverty rate is higher than the US average. That's not an auspicious premise for quality economic reasoning.
The constraint on housing prices in places like San Francisco is land cost. If developable land costs $500,000 per buildable dwelling unit on the open market, then $1,500,000 and up is where finished dwellings need to be priced to make development economically viable. Land supply is mostly fixed pending large investments in public infrastructure, particularly efficient extension of public transit.
[1]: https://en.m.wikipedia.org/wiki/List_of_U.S._states_by_pover...
Re: A lot more market-rate construction helps low-income renters more than subsidies
#40Earlier quoted context omitted.
For a property owning corporation, it might not be the best thing. However, in a free market, there wouldn't be anything they could do about it. Competition is supposed to reduce the profits of any industry over time. Barriers to new construction is of course the problem. If you had to fill out a lot of paperwork and get government permission to build a tractor, and there was a shortage of tractors, the solution woul…
In an unrestricted free market, someone would just buy up all the property in a constrained space to corner the market. That has definitely happened before in robber baron days. And honestly, if I wanted to live in a cess pool like Houston, I would move there. Houses are cheap enough (comparatively) but it is a huge icky sprawl.
This buy-up argument is impossible in a free market.
Let's say there are 10 people renting apartments that a monopolist plans to buy out, and each of their properties are 'worth' $1, meaning you could reasonably expect to pay $10 for one property. They also rent out their appartments for $1 each.
What happens when the monopolist starts buying properties? He buys a few, and they notice he's going for a monopoly. They will raise their prices, because they know it will be worth it for the monopolist to pay $20 or even $30 to aquire their properties.
Let's say, through a miracle, the monopolist endures these exponentially growing raised prices, buys 9 of the 10 properties, and raises rates to $3 to cover the losses he's had to put into buying his last couple of properties.
Well, the 10th would be able to rent his land out at nearly the same price as the monopolist, say $2.50. But notice that the 10th property owner didn't have to over-pay for his land, so he will is making way more profits than monopolist, which would price his property out of the range of the monopolist.