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A lot more market-rate construction helps low-income renters more than subsidies

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Re: A lot more market-rate construction helps low-income renters more than subsidies

#61

Post by yummyfajitas »

whybroke wrote: post #43
yummyfajitas wrote: post #32

Earlier quoted context omitted.

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 st…

So if India and all its cities had 4 times as many people would it be better off? The population is so high that wages are so low that talented people are fleeing the country. Indeed if mega-cities were a good thing then Pakistan, Nigeria and the Congo should be doing better than Japan. Excepting just 6 out of 84, your list thoroughly proves my point; over crowding correlates with societies with suppressed labor valu…

I only mentioned the 8 cities on that list which I've spent enough time in to form an opinion.

As for the one I gave a negative opinion about, a big part of my dislike for Delhi is due to the lack of density - it's more suburb than city. Going from where I work/live (Pitampura) to the fun parts of town (South Delhi) takes 1-1.5 hours and the metro shuts off at ~11pm. (Other things I dislike are pollution, oily food, and the difficulty in finding a date.)

India almost certainly will be better off after people escape rural poverty and enter the middle class living in the cities. This process is happening rapidly and the results are good.

Re: A lot more market-rate construction helps low-income renters more than subsidies

#62

Post by yummyfajitas »

whybroke wrote: post #60
icebraining wrote: post #53

Earlier quoted context omitted.

Indeed if mega-cities were a good thing then Pakistan, Nigeria and the Congo should be doing better than Japan. If universal healthcare was a good thing then people in Rwanda should be more healthy than in the US. They aren't, so universal healthcare is bad. Find the flaw in this argument and you'll find the one in yours.

41/58 countries with universal healthcare are in the developed world. 84/100 mega-cites are in the third world. I don't know how this could confuse you but feel free to google inductive reasoning.

83% of the world population lives in the developing world, according to a quick google search.

http://www.prb.org/Publications/Datasheets/2013/2013-world-p...

Re: A lot more market-rate construction helps low-income renters more than subsidies

#63

Post by whybroke »

davidw wrote: post #8
whybroke wrote: post #4

Earlier quoted context omitted.

> determined by ... political processes Part of which is playing out here where people of privilege are working out a story that allows them to displace an older population dependent on rent control so that they can get that housing.

> that housing That's sort of the problem though - "that" housing. If there were more housing, if it were not the zero-sum game that it is in SF, then it would be less of a problem.

If geography is the only problem then it should be easy to answer this guy's question.

https://news.ycombinator.com/item?id=9255710

Re: A lot more market-rate construction helps low-income renters more than subsidies

#64

Post by whybroke »

escherize wrote: post #40
seanmcdirmid wrote: post #14

Earlier 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.

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…

> This buy-up argument is impossible in a free market.

On the contrary it is an inevitable risk to any commodity that can be monopolized.

The monopolist can make more from the resource because he will be able to charge more than the current owner. Thus he can offer the current owner more in cash than the owner could ever make renting it. If the owner is a rational actor he will always sell out to the monopolist.

In your analogy, the holdout charges $2.50 rent, the monopolist plans to charge $1000. The monopolists borrows 100 years rent and offers it to the holdout who, being rational, sells. The holdout makes more money, the monopolist makes more money. Only the tenant looses.

It is that way with every commodity that can be cornered. That is why we need to enforce anti-trust laws.

In the event the current owner did not sell, the monopolist could use part if his holdings to eliminate his competitor by selling at a loss. So stretching your analogy, he could use rent from distant apartments to offer discounts on those near his competitors until his competitor goes broke.

Re: A lot more market-rate construction helps low-income renters more than subsidies

#65

Post by collyw »

chii wrote: post #30
collyw wrote: post #15

That's kind of obvious is it not. Every time the UK government do something to "help first time buyers" it involves getting them into even more debt, and keeping the prices high. There are still the same number of properties around, and the same number of people competing for them. How can they honestly think this is helping in any way.

i think gov't are reluctant to introduce any policy that will cause housing prices to drop - a lot of "wealth" is locked in property, and should property prices drop, the on-paper measure of such wealth drops too (despite the fact that a house that's lived in is stable in it's "wealth" measured with utiliziation).

I agree. I am fairly sure this is the only route they have open. Allowing property prices to drop would collapse the banks again.

Re: A lot more market-rate construction helps low-income renters more than subsidies

#66

Post by whybroke »

icebraining wrote: post #50
whybroke wrote: post #35

Earlier quoted context omitted.

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 f…

And cost of living will rise with population density I don't see how you justify this, and therefore the rest of the argument. What mechanism do you see that implies that increasing population density leads to higher costs of living? I think you are falling into a third cause fallacy mistake. While there is certainly correlation between higher pollution density and higher living costs, it's not one that causes the ot…

Wanting to move there is also a believable cause of high cost of living. But since housing prices are out pacing wages worldwide, I think not. Indeed the NY Times reports 90 cities as "unaffordable" in the US alone.[1]

If there is a theoretical supply and demand argument that building always drives down costs then there is a theoretical argument that excess supply of labor drives down the value of labor.

If there is an observational argument that large population densities do not lower wages then there is the observation that high density cities do not have low cost of living.

My claim is that the price of housing will rise to at least 30% of wages no mater how many or few units you have. If you really wanted to lower rent rather than shuffling around who is living where, you'd need enormously radical change to land ownership laws and incentives. The things that made the twentieth century unique in history for the relative wealth of ordinary people. Things now being reversed.

Another apparently impossible option would be to make other cites into bastions of free thinking diversity, tolerance and creativity so there would be innovation and demand to live there instead of fleeing them for the few cities that have those things and the wealth that comes with them.

But the path we're apparently going to follow, deregulation, which will do exactly nothing, could nicely degrade the character of one city after another which would reduce demand and that might slow price rise. It'd take surprisingly little to turn SF into another Huston. But don't expect the people with a choice to stick around a characterless city among a sea of less imaginative people looking just to get rich quick.

[1]http://www.nytimes.com/2014/04/15/business/more-renters-find...

Re: A lot more market-rate construction helps low-income renters more than subsidies

#67

Post by erispoe »

yummyfajitas wrote: post #3

If you stop thinking about prices and simply count people in houses, this result becomes more obvious. If N people want to live in SF but only K The only question is which N-K people have a problem - this will be determined by economic and political processes.

A lot more than N-K people have a problem. The fact that K < N drives prices up for everybody, not only for N-K people.

Re: A lot more market-rate construction helps low-income renters more than subsidies

#68

Post by erispoe »

whybroke wrote: post #18
yummyfajitas wrote: post #5

Earlier 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…

People are not "fleeing" other cities to come to SF because it's undense. They come to SF because SF has jobs and it's nice to live here. I'm somewhat unconvinced that more density in SF would make it less nice for all the people coming here.

High prices is not beneficial to the wealthy, it's only beneficial to homeowners. A vast majority of tech workers in SF are renters, who can afford high rents but would nonetheless prefer them cheaper.

Re: A lot more market-rate construction helps low-income renters more than subsidies

#69

Post by pron »

yummyfajitas wrote: post #33
collyw wrote: post #20

Earlier quoted context omitted.

"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 .

> A wealthy software developer produces a lot of value in an hour, whereas a poor barista does not.

I could argue the exact opposite. The barista assists those who'd like to drink a cup of coffee and contemplate, and increasing contemplation creates a lot of value (intrinsic value) -- maybe not every barista, but this particular one does -- whereas the software developer writes programs that make soul-crushing economic activities more efficient, and so sucks away value from the world.

> The world is then better off.

Or worse off. It all depends on how you see value, which, naturally, is part of your personal value system. For example, in my opinion, a single crippled cat may create more inspiration for a great work of art than, say, Uber. I therefore see a single crippled cat (or any cat, for that matter) as making the world much better off than an inane ride-sharing smartphone app. I would venture to guess that you believe Uber is more valuable than a cat. You value efficiency, I value inefficiency (or, rather, freedom from efficiency); you value rational behavior while I value spite -- or freedom from rationality (not all the time, of course); you value freedom from the will of the masses, while I value freedom from the will of corporations.

BTW, are you a Dark Enlightenment believer? If so, I'd love to shoot you an email, if you don't mind.

Re: A lot more market-rate construction helps low-income renters more than subsidies

#70

Post by OrwellianChild »

specialist wrote: post #28
bjourne wrote: post #9

It'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.

From the executive summary: "In these areas, community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction." In other words: zoning. I've spoken to both policy wonks and developers. IIRC, a good 70% of our land is zoned residential. Everything else is being redeveloped as fast as possible. The single bi…

This is interesting - I didn't know much about the political process that led to SLU being able to up-zone... Do you have any more background? How did adding the street-car allow for the stalled up-zone?

For non-Seattleites, this will add context (South Lake Union, circa 2005): http://www.seattle.gov/economicdevelopment/files/south_lake_... http://www.seattletimes.com/seattle-news/nickels-outlines-fu...

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