Home is where the cartel is: On the politics and economics of land-use controls
interfluidity.com
interfluidity.com
I'm not entirely convinced by the paragraph on rent control. The author is resting on the assumption that new housing construction post facto overcomes regulatory hurdles, but it seems to me a broader picture of regime uncertainty and adaptive expectations might still skew the allocation of resources, and this discount be reflected in the rent being "too damn high". Actually, he mentions the market-clearing quantity, but seems to gloss over that a modern mixed economy has many forces countervailing from markets ever clearing.
The dichotomy of housing as capital/investment good v. housing as consumer good is interesting, but again, I'm unconvinced of how one function excludes the other, unless there is something countervailing the process of speculation.
I'm sensing a Georgist vibe from this whole thing, but the author stops short of advocating a land value tax. There's some issues with qualifying what an "unimproved" value of land would be, and also on the valid uses of a resource being idle. I'm unfamiliar with the housing trends in countries that implement LVTs, but they're worth researching.
Good comment. I also wrote a longer response to the original article, "Why did cities freeze in the 1970s?" (http://jakeseliger.com/2015/12/27/why-did-cities-freeze-in-t...) It's also a genuine question and I haven't seen a good answer to it, though two people on Twitter pointed me to William Fischel’s book Zoning Rules!
Rent control on existing units makes less of them available on the market. That drives demand for new units (that are not under rent control). That's the opposite of the straw man position the author argues against.
The real problem with rent control is that on the supply side it removes incentives for upgrading or even just maintaining existing property; and on the demand side it discourages an efficient allocation of scarce resources.
* RS only applies to buildings built before ~1979.
* RS does not apply to buildings built after that date.
* RS only controls rent while one or more of the original tenants on the rent-rate-establishing lease occupy a controlled unit. Once zero of those tenants occupy that unit, rent can be set to any value.
* RS permits all sorts of passthroughs direct to the tenants in the building... city bonds, water bonds, capital improvements, maintenance cost increases, increases in the cost to service the landlord's debt...
The SF rent board's site has more details. [0] So does my comment history.
[0] http://sfrb.org/
> * RS permits all sorts of passthroughs direct to the tenants in the building... city bonds, water bonds, capital improvements, maintenance cost increases, increases in the cost to service the landlord's debt...
Sounds like a good lawyer / accountant should make rent control toothless for the landlord?
Potentially, kinda, yeah. There are some limits (depending on how many buildings the landlord controls) on how much of an increase can be imposed how frequently [0], but if you're sufficiently nasty and clever, you could squeeze substantially more out of your tenants than a naive understanding of the RS ordinances would lead one to expect.
[0] Though, for things like municipal bonds, legally mandated retrofitting, and water cost increases, there are -IIRC- no limits.
It's not a dichotomy; it's a dualism.
The article does not address this directly, but it's sorta hanging there. Housing has a dual nature as a consumer good that looks like an investment. In the US, there are also direct and indirect subsidies.
> I'm sensing a Georgist vibe from this whole thing, but the author stops short of advocating a land value tax.
Indeed.
> There's some issues with qualifying what an "unimproved" value of land would be,
Not really - in real life. You'll see property tax assessments being pretty accurate in most cases. I say "pretty accurate", so long as there's dialogue between the taxpayer and the tax agency.
You can get a long way with Zillow-like prices and square feet vs. land area.
> and also on the valid uses of a resource being idle.
This is a much larger problem.
> I'm unfamiliar with the housing trends in countries that implement LVTs, but they're worth researching.
A really weak but convenient example is Texas v. Florida from 1990 to the present. Texas never quite had a bubble.
(I happen to have lived in both Germany and Singapore, and a few other places.)
Maybe with technology advances such as telepresence robots location will matter less, so cities will have to start competing against each other?
On the other hand, the whole software industry which can be perform from any office with the internet is so heavily condensed in San Francisco...
The idea is like that: on the one hand renters pay rent with post-tax money. But owners pay mortgages with pre-tax money. To equalize the two situations, owners-occupiers get taxed on the virtual income they are at once producing and consuming---ie they are taxed as if they were renting to themselves.