Unlikely. UBI removes the connection between location and income. As a result you can move to somewhere incredibly cheap to live since there's no need to be in an in demand market in order to have a nice job.
Housing is really quite cheap in the US. With Real Estate you pay for the location not the actual land or building.
Of course people won't necessarily want to move away from their "hip" city, but UBI is "basic" and if you want to stay in a high demand area you will have to supplement UBI with work.
As for basic consumables, demand is unlikely to go up for these fundamental goods because people are _already_ consuming them at their basic required levels under the current system (toilet paper, eggs, milk, bread, chicken, beans, rice, birth control, etc).
It isn't that they can't afford to live where they are now, it's that BI will be absorbed by price inflation everywhere.
A big reason for the current rise in real estate prices is urbanisation (centralisation of population in big urban centers) - e.g. London, NY, SF, and plenty other cities. (The other reason is foreign investments, but I'd argue the investment comes after the initial rise in prices, simply because real estate is perceived as a good investment opportunity.) This urbanisation is to a large extent driven by the fact that the most high-paying jobs are available in these cities, which consequently also increases the availability of lower-paying jobs. I.e. people move to cities to succeed/earn money.
If you remove the last implication - if people can earn a living without moving to big, overpopulated cities - then arguably the concentration of population would drop and the "bubble" would pop/deflate.
Housing prices are a function of income elasticity - raising the income for everyone will raise housing prices for everyone. Note - this is not the only way that real estate prices can increase (as you described urbanization), but it is one that BI would cause.
This is a truism but incorrect in the context of this conversation.
UBI does not increase incomes for everyone. It is a wealth redistribution. Many will see their income fall, especially initially, in order to prop up the incomes of the poor and those who decide to live solely off UBI.
What you're thinking about is a negative income tax or some other BI that is disproportionately weighted.
Many people (the wealthy) will have their net income (income after taxes) go down considerably in a UBI system.
For example, everyone gets $12k a year in UBI income, however funding such a system will require a fairly stiff tax increase (this is how the wealth redistribution will occur), so for high earners, their $12k in UBI will be negatively offset by the increase in taxes.
As an extreme example, someone earning $1MM annually will get the $12k UBI same as everyone else, but an (example) increase in the top income bracket from 39.6% to 60% will cause them to pay $118646.4 more in taxes resulting in their net income under a UBI system to go down (-$118646.40 taxes + $12000 ubi) $106646.40.
UBI does not "create" new money and just give it to everyone (which would cause inflation). It's a wealth redistribution. That is, many people will see their income go down under UBI (probably most HN readers for example). The money supply will represent the same amount of wealth, what changes is who owns that wealth and as a result who decides how to use that wealth to consume.
Regarding price changes, price is set by the amount of a good/service demanded by consumers, and the supply of the good/service created by suppliers. High discretionary income does cause the demand for certain goods/services to go up (especially luxuries), but UBI is so basic at $1k per month it won't make much of a change in the demand curve because the type of goods/services that will be consumed by someone living on UBI are so fundamental they are already consuming these goods at the same rate under the current system.
So far as housing is concerned, UBI will pretty much "explode" the supply of acceptable housing for people living solely on UBI since they get access to housing in the entire US instead of having it constrained to locations where they could conceivably "make a living." I'm sure you realize what happens when supply increases drastically but demand stays somewhat constant (everyone has to live somewhere and you can only live in one place at once) -- the price of housing on avg will plummet considerably for UBI'ers.
UBI is Universal Basic Income, meaning that income is increased for everyone universally. Nobody is claiming that money is created out of thin air.
What you're thinking about is a negative income tax or some other disproportionately weighted welfare program.
Increasing the income for the vast majority of the population inflates the prices of income-elastic goods and services.
Again, good luck trying to raise tax revenue 30% without killing the US economy.
You're subsidizing the unproductive, and punishing the productive. I can be productive in untaxable ways.
Under UBI that would be your prerogative. Most highly productive individuals and all corporations will carry on producing.
>You're subsidizing the unproductive, and punishing the productive.
You may have moral qualms with a UBI system. You will need to come to terms with these doubts in the midterm future, as UBI will be the only system (we currently know of) capable of sustaining a market economy in a world where automation has displaced the workforce.
Instead of having to work for that first $1000/mo, it just...appears. Yes it was earned elsewhere, and whoever earned it won't miss it as much as the recipient will appreciate it, but since the recipient has done nothing for it, its local value plummets. Instead of some low-income people having $1000/mo for rent, now everyone has $1000/mo for rent - and basic prices will rise accordingly.
I won't notice much change for losing a sub-1% of my income, but those for whom UBI is really intended can go from really struggling to renting (even buying) housing. With limited housing supply, suddenly prices will rise.
While I'm a staunch advocate of "move already!" for solving economic problems, I don't see enough people moving - nor enough housing for them to move to - to cause "the price of housing on avg will plummet for UBIers".
Imagine the poor section of town. Many/most rent. Suddenly, with no additional productivity, everyone is getting checks for $1000/mo. You think rent etc prices aren't going to suddenly skyrocket? I grasp your theory that people can now move to more affordable locations, not needing to be near jobs - but will they really? before they can, rent prices just shot up, consuming their newfound income. Destination rental prices similarly increase - still relatively attractive, but higher than before since there is more demand and more money to pay for it.
Yes the supply of acceptable housing for UBIers increases, but those markets already existed and were already priced for a low-demand market; now you've "exploded" the demand - prices will rise, matching people who now have $1000/mo and few expenses.
I live near Vancouver, which is the most expensive housing market in Canada. Poor people here have access to free health care, a provincial welfare program, and a permanent disability allowance. The income amount is enough to live on in some parts of the province, but not Vancouver. Still there's a glut of unemployed poor people who prefer substandard housing or homelessness over relocating to where they could afford to live. They don’t choose to live anywhere else, even though they're not in Vancouver to “make a living”.
Programs aimed at helping the poor here focus on providing subsidized housing, not relocation.
It seems to me that if UBI doesn’t help these people afford a better standard of living where they are now, then it won’t help them at all unless they’re forced to relocate. What am I missing?
So its not that the whole housing market just moves up the value of UBI and nothing changes. UBI introduces a new market of houses that currently are unsellable and rotting.
Those are obviously not a long term solution, but the existence of UBI and the economic pressure it produces will incentivize builders to develop the cheapest possible living conditions to supply to people living on UBI. That almost certainly would be an entirely new model of building - constructing for density, but without the limitations of building in already densely populated areas.
You could say, "This is a problem with the current financial system," which it is, but it's not a problem that UBI will solve.
If UBI is enacted, then prices will still inflate and people who purchase foreclosed homes at auction will continue to do so today, because they will also have the same increase in income as everyone else.
If UBI is funded by printing money, people with assets will see them devalue through inflation (people with no assets won't have this loss).
If UBI is funded by taxes, it's likely to be progressive. So sure, the high income people get the UBI check. And a bigger tax bill to go with it.
Even so, if you hypothetically see a decrease in income for 3% of the population and an increase in income for 97%, you still have inflation. 100% of the population purchases housing, which is income-elastic, meaning housing prices will increase because 97% of the population's income will increase.
Maybe it would be funded by magic fairies, who knows. I guess funding it with inflation would be close enough to that.
The point I'm making is that the "universal" or "unconditional" just means that everyone gets it. It doesn't mean that everyone is better off after it is put in place, because there will be tax and economic effects from putting such a thing in place.
This is why traditional welfare programs tend to limit the type of spending - i.e. medicaid or food stamps.
In terms of A, some people would drop out of their current employment. In all likelihood temporarily, but a lot of people are doing things they don't want to do because they don't want to be homeless. Likewise, it would almost certainly not be 97% of people making more money - that kind of progressive tax threshold would mean you don't even start taxing for UBI until 6 figure income.
In terms of B, a lot of areas of the country are currently unlivable for a huge percentage of people because there is no way to earn money to afford to live there. Living there in absolute monetary terms would be cheap, but absolute money is pointless if you have nothing coming in.
UBI reduces demand for housing in cities because anyone that doesn't want the added income from living there would now have the option to move away. City housing prices are extraordinarily beyond the flat costs of construction and maintenance - the scarcity of work means a scarcity of high demand housing in cities surrounded by deserts of unlivable land.
Finally, for all those dropping out of the workforce, the UBI is not an elastic income - it will be a simple binary can a UBI recipient afford to live in your apartments or not. For those who want an extremely reliable tenant who has a guaranteed ability to pay rent every month, meeting the UBI threshold becomes an extremely strong price ceiling on affordable housing.
Inflation isn't magic. Inflation happens insofar as someone is willing to pay the higher prices and nobody can produce supply to drive the price back down. Introducing UBI does neither to housing (especially when as a percentage of income UBI relative to the cost of home ownership would be a relatively small gain in income for most people, and almost all current homeowners / tenants).