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Comment by dalbasal | Hacker News Reader

I think it's worth occasionally thinking of the "economy" in simple terms, especially for the wider middle class. There are relatively few broad categories that make up most of our economic lives.

For most people the "economy" mostly consists of (0) their job/income (1) food/consumable (2) stuff/durables (3) transport (4) vital services: health, education, etc. (5) housing.

1 & 2 are well served by free markets, and industrial capitalism^. We're "rich" in these. 3 & 4 are not, and are generally managed by governments. The long term trend is decent-ish though. Medicine, education and such have grown over the decades and people get more of this.

Housing is in many places (mostly successful cities) the economic disaster. Fully exposed to financialization, business cycles, inflation prone. Rather than signalling to supply, prices adjust to whatever the median person can afford to pay. Meanwhile, the whole market acts a mechanism transferring wealth up the generations & economic classes.

Especially in europe, the whole thing is stagnant too. Modern planning doesn't seem much better than old planning. Modern building is not much better/cheaper than old building. It seems that we have less ability to deliver on larger & more ambitious projects than they did 100 years ago.

Interestingly, this generational stagnation seems to hold for both the liberal and ex-communist parts of europe. No one wants to go back to soviet supermarkets, cars or electronics. Soviet housing system...? opinions vary.

Housing is the biggest problem in our economic lives.

^excepting mattresses :)

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The planning commission in my small town recently blocked a $10 million apartment building that would have mostly been cheaper housing.

Some directly stated that they didn't want the poor people living in the area, which is stupid because they already live there (demographically it's already the poorest zone in the county). A few others said they didn't want to disturb the historical character of the shabby, decades old commercial building that is currently on the site.

The real reason is that they don't consider reducing housing prices a good outcome. Which is just bonkers. Variations of that problem will repeat all over the place. Entrenched interests are often at odds with the policies that would serve the larger group of people (and even be economically beneficial...).

Same thing has been happening in the Atlanta metro area for decades, but in relation to transport instead of housing.

750,000 people live in Cobb county, which lies just northwest of the city center. Many of them commute to and from the city everyday for work via one large, congested interstate highway. Expanding MARTA, the Atlanta subway system, into Cobb county seems like a no-brainer way to cut down congestion and speed up travel times for workers who live in the suburbs, and make commuting to downtown events on nights and weekends much easier as well.

However, since the 1960's Cobb has blocked expansion of MARTA into the county. Many people point to racial tension as the reason. Cobb county is mostly affluent white suburbs, and voters have feared that creating a direct transit link with downtown will cause poor blacks to flood the area.

A quote from a state senator in 1971, “People fear that rapid transit would give Negroes greater mobility and consider the $0.15 fare as a gift to ‘a certain segment of the population.’” [0]

Opinions are supposedly starting to change, but as someone who lives (and thankfully works from home) in Cobb, it really does suck not having a quick link to downtown. For now, instead of adding true rapid transit, they're adding 30 miles worth of elevated express toll lanes to that same congested highway, at a cost of about a billion dollars. [1]

[0] http://www.mdjonline.com/cobb_business_journal/marta-s-expan...

[1] https://www.myajc.com/news/local/giant-toll-lane-project-ram...

> The real reason is that they don't consider reducing housing prices a good outcome.

I think this is the key. If you're a property owner, any outcome that reduces the value of your property is naturally a negative outcome. A rational economic actor, in that case, would always oppose anything that would reduce housing costs. It's a tough problem to combat, because what can be done? Barring property owners from participating in local governance?

> It's a tough problem to combat, because what can be done? Barring property owners from participating in local governance?

Zoning shouldn't be local governance, because it's too easy to capture. It should be regional at the very least. A San Francisco politician doesn't have to care that most of the people working in his city have to commute 1hr+ to get there...that's someone else's problem. All he has to care about are the people in his own district. If he is given jurisdiction over a decision like zoning where a net negative to the region is a net positive for his constituents, he's going to make the decision that benefits his constituents. He shouldn't be given a decision like that.

Bar local government from implementing housing policy.

Well you could add a conflict of interest clause. If the thing you're testifying on impacts the property value of your home then you must state that up front. Further, such rational economic thinking isn't really that rational. For example next to my home is a tent encampment. That certaintly doesn't increase property values and could easily be fixed by say building some affordable micro-apartments on that plot of land.

I think this might be a case where we are seeing something as a zero-sum game that isn't. Property in Manhattan would be pretty worthless if we had kept Manhattan to a few hundred single family homes. Lower prices might attract more people to move the and everyday someone might want to build a skyscraper where my single family home is now.

Building a big tower could decrease your property value, but upzoning and by-right construction should increase property values (because now the person who wants to buy your house wants to replace it with more than one house.)

Local government being able to stop individual projects rather than setting policy could be the problem. Maybe.

>Housing is in many places (mostly successful cities) the economic disaster. Fully exposed to financialization, business cycles, inflation prone. Rather than signalling to supply, prices adjust to whatever the median person can afford to pay

Why should housing not be to governed by market forces? Housing shortages are due to regulations, from limiting new development outright, to limiting high density buildings, to heavy rent control (disincentivizing investment and maintenance), to regulations that just make housing investment expensive. Reasonable regulations should be the guideline, but they aren't. The most aggregious local example is San Francisco.

Soviet housing never worked. More to the point the wait lists for apartments was measured in years (ripe for corruption). The buildings were shoddy and depressing (hope you like grey). Urban planning was haphazard and may or not may have corresponded to where people actually wanted to live.

> More to the point the wait lists for apartments was measured in years (ripe for corruption). The buildings were shoddy and depressing (hope you like grey). Urban planning was haphazard and may or not may have corresponded to where people actually wanted to live.

This tv show on amazon prime was really good insight to soviet life during stalin times, based on the life of Regina Zbarskaya. I really enjoying looking at the houses across social classes, streets in different cities, law enforcement, morality, relationships(eg: giving up your apartment is the biggest favor you could do, staying in relationship with someone because they have govt allocated apartment ect)

https://www.amazon.com/Part-9/dp/B01GU8D4IK/ref=sr_1_5?ie=UT...

while definitely pre-fabricated building were grey and ugly, they still look better than British council houses in London; especially after many of them, for example in Warsaw, got renovated, insulated, covered with plaster and colourfully painted.

Worth mentioning these pretty renovations happened well after the system which brought them stopped its existence.

that's for sure, mostly 10-15 years after. Doesn't change the fact that this never happened in the UK; old council houses are still ugly, energy inefficient and often mouldy inside... not to mention some awful&impractical design choices

Well, after I stayed in a typical British house for some time, with its coldness even in a relatively warm weather, and two separate taps system in bathroom, I started to believe that impractical designs in building could be an inseparable part of British culture :-)

This is a reault of huge EU subsidies coming from Brussels/western Europe. Causing set of new problems in the region like making rich people and firms who can orient in the subsidy bureaucracy labyrinth. Which makes it quite similar to Soviet era economics where you had to be well connected to get around.

> Why should housing not be to governed by market forces?

Housing can and should of course be managed by market forces. Land usage rights distribution is where the problem lies.

For physical reasons there is no supply of new land. We'd have to wait until Mars or Moon colonization, which would pop the ongoing land price inflation.

Until then it's just a market in which the sooner you get in the better off you'll be. Which is why older generations and aristocracy benefit from such arrangement.

Later generations are just told to shut up and accept that you have to slave more and more each decade to be afford living. Until a revolution of some sort.

The funny thing is the misnomer 'to own land'. The only thing you own is a right to use the parcel, which is guaranteed by no one else but the population. And the population is not paid to provide such a service.

Payment for actual usage on ongoing basis is a solution. Such as land tax or government lease.

Worked wonders in countries founded on this principle.

https://blog.p2pfoundation.net/successfull-examples-of-land-...

Many supply restrictions are geographic rather than based on regulation.

Also, Singapore has a semi-socialized system that seems to work.

>Many supply restrictions are geographic rather than based on regulation.

That's true. At the end of the day there are only so many desirable beachfront properties, or direct views on Central Park. Those are going to be expensive.

>Singapore has a semi-socialized system that seems to work.

I know very little about Singapore, but I'll make two comments:

1) I'm skeptical about the feasibility of models that work in tiny regions with very specific constraints and applying them to big nations. But maybe there's something there to learn from.

2) At the end of the of the day, it's not magic. You have a lot of people, in a relatively small geographic area - you need to focus on density. You don't need a heavily socialized system to build dense housing - you just need to align regulations.

Singapore is dense like NYC is, and, outside of its public housing program, is equally, if not more, expensive than NYC. Singapore is otherwise a very capitalistic country, and its housing program is basically ownership with restrictions that fade overtime.

But more to the point: every super dense city I’ve lived in has had more expensive housing than the lesser dense cities I’ve lived in. Obviously something else is going on, density itself isn’t magic.

> Obviously something else is going on, density itself isn’t magic.

Of course it's not. You can have dense cheap cities (Tokyo, Chicago), dense expensive cities (Hong Kong, NYC), sprawled cheap cities (Houston, Indianapolis), and sprawled expensive cities (Palo Alto, Los Angeles). Density doesn't make a city cheap any more than it makes it expensive. Supply relative to demand does.

If you want a nearly perfect predictor of housing prices, don't look at density, look at the vacancy rate. The vacancy rate is probably the most direct way of measuring supply vs demand. If you have a high vacancy rate, you have a cheap city, and if you have a low vacancy rate, you have an expensive city.

The reason density is often touted as the solution is because increasing density is an increase in supply. It only moves the needle in one direction. Sprawl also moves the needle in that same direction. Cities with lots of space to move out have both options, and typically sprawl is cheaper. A city like Seattle or San Francisco doesn't have both options, so density is the only way to increase supply.

> Why should housing not be to governed by market forces?

The limit is transportation/infrastructure. not buildings. You need NYC's roads, schools, and subway etc before block after block of 40+ floor building are viable. It'a very much a tragedy of the commons situation as a single high rise is fine but 100 of them are not.

Unfortunately, most areas are regulated at the local level which while better than a free for all creates massive problems.

I would posit that the best solution is state level control + an infrastructure tax on new development. Charging ~30k per SFH might seem to make things more expensive but by allowing new entry to pay their own way let market forces work while adjusting for externalities.

> I would posit that the best solution is state level control + an infrastructure tax on new development. Charging ~30k per SFH might seem to make things more expensive but by allowing new entry to pay their own way let market forces work while adjusting for externalities.

Why should the new pay the burden of the new and the old together?

The old has already paid for a lot of infrastructure or their would be no roads etc. New people need both new and old infrastructure their property taxes offset the use of old infrastructure, but the added cost of new should be paid for by the people who need it.

The idea that the current residents have a right to extract a tax on the future ones is the basic motivation of nimbysm. Then come zoning controls, come construction controls, all those that make the new buildings more expensive to make, and the old ones more and more increasing in value, even at the decay of services or population.

This tax is not going to increase the cost of a new home 1:1 as markets still exist. It's going to reduce the profit of a new home construction and thus the value of existing land. As the tax is very much levied on the person building the house not the person buying the house the person selling land is also going to take a hair cut.

Really I am saying local governments lose the ability to limit growth.

The ideal amount of growth is where the total cost of new construction balances the demand for new construction. I am simply including externalities as part of that cost. Any other system makes some group richer at the cost of everyone else.

> This tax is not going to increase the cost of a new home 1:1 as markets still exist. It's going to reduce the profit of a new home construction and thus the value of existing land.

Reducing the profit of new construction increases the value of land, as it reduces the supply of housing. Study case, san francisco. It has a 0.1 supply elasticity: if rental prices went up 100%, construction units move by 10%.

Any tax that is put on construction reduces construction.

> The ideal amount of growth is where the total cost of new construction balances the demand for new construction. I am simply including externalities as part of that cost. Any other system makes some group richer at the cost of everyone else.

Your system makes local homeowners with very old large houses very rich: not for the house, but the land they have that appreciates because it is harder to build around it.

I think you are confused about actual housing prices and infrastructure costs in the US. In SF for example a ~30k tax per new home would be meaningless until the price of a new home crashed enough for it to become meaningful.

In small towns on the other hand the infrastructure cost would be much lower.

Its even more meaningless to increase property taxes on everyone than to focus the pain into the new construction. a 30k tax on any new unit might be like 10 dollar tax on all units.

The effect of concentrating a tax on something is to make it happen less, and less construction means higher home prices and higher rentals. San Francisco needs to build 1000 units to bring rental prices down 50 bucks. What you need is not to punish, but to make people responsible for the infrastructure they use, and everyone is responsible for the usage, and new construction even less so: until the building is used, the increased infrastructure usage is less. And once its built, all the dwellers pay sales tax and income taxes as well. They will be brining more than their fair share.

Perhaps you believe that the new construction represent a minority that can be exploited, after all, they found a way to profit from the city. But the ones that exploit it the most are the state and the current residents. SF has one of the highest budgets in the world, per city per inhabitant. It doesnt need more money, it needs more discipline.

But there you have the actual issue of SF and california, things like prop 13 that make it impossible to raise taxes on property owners but it makes it easy to apply sales taxes which are known and accepted to be regressive.

SF is not adding units because people are not allowed to add units. I am specifically saying you need to change that to build units. I am also saying that a portion of windfall from changing zoning should be used to offset the cost of new infrastructure. As long as building units stays profitable and people are allowed to build units then people are going to build units. Giving people building units even more profit is going to have minimal effect.

As it stands now anyone that can convince a zoning commission to change zoning get's a huge windfall from doing so as suddenly with zero other changes the land is more valuable. That's ripe for corruption on many levels and creates terrible incentives.

As to building infrastructure after people show up that's really does not work because building takes time. The lag between getting permission to build and someone moving in is not long enough to finish infrastructure but it is useful.

Nobody needs, or can even afford for that matter, infrastructure for people that don't exist yet. That's why that process never works. It is nothing more than a giant concern troll: you get to look like the smart one who insists on planning ahead for more development, knowing full well that nobody will seriously propose adding more infrastructure for people that don't exist yet.

Luckily, you can build infrastructure as it's needed. If traffic gets bad because 100k people moved in and it's straining the transit system, you've got an additional 100k people who will help pay for it. We've been doing it this way for thousands of years, so it's pretty hard to argue that it doesn't work.

It's a question of collecting money not building infrastructure.

When 100k people move in and you need a new water treatment plant. Those 100k people should pay for the water treatment plant not everyone that lives in the area who also paid for the last water treatment plant.

Further, you need to start building infrastructure now, not in 20 years when the new people have paid enough in taxes to pay for it. It's not like you need a new police station and a new school from a single new home but you do need them after X new homes.

Debt seems like the obvious solution to time shifting infrastructure, but that increases costs, adds risks, and still forces everyone to pay for new infrastructure. When a tiny home is worth 3x what would be somewhere else that value is from the existing infrastructure not the cost of building the house so adding a tax to capture that surplus is completely reasonable.

That's exactly the point, nobody is gonna pay to build infrastructure for people that don't exist yet. Especially if they don't want those people to exist. That's what's so ridiculously obvious about the concern troll. When a developer wants to build housing, it's always "no, we don't have the infrastructure to support it", yet a few days later when new infrastructure gets proposed, it's "we can't afford that!". Well shit, wouldn't it be nice if there were more people in the city that could help share that cost? But you blocked them out.

Requiring infrastructure to be built beforehand is nothing more than a way for incumbents to win in their quest to never let anything new get built.

In my new system local government can't say no. Making that objection meaningless.

They simply collect money from new people to pay for it, because it's very much needed.

Maybe theoretically that works. But it's still not fair in the way that you think it is.

100k people move in and several things happen: you need a new sewage treatment plant, new some more transit capacity, new schools, etc. You are proposing that the new people pay for this expansion. But you are neglecting the ways in which you benefit.

By building more schools, each school serves a geographically smaller area, meaning school buses drive a lot less. You can also have higher student-to-administrative ratios (even if student to teacher ratios stay the same). By having more transit riders, your transit system might need additional capacity, but it will be using that transit capacity much more efficiently, because transit system is a step-fixed cost business, and more riders means more profitability (or less subsidy). You aren't getting any benefits to scale on the sewage treatment plant, but you will get benefits on the water provision: smaller and higher density housing uses far less water per person than single family homes with yards, etc.

So yeah, if new people move in, you're gonna need a new sewage treatment plant. If you charge the new residents for the new sewage treatment plant, are you gonna credit them for the improved efficiency of the transit system, school system, and water system? Or are you gonna try to keep those benefits to yourself?

Somehow I think its all just a bit easier to treat every person as the same whether they're new to the area or not.

That's an agreement around what the tax should be not that it should not exist.

Complexity with undefined or difficult to determine benefits is definitely a case against itself.

If you want to charge a newcomer more because the city had to build a sewer treatment plant to accommodate him, you should at least credit him back the ways in which he also made the city more efficient, such as by taking public transit or reducing school costs. And if you are willing to take on the burden of an extensive economic analysis of the marginal cost and benefit of every new housing unit, by all means go ahead. For most of us, a single property tax rate works fine.

And if you are willing to take on the burden of an extensive economic analysis of the marginal cost and benefit of every new housing unit, by all means go ahead.

Long term benefits are meaningless as they would impact long term property taxes. It's only a question of new construction which is a fairly simplistic annalists.

PS: Really it's hard let's play checkers is not an argument.

>Soviet housing never worked. More to the point the wait lists for apartments was measured in years (ripe for corruption). The buildings were shoddy and depressing (hope you like grey). Urban planning was haphazard and may or not may have corresponded to where people actually wanted to live.

And yet there was no homelessness in the USSR.

If that's a system that doesn't work, sign me up for two.

You'd be surprised at how humans "make a plan" when it comes to those things, as long as family/community is not broken. Either way, there probably was some homelessness, but we'd have to look at actual records/stats on it.

But the USSR was just one system of social housing. Have a look at what's happening right now in South Africa with what they call RDP housing:

https://en.wikipedia.org/wiki/Reconstruction_and_Development...

Sounds good on paper. However it has so many problems:

https://www.dailymaverick.co.za/opinionista/2017-03-16-gover...

http://www.corruptionwatch.org.za/cracks-exposed-in-rdp-hous...

http://www.cplo.org.za/wp-content/uploads/2017/02/BP-432-RDP...

> Either way, there probably was some homelessness, but we'd have to look at actual records/stats on it.

Since it was a subject of official denial, records and stats would likely be hard to find.

> And yet there was no homelessness in the USSR.

Just stop, you have absolutely no idea what you're talking about.

Source: grew up in USSR, 4 people in a 10 sqm room.

Wasn’t the lack of homelessness and unemployment because both of those were designated as a crime and so you got sent of to a work camp?

More or less so. Plus, you also could not just decide to go to Moscow (or other city), you needed "propiska" (residence permit). And those born in countryside didn't have passports until _1974_ so had no freedom of movement at all.

Seriously, I cannot find polite words for people praising USSR

Please don't take HN threads into ideological flamewar.

https://news.ycombinator.com/newsguidelines.html

>And yet there was no homelessness in the USSR.

Was there no homelessness or did the state just say that? Just like there are no homosexuals in Saudi Arabia or Chechnya?

Honestly, there probably wasn't. It's not hard to 'solve' homelessness if you can forcibly send the homeless to work-camps or institutionalize them. Done and done.

There was also no unemployment. Clearly that is a system worth emulating.

>And yet there was no homelessness in the USSR.

>If that's a system that doesn't work, sign me up for two.

Okay, step one is to starve millions of Americans to death in order to reduce demand. What's step 2 again?

Please don't take HN threads even further into ideological flamewar.

https://news.ycombinator.com/newsguidelines.html

Its important to think about what the problem really is. Right now many people are moving to the big cities, and the big cities have expensive housing. To me the real problem is why people want to live in a handful of big cities instead of cheaper regions. If its true that there is no choice but to live in big cities then the current high prices really aren't a problem, its just that is where the money is. Manhattan is a great example, lots of high density development and it still isn't cheap.

Tokyo has an increasing population due to increasing urbanization, and yet as the article claims, housing demand has remained relatively stable. We can have increasing urbanization in the west too without the crazy housing prices.

Further one reason people want to live in just a few cities is because people don't want to be treated like outsiders. I know I'll probably be downvoted for saying this, but I grew up in Virginia but moved to California shortly after college. There's far less overt racism here than back home. I've also been to many rust belt cities, and can say I'm fairly certain those places are about the same as the U.S. South. For me at least, the subjective experience of racism is a reason why there are only a handful of US cities I'd live in.

But, in relation to Japan, the same holds true. Most people move towards a few urban areas for jobs. And they build housing for them.

The difference in America are the inequities between the wealthy and everyone else. The belief that it’s somehow just or moral to arrange society this way, to build entire cities that can’t function without the labor of poor people, but where they can’t afford to live or easily commute into on public transportation. That these aren’t problems that we should collectively solve, but just another disparity from which the rich can profit.

I think you're right and this is an important point. We tend to be pretty parochial in our views, very influenced by our ideas about what is wrong with our local markets.

There are scarce-few examples of things gone right. That's why Tokyo is relevant. That said, Tokyo has experienced relatively little population growth, Japan has experienced none and Japan hasn't had asset inflation and/or big economic growth for a long time. One example is good, but I'd prefer to have several. Preferably one or two in real growth cities.

You are right though. We have plenty of dense-but-still-expensive examples proving that density alone does not guarantee much.

Every market has its own peculiarities, and housing much like anything benefits enormously from behaving like a free one.

The two single most important factors that make housing not behave efficiently as a market are zoning and taxation.

Zoning because it puts limits on what can be built, which means the process to expand is now bureaucratic. The original article talks about how in tokyo zoning hasnt been a problem for the market as the championing difference.

Taxation is the second one. No matter how much you build, the people and the space require considerable resources to manage: sewage, garbage, public transportation, local courts ,etc. If you tax income, the more people you cram, and the more the expenditure of the government is, the more oppressive becomes rent. That is because as a dweller, you pay taxes that go to services that increase your rent. This great injustice is described in the book "Poverty and Progress" by henry george in the 1900's in california, where the concept of Land Value Tax was created and then validated by economists on the left (Krugman) and the right (Milton Friedman).

You would not see any problems with local neighbors in San Francisco if instead of state income taxes and sales taxes they moved that to land value taxes, and suddenly the guy with the picturesque 1920 house for himself will find that his taxes look like a monthly rent.

The biggest problems of housing, much like the biggest problems on almost any market, come from the government, not for the peculiarities of the market itself.

>> Every market has its own peculiarities, and housing much like anything benefits enormously from behaving like a free one.

IDK if you can just take that as a premise. I think we've had a body of evidence, hard to refute, suggesting that laissez faire markets improve industrial output.. substantially. Not necessarily pure laissez faire, but the effective systems seems to have effective price systems, and private profits. Post 80s China, West vs east europe in the 70s & 80s.

There are other sectors with good evidence too.

Housing...? I think that we've seen laissez faire markets can build a certain type of city (car-suburb) in certain conditions (green-field). In cities that already exist... IDk. Housing in europe is not that much better now that socialism is gone. The stuff in the house, way better. The house, nope.

Free markets work well when there are nicely sloping supply and demand curves, plenty of competition, and coordination can happen via prices. Price systems can't coordinate the infrastructure & public service requirements of cities. They can't usually affect supply much. All they can do is "allocate" a limited supply, based on wealth. Allocation always happens, whether you use ration cards or markets. At this point, I think half the population might prefer ration cards.

I just don't think that housing is like furniture or smartphone manufacturing. I don't think you can refer to the same lines of reasoning.

> Housing...? I think that we've seen laissez faire markets can build a certain type of city (car-suburb) in certain conditions (green-field). In cities that already exist... IDk. Housing in europe is not that much better now that socialism is gone. The stuff in the house, way better. The house, nope.

I can't speak for europe's cases. Can you share some data, anecdotes or articles? Housing is also one of the things where every country has its own rules.

For example, in San francisco you have 3 story buildings galore, and in argentina you have 8 story buildings much like spain does. And yet both places, by similar criteria, restrict higher buildings: in SF they dont want taller than 3 stores, and in argentina they dont want anything taller than 12 stories.

Housing has also, globally, been part of a very particular cycle in the last 20 years. First the run up to 2008, and now a decade of rising city populations, pent-up demand and low interest rates.

> Free markets work well when there are nicely sloping supply and demand curves, plenty of competition, and coordination can happen via prices. Price systems can't coordinate the infrastructure & public service requirements of cities. They can't usually affect supply much. All they can do is "allocate" a limited supply, based on wealth. Allocation always happens, whether you use ration cards or markets. At this point, I think half the population might prefer ration cards.

More than half the population are owners, at least in the us and most countries I looked at. So no, they do not want ration cards. Moreover the biggest issue of implementing housing policy is that the locals are permanent but the visitors , even though they are more, dont stay long and dont have the capacity to vote. If San Francisco made a law about construction, and allowed any person that lived more than 1 year in san francisco in the last decade to vote, the renters, foreigners and visitors would land-slide any vote where the local property owners would like get their way. But because that is impractical and impossible, the locals get to put the rules, rules like prop 13, rent control, etc.

Housing IS unique en the aspects you say: land is limited, and thus deciding how to split it is a hard problem. Thankfully the solution old, known and consented by economists: just put a land value tax. Let every piece of land be responsible for the local taxes, and suddenly the locals themselves, being responsible for their expenditures, will vote for construction themselves.

No zoning is awful - just look at Houston. Factories and power plants build abutting residential neighbourhoods without any communal impact discussions.

How do you properly price these impacts?

Good point. I do agree that a certain level of zoning is justified. Industrial vs residential is a solid example of that, as you say. However, give it the power to the local to block the future dweller and he will use it to his own benefit at the expense of the other.

Zoning should be more of a technocratic issue than a political one.

From a German perspective, I can say that costs of building a house are rising mainly due to new legislation around CO2 reduction and fire safety. In a time when producing most goods is getting cheaper through technology, cost of house conatruction is rising. There also doesn't seem to be much innivation in the building industry.

Adding a German perspective: this might be one factor among many. Other factors include

- land owners who wait to sell at even higher prices

- drastically reduced social housing construction (Sozialer Wohnbau)

- heavy influx of foreign capital (at least in major cities) reducing existing capacities

- missing holistic development concepts/strategies (one big exception is probably the Bahnstadt in Heidelberg)

- on average, low building height in city centers

The whole topic just hasn’t been a top priority lately and we’re moving way too slow to change that

What i've lately dreamed about doing is a city-building Kickstarter. You take a piece of undeveloped land in Germany, buy it for cheap and then let people & companies pledge money to build housing at building cost with the requirement that it has to be used by the owner himself, until you get enough for a 500k-1M people city. I'd love to live in a city where every inhabitant is an owner, something drastically different than the rest of Germany.

It's just a dream with a lot of big holes, i'd love to hear how to make this viable.

This something only a government could really do.

Housing is nowhere near a free market. Public decisions control what can be built/rebuilt & where, essentially dictating "supply". It's also public infrastructure, services and wider economic policies that determine the value of that supply to consumers.

A quasi-laissez faire housing market can work. The US has many of them, in the geographically unrestricted cities like phoenix or.. lots of cities. The city/country builds roads. Land gets parceled into 1,000 - 5,000 sqm blocks and cheap houses are built on them, starting at $100k + taxes and land which are cheap relative to europe.

This can produce almost unlimited (given unlimited space) housing. Infrastructure is very basic: roads, sewage, etc. They usually don't have sidewalks, nevermind trams. They also produce low-density sprawl. As things get tighter, more and more burden is on cities to plan, provide infrastructure. Rights compete.

In theory, land efficiency and shorter transit distances should balance this out. In practice, land prices (enriched by infrastructure & proximity) generally outpace these efficiencies so house prices are higher anyway. Governments also limit supply in dense areas, because they can't keep up with the infrastructure requirements.

Truly revolutionary projects out of scope for private investors. First, horizons are too long. They can't wait 15 years for the value to emerge. Second, the governments' parts in the game (infrastructure & planning) is more important than private money's. Third, the money is too big, even for today's giant piles of cash. A small city (100k people) would cost 10bn to build, at least.

In that case, wouldn't the reasonable response to desire for higher density be, you know, demolishing single units to build high density housing?

Often, that isn't possible due to zoning in these 'unrestricted' cities. Zoning tends to be really restrictive, up to the point of placing tight limits on the density of dwellings.

Zoning or not, leveling housing to make room for high density is expensive, slow and difficulty-prone.

It's slow because you need to wait for many individuals in a market to act. They'll usually need to act in cooperation, piecing together smaller parcels. It's expensive because you are destroying housing to make housing.

Also, management of public infrastructure (even schools) is not flexible, adapting to local needs in realtime. A planner/zoner may look at an area, see that the infrastructure is insufficient and shut down population increases because they have no way to pay for more infrastructure.

No zoning in Houston..

Why keep building where you get flooded all the time? https://www.theatlantic.com/technology/archive/2017/08/why-c...

You can just move to Oslo. Norway doesn't have a functioning rental market. It's because of big tax advantages for homeowners and social stigma for renters. The grass is always greener on the other side. I prefer German cities.

We have small projects, such as Collegium Academicum in Heidelberg. If you want to start one yourself, the Mietshäuser Syndikat will help you with organisation and financing.

https://collegiumacademicum.de/ (German)

https://www.syndikat.org/en/

Make sure it has safe, dutch or danish-level bike infrastructure and I'll join you.

The social concepts in Heidelberg's Bahnstadt put the prices there just a tad below ridiculous, if you qualify. (If not, they are indeed ridiculous.)

Sounds just like London. I would hazard a guess these symptoms are common.

Building costs are negligible next to land costs.

Soviet housing worked by building a huge number of small and medium cities while trying to limit number of people moving into capital and other desirable cities.

Guess what? After collapse of communism, housing in small cities depreciate rapidly, while housing in capitals skyrocket. There's much many more small cities than there's economic demand for, hence not enough jobs in those.

EDIT: Even when new factories are built by capital, they are usually not in small cities in the middle of nowhere with limited worker pool, but on outskirts of medium-to-large cities in comfortable distance of capital/large city (think Tesla Factory). This makes small cities unfit for anything other than eco-tourism.

Of course it applies more to large countries, since small ones (like Montenegro) just never had the quantities of population to form too many extra cities.

> Soviet housing system...? opinions vary.

Opinions vary for those who were exposed to privileged side only. In reality, most people had to wait decades for an apartment. There was an easy way to get an apartment though - get sent to bumfuck nowhere for infrastructure project (military base or factory, nuclear plant etc..). Or climb up the party ladder or get a job at well-connected company than get arrange you an apartment.

On top of that, many people were stuck in Kolchoz without any prospect of moving to a city. Thus were was no pressure to the system. If a city can't take in people - they're not sent in..

> Opinions vary for those who were exposed to privileged side only.

That's completely opposite to my experience in the GDR. Neither my aunt nor my grandparents had to wait "decades" to move into their Plattenbau apartments and I can assure you neither of them had been on the "privileged side", their Stasi files make that pretty clear.

For my grandparents it was a giant step up in terms of living conditions, previously they lived in an old house that didn't even have running water in the toilets.

In contrast to that, the Plattenbau apartments had very modern design and interiors, they are still living there happily to this day.

The starting comment in the thread explicitly mentions "Soviet". I cannot say much about GDR, but as for USSR, Mantas is right. Soviets controlled 100% of employment options, and restricted movements of citizens - and that was their approach to urban planning. Which in the end didn't work well anyway, as my parents waited for an apartment for more then 20 years, and finally USSR collapsed before it happened :-) By the way, I guess GDR was not that different in the idea, it's just that lesser territory, and population made the approach less catastrophic.

Imho the GDR was just another extension of the Soviet Union, sovereign in theory only. Otherwise the "Iron Curtain" wouldn't have gone up where it did, splitting Germany in half.

Of course, the GDR also saw its fair share of cronyism with all of its injustices, like they exist everywhere, but the Plattenbauten are still held in high regard by many East-Germans.

Maybe the Soviet approach wasn't actually that catastrophic it just didn't scale that well when applied to the more populated and bigger eastern bloc states compared to the GDR? GDR wasn't that big, so not that much need to force people to move around.

To give you some idea, GDR was seen as almost totally west from USSR. Anything "made in GDR" was immediately seen as super high quality. Getting visa to visit GDR was next-to-west hard.

USSR had much worse conditions as a starting point. On top of that, it was an empire that had assimilation as one of it's goals as well as military targets to meet. Thus playing field for citizens was far from level. For example, even whole "strategic" cities were much nicer to live in that a regular cities. Better food, more exotic food options, better housing, more entertainment... You name it.

The whole approach of state-owned housing is not catastrophic. If you can build reasonably fast. USSR couldn't. After all, catastrophic productivity is what brought the red empire to it's knees. Why it was so bad is another topic though.

> Soviet housing system...? opinions vary.

> In reality, most people had to wait decades for an apartment. There was an easy way to get an apartment though - get sent to bumfuck nowhere for infrastructure project (military base or factory, nuclear plant etc..). Or climb up the party ladder or get a job at well-connected company than get arrange you an apartment.

I don't see how that's meaningfully different from current day USA.

In America, you have to save for decades to afford a down payment on the chance to potentially land an apartment. But, if you enlist in the military or move to bumfuck nowhere, you can bypass that problem. And if you are willing to start climbing the ladder at a well-connected company, they will pay you enough to afford an apartment right away.

Sure, we swapped "government" for "corporation". But to a regular person, it's a pretty similar situation.

> If a city can't take in people - they're not sent in.. On top of that, many people were stuck in Kolchoz without any prospect of moving to a city. Thus were was no pressure to the system

As opposed to today in the US, where if a city can't take in people, they get people anyway, and they huddle under an overpass or setup a tent camp in a park somewhere. Pressure in the system is only useful if people react to it, and in America no one reacts to that pressure in any useful way. (to the extreme that it became national headline news when Utah decided to actually try to build housing for people who needed it - https://www.washingtonpost.com/news/inspired-life/wp/2015/04...).

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I'm not arguing that the Soviet system was good. But American housing has become so bad that it's understandable that for some, Soviet housing is starting to look appealing in comparison.

> Pressure in the system is only useful if people react to it

Indeed. And in Soviet system, nobody reacted for decades.

The main difference is fairness of playing field. In USSR, you could try to bribe your way into good living. In capitalist system, you can work your way through. In USSR, there was much less regard for quality work. On top of that, even the well-connected&bribed 1% of USSR would barely live like US middle class. If not lower-middle. Meanwhile working yourself up to middle class is quite doable in capitalist system.

There were lots of things that were very bad about the eastern bloc. Freedom and rights, for a big example. As you say, people could not decide where they would live. I'm not comparing democracy to totalitarianism's merits on the moral front.

I was just comparing the average GDR house, to a modern one. It's not that different, and most people lived in an apartment then as they do now. Both are similar in quality & abundance to housing in West Germany, UK, etc.

Contrast this to manufactured goods. Eastern bloc residents couldn't get a car, and if they did it sucked. They couldn't get enough razors, toilet paper, car tyres. All the things that were abundant and cheap in the west, and are abundant and cheap in those countries now.

We can argue about the small/marginal differences in quality or abundance of housing under different systems. We can't argue about the massive quality & abundance differences for industrial goods.

This is why I'm quite leery of ideological "theory." From Marx to Rand, it all seems too grand to me. At the end of the day, these were economic policies and their successes and failures varied.

I'm not sure about GDR, but in Lithuania Soviet housing is piss-poor. Apartments are tiny and dark, planning is crappy, heat insulation is shitty (at least renovation can somewhat fix it).. And nobody did anything for decades - just kept building same standard apartments. And even if they were shitty, they weren't building nowhere near enough of them.

On top of that, a lot of people, even families with young kids, got "dorm" apartments with shared kitchens/bathrooms/etc.

So yes, housing quality between USSR and modern housing is quite big.

Germany seemed to have solved that problem - their real-estate costs are very stable - rising on average only 0.05% per year in 1970-2003.

The how is somewhat complex , google 'Evans hartwich better homes greener cities' pg 13. On mobile so it's complicated to link to a PDF search result.

There can never be enough jobs for everybody with 'free markets'. Structurally there can only ever be 95 jobs for every 100 people. Inflation is controlled by an unemployment buffer - because matching people to jobs doesn't clear a market in a world with full time jobs.

That makes no sense. Labour shortage is a real thing.

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