Comment by olfactory | Hacker News Reader

Comment by olfactory | Hacker News Reader

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It's frankly pretty silly when people complain about prices (housing prices, prescription drug prices, gas prices, etc.)

The issue with housing prices is that there are a lot of government policies that have the (intentional or unintentional) effect of increasing housing prices. Some of them are as follows:

- Making mortgage interest tax deductible

- Special tax treatment for the sale of a primary residence

- Laws limiting how many people can cohabitate in one building, or similar laws that enforce this more softly through limits on street parking.

- Rent control laws which suppress the price of rental units, limiting the incentive for landlords to build new units.

- Laws that limit the construction (or add extra costs/requirements) to projects that would add more residential units.

- The utter failure of highway infrastructure during rush hour, which adds hours of commute time for short distance travel, drastically increasing the price of residences that do not require a highway commute.

- The failure of municipalities to provide adequate and affordable parking and public transit, adding inconvenience to many neighborhoods which drives up prices in others.

- The failure of law enforcement to create a safe environment in many neighborhoods that offer more affordable housing, leading to increased crime and under-investment in improving and expanding areas that would otherwise be highly desirable for residences.

- Laws that create building code requirements that are not based on sound engineering or safety principles but which create lucrative contracts for certain professions in the building trade... These increase the cost of new construction and make many retrofitting/repurposing projects impossible.

There are many, many more.

Rent control in SF is determined by the age of the building - a new building doesn’t get it.

Also rent control in SF caps rent price increases to 2%, which is the same rate that a building increases in market value. That’s courtesy of prop 13 that says (in effect) that for tax purposes building valuation cannot be assessed at greater than 2% increase a year. Given a large part of income is determined by cost of living, wages have to increase at the same rate as property value.

If the taxable value of property increases at a lower rate than the actual market value of that property then all services that are functionally paid by tax dollars start consuming a greater portion of total tax revenue.

That means a landlord who is increasing their rent/lease by more than 2% is getting a tax payer subsidy as they are using services (roads, utilities, etc) which have costs that increase at market rates, but the landlords aren’t paying taxes at market rates.

Those points are true of SF rent control, however rent control has the side-effect of leading to people being able to afford a bigger place than they would otherwise afford, which in turn reduces the number of people who can afford to live in the same number of units. Why bother taking on a roommate if your rent controlled price makes the unit affordable? So now that would-be room mate has to find somewhere else to live.

Generally rent control only applies to existing tenants, so at some point they could afford the unit. The common issue in California is the landlord increasing rent in according to a market rate that doesn’t match wage increases.

Another fun one in the Bay Area at least is people preventing new construction because the will reduce the value of their property. Literally that’s the argument used in Palo Alto and Mountain View - I can’t imagine it being different elsewhere.

All you have to do is look at the final effect, Z. The stated purpose X may or may not be the intended purpose Y. Even if stated purpose X genuinely = intended purpose Y, the actual effect Z matters the most. You're spot on.

I'm not sure what you mean by 'actual effect Z', but citizens and their local governments had many valid reasons as to why they enacted each of those policies and constraints. For many people, the value of those policies will be more important than having more-affordable housing.

Exactly. Some such policies/laws may be "worth it" because they have other socially desirable outcomes that we rank more highly than affordable housing.

What's odd when seeing my comment get down-voted to oblivion is that I am not making a value judgment about the laws/policies, simply mentioning that many of the ones listed have unintended consequences when it comes to housing affordability.

As usual, downvotes are used instead of a counter-argument because whoever does it lacks the sophistication required to offer one :)

Most of your cause and effect here is correct. I think, The reason you're being down voted is probably because you said it was silly to complain about housing prices. yes, there are many many political problems that cause high housing prices. But, there's still many victims of those housing prices/policies that didn't have anything to do with creating those egregious policies

Ahh. Well, if you consider price a function of supply and demand, then complaining about a price is likely actually a complaint about supply or about demand.

If I say "Wow, the price of a Tesla Model S is too high", I am implicitly saying either "I wish demand for the Model S suddenly fell, leading to a large price drop on existing units" or "I wish a lot more Model S sedans magically got manufactured so that the profit margin available to Tesla on the units sold would be reduced to the point where I could afford one".

Both of those sentiments are fairly silly wishthink. Similarly, so is the sentiment that "Regulators should pass a law requiring all new Model S vehicles to be sold for $20K".

I could define myself as being a victim of the over priced Model S, or I could define myself as being the victim of insufficient wages to afford one at the actual retail price.

I'm not sure why in the case of housing it seems logical to blame the price of the housing instead of blaming the wages that make some standard of living difficult to afford.

For some people, even "affordable" things like community college or McDonalds food is expensive and out of reach. So why not focus on how McDonalds is not "affordable".

One reason why McDonalds is affordable to many is because of the existence of other competitors. My comment above meant to point out that there are many, many ways in which the regulatory landscape limits the number of competitors each landlord faces, driving up prices.

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