Hacker News Reader

Comment by captainbland | Hacker News Reader

This article makes some interesting points, but I do find it strange that they reference George without referencing his famous idea of a land value tax in this context, a proposal which would at the very least put a sizeable dent in the ability of landlords to directly benefit from the increase in value of their land resulting from municipal service improvements while also encouraging better use of property in general.

Rent controls could be another alleviating factor. As could indirect competition from subsidised/social housing.

I'm not really comfortable with how the article attempts to frame municipal social improvements as something which must implicitly also drive wealth inequality, despite the other potential remedies to this.

View on HN

Rent control is good for the people who already have housing who don't see their rents go up, but it's bad for people who might want to move to an area. It's very much a "pull up the ladder behind you" sort of policy and in the case that the article addresses it will tend to weaken coalitions in favor of reducing housing prices for new home buyers/renters and will tend throw currently homeless people under the bus.

It's bad for people who might want to move to an area of you believe that rent control significantly affects the supply of housing.

If you believe that then it might be worth pondering why New York's highest rate of homebuilding occurred when it had its strictest rent controls though.

In reality all rent control really does is redistribute some the spoils of rising land values from certain owners to certain renters.

This makes some property owners extremely angry but as far as renters and potential renters are concerned it's potentially good or potentially neutral.

If you really want to incentivize home building you need to disincentivize land hoarding. That means repealing prop 13 or implementing LVT.

Just because there was a boom during the time of ham fisted rent control does not mean it was caused by rent control nor does it imply that rent control was even good for it.

Have you ever considered how much more housing might have been built if it weren’t for rent control?

I don't think it necessarily was caused by rent control.

It's still an extremely inconvenient fact for anybody advancing the hypothesis that rent control impedes housing development.

It might very well be that the effect is real but is so weak that it is completely overwhelmed by other factors.

It might also be that bringing down property values (which rent control will do) lowers the bar to housing development, spurring more of it.

> In reality all rent control really does is redistribute some the spoils of rising land values from certain owners to certain renters.

No, rent control also redistributes the burden of rising rental costs from people who have rent control to people who don't, and tends to make that burden larger than it would be otherwise.

> If you really want to incentivize home building you need to disincentivize land hoarding. That means repealing prop 13 or implementing LVT.

On this, we agree. And we can't just simply throw rent control in the trash overnight and expect everything to work out. It needs to happen in concert with other initiatives that increase the housing stock, and be phased out over time, with targeted help to more vulnerable people.

But I don't expect any of this to happen, at least not until things get to people-are-rioting-in-the-streets levels.

>No, rent control also redistributes the burden of rising rental costs from people who have rent control to people who don't

Supply of apartments and demand for apartments doesn't suddenly change under rent control so no, there's no market pressure making non rent controlled apartments more expensive hence there is no redistribution between renters.

Lucky renters get below market rate and unlucky renters get market rate.

There is only re-redistribution from rentiers (landlords) back to renters. 1% -> 99%.

I don't think rent control is the best solution for the housing crisis (100% LVT ftw) but it's intellectually dishonest to pretend that it hurts renters. It never has and it never will.

> Supply of apartments and demand for apartments doesn't suddenly change under rent control

Yes it absolutely does. Demand doesn't change, but supply is artificially reduced because people with rent control are less likely to want to (or be able to) move out.

People who don't move out aren't increasing supply but they also arent competing with other people seeking new apartments so they aren't increasing demand either. It's net neutral.

Unless you're talking about the people forced on to the street or out of the city entirely by rising rents...?

If I am renting somewhere, surely I am putting money into the local economy? If I am doing that, then surely I deserve some of the benefit of an improving economy? As it is, a renter is punished for improving the local economy because it improves the value and the cost of rent goes up. As it is, employers aren't exactly keeping up with inflation. Add in the increasing cost of rent? Time to move. Oh, wait, all the high tech jobs are highly concentrated when they don't need to be.

>Rent control is good for the people who already have housing who don't see their rents go up, but it's bad for people who might want to move to an area.

I don't see the problem. "Wanna move to the area" is a choice. "I am forced out of my house because of higher rent" is not.

Try rephrasing the first as "I can't move into the area because I even though I would gladly pay what a landlord would freely charge, his current lessee has a legal claim to renew at a rate below that."

Living in a particular place is always a choice. You shouldn't be entitled to get the same house at half the price just because of the accident of where you happened to be born.

There is a large section of the SF Bay area that is horrified at the idea of closed borders, yet they are as horrified at the idea of anyone new or poor moving into their neighborhood.

Why not? If you were born there, you should have claims there.

Would you extend this idea to property? After all everything you've inherited is like that too (an accident of birth). How about parents? Perhaps children should be assigned to random families at birth, to keep it fair? How about citizenship? Would you give up your citizenship because you being an X citizen is just an "accident of birth" (and as such not really entitled to it)?

People don't have "accidents of birth". People are born in a place because their parents moved there. And the important part comes after the birth: people grew up there, played there as kids, connected with the place, etc. A place is part of a person's life history. It's not just a consumer good up for grabs by the highest bidder.

“Wanna keep living here” is also a choice.

Not really. Residents should have priority from others coming into their city. Else it's a moving chairs situation.

>Rent control is good for the people who already have housing who don't see their rents go up, but it's bad for people who might want to move to an area. It's very much a "pull up the ladder behind you" sort of policy and in the case that the article addresses it will tend to weaken coalitions in favor of reducing housing prices for new home buyers/renters and will tend throw currently homeless people under the bus.

You could defray those negative effects by building lots of public housing and/or heavily subsidizing new construction.

> You could defray those negative effects by building lots of public housing and/or heavily subsidizing new construction.

To the extent that you actually do that, you will naturally lower the market rent to the level that you wanted, making rent control pointless (except that it removes the signal that would warn you when you need to build more housing).

>To the extent that you actually do that, you will naturally lower the market rent to the level that you wanted, making rent control pointless (except that it removes the signal that would warn you when you need to build more housing).

You kind of answered your first clause with your second. Demand can rise very rapidly, but supply can only grow slowly. If you want to keep housing prices stabile for people so they're not being thrown out of their homes or displaced, public housing doesn't address that because you don't get the signal that it's a problem until after the displacement has happened.

Or, just let private builders build. Housing is not magically immune to supply and demand. Only advocating for the government to increase supply isn’t a very effective solution.

>Housing is not magically immune to supply and demand.

It kind of is because housing isn't the only component of housing value. Access to transit, safety, and public amenities like parks and schools are a huge component of what makes housing valuable. All of those things are public goods built by the government. Expecting private builders to build is just allowing public expenditure to line the pockets of a landowner who did nothing to add value to it.

>It kind of is

Do you think that people would choose to ignore housing that isn't close to certain public services, if it existed? No, they would choose to live there because it'd still be closer to their workplace than neighboring cities and what not.

Don't forget that if the private sector isn't spending money to create value for the rest of us where we need it, then the alternative is spending people's money through government efforts. And as with any government effort, it is still less efficient because of its much bigger bureaucratic overhead.

> And as with any government effort, it is still less efficient because of its much bigger bureaucratic overhead.

Government programmes aren’t always less efficient than their private equivalents, e.g. the NHS in the UK is more efficient than many private healthcare systems (source: https://www.bmj.com/content/343/bmj.d5143)

>Do you think that people would choose to ignore housing that isn't close to certain public services, if it existed? No, they would choose to live there because it'd still be closer to their workplace than neighboring cities and what not.

Yes. People with money would choose to ignore them and they would wind up being peripheral slums and shanty towns because there aren't public services being built out to support the capacity.

> it is still less efficient because of its much bigger bureaucratic overhead.

Have you never interacted with a telecom provider or health insurance company? Heavily regulated industries and monopoly industries tend to approach messy bureaucracies as well. The messiness of bureaucracy comes from having to suit everyone's needs rather than just ignoring segments of the population that aren't profitable to serve.

This article of faith that government is inherently more bureaucratic or less efficient than the private sector is just not borne out by anything but religious devotion. The assumptions of perfectly fungible goods in a perfectly competitive market, which provides the theoretical basis for the idea of market efficiency, doesn't even hold in real estate.

It is when the main barrier to a supply increase is rooted in government policy.

How ownership has a very similar effect as rent control, especially in California where prop 13 exists. Should we abolish home ownership and have everyone buy into a single rental market such that prices wouldn't be distorted beyond what median area incomes are.

The issue at hand will always be that there isn't enough housing for newcomers, if we mandated housing construction to grow in a parallel way with office construction and job growth we wouldn't have nearly the sorts of problems we have today.

You don't have to mandate construction of housing. You just have to get rid of the INSANE barriers to housing construction that exist today in places like SF and the wider Bay Area.

This will sound counterintuitive but you absolutely have to mandate housing. Compare this to parking requirements, if we want an abundant housing supply we need to distort the market price of housing the same way we did for parking.

Require that new offices build an equal square footage of housing on top of themselves, and you've immediately build enough housing for at least the initial stage of population growth that comes with that new office.

I think you should hope to live in more than the handful of square meters than a classic tech worker occupies in an office.

Housing people on the same ground area than the offices would probably prove to be a huge technical challenge since it would effectively need probably 8 to 10 times the square footage, not to mention I'm not quite sure people really all want to have their colleagues as neighbours.

I'm not saying that the housing would need to go to those who work in the office, if anything it should be a part of the broader open market.

I'm also not saying that the office needs to match the housing supply of it's office workers in full, as a lot of new office development is hiring from people locally as well. But say, if you looked at the Seattle area, where Microsoft and Amazon have built over 10 million square feet of office space in recent years, an extra 10,000 apartments would go a long way in relieving the pressure on housing prices.

Hmm, maybe we could have a "housing credit" market system. For every office building with n workers, require housing for some % of n within the local area. Then the credits would be priced according to the imbalance between residential and commercial construction. Excess housing around? (Hah.) Well the residential builders will have to pay the commercial builders!

The mandate the post you are replying to speaks of wouldn't be to create housing but tie it to the rate at which other types of buildings are created. I believe the poster is referencing the situation in California where a town will let office space be built for 10k workers but then not allow any housing to be built for those workers.

My belief for that issue is that zoning powers need to be removed from towns and done at a state level as travel technology has made it too easy for towns to push off their negative externalities to other towns. Towns have no incentive to add new housing stock as that leads to more people needing to be serviced and new voters who might push to change the way of life that the current citizens enjoy. Businesses on the other hand, don't get to vote and usually pay much more in taxes than they cost in services. Every city appears to have towns that have realized this an effectively become polluters by letting new business come in but making it other towns problems to pay for. If the state controls zoning, and likely the burden of providing services, then that kind of fucking over of your neighbor won't occur at the level of cities other than ones on interstate borders like NYC and the two Kansas Cities.

I definitely agree with you about zoning needing to be done at the state level. I'm somewhat optimistic that some of the state level zoning initiatives in CA will take hold and we'll see some progress in this area. Fingers crossed!

I believe we need explicit housing mandates in the way we have parking mandates. Except this time, we'll be creating a more universal public good.

Just as how parking requirements make it much easier to find parking in high density and otherwise crowded areas, housing requirements will do the same for housing. A lot of folks on the public housing side of the debate want to decomodify housing through public ownership, but it would be far more effective if we just mandated housing be a part of every commercial development project nation wide.

This would be good for so many reasons ranging from better land use to much more abundant housing.

Additionally, zoning codes should be a state or federal system, as this would make it much easier to build economies of scale around housing development. But the placement of those zones/codes should still remain in the hands of local muncipalities, as no municipality should be able to protect their right to certain types of euclidian zoning.

With higher property taxes or land value tax that stops being true. It’s true today because our tax policy is designed to use home ownership as a tax shelter, which favors the wealthy over the poor and limits upward mobility.

How is home ownership a tax shelter?

Is this a serious question?

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

"Economists have demonstrated that high-cost high-income areas receive most of the tax benefit. For example, San Francisco, California receives $26,385 per home while El Paso, Texas receives $2,153 per home, a 1,225% difference.[28] The five highest income metros receive 87% of tax inflows, with over half going into California alone.[29]"

This is more just a subsidy to the well off than it is a tax shelter.

Yes, it is a serious question. I was worried you were going to bring up the interest deduction, and you did.

If there are people out there "sheltering" themselves from taxes by paying more in mortgage interest, those people are idiots. Any savings you gained on taxes were already wiped out by the fact that you effectively threw away money on your home (i.e. your money did not go into equity; to you, the money just went into a black hole).

I understand that they pay less in taxes as a result of mortgage interest, but if you have an actual choice between (1) spending $1 on mortgage interest and getting a tax deduction or (2) spending $1 on principal and not getting a tax deduction, the choice that leaves you wealthier is #2. Obviously this is not how mortgage payments work and ignores choice (3) of putting money in some other asset, and the time value of money should be considered, but for each equivalent dollar, I would rather get more equity in my home than a tax deduction. The tax deduction is nominally smaller than the equity you would gain on an equivalent amount of money going to principal rather than interest.

This isn't even considering the extra costs of homeownsership, especially property tax and maintenance (and the latter is tax deductible to a much smaller extent than mortgage interest).

Not the OP, but also to consider is the high exemption on capital gains tax to be paid on a home sale: $250k for single owners, or $500k for joint owners. If I buy a house for $500k, live in it for a few years, and sell it for $750k, I get that $250k in gains tax-free.

> The tax deduction is nominally smaller than the equity you would gain on an equivalent amount of money going to principal rather than interest.

True, but you can't ignore the "choice (3)" that you mention. I'm not in the market for a house right now, but if I were, I would absolutely get a mortgage even though I could pay cash for the whole thing. It's a non-zero risk, but I feel it's a reasonable bet to believe I can make enough in the markets to more than offset the mortgage interest, especially with the MID in play reducing my overall tax.

That doesn't really address the point the parent was making about buying a house being a good tax shelter (I agree with your premise if you restrict thinking to just that), but I don't think it's safe to ignore it in the bigger picture, either.

The exemption on capital gain tax on house sales is for avoiding taxing the gain from inflation over the years.

Doesn't really matter what it's for; at the end of the day you don't pay tax on the gain. If I invest in a stock or mutual fund that sadly only grows with inflation, the IRS still gets its cut from my gains. Home sales are (AFAIK) unique in this treatment.

The first quarter/half million (depending on marital status) of capital gains on your primary residence is exempt from taxation.

>Should we abolish home ownership and have everyone buy into a single rental market such that prices wouldn't be distorted beyond what median area incomes are.

Henry George would say so: https://en.wikipedia.org/wiki/Georgism

We should abolish prop 13. Incentivize homeowners to support more housing, as happens in Texas.

That as about as likely as introducing an income tax in Texas.

With the hordes of rats fleeing a certain sinking ship of a state on the west coast anything is possible. Texas might not be Texas in 20yr.

What do you mean with that? Honest question, I am not from the US.

That so many people from California will move to Texas over the next 20 years that it will change the voting population’s habits and Texas will get a state income tax.

The Texas constitution is written in such a way to provide defense-in-depth against an income tax, or any tax that even looks like an income tax. I don’t even think you’re allowed to file a bill with lege council that lets you file a bill to pass an amendment to remove the wording that prevents income tax—that sort of thing. You’d for sure get sued, and there’s no way the reps would keep their jobs.

Why is it important to accommodate people who might want to move to an area? Does everyone have the right to live anywhere they want to live without having to pay the necessary price to be there? For example, does everyone have a right to expect a residence on a Hawaii beachfront? And if not, why is it reasonable to portray a city as somehow lacking because it serves existing constituents above new ones?

Maybe not, but would you agree it's important to keep families together? If my children turn 18 and want to move out of the house but stay in the region to be close to family, they might not have many options when rent is $3000 per month and minimum wage is $7.

It's not just people moving to the area.

Also consider existing renters who need to move, or people who become renting-age.

I will need to move out of the city if I lose my place. I'm paying $1000 below market value.

[Apologies - copying a comment I made elsewhere, but it is relevant to the point you made]

Here's a better alternative to rent control. Instead of rent control on a per-unit basis, cities could provide subsidies to long-term low-income residents that reduce their personal expenditure on rent. The subsidies would be paid for through taxes, thus amortizing the subsidy across the local tax base instead of impacting an individual landlord or unit.

But let me note that this must be done only for long-term residents (that is, those who have been there for years). For example, if someone moved to SF within the last 5 years, they should have known what the price of living there is. This is one of the most desirable cities, and it makes sense that it would be expensive and that not everyone would get to live there. Those moving there in recent years therefore, simply made an irresponsible personal choice and must yield to the consequences, rather than being subsidized at others' expense.

People should be able to move easily because it's good for all of us. The less friction there is in the labor market, the better off the economy is. It's also very good for the sellers of labor who now have better ability to move to where their services are most wanted or negotiate better rates.

It's not super unreasonable for a city to try to protect its current residents but when an entire country of cities are all protecting their own residents that country is much worse off.

It’s exclusionary and merely the local version of nationalism. If you don’t want anyone to move to an area raise taxes and stop allowing new business etc. - ie, actually discourage new growth.

But no place does that. They actively encourage new growth, just not new housing, which has the effect of systematically displacing lower income people, and eventually the middle class too. Long term it ends up hurting the original people it was supposed to benefit - ie. all the Californians crying about how their kids can’t stay in state when it’s the discriminatory policies they supported that created that situation.

I have to be honest, the linking of 'nationalism' to this discussion looks like hyperbole to me. Those who want to prevent housing growth or higher-density are not thinking "I don't want people of type X living here". They are most often thinking about what they personally want for themselves - the quality of life they want, the neighborhood character they desire, the breathing room/space they desire, the amount of traffic they want to deal with, and so on.

> If you don’t want anyone to move to an area raise taxes and stop allowing new business etc. - ie, actually discourage new growth.

Personal responsibility is still a thing. If someone can't afford to live in some area, or they don't like what they're getting out of it in terms of wages or expenses, they shouldn't move there.

> They actively encourage new growth, just not new housing

If people continue to move there, they are signaling they are OK with low wages or high expenses or any other drawbacks associated with that choice. If they are not OK with those things, they shouldn't move there.

No, they are signaling that, in a world that does not have limitless options and alternatives, this one option is at least marginally better than other available options. It doesn't mean the option is good, or even sustainable, just that it's not the worst one.

I, for one, would like to raise the bar a bit and give more people actually good options.

Anyone who suggests that a "best option" that involves commuting 3 hours every day is actually a good option is not someone I want in charge of public policy.

I have to be honest, the linking of 'nationalism' to this discussion looks like hyperbole to me.

I have seen a lot of people in my area assert that my political will should be subordinate to theirs because I came from somewhere else. Last place I lived, the notion that a particular demographic I fall into should be kept out of the general housing market when possible due to pricing others out was not just a fringe idea but part of several (ultimately successful) city council candidates' platforms. Perhaps people in your area are less nutty about outsiders.

If someone can't afford to live in some area…

Yes, those who can't afford the rent can live elsewhere, so rent control is not needed.

In San Francisco the return on land is so much higher than the return on work. There's no scenario under which this leads to a healthy society. NIMBY excesses created a modern feudalism. Why would the new hard-working generation subsidize the previous one and suffer taxes order of magnitude higher than the previous one (through property tax for example)? This is like a Ponzi scheme. There's nothing fair nor sustainable with this model. That's when in a properly working society you would have the State or Government take over and override the local policies to implement what's good for the greater good. Not what's good for the SF boomer wanting to sell his shack for 2M and retire in Florida. A couple of billionaires in Atherton should have no say on Caltrain improvements that could benefit millions of working people at the expense of a couple of trees in their backyards.

I realized this when my landlord came home with a brand new Mercedes SL one day, and I was still taking the N to work despite having a 6 figure tech salary. I was basically subsidizing his car payment. I worked at a 6 person startup that received a few million in funding, and between our personal rents and the rent of our office, probably around 40% of that investor money went into the pockets of landlords. If our startup was somewhere cheaper, yeah we wouldn't have raised $X million, but we wouldn't have needed that much just to exist.

Sounds like the solution is to become a landlord ;-)

Right after I get approved for my small loan of one million dollars to buy a 2br bungalow that will turn to dust the next earthquake.

Peter Thiel: Majority of capital poured into SV startups goes to 'urban slumlords'

https://www.sfgate.com/expensive-san-francisco/article/peter...

> There's nothing fair nor sustainable with this model.

This is an opinion and not fact - it's how it looks from your perspective. The line between what is a smart investment and unfair feudalism is pretty gray, and I am betting people decide how to frame the situation based on how it personally affects them. That is, I am betting everyone is acting in a self-serving manner.

> Not what's good for the SF boomer wanting to sell his shack for 2M and retire in Florida.

This statement comes off as ageist. Why is it wrong for the SF boomer to want to make a gain off their investment and retire elsewhere? This is a core mechanism of every modern society.

> A couple of billionaires in Atherton should have no say on Caltrain improvements that could benefit millions of working people at the expense of a couple of trees in their backyards.

You are cherry-picking. It isn't just a "couple of billionaires in Atherton". But even if it were, why can't they choose to defend their quality of life? Why does everyone have to live in the bay area? This all comes off as people feeling entitled to live in a highly-desirable region, but on terms that suit them.

Your, or more generally, the present population's children, are among those who will seek to establish new households.

Whilst unlimited population growth is impossible, stagnant communities and regions tend to slide into decline. Those regions most amenable to and rewarding of new activity tend to grow.

California occupied this position, globally, for much of the period from ~1930 - 2000, and particularly from ~1950-1975 or so. It does so far less now, with housing costs being a major factor.

It's like saying some cars are more responsible for a traffic jam than others, or some people on the subway contribute to it being crowded more than others. Everyone takes up space. The people who live somewhere contribute to the housing problem just like people who move in, in proportion to the amount of space they take up.

Choosing a subclass of people to scapegoat doesn't solve a structural problem.

It's also useful to think about who is doing things to make things better or worse. Moving in makes things worse, moving away makes things better. Building more housing helps, removing housing makes things worse.

So far that seems to make sense, but here's the counterintuitive part: in any given year, choosing not to move away is as bad as moving in. You're taking up space someone else could use.

(But normally we don't beat ourselves up too much for taking up space.)

> Why is it important to accommodate people who might want to move to an area?

Just to be clear, "move to an area" includes "move out of their parents' house and live on their own".

> because it serves existing constituents above new ones

Because the "new ones" are the kids of the "existing ones", in many cases, if not most. As in, they are also existing constituents.

> Because the "new ones" are the kids of the "existing ones", in many cases, if not most.

Do you have a source for this? Personally I don't buy it.

But just for a second, let's assume that's the case. Would you be OK with limiting rent subsidies to just those who either have provably been residents for multiple years (let's say 5+ years) or have long-time roots (e.g. family)? I don't think any city owes expansion and housing supply and a re-architecture to accommodate just anyone who wants to move there.

> Do you have a source for this?

Non-anecdotal? Not at the moment, sorry. I'd have to go dig. But anecdotally, most of the people I hear complaining about rents (not in SV, various places on the East Coast) are complaining about it being impossible to stay near aging relatives.

> Would you be OK with limiting rent subsidies to just those who either have provably been residents for multiple years (let's say 5+ years) or have long-time roots (e.g. family)?

I personally? It really depends on the form the "rent subsidies" take and how they're financed. I do think that thinking of "build more housing if there's more demand" as a "rent subsidy" is a bit odd, if that's the sort of thing we're talking about here.

> I don't think any city owes expansion and housing supply and a re-architecture to accommodate just anyone who wants to move there.

Now we're talking about the moral and ethical dimension of things, right? Opinions on this differ widely; I personally do not have strong opinions that would apply in a blanket way, and would prefer to analyze specific cases (i.e. specific cities) on a case-by-case basis.

> Why is it important to accommodate people who might want to move to an area?

Because walling off cities has awful consequences for national GDP

https://www.nytimes.com/2017/09/06/opinion/housing-regulatio...

If you are going to adopt a policy of stagnation in housing availability, you need to adopt a policy of stagnation across the board. You can't have incentives that encourage businesses to locate in your area and at the same time refuse to allow additional housing for the jobs that the business creates. You should prefer to send to universities out of state where they are more likely to find jobs out of state rather than expanding your local higher education options. You should help with relocation expenses for young people who don't get into college, since you don't have enough jobs for them locally. And you should hope that the current industries you have remain relevant, because it is hard to adapt and diversify without allowing growth.

Do you want your local school to be able to hire teachers, or your local restaurant to be able to get help? Housing costs make everything where you live more expensive. Lowering housing costs makes everything else cheaper for you too.

> Do you want your local school to be able to hire teachers, or your local restaurant to be able to get help?

Yes, and they would still be available. If wages/living conditions are not good enough for them and they move away, there would be an under-supply of their labor which would cause their wages to rise, which would self-correct the problem.

Right now, those same people are willing to work for less. This is a personal choice they are making. And I don't think it obligates lower residents to provide lower-cost housing or greater housing supply.

In CA there is an under supply of both teachers and wages. The market will not correct even if wages/living conditions are 1:1. There are already people living paycheck to paycheck, unable to generate a dime of savings. There are people who are priced out of cost of living despite holding a job, and they opt to be homeless in an RV or car. Here is a great article about this new class of homeless in CA:

https://www.cbsnews.com/news/los-angeles-hidden-homeless-pri...

>Why is it important to accommodate people who might want to move to an area?

It's not just people moving into an area, it's moving within an area.

Rent control creates an market where existing renters are inhibited from moving even into the building next to their current residence. It prevents free movement in/out and within the market.

This also makes it so landlords want to evict/churn renters as much as possible, so they are incentivized to become slum lords. Landords invest as little as possible into the property because as soon as a renter moves in, that renter is never going to leave and the landlord sees diminishing returns over time.

OK here's a better alternative. Instead of rent control on a per-unit basis, cities could provide subsidies to long-term low-income residents that reduce their personal expenditure on rent. The subsidies would be paid for through taxes, thus amortizing the subsidy across the local tax base instead of impacting an individual landlord or unit.

This already happens with income-subsidized housing. The added long-term requirement is absurd for the same reasons that locking people into long-term rentals is bad for rent control. You don't want to inhibit movement in the market.

The circumstance isn't exclusive to just people wanting to move to a new city. Rent control increases moving friction, which could be due to changing life events such as having kids, being an empty nester, or wanting to move to a more convenient neighborhood in the city.

> Why is it important to accommodate people who might want to move to an area?

They're going to move there anyway. Making it more difficult and expensive won't stop them, as the example of SF shows. Accomodating them, then, is about mitigating the negative effects of immigration on residents and welcoming your new neighbors.

> They're going to move there anyway.

I don't think this is going to be true in the longer-term, and clearly SF has an exodus underway (https://www.sfgate.com/expensive-san-francisco/article/Bay-A...). People will (are?) realize that the benefits of SF are not worth the tradeoffs (if their circumstances are such that they can't make it there), and move elsewhere. They might (should?) make their way to many of the inexpensive cities away from the coasts that are more affordable, and the new residents moving into those cities will help make them vibrant cities.

At some point, the incumbent residents of SF or other communities may change their policies if what they desire is different. Or not.

But I don't think there is any lack of housing supply or jobs in the middle of the US. What is lacking is the exact housing people want, at the exact price point people desire, at the exact locations they want to live in, in the line of work they want to be in. Demanding such an exceptional situation is highly unreasonable. Making tradeoffs/compromises is a part of life, and no one is entitled to have the best on every dimension by default - that has to be earned.

> I don't think this is going to be true in the longer-term, and clearly SF has an exodus underway (https://www.sfgate.com/expensive-san-francisco/article/Bay-A...)

You're right! SF has an exodus underway among certain groups. It may be possible that this might be distinct from an overall exodus and resulting shrinking population, however.

Is it possible that your perspective, while completely valid in every possible way, may not be as widely shared as you could hope for?

This is the thing that always gets me. It has been hugely painful for hundreds of thousands of people living in the bay area, for 10-15+ years now. Sure, maybe in 20 years people will give up and prices will go down again. Maybe. But what a pyrrhic victory it will be for the long term landowners who got their way only through imposing hardship on others for 30+ years.

But I guess they just don't care. "I got mine; fuck you" seems to be an attitude prevalent around here.

Not everyone has a right to a specific house of arbitrary size in a specific location. Sure.

But it's also a bit hypocritical to encourage and incentivize building tons of new office space, and then be surprised when the people who are to fill that office space would like to live within a reasonable commute distance of that office, and then deny them that opportunity, because "it will change the character of the neighborhood", or, "it will reduce my home value".

It's also bad for the people in those apartments, because it traps them there. Life circumstances change and people get different jobs. Maybe you live in Palo Alto and get a job in San Francisco or visa versa. Before you'd swap apartments with someone moving closer to where you are now, with rent control nobody can move.

If you can't afford to live in a non-rent controlled apartment in a given area, that's not going to change if your own apartment becomes non-rent controlled. You'll just be forced to move out of the area to somewhere more affordable.

I really don't see how making more apartments expensive to live in helps anyone but landlords.

The argument is that rent control is a poor bandaid over the long-term problem of housing supply, because it reduces political pressure to build more houses. It's not the same longterm fix that changing zoning laws would be, for example.

It makes it more expensive via three avenues.

1. It incentivizes owners to convert rental stock to housing stock.

2. It disincentivizes developers from building new rental stock.

3. It concentrates demand and removes supply driving up the price of non-rent controlled apartments.*

* Every rent controlled place that is lived in my a person who can't afford market rent displaces an individual who can afford market rent who then competes for the remaining rental stock driving up the prices of the non-rent controlled apartments.

Where does the displaced person who can't afford market rate go? They could afford it at one point, just their wage increases were dwarfed by housing price increases. All it asks is that landlords have a %cap on how much they can increase their rents each year. It's just not sustainable to displace all your tenants every pop of the housing market. It's not like the landlords property tax gets affected when market value goes up, landlords are encouraged to hold and not build on their properties right now because property tax burden is assessed when you sell or build, doesn't matter what realtors can get for your property or how much you ask from your tenants every month.

> Where does the displaced person who can't afford market rate go?

It's been interesting seeing how the "if you can't afford to live there, you don't deserve to" attitude can be played both ways.

But my empathy will fall on the elder living on SS.

There are many downsides to rent control, but #2 is usually not one of them. A sensible rent control policy limits rent control to housing built before year X. This is the case for all cities in California that have rent control. For example in San Francisco the apartment needs to be built before 1979 to be under rent control.

This is a good thing for creating new housing. New apartments will not be under rent control and can command higher rent, so developers are incentivized to build new apartments.

If there's enough demand in the market, either the person already living in the apartment or someone else is going to live there.

With rent control, whoever lives there pays lower rent. Without rent control, whoever lives there pays higher rent.

There is no net change in the number of people living there either way.

So why (other to benefit landlords) would we want whoever lives in a given apartment to pay higher rent?

"it will tend to weaken coalitions in favor of reducing housing prices for new home buyers/renters and will tend throw currently homeless people under the bus"

Landlords are not going to voluntarily lower rent prices if they can get away with charging more (else rent control would not even be necessary), and homeless people are not going to be able to afford the higher prices that non-rent controlled apartments cost.

> [Rent control policy] will tend throw currently homeless people under the bus.

Precisely the opposite is true. Uncontroversially the immediate effect of abolishing rent control will be to create more homeless.

Rent control does not apply to new construction in many cities such as SF, so it does not affect the incentive to build. The mechanism by which abolishing rent control might lower prices somewhat for wealthier people moving into the city is by clearing out the less fortunate who have built lives here, adding their units to the market. Those that have nowhere else to go will become homeless.

Henry George thought that land was our common inheritance, but was in favor of free markets. He did not support rent control. He thought of rent as a fact owing to the value of the location, and the question is not how to make the rent lower. The question is who gets to profit off the fruits of nature.

Rent control, in effect, converts tenants into pseudo-landowners with less fungible rights.

If locations are valuable, and by extension the rents, that is good. But to whom does the rent belong?

If rents are unaffordable, it is because wages are too low and the rent is not shared... which comes back to bargaining power and the overall health of the economy.

Taxing production, for instance, harms economic health.

But allowing speculators to hold the land for ransom creates stagnation, sprawl, and harms the bargaining power of labor... by worsening everyone's best available options for living and working.

> But allowing speculators to hold the land for ransom

Property owners paid all the development costs, directly and indirectly,as well as all the maintenance and bureaucratic work.

If you rent an appartment, you're not paying for a percentage of the lot. You're paying for the fraction of a whole system (structural, electrical, sanitary, etc) which exists only because those who invested their hard-earned cash puting everything together.

More importantly, that little lot is only worth something because other investors spent their hard-earned cash investing in that area, either in urban development projects or in commercial and/or industrial activities.

So quite obviously that sort of exploitation angle makes no sense as it is based on a very weak strawman (i.e., there is only value in occupying a specific region in space) that had no bearing in reality.

Let's put it this way: what would happen to San Francisco's housing costs if magically the entire tech industry raised their figuratice anchor and moved elsewhere?

The idea of Land Value Taxation, which was George's proposal, is that improvements are to be exempted from taxation, and the effort of property management is to be considered as authentic labor.

Only land is to be taxed. Not capital. Not labor.

Rent control is bad economics. The simple progression:

1. Local political culture limits natural housing supply growth.

2. Increasing percentages of people can't afford rent due to housing supply not meeting demand.

3. Rent control is enacted for political wins.

4. Property values fall due to decreased utility in ownership.

5. New housing creation falls due to new lack of incentive.

6. End-stage dysfunction; negative feedback loop established.

6A. Lack of inflation-tracking minimum wage exacerbates.

What's the alternative?

To aggressively build housing. But this requires local politics to cordially ignore the calls to keep the status-quo. In many places, it isn't possible. :/

Raising LVT proxies (e.g. property tax) would make the NIMBYs quieten.

Untaxed land -> higher property values -> NIMBYs start getting agitated about proposed housing developments taking chunks out of their home equity by increasing supply

Zoning enough housing to meet demand.

There is technically a second option - better transit to handle it but it is usually a worse one and like landfills they have to be built somewhere. And of course the most efficient, scaleable, and clean transit benefit from higher density housing. And of course people resist that as well. The problem with rent isn't that we don't have a cure but that people don't want to take their medicine.

The implication of that framing is to somehow overcome: "Local political culture limits natural housing supply growth"

via - ignoring NIMBYs or at least reducing their influence, rezoning for density, deregulating to allow smaller/denser/cheaper constructions...

https://news.ycombinator.com/item?id=16704501

Rent subsidies. https://www.harris.senate.gov/news/press-releases/amid-risin...

By the same logic as how LVT decreases rents, subsidies are simply a net economic transfer to landlords.

They might be a reasonable very short-term emergency measure for a few, but long-term, this exacerbates the problem.

Wrong. Long term, subsidies encourage building more housing. Rent control has the opposite effect. On top of that, subsidies can be directed to bring the most benefit to the city (teachers, for example), while rent control benefits whoever happens to be renting at the time it is instituted. There are better long term options, but the political reasons for rent control are because the short term problems can't be ignored, so they aren't actual alternatives to rent control.

Subsidies encourage more housing as much as any other demand-increase does, which is to say, not at all, where supply is effectively constrained. Existing actors in the landlord, real estate, and finance markets all benefit from constrained supply and price inflation.

See: https://web.archive.org/web/20190115035057/https://plus.goog...

You've got to break that logjam, and LVT is one of the most effective ways to do that.

Remember: they're not making any more land. You can build out (sprawl, congestion) or up (density). Low land taxes or high improvements taxes both discourage density and encourage sprawl. You cannot change land-use by adjusting demand parameters, long-term and large-scale, only supply and holding costs.

Land value tax.

Land value tax requires a constitutional amendment in California. Once again, with feeling: it does not solve short term problems and is therefore not an alternative to rent control.

Also, you've ignored that renters are still encouraged to increase housing supply with rental subsidies. If they have enough votes to enact rent control, they have enough votes to increase housing supply for the long term solution.

Your first point is, sadly, very true.

Your second remains economically invalid for the reasons already stated.

Nope. New landlords are incentivized to build housing. The only thing that could stop them is regulations from existing landlords, but in a place with enough votes for rent control or subsidies, existing landlords do not have the votes to stop them.

Counterfactual: San Francisco has rent control and subsidies (Title 8). Landlords have the votes to stop construction.

Plus; the probem is *regional8. It's the Bay Area as a whole which is chronically short new housing. SF alone cannot absorb all new demand. Similar dynamics affect most constrained markets.

Again; your economic understanding is flawed, as is your grasp of historical facts.

It is not a counterfactual. Once you have rent control, existing renters will no longer be in favor of building new housing. You're confusing having the votes at two different times, among other things.

I like the approach Houston has taken: no zoning. Many say it won't work, but it does. HOAs pop up in some places if they really don't want commercial.

OK, but isn't the existence of zoning basically the same as the existence of HOAs, in that people have chosen to enact these policies locally, much as HOAs enact hyper-local policies? You seem to be OK with HOAs but not zoning laws, so my question is why are zoning laws bad when it is the choice of their residents (through representative democracy) that they enact policies that preserve their area's character and quality of life?

Basically, HOAs are smaller scale. Also, there's a big difference between a bureaucratic gov't doing it and a bunch of residents doing it. Here's the thing about zoning: the people on whom it is enacted probably have a part of one vote in the city council. The decisions are mostly made by the rest of the city. This is especially true in a city as large as Houston.

It's the classic problem of tyranny of the majority, which is best solved through hyper-locality (i.e. HOAs).

I disagree with the framing of this as 'tyranny of the majority'. The size of the group of people which is allowed to enact policies is entirely arbitrary, and I don't see a principled reason as to why HOAs would be OK but cities would not. I feel those who are OK with HOAs but against city-level policy-making that constrains growth are likely just drawing the line in a way that matches their own interests or ideologies.

I also don't understand why you are framing government as inherently bureaucratic as part of this argument. If that's the case and it justifies not having policy-making left to public governments, why not apply the same logic wholesale and say that we don't need city- or state-level governments at all?

> city-level policy-making

How would you propose to do this? Houston is an incredibly large and diverse city, and different places have different needs. It's much easier for people from the actual place to come to a resolution than bureaucrats in a council chamber, many of whom have essentially zero specific knowledge of the area or problem at hand.

> why not apply the same logic wholesale

I think we should. The more sovereignty we can reserve to individuals, the better. That which must be given up should be given first to as hyper-local an organization as possible, growing in scope/scale only as needed.

> why not... say that we don't need city- or state-level governments at all?

Because obviously some things (like, say, some city issues) can't be handled well by a government smaller than a city. This doesn't mean that everything needs to go to them. You're deliberately misunderstanding my arguments to try to discredit them.

Do nothing and let the market sort it out. It's time to try some actual laissez fair now that intervention has failed, as was predicted by most economists.

Minimal zoning, minimal taxes, minimal codes. Just boil it down to the raw essentials and give a legal guarantee that every building permit application will be processed in 6 weeks and furthermore legally guarantee that for new buildings all of these new rules are immutable or 10 to 20 years.

Land value tax.

The alternative is:

Make towns growth into cities. A lot of heartland available. A lot of people wants to own their house. Good Mortgages. Good construction credits. Industries can have tax benefits to be there.

Here is also Paul Krugman in The New York Times 19 years ago:

The analysis of rent control is among the best-understood issues in all of economics, and -- among economists, anyway -- one of the least controversial. In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ''a ceiling on rents reduces the quality and quantity of housing.'' Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand. Sky-high rents on uncontrolled apartments, because desperate renters have nowhere to go -- and the absence of new apartment construction, despite those high rents, because landlords fear that controls will be extended? Predictable.

...

None of this says that ending rent control is an easy decision. Still, surely it is worth knowing that the pathologies of San Francisco's housing market are right out of the textbook, that they are exactly what supply-and-demand analysis predicts.

But people literally don't want to know. A few months ago, when a San Francisco official proposed a study of the city's housing crisis, there was a firestorm of opposition from tenant-advocacy groups. They argued that even to study the situation was a step on the road to ending rent control -- and they may well have been right, because studying the issue might lead to a recognition of the obvious.

https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...

It's interesting because the argument these NIMBYs use against studying rent control is the exact same as the one gun rights activists and the NRA used against allowing the CDC to study the effects of gun ownership rates.

These privileged "progressives" need to be put in their place politically.

Sorry, could you clarify that?

Opposing a study of the city's housing crisis is a really shitty thing to do.

This seems to assume that rent controls are the only thing preventing new home construction (because of the uncertainty of being able to sell units without being hit by rent control), but supply can be restricted in many ways. The most common of which is simply running out of room thanks to natural boundaries (rivers, oceans, lakes) and local policies against building high density housing.

So rent control tends to show up in areas where rents are growing significantly faster than inflation already, meaning the rent control is at best a band-aid over the existing problem. And then the problem gets worse and economists blame rent controls.

Additionally, people in rent controlled units are strongly incentivized to stay put, keeping the unit off the market. Knowing this, landlords must estimate the future market and price that in to new rates or they risk being even more below market rate after that new renter has been there for a few years. This is a feedback loop between landlords. Therefore, even if median rent paid in the city is reasonable, all available units are priced sky high.

This leads to people being stuck forever wherever they managed to land on their first try. Got a new job offer across town that pays better? Ready to upgrade from your straight outta school studio apt? Too bad. Moving out of your established rent control would cost you so much you’d be moving for an effective loss. Just stay immobile and keep that unit off market for decades.

"Knowing this, landlords must estimate the future market and price..."

No. Just because a landlord is saddled with low rent units does not mean they can charge more for vacant units. They can only charge what the market will allow. They can't magically find renters willing to pay 50% above market just because they have some units being rented for 50% below market.

I see this argument a lot about how bad it is to be stuck and I really can't wrap my head around how its presented. Laid bare its "you've been underpaying so long you won't be able to afford overpaying."

If the landlord suddenly demands double the rent and you don't have rent control, and everywhere else in town demands double the rent, you are homeless. If you have rent control, your landlord cannot double your rent, but it still goes up at a fixed % a year, and you aren't gonna go homeless.

Housing prices have rose faster than wages can keep up, either you offer some limits at how much you can gouge from a tenant or you accept the consequences of low income workers forced to live far from their low wage job (increased vehicle usage due to being far from convenient transit, more congestion on the roads, more pollution in the city), as there's just not enough jobs in these far flung areas.

The great irony is that all of these debates and issues and perilous environmental and economic situations could all be avoided if we simply built dense supply to match demand. This is the U.S., we do nothing better than create heaps of supply to exceed demand. Distal suburbs hastily constructed in wildfire lands aren't the answer; you have to build housing where you've built the jobs. That means building UP so people don't have to travel for hours and hours sideways to find something they can live in with their wages.

Rent control tacked to region wide inflation levels is still good policy even if it's bad economics. People should have an inherent right to place, if they didn't the immigration and native rights debates around the world would be non-existent.

Rent control also has the positive effect that if renters put in effort to improve the economic value of their community and neighborhood, that they wouldn't be displaced in the process. I'd also point out that rent control doesn't always have to happen as a result of low supply, nor does rent control necessarily reduce housing construction should zoning be relaxed in the process (in the era with the highest levels of rent control in Manhattan, was also the era of the highest amount of construction).

If people have an "inherent right to place" that extends to the actual address, what's the incentive to private residency land ownership?

I probably wasn't clear on this, but I'm referring more towards the broader neighborhood a person lives in. At least currently, rent control and land ownership is the only clear way to prevent outsiders from coming in and disrupting the community.

Just what kind of outsiders are you so worried about?

The kind that come in, buy up property and evict every tenant living in said building, followed by raising prices such that no one who lived in the area previously could afford it.

This isn't about outsiders who move to a neighborhood with the goal of having a place to live, this is about investors walking into a neighborhood and viewing it as a financial opportunity.

So you DO mean right to place by address, when pressed about it. That's a pretty nativist impulse.

why of all things should people have the right to live in a dwelling they dont even own for a fixed price in perpetuity? prop 13 is pretty awful but at least it makes slightly more sense than rent control.

I never said it should have to be at a fixed price, and you could ask the same question for why does a person own property that they don't live in.

Landlordism and rent seeking is an inherently immoral thing that we allow to exist in our society, and we need land value taxes alongside reasonable rent controls (like the ones Oregon just passed) to stop these behaviors.

"People should have an inherent right to place ..."

If that is the case, wouldn't we all just choose Aspen (or La Jolla or Zurich, depending on tastes) ?

It's not obvious to me how recognizing an inherent right to live in any place would be operable ...

This isn't about choosing where to live, and as a matter of fact Zurich does have very strong tenant protections and rent controls. This is about if you've lived somewhere 20 years, and the neighborhood changes, where you were a part of improving the conditions of the neighborhood, you should have the right to remain in your home at a price you can afford.

We as a society should incentivize people improving their neighborhoods, as right now we're doing the exact opposite in areas with large numbers of renters.

Correct. The most credible study on the matter (Diamond et Al. 2018) makes it clear rent control over the decades evolves to hurt the disadvantaged the most.

Thanks for calling attention to the land value tax concept. Was worth the 20 minute dive on wikipedia [1] and references for me.

[1] https://en.wikipedia.org/wiki/Land_value_tax

If you live in California it's honestly better to just not know about it.

Before reading that Wikipedia page I never batted an eye at golf courses in city centers, dilapidated shacks with huge yards bordering Google's HQ, or empty lots worth millions sitting undeveloped in the middle of a housing shortage.

I don't understand how a land value tax would correct for the issue the original article outlines. That is, landowners will be the primary beneficiary of municipality improvements regardless of whether we have a land value tax or property tax.

Rent control can also distort markets and change the way people live. So say you have rent controlled apartment close to work but later lose your job. In that case people are heavily incentived to stay put so less likely to move and more likely to commute longer distances for work.

Often around these kinds of high-density cities, many (most?) people are living some sizeable distance from work anyway so I'm not that rent controls would be massively influential there either way. I agree with the principle that we should attempt to reduce commutes but I think there are other issues at play which are more relevant to commutes specifically such as agglomeration which generates areas which are dense in work and relatively sparse in housing and vice versa.

So there are other dynamics at play, some cultural like being expected to be physically present when your work could be done either at home or from a local desk-space or something to that effect. I'm sure there are other possible answers to this, but quite a straightforward one to me seems that paying your employees for their commuting time would probably be right in terms of incentivising employers to allow more remote work or even set up satellite locations (possibly as a part of a desk sharing arrangement) in areas typically considered commuter belts.

One other thing I've seen in NYC is that rent control results in increasingly divergent incentives for the landlord and the tenant over time, assuming that the value of the property is increasing.

It gets to the point where some landlords do truly despicable things to drive out tenants who they cannot otherwise legally ask to leave. It also leads to things like tenants refusing necessary repairs because they fear the landlord will use that as a pretense to raise the rent or evict.

Basically, trust just breaks down on both sides.

> Often around these kinds of high-density cities, many (most?) people are living some sizeable distance from work anyway so I'm not that rent controls would be massively influential there either way.

Plenty of people commute from an inner suburb on one side of the city to a job on the far side of the center. If they could move to the corresponding inner suburb on the other side, and pay the same rent, that would be a substantial saving for them, at no cost to anyone else.

> I'm sure there are other possible answers to this, but quite a straightforward one to me seems that paying your employees for their commuting time would probably be right in terms of incentivising employers to allow more remote work or even set up satellite locations (possibly as a part of a desk sharing arrangement) in areas typically considered commuter belts.

That's not workable; employees can just pick a long commute and pocket the money. And what about those who aren't traditionally employed, or the small companies who'd be bankrupted by this?

Employers don't put their offices in the center of the city out of malice. They do it because it's better for productivity, and/or a better work environment that lets them attract more talented employees. That's real value that you destroy when you make it expensive for two people to swap houses and live nearer where they work; even if you force the bill onto the employer it's still a loss to society.

> If they could move to the corresponding inner suburb on the other side, and pay the same rent, that would be a substantial saving for them, at no cost to anyone else.

Why do you assume they would want to? I don't want to move every time I switch to a job in a different part of town.

> Why do you assume they would want to?

Because commuting is unpleasant.

> I don't want to move every time I switch to a job in a different part of town.

Then don't! It should be a free choice. You shouldn't get special tax treatment for moving, you shouldn't get special tax treatment for staying still.

How is this any different than if a person owned their home, how many people sell their house should they take a job further away. Rent control generally only contributes significant savings if you've lived somewhere a long time.

There are inherent costs associated with selling/buying used property and this is especially true for housing. Renting does not have the same inherent overhead when switching, only the common overheads (moving physical possessions, changing mailing address, etc).

> how many people sell their house should they take a job further away

That's... extremely common in areas with functional, non-distorted housing markets. There's some financial friction involved in buying and selling a home, plus the obvious emotional attachment, but I nonetheless still regularly hear of people moving across town for a shorter commute or a more desirable neighborhood. It's not a huge deal unless home sales are heavily taxed or the local property tax regime favors long-term owners (the homeowner's equivalent of rent control).

I lived in a rent-controlled apartment in the 1980s and it was impossible to get the landlord to fix anything (i.e. invest in anything) regardless of what the laws said (this was Cambridge, MA, and the usual junk grad student apartments next to campus). He wasn't going to get any additional rent for anything put into the building.

In fact his best option was to let the block decay and become uninhabitable so he could pull it down, put up something better, and rent out at market rates to new tenants. A few years back I drove down the street and guess what: the buildings on that street had clearly been built since I graduated.

Why would a land value tax decrease the benefit landlords accrue from municipal service improvements?

We already have a property tax, and the only difference between a land value tax and property tax is that it favors one type of landlord (the ones who develop their land) over another.

To the extent that municipal service improvements increase the utility provided by housing in the area, landlords are able to collect more rent from tenants (not necessarily from the same tenants -- new tenants with more buying power will be more interested in the area after municipal services improve). Since that increase in utility for tenants is derived from the location of a lot rather than what's built on it, the value of the land itself increases while the building remains unchanged. So taxing improvements can't recapture the utility increase the way that taxing land can.

Reply on news.ycombinator.com