Rent control will make housing shortages worse?
economist.com
economist.com
This does far more to hurt renters than anything else: https://www.latimes.com/local/lanow/la-me-ln-housing-bill-co...
If the rents are high because of a lack of available units, you build more units or make more units available.
If you are at peak carrying capacity in a given city you need to expand infrastructure (vertically or horizontally) to support more & denser development.
The trick is both can require public spending to make work. You can't just rezone and let a city go and expect magic in the first case scenario. You often need government subsidized building of cheap apartments to spur the economy to build up and attract investment / higher paying residents to build generalized housing. Most developers are looking for the highest margin building they can do, and while in theory any potential profit from building should eventually be met there are only so many construction companies, especially urban highrise class builders, and they prioritize the best deal.
Why not say, "sorry, we are full"?
It really comes down to transit not where lines are drawn on a map.
But yeah, property taxes can be rough, they’re meant to ensure that you’re not sitting on land that could be used more productively. On the other hand, your neighbor’s investment in land has apparently paid off in terms of appreciation.
With prop 13, I’d support age-based property tax abatement, but the current way it’s set up is insane (commercial property gets the same treatment, the tax basis can be passed on to heirs, if you sell less than some fractional share of the land, it doesn’t trigger a reset, and some other insane provisions).
This rarely happens because developers want to pocket that difference, nimby wants zero development, and everyone wants to spend that money on their own ‘critical’ projects.
True, I would have built a 10,000 square foot single famly home with a massive yard in manhattan facing central park but those damn regulations are making it too expensive /s
It's not possible that desirable places may have more demand than physical space?
[1] https://sf.curbed.com/2019/3/21/18276227/vacancy-rate-san-jo...
[2] https://abc7news.com/society/homeless-population-history-in-...
also, did you seriously think that the problem with homelessness is that they didn't have a house to stay in?
Why are these homes vacant? Should people be allowed to take a month of vacation without losing their home? Is it ok for an apartment or house to be empty for a few months in between residents?
One month in between tenants every two years is more than a 4% vacancy rate. What should the vacancy rate be?
And what if in addition to housing the homeless we also want to house workers with unreasonable commutes?
Every single person I know who has raise this X vacant homes and <X homeless has not bothered to ask these very basic questions.
We need more homes. 25% more than we currently have, in the high demand areas. We don't need hem in Detroit or Stockton, we need them next to jobs. And we need to stop the profiteering home owners who speculate on the value of their homes by blocking others from living close to them.
I've seen the idea of a vacancy tax thrown around. Not sure how effective it would be, but might be worth trying.
It's time to stop treating housing as if numbers don't matter, and the only thing that matters is our feelings about seeing a crane.
There is a massive housing shortage, and people that deny it are just as fact-free as climate deniers.
[1] https://www.reddit.com/r/urbanplanning/comments/d0a9wb/top_2...
If more companies embraced remote workers or even just partial remote work, this problem would be greatly alleviated.
People want to live in the Bay Area, it's wrong to exclude them.
While there are a lot of nice things here, people mainly want to be here because of the jobs. If you help distribute the jobs via remoting, it will really help in reducing demand for very limited resources
This isn't just a social issue, it's also a climate issue. Even if we assume extremely ambitious goals of 100% EVs and 75% of energy from renewables in 2050, we need to drastically reduce the amount of vehicle miles traveled in California, which means denser housing with mixed uses.
Right now that sort of necessary housing and business is illegal in most of the peninsula. We need to change that.
It really is just gate-keeping to keep others out.
Distributing jobs is not a solution, because sprawl is not a solution. We must make better use of existing land, rather than consuming more farmland or nature.
Remote work is still a good tool because it requires no extra upfront costs or slow to pass legislation; it can be done right now to offset demand of a scarce finite resource: living space. Moreover, it doesn't have to eat up new land. I would imagine it could help revitalize urban centers such as Detroit and other cities in the Rust Belt
I don't know why this has to be the case. Can you expand upon the reasoning that makes you think this?
Here's a couple different models of what building adequate housing would look like:
https://medium.com/@firstcultural/how-california-can-build-3...
Also, it's not just physical space that's a resource limit: there's also time (how fast can you build it?) and money (do builders have enough financing). This is with the optimistic assumption that NIMBY legislation doesn't get in the way, which is why I still feel that remote work is still the most ideal solution, since the only roadblock it has is company culture.
I guess another solution is the route Palo Alto is taking: hinder or destroy the local economy to limit demand of physical space. I don't agree with this since only wealthy people can afford to deal with it.
To me it seems the problem is that the braindead NIMBYs successfully co-opted the locals with property, thanks to the property tax boogeyman.
As to why landlords leave units empty; rent control. Rent control and strong renters protections, combined with dramatically increasing market rate, means landlords will get more money if they keep a unit empty for a year.
Are they? I don't see much of the Bay Area but I haven't notice many vacancies at all, and the rates overall are low from what I've seen, something like 5%.
I'm all for vacancy taxes, and actively looking to see how to get one passed in my city. But I don't think it's going to do much other than provide a revenue stream for homeless services, like Oakland's Measure W. I can't see them helping with the housing situation based on these sorts of low vacancy rates. We need 25% more housing than we currently have, and a 0% vacancy rate is pretty much impossible and a horrible situation for renters, so I would hate to see the vacancy rate go any lower.
That's very much NOT 100,000 livable houses sitting around being owned by speculators.
A much better way to look at it is vacancy rate. SF's vacancy rate is around 5%, which is very low and indicates that nearly all of the housing stock is being used. For a lot of the same reasons that a 0% unemployment rate is not possible, it's not possible to have a 0% vacancy rate, and in practice 5% is about as low as you can get.
refers to the metro area which includes a much larger area
That's a crock. That computes to 1.78 million units in SF. That overstates the number of units by a factor of at least 3!
The housing market in California is already non-functional because supply is not allowed to meet demand, which puts renters at a tremendous disadvantage. Efforts to relax restrictions on new housing construction have failed.
Adding restrictions until the market breaks in ways that everyone hates might be the only way to get any momentum toward fixing things.
https://www.cato.org/publications/research-briefs-economic-p...
Pretty much the only study I’m aware of that took the issue head-on, from the Cato institute.
They found that rent control greatly benefits recipients, that rents increase diffusely citywide (about 5%), and that the overall positive and negative impacts were roughly equally balanced (~$3Bn over 17 years). The net is slightly positive, in fact.
In other words, rent control pretty much does what’s printed on the tin: helps certain renters a lot, hurts others a tiny amount, averages out to zero net impact. Here’s the TL;DR:
”On net, incumbent San Francisco residents appear to come out ahead, but this is at the great expense of welfare losses from future inhabitants.”
You can certainly debate the desirability of that outcome, but it’s exactly as advertised.
I'm seeing phrases like (gross cherrypicking, also doesn't represent the full picture article, I know, I know) '15 percent decline in the number of renters living in these buildings' and 'led to a higher level of income inequality in the city overall'. This and conclusions like a 5% increase in rents city-wide suggest that the policy is not improving the housing affordability situation.
Indeed, it looks like rent control is great if you can get it but is making any housing shortage worse.
As I said, you can certainly dispute the goal of favoring incumbents over new residents. There are also issues with landlords in rich neighborhoods wiggling out of the controls, which lead to the rich/poor inequities you note.
But on net, it does what people want it to do: protects existing residents, with a minimal net impact to the housing economy.
If I didn't mind the financial outcome (because I didn't have the money in the first place) I'd have hung on for dear life.. instead I took the settlement and found another living situation.
Rent control does not prevent developers from building new construction, in fact it may promote new developments. Rent control reduces the cost of housing for a select few people who haven't moved in a while, which artificially raises the prices for newer tenants that just moved into a neighborhood. Higher prices for new tenants make developing new housing more attractive, not less.
I think you have switched cause and effect. Developers have to charge higher prices because they have to subsidize rent controlled units. Without rent control you may get away with charging $1000 per month to cover your costs and then slowly increasing prices as inflation picks up over the years.
If you expect 3% inflation but rent control only allows a 1% increase then only charging $1000 will result in a net loss over time so you will have to adjust the rent upward. Assuming a tenant in a rent controlled unit stays for 20 years then the land lord has to charge the tenant $1400 from day one.
> Developers have to charge higher prices because they have to subsidize rent controlled units.
I don't think these two points are contradictory. Yes, rent control increases housing prices on newer units. However, higher prices on newer units provides incentive for developers to build new construction rather than squeezing everything they can from existing ones.
You should read the article before you assert that your opinions rebut its contents.
> "The Cato Institute is an American libertarian think tank headquartered in Washington, D.C. It was founded as the Charles Koch Foundation in 1974 by Ed Crane, Murray Rothbard, and Charles Koch, chairman of the board and chief executive officer of the conglomerate Koch Industries."
I also have a hard time supporting it just in principal - it restricts mobility, disincentivises renting out property at all, and puts young people and immigrants and anyone else who didn’t happen to get here first at a disadvantage. Then the only housing those folks can get is market rate housing, which we now just call luxury housing as a shorthand even though it’s the only possible housing, and now we can write them off as rich assholes and pretend there’s not a housing problem.
Obviously the causality of these issues is complex, and it’s not all the fault of rent control, but it does seem to be a major pillar of this whole crazy mess we’ve created here.
One last point — think about how big of a deal that 5% increase really is. The median rent is around $3500 for a 1 bedroom apartment, that’s $175 a month the average person in the city could save. That’s significant.
Mods, if you can’t control the ideologues, it’s time to get rid of graying of downvoted comments. People are just using it to censor speech.
- didn't control much more than egregious rent increases
- didn't apply to new housing
- expired after a time
Each city has its own law.
Edit: whoops... I had meant the currently active laws, not the new statewide law. Now I realize the comment was about the new law.
This is accurate, this year the increase limit is 7%, which is pretty much unheard of except in the most egregious cases.
> didn't apply to new housing
> expired after a time
The expiration is on the waiver for new buildings.
Rent control won't apply to buildings that opened within the past 15 years, and it won't apply to single-family homes, unless they’re owned by a corporation, or duplexes where the owner lives in one of the units.
I understood that it meant the controls would only be in effect until 2030.
Until there's a better solution than "tough shit" these policies will continue to be popular.
Why do we need a better solution than "tough shit"?
Not everyone is entitled to live where they want. If you want that, try Europe.
I don't know man, appealing to the authority of the collective wisdom of the voters seems like a pretty shaky foundation on which to base an argument these days.
If you want rent control, I'm saying you should go elsewhere.
If you are against rent control, my comment did not imply what you should or shouldn't do.
you'd probably get a better answer if you were to ask the person who made that comment.
"Not everyone is entitled to live where they want" is like... OK sure. But only land owners used to be able to vote. It makes a lot of sense to help out renters through policies that might harm owners.
You're saying the only people entitled to live on desirable land are wealthy assholes coming from afar? "I'm sorry, the only place you're entitled to live at your income level is that shithole next to the meatpacking/chemical/whatever plant. Why are you complaining? You can live with all your other equally-abled friends!"
This is how you create ghettos.
Rich or poor, asshole or not asshole: No one is entitled to live anywhere.
There is only a market price. That's all.
What's wrong with the housing market is that a housing market actually exists. We should be working to provide food, housing and comfort for all people as a matter of course, not to make rich capitalists who already own most of the wealth on the planet even richer.
But beyond that, local residents set local policy so it's obvious why these policies are in place.
whilst that is true, society should band together in such a way as to make it possible to create cheap shelter for everybody (as an option, those who wants to live more luxuriousy should be able to if they have the means).
Rent control isn't really achieving it though, and only distorts the market.
Why is this something we should encourage/subsidize?
And that's assuming that if they can't find housing sufficiently nearby, they may also need to find a new job, lose friends, have a harder time staying in touch with family, etc.
I'm not suggesting it's easy to own, but emphasizing that the rental market is a market, and rents change whenever a new contract comes due. If you want to smooth the rates over a long time horizon, buy something or sign a long-term lease.
Unfortunately, rent control fails consistently. It doesn’t change the fact that too many people need too few homes, not to mention the margin squeeze for property owners. The Bay Area needs way more home, especially multi-family units near transportation.
But that doesn’t change the fact that renting is fundamentally unstable, and a short-term contract comes with risks. You seem focused on shooting the messenger.
The relevant issue: Switzerland has rent control (and has had it for a long time). So if it's tenable position for the 2nd richest nation (and has been for a long time), it does suggest that renting being "fundamentally unstable" is not a requirement.
The same individual responsibility for the rental price is on the landlord. If prices rise substantially during their renter's lease period, the landlord is going to pay attention to that. If the rental market increases only a little bit, it is not uncommon for landlords to leave the rental price more or less the same when there is an upcoming lease renewal because it is often more of a hassle (and a risk) to jack the price up, potentially piss off the renter, then they move out, and the landlord now has the new hassle and risk of finding a new renter and possibly going one or more months without revenue.
But in cases where rents rise, say 25% or more in a 1-year lease period, what should a landlord do? Not raise the price for his renter? Leave that money on the table? Or raise the price, run the risk that the current renter cannot afford it, and they either move out or pay.
I'm basically describing normal market behavior. And I think this discussion often devolves into what we often deem to be our "rights" as people. We see the same discussions occurring with healthcare, too, and there are pieces of that applying to housing as well. Renters cannot easily "control" what happens to their supply/demand of rental housing units in their area but when there are large swings, how much "protection" from those swings are people really entitled to?
Perpetual rent controls seem awfully unfair, in my view. There has to be at least some form of rent price adaptation that allows a rental unit to always converge towards its market price if a renter is already living in it.
And besides, no rent should be jumping past 5%+inflation in good faith, especially while wages are stagnant. The name rent control is confusing as it implies some sort of stasis.
In this case, it just helps prevent gouging.
Because you don't want the social fabric of a city rooted up because no one can live there. Where are your teachers going to live? Or the person flipping your burger?
I say this as an opponent of rent control. The people you should feel sorry for are not the owners. It is all the people who want to come to SF, would have a better life in SF, would have a lower impact on the environment, would be more productive and make this a better country, who can't because housing prices are so high and there are no vacant units.
If the fundamental property rights under consideration themselves are unjust, then efficiency arguments are missing the point
Of course, I also oppose rent control, because of the inefficiency. But I very much sympathize with and understand the brutal truth behind how land ownership is acquired. It is a simple matter of force... ownership is decided by whoever wields control over the application of violence.
That fact, combined with the fact that land is not a fruit of labor, means that individual ownership claims are unjust. And even from a pure efficiency standpoint, the ability to own and speculate on land creates a huge amount of idleness and underproductivity. People are able to afford to sit on idle land indefinitely, if there's little cost to do so.
The obvious solution is to tax land by value and use the revenue for infrastructure and public goods, and any remainder should go to a Citizen's Dividend. Wise use of such funds would always flow back into the value of land itself, and thus pay for itself. Without needing to tax production or labor. This would be much fairer than our current process of creating perverse incentives by taxing labor, and then allowing landlords to reap unearned benefits from nearby public works.
In CA, the landlords property tax will be the same as the day they bought the property.
We recently moved from Saskatoon to Regina, and our family sold the Saskatoon house. We priced it slightly below market and it sold in 3 days, but there were many similar houses that had been on the market for months. The buyer tried to flip it (it needed love for sure); I'd guess $15-20k worth of supplies plus his own labour. It sat on the market for a long time, and ultimately sold for only $40k more than he paid us for it.
Housing is NOT anything like that kind of market.
Building permits, zoning, NIMBY, various minimums (aside from taxes, thanks Rs for focusing so strongly on less taxes rather than greater value for money...).
Make building the desired type of housing easy; incentivize it until market conditions have been corrected... We're several decades behind at this point, so a huge boom is required to correct prices.
Conversely, you don’t want unsound buildings in earthquake country, but yeah they’re also being abused
However, 'supply and demand' doesn't care at all about fairness. Richer people will get more of the desired resource than poor people. Poor people might be priced out of the market entirely.
The 'free market' might end up with entire communities being forced to move to a cheaper area because their current location is highly desirable to wealthier people.
In a free market, this might be determined to be a fine outcome: people willing (and able) to pay more for that area get to live there.
Citizens might not think this is an ideal outcome. They might, with valid reasons, feel that poorer, existing, residents should be allowed to stay where they are, even if wealthier people from other areas want to move there.
I am not saying one side is right and the other is wrong, I am saying a free market only solves the efficient use of resources part of the equation, not the other parts.
It surprises me, because economics seem so aligned with this board's interests, and usually the conversations about these kinds of topics here are informed or at least interesting. The "free market" seems to always be an exception.
Here are a few _basic economic_ reasons why you might not want a "free" market to determine the price of some good:
1. It's "free" but not actually free. For a free market to exhibit the beautiful self-organization and maximization of surplus, you need:
a. Zero-cost (or at least low-barrier), voluntary entry/exit from the marketplace
b. Many participants
c. Information transparency
(a) doesn't apply to housing, healthcare, food, or anything else that's required for survival, so there are no theoretical guarantees about "free" markets in those cases.
2. Self-organization and maximal surplus are not sufficient. This is a question of values, and usually is a question of valuing equality over efficiency. You might want, for example, for everyone to have a access to something (like a home) even if it comes at an economic cost.
3. There are costly externalities. Sometimes markets can self-organize and provide efficient distribution of resources, but also cause a lot of problems that aren't captured in the supply/demand curve. For example, not having a home might cause you to do things that is socially harmful that you wouldn't otherwise do. Like using the sidewalks as a toilet.
Suppose rentals were simply banned. That is, you can only buy, and the rental market was eliminated. Would housing supply disappear?
I'd argue no, that you'd simply end up with more longer-term, higher-rate (to compensate for default-risk) mortgages.
Which might be a good thing. You wouldn't have to worry about 40-year residents being suddenly forced out of their homes any more, and still have a "free" market.
There are a lot of reasons Sweden has absurd real estate prices (the Gothenburg area in Sweden, which is the seat of moderately famous Volvo, has real estate prices close to the Seattle area which is the seat of Boeing, Amazon and Microsoft while the median incomes are not even remotely similar), and why the bulk of the price hike happened during the last decade, but a big one that's often overlooked is that local governments don't want rentals. Because of rent control they are mostly inhabited by low income earners, who pay less tax. Rent control is set by the national government agencies, who of course don't care where you live, they want everyone to have a decent home without being gouged.
Not saying that rent control is necessarily a bad thing, but if implemented on a national level they give local governments less tools to get rid of poor people. In the end, they'll find a way, and that might create even more problems.
The only units I’ve seen that have rent increases that are greater than 10% are the new luxury high rises, which will continue to be exempt. The only landlords I really see this impacting are the corporate landlords like Avalon that manage older rentals and squeeze rentals as much as they can.
This is different than speculators who boot out tenants to take advantage of market swings.
People view “market rate” as “expensive so lets do something so people can afford housing” , distinct from “influenced by supply and demand and a rent control solution further constricts the supply of non controlled units further exacerbating inequality”
Of course - my rent was just jacked up again. Got the letter in the mail today. (Now paying about 22% more than two years ago) Landlord needed to get another 10%+ rent increase in before they're under rent control.
Figured this would happen. Just sad to see it actually go through. So much for protecting existing renters...
So this will likely hurt many, many other renters. Not to mention makes it harder to move across town (they'll do massive rent increases every time a unit is vacant in anticipation of not being able to do it while you're there) and will hurt any newcomers to the state (ya know the same shit we like to bitch about Boomers doing).
If they, looking at housing starts and the economy and projecting out, think that there's a chance that there'll should be a 40% increase over five years, they now have to raise your rent to have a chance to get there and also know that the other landlords in the quasi-market that they're competing with will be doing the same.
I seem to remember that your rent in Jan 2020 must be lowered to what it was in March 2019.
Edit: text from https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml...
"...The bill would provide that these provisions apply to all rent increases occurring on or after March 15, 2019. The bill would provide that in the event that an owner increased the rent by more than the amount specified above between March 15, 2019, and January 1, 2020, the applicable rent on January 1, 2020, shall be the rent as of March 15, 2019, plus the maximum permissible increase, and the owner shall not be liable to the tenant for any corresponding rent overpayment..."
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml...
There seems to be a requirement that policy makers not have read this book.
[1] https://www.amazon.com/Basic-Economics-Fifth-Common-Economy/...
A mild level of rent control such as the new California law is not nearly as damaging to supply as policies like strict height limits. Knowing that rent control isn't fully optimal, I'd still gladly trade one for the other.
If you don't know the podcast (or the books) I highly recommend those.
It basically gives them a monopoly. Rent control serves as price fixing to keep out competitors. The entrance fee (to build a new building) is too high for the returns compared to alternative investments. For current landlords, it's a trade-off of lower short-term profit for long-term stability. Isn't stability the reason you invest in real estate (as opposed to say the S&P500)?
But the typical rent control regulation only covers older building. If you are a developer of new apartments, you can benefit here. Your competition is under rent control, so their current tenants have a strong incentive to remain in older buildings. This reduces supply, and your new apartment building can raise prices.
The whinging about rent control strikes me as misunderstanding the differences between modern rent control legislation and the policies of the 20th century, and also pure libertarian whinging. The arguments against rent control are econ 101 mealy mouth crap that is not even representative of all econ theory.
I own four houses outright and rent three of them out to families, and I'm currently invested in a quadplex whose rents I use to pay the loan off; and I'm about to leverage all of these properties to invest in a 20 unit apartment complex. Even considering taxes, maintenance, legal expenses, etc. I am pulling in so much raw cash that I foresee that I will be able to expand my business indefinitely -- even with Oregon's new rent control and tenant rights law.
The biggest hassle with rental property, as you are well aware I am sure, isn't the government -- it's shitty tenants.
It'd be much better if I could lock in a tenant and simply raise the rent each each, but where I live housing is plentiful and if I did that, they'd move.
It’s usually the other way around.
In theory, if real estate was a perfectly competitive market you'd be right. But by setting a standard well-known rent control rate, it sets a standard that landlords can follow. It allows landlords to act in concert and collude on rent increases without any direct communication between them.
The real estate stuff isn't even my main job, it's a side business. I'm a full time software engineer.
Part of the problem!
Like a lot of economic critique, rent control criticism is driven from cultural allegiance to landlords and the rentier class, rather than good faith.
What a bizarre claim. There's plenty of "good faith" criticism of rent control.
People think different things. You're allowed to advocate rent control. But assuming bad faith because "I am right" or "my opponents are in the thrall of the rentier class" is just astonishing.
People's opinions on these is overwhelmingly driven by their political values.
Trump doesn't love the Laffer Curve for its abstract mathematical beauty or essential truth - it's merely a rhetorical device for justifying the policies that he and other wealthy interests prefer.
If you have given up on this, there's no point in participating at all.
I'm simply describing what motivates people on the political right. There is no end of literature to support this view.
You may find it troubling to accept that many people in politics aren't acting in good faith or motivated by pure virtue. But it's true!
1. Those who focus on the beauty and simplicity of markets and the advantages of decentralized decision making.
2. Those who focus on all the ways markets create or abet undesirable conditions for human beings.
Everyone reasonable sits somewhere in the middle of those positions. The loons are gathered at both extremes. There are perfectly good arguments against minimum wage, rent control, and steep progressive taxes. There are also perfectly good arguments for those things.
And none of that has anything to do with Donald Trump.
https://www.jacobinmag.com/2016/10/housing-crisis-rent-landl...
This is an old joke, but why should we show any deference to a person we literally call Lord?
"Imagine paying rent for a home with rats, cockroaches, lead paint and mold. That’s what far too many of the estimated 600,000 residents of New York City public housing are doing, even after a lead paint scandal led to an investigation by federal prosecutors." [1]
[1] https://www.nytimes.com/2019/07/30/opinion/new-yorks-public-...
I used the word conservative not because it's 100% accurate (liberals are conservative compared to leftists though so it still is accurate), but because it's the word that people more immediately understand.
https://www.jacobinmag.com/2015/11/public-housing-social-wel...
Kind of like public schools?
Economists love to criticize rent control because in some abstract economic sense it is "bad", but most people don't care about the market efficiency (Which mostly means maximizing profit to landlords and developers) of the housing market. They care that their communities are not destroyed by gentrification and that they are able to stay in their homes without being dislocated, both goals that rent control is successful at achieving.
Libertarians have this idea that the housing market is restricted by government regulation and just needs to be freed in order to flourish. In actuality, the only reason there is any affordable or low-income housing in the U.S. is because of government money (Section 8, LIHTC, public housing, etc). Homelessness is a totally solvable problem, and any place that has solved it knows the solution: build enough homes for people to live in, through state-funded programs!
It's bizarre to me.
Going into an election season its valuable to remember. Housing, healthcare, the military industrial complex, infrastructure, bribery, corruption, undemocratic elections, polarization, etc are all fundamentally a product of flawed government. Its not just a "get money out of politics" flawed, its a fix elections to be representative and equitable, make representatives accountable, make everyone matter and have equal influence. Because contemporary American government is hugely against all these points.
Its a super hard problem of course, but it is the problem to solve first - nothing else is going to get much better while things are very likely to get worse so long as the disconnect between having an educated rational electorate whom are fairly and justly represented by elected officials accountable to them isn't the general state of affairs.
Every city in the USA builds less housing than 20 ago, adjusted for population, etc. The primary reason is wealthy HIMBYs, lawsuits, laws, mandated affordable housing requirements, etc. In DC most new buildings require huge payments to the affordable housing fund, which in turn jack up middle class rents. Nonsense.
If SF only allowed one Burger King and no other restaurants or grocery stores, the price of food would be shockingly high, yet government subsidy wouldn’t be the most effective fix.
In the cases where someone can make it through the years long process to get a building approved, the only thing that makes financial sense to build is luxury apartments.
If you want more inexpensive apartments the key is to build more of them.
Exactly! That's the problem with housing as a market commodity -- developers will only build luxury housing or slums. A deregulated housing market looks like this: https://en.wiktionary.org/wiki/slum#/media/File:Mumbai_03-20...
Affordable housing requires public investment, public housing. There is no other solution.
Trust me, if developers could freely serve every sector of the market there was demand, without being choked by zoning, land supply, etc, we would see the whole housing range from the Toyotas to the Testarossas.
You can't do that with housing. No amount of new zoning or new construction can solve that problem, because the land in every city is already fully monopolized.
Housing will never ever be a "competitive" "free" market. It can't be, because buyers don't have meaningful agency in their choices (for all but a few exceptions, everyone basically has to live pretty near their work/school/family), and buyers can't opt-out of the housing market (there are no reasonable alternatives except things like homelessness, which aren't reasonable).
Saying "new (for-profit rental) housing construction will fill the shortage" is like saying, "Yes, Nestle charges an obscene amount for our water, but if we just let Nestle pump more water from the ground, they'll voluntarily sell that water to us for less".
Every city is growing and adding more people than new housing construction. Thus rents go up. Hm, wonder what the solution would be? If a landlord has a unit open for 2 months maybe they would drop the rent? Crazy idea.
I also agree that "owners" are likely to try to influence politicians. However, "owners" intentions are probably relevant to the discussion. For instance, there may be existing owners who want to have zoning that prohibits new construction for multifamily units near their golf course. They would see a "developer" who wants to build multifamily units as "bad". Presumably, in this scenario many would support the "developer", ceteris paribus.
On the other hand, if the "owners" were in an area that was being gentrified and there were "developers" who wanted to construct luxury condos in the area (with similar density to the multifamily units discussed above), the "developers" would be "bad" and the "owners" would be the good guys to many.
Politics is inherently involved in both cases as you allude to in your response. The question is which politics is going to better resolve the "crisis" - it appears many will bet on politicians/government to resolve the "crisis". While most politicians can talk a great game, I haven't seen a lot of results from any of them from either party in any geography which tempers my confidence politicians have anything to do with a solution...
The reason economists get so excited about abstract issues of market efficiency is because if supply and demand don't balance naturally there will either be too much or not enough of something (effectively). Introducing rent controls will push the market towards the not-enough end of the spectrum and shortages will get worse.
> The unregulated market has never and will never provide affordable housing to all on its own.
That is a huge claim. If people could use their land as they like there probably wouldn't be a housing shortage. Developers make large fortunes out of install dense blocks of apartments; and doing that isn't going to make housing more expensive.
That magic wand is called public policy. There are similar things you could say about food -- i.e. how unregulated markets lead to developing countries being forced to export cash crops instead of growing food that people in that country need to actually eat.
>That is a huge claim. If people could use their land as they like there probably wouldn't be a housing shortage. Developers make large fortunes out of install dense blocks of apartments; and doing that isn't going to make housing more expensive.
4.8 million households in the U.S. depend on Section 8 to afford rent. These are direct subsidies to landlords to house these people. In an unregulated market, landlords would not rent to these people, and they would be homeless, or they would live in actual slums, which don't really exist in the U.S., but would have to in a fully unregulated market.
Public policy is not a magic wand that creates something from nothing. Governments that believe that tend to be called socalist and the worst case scenario for socalist governments tends to be much worse than for capitalist governments. Public policy can allocate resources from people who make money to people who make less money, but it is a lousy tool for trying to create more housing when there is not enough housing. A much better policy would be to remove government restrictions that actively prevent or disincentivise people from building housing/renting it out. That is to say: less controls on rent and construction.
> 4.8 million households in the U.S. depend on Section 8 to afford rent. These are direct subsidies to landlords to house these people.
I don't like welfare either, but it is certainly a step up from rent controls. Rent controls are an actively destructive policy that work directly against getting everyone in a house. Welfare is only questionable incentive structure and some welfare is appropriate.
Public policy doesn't exempt resources from economic forces, it's just a mechanism to divert resources from one area to another. It just allows you to fudge a little bit, push resources here and there. The Soviet Union eventually collapsed because towards the end for all their fudging they couldn't keep up net economic production. All effective policymaking comes from understanding constraints and operating within them to achieve the best outcome. For that reason - pretending that constraints don't exist is a recipe for bad policy.
In the same vein, it seems like its almost necessary that governments be leading the density charge in building. There should always be a public housing option everywhere, and it shouldn't be a default ghetto. Japan does an extremely good job providing a baseline amount of public investment in dense urban housing that helps regulate the unit supply the private market is otherwise managing.
De-commodified housing gives a community more control over who gets to be a resident, but there's no reason it would lead to a change in how many. Expensive cities already have the levers for that.