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Comment by kiba | Hacker News Reader

This is exactly the kind of solution I favor in the states. Buy up properties, build or expanding housing supply, and then either continue to subsidize it or sell it back to the market while imposing land value tax.

Why? Because the problem is lack of political will. You can't expand housing supply if nobody wants to.

It's a piecemeal solution until we figure out something better or that society is willing to support public housing initiative. Otherwise, we would be waiting forever for entrenched political opposition to die or the situation to worsen over time.

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Why not just let private developers build apartments. They have the capital, know-how and will to do it. All that needs to happen is government and councils getting out of their way with zoning restrictions and the problem will fix itself as if by magic.

I agree on the land value tax part of what you said, though.

The problem is not government and councils but all the homeowners who don't want any development. Buying them out incrementally is hopefully a way to remove political opposition.

The problem is councils and governments that are controlled by homeowners who vote in NIMBY restrictions. The reason there aren't apartments going up everywhere is that it's literally illegal to do it, not that a developer is finding it difficult to find eight adjacent single detached homes to buy up in one go.

Baden Würtemberg is introducing a modified land value tax. It's probably the biggest political win of the decade.

Because private developers optimize for their profit, not creating high quality area of living. You can look at what the full fledged free market is doing to largest cities in Warsaw. It’s a shit show.

There's nothing preventing them from building now, yet they are not.

What would incentivize the building of low or medium income housing, when higher profits can be made from high income housing.

The BauNVO stipulates restrictions on building height and on floor area relative to land area. Are you sure it's legal to build a 30-storey apartment in a residential zoned area in Berlin without needing to get some special exemption or permit?

In the US and many other countries, the reason is definitely local government restrictions. Developers would love to build more high-rise apartments - it's very profitable to them - but they're not allowed to in many areas. In the area I'm living in, it is illegal to do it.

The incentive picture is not as you're portraying, and we can look to other industries for counter examples. If there's profit to make, the market will fill those shoes, even if there's "more profit" (which I don't agree is the case always due to volume) serving wealthier customers. Consider the market for low-margin cheap restaurants in poor areas, and the market for high-end dining in rich areas. These are both very well served markets. The market will almost always find profits where they're to be had, especially in an industry like real estate development.

>You can't expand housing supply if nobody wants to.

it's wrong to say "nobody" wants to. the problem is that the homeowner class holds all the political power, and so there is no greater political sin than decreasing the cost of housing (or "lowering property values" in homeowner terminology). if anybody cared what non-homeowners thought, there'd be plenty of will to build more housing. as long as so many people's net worth is tied to their housing, there will be no appetite for lowering the cost of housing.

Maybe this is just me being a filthy capitalist, but it also seems somewhat fair? If cities are instituting rent controls on properties that were previously market rate, that is a targeted form of wealth expropriation. To be clear, I'm not one of these "taxes are theft" people -- we do have to pay shared costs. But there's a continuum of acceptability: it would clearly be wrong to pass a law that raises taxes on one person by name. And it's clearly ok to raise taxes on everyone.

For me, instituting rent controls is towards the less acceptable end of this spectrum. If the city believes it ought to be able to set prices on an apartment, it should own that apartment first. Just my unenlightened gut feeling on this issue.

> it would clearly be wrong to pass a law that raises taxes on one person by name

What do you mean? There are innumerable such taxes, globally. You definitely need to tax various people & businesses differently, it’s the only real solution.

I am not aware of any examples where a country taxes a single individual at a higher rate than everyone else by law. If examples are innumerable, I'd be grateful if you could provide one.

Where are you getting this strawman of taxing “single individuals”? I’m saying that classes of people or businesses are already taxed differently.

> Where are you getting this strawman of taxing “single individuals”?

Could you please reread the section of my comment that you quoted and your response to it? I said, "it would clearly be wrong to pass a law that raises taxes on one person by name," and you said, "there are innumerable such taxes, globally." You very specifically did not say that classes of people or businesses are taxed differently. You said single individuals are taxed differently. (You might not have intended to, and if not, well enough, but I set up no strawman in my comment.)

Iirc the first income tax targeted a very small number of individuals- maybe just Rockefeller or something, as nobody else qualified.

I believe it, although at least then it's still targeting a class that others might enter. I do also believe that there's a fundamental difference between income taxes and wealth taking in this regard, in that one is retroactive and the other isn't.

Or, you could simply allow private entities to build housing.

I am sure especially in those "hot" areas where prices are spiralling out of control, there is no shortage of entities with the "will" to build.

That is usually the point behind markets, rising prices give an incentive to increase supply.

Berlin has been a hot market for a long time, what's been built has been a lot of very expensive apartments. There is actually some leerstand but they are luxury apartments without renters. The biggest thing the market has achieved in Berlin is allowing landlords to rent out shitty apartments at abhorrent prices (25sqm at 600€) without incentive to actually provide good services for the renters

It would surprise me if Berlin is permissive with respect to permitting new housing. It would be quite unique among desirable western cities if it did. When the amount of new housing allowed is insufficient to keep up with growth in demand, obviously developers are going to tackle the most lucrative segment of the market, since they can essentially pick their buyers. If there were ten people who want new cars but you have one import permit, and your cut is 10%, are you going to import the luxury car or the econobox?

I agree and that's why I think the problem cannot be solved in private hands but with communal ownership.

If you permit enough new housing to satisfy demand, that would also solve the problem. As long as insufficient new housing is being built, prices will go up on market rate housing. The lucky few who manage to get into price controlled housing will have better prices, but everyone else will face higher costs or be unable to live in a region entirely.

One thing is for sure: as long as any private housing ownership is allowed, rich people aren't going to be the ones left high and dry.

The amount of new apts would be dramatically high to curb prices and make them realistic again. And Berlin is probably also not able to magically create as much new living space as is needed in that short of a time frame especially given the developers unwillingness to build affordable housing. I think where we probably fundamentally don't agree is that not all things need to be provided through a market. (or I think my point is more so that we've at least observed it not reall working here, so we could at least try a different strategy or multitudes and see how far those take us)

> The amount of new apts would be dramatically high to curb prices and make them realistic again

I'm fine with short term patches to help with the acute issues, but fundamentally unless a lot of housing is built, there are going to be some people suffering in the housing market. Either it will be poor people paying a lot for housing, or it will be poor people who are unable to win lotteries to get into public housing who then cannot afford housing at all. Whether the housing is publicly or privately owned is just pushing sand around the sandbox. It just changes exactly who the winners and losers are, but not the number of people losing.

> I think where we probably fundamentally don't agree is that not all things need to be provided through a market.

I don't hold this belief. There is no fundamental disagreement on this score between us.

The problem is: who gets the cheap housing in communal ownership? Supply is limited. So if you don't pick the person who is willing to pay the most, who do you give the apartment to? Who gets to decide? Are you sure you want to live in that kind of world, where some political elite gets to decide your fate?

A number of public housing here in Berlin is reserved for people making less than a certain amount, having no job at all, or working/living in precarious situations. You can apply for that status at the local gov. It is not flawless, of course, but it at least avoids segregation.

I live in a district that was originally working class, and is being very fastly gentrified now (yuppie myself I guess), and it just sucks that people who've lived here all their lives have to move to completely new environments because this is now an area desirable desirable for rich people.

Same with small businesses, one of my favorite bars closed down recently due to some English billionaires wanting to turn the house into higher margin living. Vice did a documentary on it called "Punks vs. Billionaires". For the people living here, who live in small flats and still pay half their income to it, these "living room" bars, where you do not have to buy to be welcome were absolutely essential. But they all get destroyed now.

Almost all new private housing is for richer people, because they are the most profitable, and lots of them move over at the moment. The state needs to step in to make sure that normal people can still live a decent life around here, too, lest we become a horror show like London.

> Are you sure you want to live in that kind of world, where some political elite gets to decide your fate?

Whenever people say stuff like this, I wonder if they’ve ever taken a moment to look around themselves and see that it is already that way. The current housing problem is also orchestrated by the same political elite…

There is a difference between policies making your desired place more expensive, and being literally dependent on some corrupt government officials, who is handing out apartments as favors for allies, or just for bribes.

There is already communal property in Berlin and all over Europe. Its not some grim socialist dystopia. They serve under the same conditions as private companies just don't have to completely bend over to shareholders wishes. Vienna the city for example is the biggest landlord in Europe.

Obviously we need more housing but until then we also need to ensure that people with normal incomes can also afford to live _in_ the City.

How is it that there are "luxury apartments without renters", yet landlords get away with " rent[ing] out shitty apartments at abhorrent prices"? Why don't the people who can afford those shitty apartments move to the empty luxury ones instead?

Because they're not on the rental market, but are mostly used as a value store by owners that don't live anywhere nearby, and have multiple properties.

Maybe impose a tax on unoccupied apartments past a certain number

A land value tax accomplishes this without the complexities of determining occupancy status or fraud concerning same.

The argument of the empty apartments in Berlin comes up all the time, but it is a myth. Maybe in London it is different, for various reasons, but in Berlin, that is not the reason for the issues. [1]

Even if only new luxury apartments are being built, it is more housing that takes pressure off the market. The wealthy people can move into those apartments, freeing their old less luxurious apartments for "poorer" people.

And there is no "free market" for housing here - it is very difficult to build, with lots of regulations.

And who wants to invest, when the government will seize your assets as soon as you are successful? Last year they introduced a hard cap on rents, that applied no matter how much you paid for the house you wanted to rent out, and no matter where it was located.

In two weeks, there will be a public vote to seize thousands of flats at "way below market value" (quote from the voting sheet) from corporate landlords. These are not conditions where a "free market" can do its thing.

As a matter of fact, only big companies have the means to build under such conditions, it is much too risky for smaller entities.

But then, sure, blame the evil capitalists for the issues your socialist government has created.

[1] https://www.tagesspiegel.de/berlin/wohnungsnot-leerstand-in-...

> Even if only new luxury apartments are being built, it is more housing that takes pressure off the market.

Luxury housing construction can help, but can't really fix the issue on its own because it is also a relatively inefficient and expensive method of increasing the housing supply (since each added unit has high costs.)

This problem is one that a large number of municipalities have failed to solve. It seems very difficult to get the regulatory and tax incentive structure setup just right to get sufficient affordable housing built in large urban areas.

> As a matter of fact, only big companies have the means to build under such conditions, it is much too risky for smaller entities.

I would think that governments have the scale to take on those risks as well. At some point, I think it makes sense to stop struggling to get privately build affordable housing and do it publicly.

> you could simply allow private entities to build housing.

London is the poster boy for exactly why you don't do this.

The result is builders and landlords buying up land, "delaying" (often indefinitely) building the homes to artificially drive up the prices of existing housing, or building tiny, tiny, apartments in huge hive-like blocks and towers, with insane prices.

Nobody lives there anymore. It's too expensive.

There’s always real estate developers willing to build. The problem is that they never want to build affordable housing, only massively profitable housing. Also, an underlying problem is usually lack of land - a limited resource by nature.

If they build luxury apts rich people take those freeing up crappier apts for middle income people and so on. Silicon valley millionaires dont want to spend 2.5 million on shitty 50yr old homes, but they cant get new ones built

Thanks for this non-insightful comment and derailing a post about Berlin into yet another SV rant.

If you give real estate developers too much of a free hand, they will plaster over every bit of common space with cramped flats or other abominations. There's even a word for it in Polish - "patodeweloperka". It's most prominent in Cracow (alleged ties of real estate companies with local officials), also in Warsaw and its suburbs. In Gdańsk, it's suspected that many old unused buildings in attractive areas had an "accidental" fire.

I looked at some of the new construction in Wroclaw (arguably not Cracow) and it seemed fine to me.

If I could sustain my work from abroad, I would be tempted to move to Wroclaw, actually. Unfortunately I need access to cheap shipping to Czechia, which means being in Czechia or at least going there pretty often.

Define “fine”. People want to start the family, but private real estate developers build shitload 40m^2, 1 bedroom flats (as they’re the most profitable). I’d argue the current housing market is definitely not “fine” for them.

You need to realign incentives. You can't do that now if homeowners and investors don't want to allow housing.

Resetting taxes to LVT means that improvements on land won't be disincentivized. Buying them out means they get a lot of cash and won't be so opposed to you lowering the value of their owned property.

Also, the government will be able to afford to focus on cheap housing, not what makes them the most money, since their focus isn't private profit.

The prices are spiraling out of control everywhere that’s even moderately desirable. In a city in the BW part of Germany which has ~20k inhabitants and is nearby another city with ~200k inhabitants there’s new 3 room apartments for sale for around 400.000+ €.

The sales prices in BW and many other areas of Germany are simply ridiculous.

And they are building: a few dozen lots are being offered by the city and there’s dozens of takers per lot.

Then they are not allowing to build enough if there are dozens per lot?

Which city can easily add thousands of parcels of land for building houses? There’s significant administrative effort and those extra houses would put pressure on all local municipal services. This has to be thought out and done incrementally.

in SF, the wholesale cost for building a unit is $800-900k.

private entities will only build luxury housing in these conditions

This is one of the reasons why all new housing is in the luxury category in Germany as well.

Building codes have become so strict that it's not worthwhile to build affordable housing for private investors. Especially since the government pays incentives (or rather gives out very low interest loans) to build houses of the highest energy standard.

Why build a "cheap" house when you can build a more expensive house with subsidies that has a lot higher resale value later?

Why are building code so strict? Are they 'necessary'? How much benefit do these building codes provide?

Note that there is a lot of lobbying involved in the building code. An example:

What if a kid ran into a balcony glass and broke it, hurting or killing itself? Better demand that balcony glass be reinforced (and more expensive, to a great delight of the glass factories!) just in case. Even in old folks' homes.

No one wants to be known as the child killer, so here is a new demand making the construction a bit more expensive.

That seems perfectly reasonable to me. I expect balcony railings to be sturdy, they exist precisely to prevent accidents. As long as there is no regulation mandating railings be made of glass, I don't see any problem. I've only ever seen glass railings on the houses of people who can afford to pay someone else to clean them (i.e luxury housing) so I don't see how that makes it harder to build affordable housing.

I meant glass in the door that connects the room to the balcony. Not in railings. Sorry.

earthquakes, at least in SF

> build luxury housing

The most luxurious housing is single family homes. Is that all they're pitching in SF now?

most of the new development is midrise to highrise condos.

I don't think there are any new SFH being built on empty lots.

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