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Comment by asdfasgasdgasdg | Hacker News Reader

It's not price gouging (as the article references) if it's a competitive market and there's no supply shock. It's just the bid up price of the good.

Landlords and owners will be able to command high fractions of average incomes as long as there is no slack in the housing market. If you nationalize housing and hold prices low, then there will be supply shortages where some folks will not be able to get housing who would happily pay your price. (This is a fact, not conjecture, and is easily observed in any affordable housing lottery in the United States.)

The only way to have low prices and also to satisfy the demand for housing (i.e. have each person who is willing to pay be allocated a unit) is to have slack in the market. No other solution will do it.

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>If you nationalize housing and hold prices low, then there will be supply shortages where some folks will not be able to get housing who would happily pay your price. (This is a fact, not conjecture, and is easily observed in any affordable housing lottery in the United States.)

Singapore solved this (and other issues) by creating a department that basically functions as the nation's largest property developer.

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

Net result is about 80% of residents living in public housing.

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

Owner-occupied public housing can be sold in a resale market, subject to restrictions. The government does not regulate prices within the resale market.

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

This is pretty much the exact opposite of the nationalize-all-the-things public housing concept, which presumably is why it's not devolved into the usual electoral capture/tragedy of the commons sh show

I'm concerned about affordability, not the designation of the housing where people live. Even in Singapore, the rent is too damn high, at least as far as I can tell from brief googling. E.g. https://blog.moneysmart.sg/budgeting/cost-living-singapore/

Hmm, interesting. It seems like things are a little bit more complex over there than here, though, with subsidies given to married couples buying their first home and different tiers for PR/Citizens and everybody else.

For example, my Googling seems to suggest that you could buy a 4BR in a new neighbourhood for under 350k. A new estate in Melbourne would be double that, with no public transport or other amenities.

> For example, my Googling seems to suggest that you could buy a 4BR in a new neighbourhood for under 350k. A new estate in Melbourne would be double that, with no public transport or other amenities.

It's worth noting that Singapore's average household income is around 1/5th that of Australia.

>It's worth noting that Singapore's average household income is around 1/5th that of Australia.

A quick Google shows an average household income of $116k AUD for Aussies, and $114k SGD for (resident) Singaporeans. Current exchange rates peg 1 SGD to 0.997 AUD.

Yikes, I'm struggling to see how I got Singapore's income numbers so wrong. I think maybe I misstook the monthly income for the annual? In any case, you're quite right. My previous point was invalid. Unless I'm missing something, I was incorrect about the relative prices of housing in Singapore and Australia.

nice followup :)

Maybe you were reading a stat for foreign (non-resident) workers? They have a bit of a weird caste-esque system where foreign workers from Burma/Indonedia/Phillipines get paid a pittance.

Oh lordy, no, they didn't solve it.

If you're not married, you can't get public housing until you're 35.

If you do qualify, you have to enter a lottery for the opportunity to choose a unit. The chances of winning the first time are low.

Then once you've won, the wait time is 4-5 years before you actually get the place. But people do it because you can buy the unit subsidized, then after ~5 years, you can sell it at market rates. It's basically a free hand out by the governement.

The fraction of average income paid to landlords is partially due to the concentration of land ownership and political culture of the ownership class.

Historically in 18th century rents were 1/3 of farm product in England, 1/2 of product in Milan, up to 3/4 product in China. Citizens in countries with low rents developed wealth quicker and in countries with high rents were quite poor.

> If you nationalize housing and hold prices low, then there will be supply shortages where some folks will not be able to get housing who would happily pay your price.

If you nationalize housing, wouldn't you also subsidize supply?

Does not seem to be true based on all the waiting lists and shortages of government funded housing in the US.

Assume a well funded program. Everyone gets a home at an affordable rate, and homes are built in anticipation of need.

Why would you assume that? I would assume a program funded by Congress, and therefore a political football.

While that'd be able to guarantee housing on an "a home exists for every person in the country" level, it pretty often means sending people away from economically-healthy areas (which should have plenty of housing competition / are or will be built to capacity, because they're healthy). Subsidized housing in those areas is more expensive by far for someone, regardless of how it's done.

Hence the wait-lists even where it exists; people want to live where they can be near what they need (be that work, medical, family, etc), not literally anywhere. The "literally anywhere" tradeoff may be worse than homelessness, or at least perceived to be.

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

The short answer is: No, in a command economy, what happens is whatever the politicos demand.

It's price gouging because existing landlords and home owners can control the supply side and prevent growing competition through zoning laws that would balance the market.

I'd have more sympathy for this narrative if there were clear voting blocs in favor of building housing among renters and opposed among homeowners. For example, if there weren't so many anti-housing pro-renter public personalities. But it doesn't seem that such clear delineations actually exist. Please let me know if I'm wrong.

Building houses doesn't mean that they won't all be bought up by land owners to add to their rental offerings.

Generally home owners are pro regulation to avoid building larger stuff in their neighborhoods though. Zoning and Nimbyism are home owner driven.

Every time I see a project opposed in my neighborhood or within my city, this is my the local homeowner/neighborhood association. Not by a group of renters. There's also an endless amount of public consultation for every building that needs to be built.

Toronto.

On the other hand, do you really expect someone with a 1 year lease to show up for a public consultation that might only affect things a few years down the road? There might even be a bias in the sense that anyone who bothers going to those meetings are boomers[1] who are retired and have nothing to do.

[1] only half serious

I am not sure I follow: there are many anti-housing, and pro-rent public personalities (I did not know "pro-rent public personalities" is even thing) who oppose more supply side competition that would lead to lower prices, but somehow also support renters? Frankly, someone who is "anti-housing but pro-renter" sounds simply like a landlord?

PS: I am sure that's not what you intended, but I'd appreciate it if you avoided that condescending tone. My argument doesn't rely on your sympathy, and reframing an argument as narrative doesn't help either. It puts into doubt all good faith you may have in a discussion.

I'm thinking of the many voices on the left who oppose building more housing because it might change neighborhood character. I don't know what neck of the woods you live in but this group is quite vocal here in NYC. Sorry for the lack of clarity on my part.

Also, my tone was not intended to be condescending. I wanted to be let know if I was wrong, genuinely. I am eager to update if there are other places where the renters are identifiably and largely YIMBY, because that would break some of my personal beliefs about the housing market. Any my lack of sympathy is for the narrative -- which I've heard many times before -- not you personally. I'm positive that you are great.

Landlord being financially stable have more time to organize as a group to do lobbying. And that's not even going into institutional landlords.

In my country, increased housing density, or new social housing builds, are routinely opposed by existing land/home owners in the area.

Whether it's because increased density would spoil their views, or make parking harder to find, or the social housing would bring in "undesirable elements" or lower their property value, the incumbents have a lot of reasons to oppose housing changes that would benefit society as a whole.

Allow me to introduce you to the acronym NIMBY[0]. Often found in newspapers with their arms crossed looking stern in front of a building site. And you'd be amazed at what they can oppose - kindergartens, schools, even playgrounds (as they increase noise, and there's a risk of balls coming over the fence!)

And planning laws that require authorities to consider submissions from residents are one of their best weapons - after all, it's typically the wealthier who can afford to own property, and so it's often the wealthier who can form groups that hire top tier lawyers to fight developments they're opposed to.

[0]: https://en.wikipedia.org/wiki/NIMBY

Renters are allowed to vote too. Wouldn't that kind of control only be possible if the number of homeowners and landlords outnumbered the number of renters in a location? In which case it is just majority rule, which doesn't sound so conspiratorial.

'Majority rule' doesn't imply fair or good. Would you find it a cause worthy of your support to repeal men's voting rights if the 50.7% of the population in the U.S. who are women are for it? Much more extreme examples come to mind, but you get my point.

There's even a snappy quote: "Democracy must be something more than two wolves and a sheep voting on what to have for dinner." James Bovard

Sure - the suffix to "majority rule" is commonly "and minority rights". But my point wasn't even that majority rule is ideal, but simply that it is an accepted system in our society for resolving disparate viewpoints on governance. The important point I was trying to make is that there isn't some shadowy system for how landlords can control zoning - it is merely that they exercise their right to vote their conscience.

> but simply that it is an accepted system in our society for resolving disparate viewpoints on governance.

But it is not, as my example shows. There's a lot more to it. That's the entire point.

> that there isn't some shadowy system for how landlords can control zoning

I don't think anyone is arguing it is in any way shadowy, it's done very openly. There is sufficient discussion in the media about the practice of voting in the US, so I will not repeat that.

Also, take the Bay Area as an example - how large would you guess is the fraction of immigrants working in Tech? And mind you, even a green card does not allow you to vote. All of these people are excluded from the process.

Ironic, if you think about how this whole country started on 'no taxation without representation'.

In fact, unless their landlord resides in the same governing region, the renters are the only ones allowed to vote, on a housing unit by housing unit basis. This is more or less what I was arguing. 70% of residents in NYC are renters. The renters have it within their power to vote in their own interests, but they do not. Instead, more often than not, they support politicians who oppose policies that would produce more housing, and favor homeowners and the lucky few renters who already rent housing that is ideal for them.

I'm sure it's ultimately the Kochs' fault, or whoever. But at some point I really feel like there should be an element of personal responsibility to educate yourself about the forces that affect your economic wellbeing, and of those whose interests you nominally have at heart. If such a large share of renters can't do that . . . well, ideally we should still build more housing, but it's tough as a homeowner to feel too bad about it.

Note that the article itself distinguishes between short-term and medium-to-long-term solutions. In the short-run, rent-control simply shifts power away from landlords. In the long-run, to maintain supply, you need to build more housing through both re-zoning and social housing, as the article states.

No, in the short term it takes money from new renters and gives it to existing renters:

https://www.bbc.co.uk/news/business-47028342

Furthermore, most policies of this nature are stupid because they assume that everything except the target of the policy (in this case rent) stays the same, and this is obviously not true. A lot of policies meant to help tenants involve moving additional costs onto the landlord... Who then increases the rent to cover them, and yet remains competitive because every landlord has the same costs imposed on them, and so makes the same decision.

The article does point out some problems (like the high cost of moving as a renter causing an imbalance) and then instead of directly addressing those issues, leaps to a completely unrelated "solution". From personal experience with agents, there's a hell of a lot that could be done to make that process smoother and cheaper...

It's not price gouging if the market is uncompetitive and there is a supply shock, because there's no such thing as price gouging.

I'm not aware of anyone who claims that the housing market is uncompetitive in the economic sense. There are a ton of independent sellers and a ton of independent buyers. Information is not exactly symmetrical but it's pretty close. These are the hallmarks of a competitive market.

I’d dispute the ton of independent buyers given the amount of bids placed by the top 10 corporations. Even if the bids are rejected it still has a large effect on pricing

>I’d dispute the ton of independent buyers given the amount of bids placed by the top 10 corporations.

What's the ratio like?

> Even if the bids are rejected it still has a large effect on pricing

If they put in a bunch of bids that end up being rejected, doesn't that work in the opposite direction? If you're selling something on craigslist and you get spammed with a bunch of lowball offers, you're not going to think your widget is more valuable. If anything it's going to make you have second thoughts about your original price and make you want to lower it.

>> It's not price gouging if the market is uncompetitive and there is a supply shock, because there's no such thing as price gouging.

>I'm not aware of anyone who claims that the housing market is uncompetitive in the economic sense.

You guys aren't even talking about the same thing. The parent post is claiming that "there's no such thing as price gouging", period.

Bingo

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