Suppose you don't have enough money to buy real estate right now but you have enough to rent an apartment. If you don't want to be homeless, from whom do you acquire a lease?
Zoning laws are the reason housing is unaffordable. Landlords lobby for zoning laws, but if you have the political power to prohibit renting then presumably you have the political power to reform zoning. Moreover, you should do that anyway, because if all you do is prohibit renting without allowing new housing to be built, you're going to have a bad time.
> if homeownership is out of reach for a segment of the population there should be public housing to accommodate that need.
So if you make 110% of the median income but don't have a downpayment yet the government pays for your housing? Do you get free housing forever as long as you spend everything you make and never save anything up?
What if you have plenty of money but you know you're not going to be somewhere for more than two years and don't want to buy property there?
Added benefit would be less traffic, congestion, and waiting in lines for anything
Housing is unaffordable because demand outstrips supply.
Economic illiterates who blame “greed” making public policy tend to make it even worse.
A large portion of the supply is being held by investors like landlords which restricts the supply. Removing them from the equation would increase supply and decrease prices.
The free market used to work better before it got handcuffed by zoning laws everywhere. If you prohibit the free market from working, don't then mock the free market because it's not working.
> A large portion of the supply is being held by investors like landlords which restricts the supply. Removing them from the equation would increase supply and decrease prices.
True - if you mean landlords who hold but don't allow occupancy.
> A large portion of the supply is being held by investors like landlords which restricts the supply.
Because they expect the value tomorrow will be higher than the value today, because they expect demand to increase over time while the government continues to inhibit new construction. Stop inhibiting new construction and they'll want to sell now before the price comes down. (Which will make the price come down sooner.)
The incentive to not rent existing units is also a predictable consequence of things like rent control and laws that make it hard to evict non-paying tenants. Don't increase the risk of providing a thing and expect that to lower the price.
As a landlord I’d be interested to understand your proposed mechanism to “remove” me.
Could you also elaborate what happens to my capital and what I should be doing instead with the excess capital my productivity generates over my chosen needs and wants?
This attitude is so incredibly economical illiterate that it’s shocking we have HN commentators that don’t understand.
Who I am selling to? at what price? Do you support state confiscation of private capital?
Are factories that produce cereal next?
It’s an embarrassment to western education that educated people have such poor understanding of basic economics.
The real problem we have is exactly what you labeled “economic illiteracy”. This is a serious problem and issue with education systems worldwide.
In the future I hope one day humanity realizes that it’s equivalent in the past to failing to teach reading and writing or denying evolution.
Whatever the solution is, it’s damn sure is not public housing.
Also Sanhedrin 38a: https://www.sefaria.org/Sanhedrin.38a.8
Our diversity is a complexity that is not addressed for in the working model, so it’s not that we shouldn’t try…but we shouldn’t assume that a model that works well in one environment will work well in another, significantly different, environment.
Otherwise its almost always a second (or third) plot that is outrightly owned by the landlord, which means they dont need it and itd be better for you to just be able to buy it.
Also the even better answer is public housing.
The landlord can make money by investing capital and then getting a return equivalent to the interest you'd pay to the bank to borrow that amount of money.
> Otherwise its almost always a second (or third) plot that is outrightly owned by the landlord, which means they dont need it and itd be better for you to just be able to buy it.
But you can buy it. You just go to the owner and buy it from them.
What are you supposed to do if you can't afford that right now?
Putting the state in charge of housing is the cause of the existing problem. They become captured by landlords, or favor higher property values because they increase property tax revenues.
What you need is some constitutional restraint on local zoning rules.
Governments have weak competitive pressure. You have to uproot your whole life and move to another jurisdiction. When you vote, you're making a choice about every issue under the sun at once and it's impossible to change your vote on only one issue by itself. You can also easily end up "represented" by the candidate you voted against. As a result they're extremely inefficient by default and should only be used when the alternative is catastrophic.
This is doubly true in markets that could be competitive, because the incumbents have the incentive to use the government to reduce competition so they make more money. The obviously relevant example is zoning rules that restrict housing supply. It's critical to not allow that to happen, or to undo it when it already has.
Trying to cancel it out with even more regulations is just another opportunity for incumbents to sneak in some new way of screwing you. When you screw up a market this badly, people get desperate and angry and start proposing all kinds of aggressive "solutions" because they fail to understand the cause of the problem but want something done about it. The most ridiculous of these are generally filtered out, but the ones that make it through are the ones that don't work or make it worse because those are the ones the incumbents fight the least.
You have to fight the cause of the problem, which is a government captured by land owners imposing rules that make housing more expensive. The solution is to remove those rules.
> There are widely published opinions that state this just makes landlords richer and housing rarer to further deregulate.
One of the main reasons "deregulation" has a bad name is that its purpose is to increase competition and lower prices, which is exactly the thing the incumbents don't want, so instead they propose a "compromise" that prevents exactly the thing you're trying to get.
For example, suppose you have two rules. One says that new housing construction is utterly prohibited, the other says that all rental properties must have working plumbing.
In a competitive market the second rule is inefficient because all it really does is prohibit anyone from offering a storage unit with no plumbing. There would be enough apartments with running water that nobody would have any reason to consider one that didn't.
But in a market where increasing the housing supply is inhibited, there are more tenants than rental units and that allows abusive slumlords to find tenants willing to live under such conditions.
Much "deregulation" is the corruption in which you only remove the second rule and not the first, which of course makes things worse, because the first one is the one that matters and the second one is just an inefficient attempt to mitigate the damage.
Increase the housing supply until rents go down. Accept no substitutes.
Suppose you want to build a 20 story condo. The most efficient thing to do is to find an empty plot of land or a single family home and build it there, but that's prohibited by zoning. 20 story buildings aren't allowed there.
Now what you have to do is find an existing 10 story condo and knock that down, because it's in a place zoned for tall buildings. But that costs a lot more, and you also have to remove all the people who are already living there instead of just buying one house from someone who is already moving. It's so much more expensive than the first thing that it's not profitable, so it doesn't happen without a subsidy. Not only that, even if it does happen, you've now paid to build a 20 story building and only added 10 stories worth of housing.
What I'm saying is that they passed laws that make increasing supply so outrageously expensive that demand has to remain at outrageously high levels to trigger construction. You can't get to reasonable housing costs that way because construction companies can't sustainably operate at a loss. You have to make it sustainable by not prohibiting construction where it's the most cost effective.
> by your own logic they just want more money.
Of course they want money. They have to pay for land and construction crews. But if you increase their costs by prohibiting them from building on the most cost effective sites, the amount they want before they'll be willing to do it goes up.
Construction companies don't make anything by not building. But they also don't make anything if government regulations increase their costs above real estate prices. So every time you increase their costs with a new regulation, real estate prices go up -- and stay there until you remove the rule that keeps their costs high. (Or something causes demand to go down, which is typically only something bad.)
This is technically correct but the areas mentioned are the size of a block or a subdivision so it's hardly the limiting factor. You can build high rise apartments in any big city and multi-family anywhere. The reason prices on housing go up is that it costs a lot to build housing and it's pretty hard to secure financing for a housing project which you plan to sell/rent below cost. It's combined code compliance, materials, labor, and financing. If it costs $300 to build a square foot just in the labor and materials then it comes up at $150K for a tiny 500 sqf 1br and you'd need to rent that for more than $2000 per month to break even on the commercial loan you took. Throw in maintenance, lapses in occupancy and some profit and you are looking at close to $3K for a 500 sqf 1br. Unless it's on Manhattan or on an ocean beach somewhere, it's going to be very hard to find tenants.
It appears that America had ran up its credit card to the limit. Mass produced goods from China are still cheap but the hoses are just expensive, can't ship those in containers from Shenzhen. Playing with zoning is rearranging chairs on the deck of Titanic, it's not going to lower the cost of construction. And yes, adding more housing would lower the price but the problem is that adding housing is held up by the cost mostly and the developers only want to build in very limited prestigious areas where they hope to get tenants/buyers willing to pay their cost. It's not sustainable.
You can't build them except in the places they already are. Converting existing high density housing to even higher density housing is prohibitively expensive. What you need to do is go to the edge of the high density area where it meets the low density area and convert the low density housing to high density. But that area is only zoned for low density, so you can't.
> The reason prices on housing go up is that it costs a lot to build housing and it's pretty hard to secure financing for a housing project which you plan to sell/rent below cost.
Who is requiring them to sell below cost? Just build more housing at the market rate as long as the market rate is above your construction costs. If you want a lower market rate, find a way to lower construction costs.
> If it costs $300 to build a square foot
But what causes that?
I.e. in all big cities? So are you really arguing that the rent in SF goes up because you cannot build a residential tower in Redding, CA?
> Converting existing high density housing to even higher density housing is prohibitively expensive.
You don't need to convert. You can change zoning on existing lots, it happens all the time.
>Just build more housing at the market rate as long as the market rate is above your construction costs.
But it is not in most places. This is why developers are trying to get into prestigious areas where it's still possible. Nobody prevents you from building a residential tower in the East LA, you just won't be able to sell it. But yes, nobody will let you to build one in Malibu, where you'd be able to move units. The issue is that as soon as you filled Malibu with commie blocks the area won't be prestigious anymore so somebody will be left holding the bag, developers are desperate enough to enter this game anyways.
> If it costs $300 to build a square foot
Just read the message, I've explained what.
Because this isn't how things work in civil society.
They can't just decree that all single family homes in San Jose are now illegal and you have to vacate by the end of the month.
Because I've seen Soviet era housing and War on Poverty projects.
Challenge my assumptions? I think the burden is on you to show that somehow next time will be different