Comment by apsec112 | Hacker News Reader

Comment by apsec112 | Hacker News Reader

Talking about "cost of living" in a place like Seattle, as if it were an ordinary economic issue, masks the real problem, which is that liberal US cities have made it very difficult to construct new housing. If a million families want to live in a city, and the city only allows half a million houses to be built, then a lot of people are going to be forced out. It's not a question of economics, it's a simple question of arithmetic. It doesn't matter how much you pay people or what minimum wage you have or what other policies you enact. It's like a giant game of musical chairs - if there are more people than chairs, it doesn't matter what else you do, because someone's going to wind up without a chair. Increase salaries, and rents go up to compensate. Subsidize housing for the poor, and landlords will charge more. Enact rent control, and watch as everyone converts rental buildings into super expensive condos. It's like trying to squeeze Jell-O to death: you can't beat the fundamental law that, if there are houses for X people, only X people can live there.

Oof don't get me started.

I like to consider myself a regular at my neighborhood council's meetings (NE Seattle). When the city shows up to present development plans, only older generations who feel somewhat entitled to their neighborhood's "culture" show up and berate the plans. At the last one, some lady was pissed because a new apartment building might block partial sunlight in her yard, which is apparently more important than 400 market priced units becoming available in a city starved for housing.

Then these same people get upset at Amazon (I have no affiliation) for bringing in tech money and causing a massive housing shortage. They then allow their short term memories to forget what a shithole South Lake Union was before Amazon bought and developed on the land.

There's an entire economic theory that progress only happens when the older generation dies off. A bit grim, but I can believe it. There's a subdivision near my house that allows only 55+, and anytime anyone wants to do anything it's a massive shitshow. They stalled a much needed bond for a local highschool for two years (during which said highschool got really, really overcrowded) and actually ran insane smear campaigns against the school board. Not fun.

That seems like it wouldn't work... I mean, a fraction of the 'older generation' dies off every day.... and a few new people join the 'older generation' as they age.

Now, I can imagine saying things like "The progress will only happen once all the people who grew up with things being the old way die off," especially with things like interracial or gay marriage, but I don't think that applies to something like housing. Whoever owns the current houses will never want more houses built; that will only drive down the value of their property. It may be true that the people who own those homes are usually older, but that will not end when they 'die off'.

You're absolutely correct; I quoted a gross oversimplification of the theory. It's more to do with per generation than actual old people, and people are always protective of home value.

Consider, however, that when an elderly person dies their assets,in this case houses, are usually sold off, which might be enough for a builder. It's not the core tenant of my argument, but it's something I'd never thought of before.

Coastal cities aren't expensive because of bad housing policy (though they certainly have that). They're expensive because lots of highly economically productive people and companies are located in them.

I disagree. They're expensive because there's not enough high rises that would provide tons more housing space.

Which has more high rises: Buffalo or NYC?

I'd argue you're mostly getting cause and effect backwards: places end up with lots of high rises because they're the most economically productive localities. Obviously at the margin another high rise will lower prices a bit, but the rate at which we'd be able to build them in SF sans restrictions would at most keep prices stable year-on-year. Which isn't nothing, but it's important to be clear that no one making, say, $80k a year will ever be able to purchase a house or condo in San Francisco, regardless of our policy choices.

>...the rate at which we'd be able to build them in SF sans restrictions would at most keep prices stable year-on-year.

Do you have any citations for this? It's unexpected to me. What's the limiting factor?

There are lots of places either similarly, or more dense than San Francisco with housing people can buy on an $80k salary. All of these places allow for higher density housing. Sure SF is way behind the curve at this point, but it's a bit silly to argue that "policy debt" is a reason policy changes wouldn't do much.

In many of those places, $80K salary places you 2x above the median. Not so in SF.

It's both but not having new housing built is definitely not helping

Housing follows the laws of supply and demand like everything else. Cities with lots of jobs draw in migrant workers. Cities that raise minimum wage bring in more workers from neighboring areas with lower wages. Those people need a place to live.

Housing should follow the normal economic laws but it doesn't seem to. Part of it is regulation, and part of it is an odd kind of scarcity. If there were no housing regulations, I'm sure you' get a lot of new housing in the Bay area and people would live in there (despite it being potentially unsafe). Heck .. I was actually entertaining the live-in-a-container option :-p

I'm still struggling to understand the scarcity aspect of housing. Supply of land isn't increasing so you'd think the asset would increase in price over time. That said, population isn't growing that much - prices in a city like Toronto have reached epic proportions fueled by a combination of speculation and foreign investment. To me, the problem lies in the fact that we are living in a highly leveraged economy. Will that ever stop? Doesn't seem like it.

You seem to be fundamentally ignoring the simplicity of supply and demand. If people could offer container housing legally, they would. However, they can't so the supply of legal housing is constrained. This drives the price up.

The same applies to any protectionist laws the greater fuckwad property owners in the area introduce. Nobody wants to see their property value diluted so they vote against every single housing measure as long as the demand is there.

Housing follows the laws of supply and demand like everything else.

Certainly not like everything else. The demand for housing is a function of (amongst other things) how easily people can borrow the money to pay for one, how much the interest on that debt is, and what they guess is going to happen to prices in the future. Under simple primary school "supply and demand" economic theory, increasing price leads to a reduction in demand, but it's common to see increases in house prices lead to increases in demand, and vice-versa. To simply say that housing follows supply and demand is such a simplified view that it's more wrong than right.

Sorry, you are confusing cause and effect. It's a common mistake.

The housing prices increasing means demand had already gone up. An increase doesn't leaf to more demand. If people were paying increased prices, it means the demand has increased enough for the seller to make the sale at the inflated price.

You are incorrect. Also a common mistake.

An increase doesn't lead to more demand.

Yes it does. People see prices going up. They see the front page of a tabloid paper declaring it repeatedly. They panic about "missing the boat" and other such. They see people who did buy sitting on sudden equity gains, and they want some of that. They were going to wait, but now they won't. They stretch, and go out and buy. Extra people deciding to buy increases the demand, which then increases the prices again. Lenders see their balance sheets looking better and better as their debtors' equity increases, so they can lend more and at lower interest rates. The increasing house prices have led to an increase in mortgage availability which leads to more people able to buy houses which increases demand again. Increasing house prices increase demand increases prices increases demand, right up to the point where enough people simply cannot get the mortgage necessary.

As markets crash and people see prices dropping, they decide not to buy. They will wait until next month/quarter/year, when prices will be cheaper still. They also flinch at the idea of negative equity, especially if they remember it from the last crash. Demand drops. Falling prices makes lenders demand higher deposits to protect themselves from dropping house prices, so people who could buy suddenly can't; the falling prices cause a drop in demand. Mortgage lenders watch their debtors equity vanish and find themselves compelled by balance-sheet regulations to change their lending; the falling prices causes a drop in ability of people to get a mortgage, so demand drops. Often, the lop-sided economy suffers from the crash and people have less money so they can't spend so much servicing a mortgage, so demand drops. Decreasing house prices decrease demand. Housing is also one of the few things non-investors buy that they call an investment. Watching the biggest potential purchase they will ever make bleed makes it a much less attractive "investment". Demand drops. Falling house prices lessen people's interest in buying a house. Falling house prices cause lower demand, which causes lower prices which causes lower demand.

But this is crazy. Surely this would lead to some kind of endless boom-bust cycle in house prices.

You've just wasted a lot of space describing supply and demand. The same thing applies to any commodity or potential investment vehicle. People buy gold when they think the price will go up, which increases demand and therefore the price. There is nothing special about houses other than the fact that you can live in them.

The point I'm making is that the supply that most affects house prices is not the supply of houses, so to say it's "supply and demand" and stop there is to imply heavily that the supply in question is the supply of houses. Which is wrong.

commodity

Houses AREN'T commodities. Commodities are, by definition, fungible. Houses are not fungible. If you are thinking of houses as a commodity, and trying to apply the rules of commodity economics, that is a large part of your misunderstanding.

There is nothing special about houses other than the fact that you can live in them.

That's also not true. Something funny happens inside people's heads with houses. They will go to stupid lengths and put themselves into ridiculous situations in order to get one. People who would drop any other investment with the same characteristics like a hot potato somehow can't see it when it's a house. They're not like "any commodity or potential investment vehicle" (not least because they are NOT a commodity, as explained above), and to say that they are is wrong.

As it is, I'm presenting a lot of argument and you're going "nu uh, nu uh, you're wrong". Do you have anything other than just saying "nu uh", or is that the limit of your argument? If this is a fundamental axiom for you that simply cannot be argued, just say so.

There's no need to toss "liberal" in there. Dense cities tend to have rent-control, and Dense cities tend to have people with policies generally referred to as "liberal" (to the extent that "liberal" means anything.

But NIMBYism and status-quoism is not just a liberal issue, and "not changing the neighborhood" is right in line with the definition of "conservative", which means a preference for how things already are and against risky changes.

Trying to squeeze any question into a "liberal-conservative" split just muddies the issue.

Well liberals often favor regulations and licenses for everything, and these prevent or delay new housing from being constructed.

Dictionary definitions of words are usually not very close to the use of these words in political contexts.

Regardless of dictionary definitions, if we agree that building restrictions are a bad policy, it is a valid and IMO interesting empirical question whether most people supporting it self-identify as liberal, conservative or something else. (I honestly don't think I could guess the answer.)

My guess is that stated support for the prototypical bad housing policies we love to hate would be pretty constant throughout the political spectrum (though that's just a guess). The issue is that that in BFN no one cares about rent control or constructing new buildings because housing is so cheap and space is so plentiful; only in places where housing is expensive and space is scarce do those issues get any political salience. And since those tend to be more liberal areas, we ascribe "liberal" to those policies as a descriptor.

Liberal here.

Yeah, there really is a need to toss "liberal" in there. More liberal dense cities seem to have this problem much worse than dense less-liberal cities. Qualifier: American cities.

Some of it tends to be due to liberal reflexes (participatory democracy at all levels, favoring small local groups of activists over people who stand to profit, etc.) that backfire writ large. Add in a distrust of markets, and you have a recipe for disaster. San Francisco is a great example.

Can you cite some evidence for this? My guess is that it breaks down much more on a coastal/inland basis than a liberal/conservative one.

Austin and San Antonio is an informative comparison. They're both inland cities, but Austin has placed significantly more liberal policy into practice. They have problems with spiking rent.

You have a serious confounding factor in that urban density correlates highly with liberal political views, at least in America.

This is true. We can separate out which cities have liberal views from which cities have put liberal urban planning policies in place.

Specifically, in the coastal cities where this is an issue, usually both sides of the development/anti-development political spectrum identify as liberal. It's very orthogonal to the issues involved in state or national politics.

So you're saying no need to toss "liberal" in there because it's so obvious.

By the way, conservatives would not object to developing a neighborhood if that development meant more economic opportunities and more jobs.

If you want to split hairs over a dictionary definition, conservatives would prefer to keep things how they are and continue economic growth through expanding the private sector rather than expanding government to direct businesses on how to operate.

"Where young, hopeful people want to strike out to do something new."

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