4 ms·

I'd argue that rents are high because too many people want to live near each other. Property that people want is a scarce resource so something has to stop peop

I'd argue that rents are high because too many people want to live near each other. Property that people want is a scarce resource so something has to stop people getting it - if not price then what? A waiting list? A lottery? If you set up your lifestyle so you're not dependent on being a short taxi ride from 100,000 other people, then you don't have to pay high rents at all. If you are dependent on that, then you must be doing something fantastically productive so you can afford to pay high rent.

dalke 11y ago
> because too many people want to live near each other Your market analysis is incomplete. For example, http://www.theguardian.com/business/2014/feb/01/rich-overseas-investors-uk-eu-housing-market http://www.theguardian.com/business/2014/feb/01/rich-oversea... says "only 27% of new homes in central London went to UK buyers, while more than half were sold to residents of Singapore, Hong Kong, China, Malaysia and Russia." These are not people who live there, but want to invest in the London real estate market. By taking housing out of the market, they also increase the market rates through artificial scarcity. > if not price then what Different taxation for residents vs. non-residents. Rich people tend to have large places, so taxation based on square footage per resident. Set up building requirements that give preference to low-cost housing. There are many ways to tweak the economic landscape. > If you set up your lifestyle .. You make it sound so easy. Why not just set up your life to earn another $100K/year? > you must be doing something fantastically productive Why does that follow? If I inherited my $1 billion, I'm certainly able to afford a quaint $10 million penthouse in San Francisco even if just leave the money in an index fund. If I am a dictator who funneled money out of the country into my personal foreign bank account, leaving the country in poverty, would you say I was productive? Or if someone discovers oil on my land, and I exchange the drilling rights in exchange for 1% of the extracted revenue, making me rich enough to, say, move to Beverley Hills, was I really doing something fantastically productive?
- Asbostos 11y ago
  As long as people are living in them, what does it matter where the owner lives? I'd agree with you if they're leaving them empty, waiting to sell again, and perhaps some investors are. But otherwise it's a way to allocate houses to people who want them the most (as shown by how much they're willing to pay). I agree that allowing low cost, high density housing would be great in many cities. But the people living there don't generally agree, and they have more power. If we're stuck with a finite supply of property, then market prices are a reasonable way of allocating that to people. As I mentioned, without high rents, how else would houses be allocated to residents? More people will want them than can get them. Would you prefer a waiting list? Or only allow ownership transfer by inheritance - excluding newcomers entirely?
  - jacalata 11y ago
    In London specifically, a significant percentage of foreign investors are absolutely leaving the houses empty. http://www.theguardian.com/uk-news/2015/jan/25/its-like-a-ghost-town-lights-go-out-as-foreign-owners-desert-london-homes http://www.theguardian.com/uk-news/2015/jan/25/its-like-a-gh...
    - eru 11y ago
      See http://www.economist.com/blogs/freeexchange/2015/04/land-value-tax http://www.economist.com/blogs/freeexchange/2015/04/land-val... for how to combat that (and raise a ton of revenue without market distortion).
  - crdoconnor 11y ago
    >As long as people are living in them, what does it matter where the owner lives? I am personally not a fan of paying 40% of my income as taxes to Russian oligarchs. When property taxes are lower than the value of the land (and in London they are virtually nil), you effectively have a privatized land tax. The proceeds of those taxes tend to fund kleptocratic billionaires.
- rfrey 11y ago
  "I exchange the drilling rights in exchange for 1% of the extracted revenue, making me rich enough to, say, move to Beverley Hills, was I really doing something fantastically productive?" To be fair, Jed did discover the oil himself, so he could be said to have contributed productively to the economy. We'd have to subtract the contribution the missed rabbit would have made though.
- bluecalm 11y ago
  You can tax owning properties you don't live in then or buying them in the first place.
- dllthomas 11y ago
  You seem to have read parent as saying "if you can afford to live in the city, it follows that you are doing something fantastically productive". I initially read it as saying "if it is important that you be so close to so many others, it follows that you are doing something productive, and it follows from there that you can afford rent." I wonder now which was meant.
crdoconnor 11y ago
>I'd argue that rents are high because too many people want to live near each other. So your theory is that people have gotten more and more desperate over the last 35 years to live near each other? What? >Property that people want is a scarce resource Is exactly why the ultra wealthy have been buying it all with their tax free profits and using it as a savings account. Guess what happens to prices when that 'demand' increases?
skybrian 11y ago
The obvious solution to high rents is to build taller buildings, but people don't seem to want that either.

dalke 11y ago

> because too many people want to live near each other Your market analysis is incomplete. For example, http://www.theguardian.com/business/2014/feb/01/rich-overseas-investors-uk-eu-housing-market http://www.theguardian.com/business/2014/feb/01/rich-oversea... says "only 27% of new homes in central London went to UK buyers, while more than half were sold to residents of Singapore, Hong Kong, China, Malaysia and Russia." These are not people who live there, but want to invest in the London real estate market. By taking housing out of the market, they also increase the market rates through artificial scarcity. > if not price then what Different taxation for residents vs. non-residents. Rich people tend to have large places, so taxation based on square footage per resident. Set up building requirements that give preference to low-cost housing. There are many ways to tweak the economic landscape. > If you set up your lifestyle .. You make it sound so easy. Why not just set up your life to earn another $100K/year? > you must be doing something fantastically productive Why does that follow? If I inherited my $1 billion, I'm certainly able to afford a quaint $10 million penthouse in San Francisco even if just leave the money in an index fund. If I am a dictator who funneled money out of the country into my personal foreign bank account, leaving the country in poverty, would you say I was productive? Or if someone discovers oil on my land, and I exchange the drilling rights in exchange for 1% of the extracted revenue, making me rich enough to, say, move to Beverley Hills, was I really doing something fantastically productive?

Asbostos 11y ago
As long as people are living in them, what does it matter where the owner lives? I'd agree with you if they're leaving them empty, waiting to sell again, and perhaps some investors are. But otherwise it's a way to allocate houses to people who want them the most (as shown by how much they're willing to pay). I agree that allowing low cost, high density housing would be great in many cities. But the people living there don't generally agree, and they have more power. If we're stuck with a finite supply of property, then market prices are a reasonable way of allocating that to people. As I mentioned, without high rents, how else would houses be allocated to residents? More people will want them than can get them. Would you prefer a waiting list? Or only allow ownership transfer by inheritance - excluding newcomers entirely?
- jacalata 11y ago
  In London specifically, a significant percentage of foreign investors are absolutely leaving the houses empty. http://www.theguardian.com/uk-news/2015/jan/25/its-like-a-ghost-town-lights-go-out-as-foreign-owners-desert-london-homes http://www.theguardian.com/uk-news/2015/jan/25/its-like-a-gh...
  - eru 11y ago
    See http://www.economist.com/blogs/freeexchange/2015/04/land-value-tax http://www.economist.com/blogs/freeexchange/2015/04/land-val... for how to combat that (and raise a ton of revenue without market distortion).
- crdoconnor 11y ago
  >As long as people are living in them, what does it matter where the owner lives? I am personally not a fan of paying 40% of my income as taxes to Russian oligarchs. When property taxes are lower than the value of the land (and in London they are virtually nil), you effectively have a privatized land tax. The proceeds of those taxes tend to fund kleptocratic billionaires.
rfrey 11y ago
"I exchange the drilling rights in exchange for 1% of the extracted revenue, making me rich enough to, say, move to Beverley Hills, was I really doing something fantastically productive?" To be fair, Jed did discover the oil himself, so he could be said to have contributed productively to the economy. We'd have to subtract the contribution the missed rabbit would have made though.
bluecalm 11y ago
You can tax owning properties you don't live in then or buying them in the first place.
dllthomas 11y ago
You seem to have read parent as saying "if you can afford to live in the city, it follows that you are doing something fantastically productive". I initially read it as saying "if it is important that you be so close to so many others, it follows that you are doing something productive, and it follows from there that you can afford rent." I wonder now which was meant.

crdoconnor 11y ago

>I'd argue that rents are high because too many people want to live near each other. So your theory is that people have gotten more and more desperate over the last 35 years to live near each other? What? >Property that people want is a scarce resource Is exactly why the ultra wealthy have been buying it all with their tax free profits and using it as a savings account. Guess what happens to prices when that 'demand' increases?

skybrian 11y ago

The obvious solution to high rents is to build taller buildings, but people don't seem to want that either.