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What's the point of cheap housing if the landowning rentier class keeps extorting everybody through higher and higher rents? The only way to get actually affor

What's the point of cheap housing if the landowning rentier class keeps extorting everybody through higher and higher rents? The only way to get actually affordable housing is to tax land so hard that it stops being an investment at all and becomes merely a commodity, like it should be.

darawk 10y ago
Nobody is extorting anyone. Rents are set by the market price just like anything else. Landowners can only charge what people are willing to pay. If there is a problem, it's with the availability of land for building new housing. Zoning laws and NIMBYism artificially constrain the supply side of the equation, which drives up rents. There is no extortion happening - just supply constriction.
- dukeluke 10y ago
  There can be more than one problem at once, you know. Zoning laws do keep new houses from being made in some places, and investors buying houses and doing nothing with them or raising all local rents in the area to increase the average rent paid are both problems that need to be fixed. At least with the housing tax, we'd see a wealth redistribution, which I could argue is highly needed at the moment.
  - conanbatt 10y ago
    You have to decide if what you want is to provide people housing or want to raise revenue to do wealth redistribution. IF you add a tax to owning a property, you make it less interesting for people to buy housing, since it will be sold for less, and thus creates less supply for the future renters.
- mistermann 10y ago
  > Rents are set by the market price just like anything else. This isn't technically incorrect, but it overlooks some important details. Historically, prices typically reflected local supply and demand, but recently throughout the world we are seeing tremendous external demand from people with massive wealth entering local markets and driving up prices. In other words, in your statement "Landowners can only charge what people are willing to pay.", "people" is not the same thing it was 10 or 15 years ago. Of course, this has always been the case to some degree, it's just much more widespread now.
  - bigbugbag 10y ago
    This is technically incorrect. First because there are places where rents are regulated, then because rents are often artificially inflated. In other words market prices can be and are manipulated to make more profit to owners. Also gentrification.
    - mistermann 10y ago
      I don't think I understand what you're saying?
  - Spooky23 10y ago
    The global demand thing is a temporary market condition. It's purely a function of the need for kleptocrats in a few countries to launder money, and the willful blindness on the part of various governments. That will eventually change. Even then, locality still matters. The children of chinese industrialists or party officials aren't buying property in Littleton, NH. Just in places like NYC, Miami, Vancouver, etc. Like anything real estate, boom leads to bust. Mere millionaires will be living it up in NYC penthouses again soon enough.
    - dvtv75 10y ago
      Actually, a friend of mine was looking for a flat (a rented house) about 3 years ago. He and his girlfriend were waiting to interview with a real estate/rental management agency in Dunedin, when a (probably) Chinese man walked in with an interpreter, walked over to the rental board, pointed out half a dozen houses and whipped out his cheque book. I can't recall just how much I was told the offers were, but they were significantly over the listed price of each house. The cheques were signed and handed over (presumably to make a firm offer) and they left. So, at least one wealthy Chinese family are buying up in the smaller towns. (Perhaps they had a forecast that suggested property values would go up significantly. Who knows?) It's worth noting that Dunedin's permanent population is around 75-80,000, but as it's a university town it can get as large as 120k during semester. Housing stock are small, old, cold, drafty, damp houses, and many student dwellings are literally falling apart but the rents per room can be more than $100/week (where the student loan or allowance approaches $200/week). Most landlords who own student housing expect to make a lot of money, and a number of don't care about the conditions the tenants live in. If you're curious, go to Google Maps and look up Hyde Street, Dunedin. Or Castle Street North. A friend of mine had me go and look at a flat for her, while she was out of town. It was literally a woodshed that had been reclad and had a window put in, on Castle Street North.
- bigbugbag 10y ago
  I'm not sure where you live, but right now on HN's front page there's a post about the housing bubble in Toronto and the 100k vacant homes in Paris. So what you say may be true where you live but it is not the case elsewhere. Many people pay more than they were willing to or have to share their place to be able to pay rent. When the choice is between paying more than you were willing to or not having a place to live, you don't really have a choice.
  - Y_Y 10y ago
    I agree with your sentiment but not your language. Nobody pays "more than they're willing to" in economic terms. They have the choice to not pay rent and be homeless, and the price they pay in rent reflects their desire not to do that. But I'll agree that most people pay more than they'd like, more than is sensible and more than is fair.
    - caryhartline 10y ago
      People can also "choose" no to pay for food and eventually die of hunger. To describe paying for basics like its a choice is highly insulting to those who cannot afford those basics.
      - conanbatt 10y ago
        With the same morality it would be highly insulting to those who cant get food to worry about taxing properties in the city so middle-class have better access to them. But even more, it would be more practical to understand why are people paying such high rents, not only because of housing supply, but because of the concentration of work in the cities, once again, making it way more sustainable to live in a city than in the country side.
      - Y_Y 10y ago
        It's an economic model. If you're starving you'll choose to spend all your money on food and none of it on rent. And you'll choose to buy the cheapest food. Incidentally I don't believe it helps for you to get offended on behalf of the starving.
- woodandsteel 10y ago
  Except the rentier class pays off the local politicians to keep land in short supply. Are you telling me you really didn't know about that?
  - mattnewton 10y ago
    I think it's less of an outright bribe and more that they are champions of protecting the value of their homes, which they see as an investment and not a commodity.
  - darawk 10y ago
    Pretty sure I said that in the second and third lines of my three line comment: > If there is a problem, it's with the availability of land for building new housing. Zoning laws and NIMBYism artificially constrain the supply side of the equation, which drives up rents. There is no extortion happening - just supply constriction.
    - woodandsteel 10y ago
      Yes, but you didn't specifically say that this is to a considerable extent due to the rentier class paying for it.
- badsock 10y ago
  I constantly hear this argument, but I've never seen any evidence. There's been a simultaneous skyrocketing housing costs in disparate parts of the world in the last 20 years - I find it implausible that they got NIMBYed to the tune of tripling the price of real estate all at roughly the same time.
  - conanbatt 10y ago
    There is definitely a global effect of house price increases. One explanation is that access to cheap credit inflated prices in the US, but after the crisis, its the feds general interest of money being low that continued that. Its interesting to see that dwelling production in the US hasnt caught up with basic demographic demand: its possible the 2008 crisis hit developers so hard that its taking time to recuperate dwelling construction (generally world wide)
    - badsock 10y ago
      But how would that affect the house prices in, say, Sydney Australia where the prices have also skyrocketed but 2008 had little effect?
      - conanbatt 10y ago
        Investors that would usually invest in the US find those assets expensive, and thus invest in other countries. Even argentina, which was definitely shielded from the financial crisis, has had price increases.
        badsock 10y ago
        I'll agree that that the two markets aren't isolated. But you can't be claiming that NIMBYism in the US is the dominant cause of a sudden tripling of house prices in Australia, can you? The elephant in the room is that, during that same time period, China (and to a lesser extent, other BRICs) suddenly acquired a tremendous amount of wealth, and saw developed-world housing as an attractive blue-chip-investment/money-laundry. You can argue that NIMBYism made it harder for the Chinese to dump money by the freighter into the real estate market, but is that really a bad thing? It caused(/is causing) a massive bubble in an area that should be stable, on account of it being critical infrastructure. In any case, it's the giant piles of cash coming in that's the actual cause of the issue. NIMBYism (in the right-wing view), is taking the entire blame, when really it's only a factor, and it's highly debatable whether it's helping or hurting considering the potential downsides of the influx.
- djrobstep 10y ago
  People are "willing to pay" rents only in the sense that people are willing to give a mugger their watch. Nobody made land. So why should some people be able to demand money from others for it?
  - darawk 10y ago
    > People are "willing to pay" rents only in the sense that people are willing to give a mugger their watch. That's a silly comparison. You could say that about literally any product that's charging more than you feel like paying. > Nobody made land. So why should some people be able to demand money from others for it? Now that is an interesting question. I think there is a strong case to be made against the ownership of land in general. The fact that people have been allowed to own land seems like an odd historical quirk to me. I think it should probably be changed. That, however, does not make rent into extortion. It's still a commodity regulated by the same laws of supply and demand as anything else.
    - djrobstep 10y ago
      > You could say that about literally any product that's charging more than you feel like paying. Exactly. Property is a system of violence.
  - mark-r 10y ago
    The concept of property taxes is the way governments prevent you from truly owning your land. I'm paying about $450/month for the privilege of owning my house. Renters here are able to apply for a property tax refund based on their rental amount.
friedman23 10y ago
Yes, clearly the problem with housing is not enough taxes. Taxing people for owning homes will definitely not result in rents rising and fewer people owning homes.
- tw04 10y ago
  He didn't say tax housing, he said tax land. Specifically non-agricultural land that has no homestead. That is a double edged sword though (at least in the US). If we continue to try to divest of public lands (thank you republicans) but then tax private lands, what happens to conservation efforts? You'd at the very least need to enact something that has an exception for land conservation, but good luck keeping out the loopholes. Minimum of 100 years before the land can be built on? And then an egregiously high tax at the end if it is to be built on?
- hwillis 10y ago
  Fewer people owning homes is exactly what he's talking about. More taxes means a higher incentive to rent to cover that cost. A tax on ownership is a tax break on renting, and more competition among renters. Of course that also means more people looking to rent, so I don't think that will really work, but its not an absurd suggestion.
  - shshhdhs 10y ago
    I disagree. If you tax the home owner, they will pass on the taxes to the family renting that home.
    - hwillis 10y ago
      Of course. But the renter and/or rentee will still be paying less in taxes than people who just own.
      - friedman23 10y ago
        Have you thought about all the outcomes that will be caused by this policy? Because one obvious one is old people and poor families being kicked out of homes because they can't afford the tax. I guess we can just increase taxes even further to pay for their safety net which will result in them living in nice beautiful public housing.
blazespin 10y ago
Policies which encourage high density are definitely the right way to go. Our cities should be filled with massive futuristic towers connected by rapid transit. If you want to live in a house or even a townhouse, move to a rural area.
fiatjaf 10y ago
Why isn't the landowning rentier class extorting everybody through higher and higher food prices?
- haihaibye 10y ago
  You can transport food around, so there is competition. You can't conjure up land in the middle of a city.
branchless 10y ago
Cannot blieve hn downvoted this. God this site!

darawk 10y ago

Nobody is extorting anyone. Rents are set by the market price just like anything else. Landowners can only charge what people are willing to pay. If there is a problem, it's with the availability of land for building new housing. Zoning laws and NIMBYism artificially constrain the supply side of the equation, which drives up rents. There is no extortion happening - just supply constriction.

dukeluke 10y ago
There can be more than one problem at once, you know. Zoning laws do keep new houses from being made in some places, and investors buying houses and doing nothing with them or raising all local rents in the area to increase the average rent paid are both problems that need to be fixed. At least with the housing tax, we'd see a wealth redistribution, which I could argue is highly needed at the moment.
- conanbatt 10y ago
  You have to decide if what you want is to provide people housing or want to raise revenue to do wealth redistribution. IF you add a tax to owning a property, you make it less interesting for people to buy housing, since it will be sold for less, and thus creates less supply for the future renters.
mistermann 10y ago
> Rents are set by the market price just like anything else. This isn't technically incorrect, but it overlooks some important details. Historically, prices typically reflected local supply and demand, but recently throughout the world we are seeing tremendous external demand from people with massive wealth entering local markets and driving up prices. In other words, in your statement "Landowners can only charge what people are willing to pay.", "people" is not the same thing it was 10 or 15 years ago. Of course, this has always been the case to some degree, it's just much more widespread now.
- bigbugbag 10y ago
  This is technically incorrect. First because there are places where rents are regulated, then because rents are often artificially inflated. In other words market prices can be and are manipulated to make more profit to owners. Also gentrification.
  - mistermann 10y ago
    I don't think I understand what you're saying?
- Spooky23 10y ago
  The global demand thing is a temporary market condition. It's purely a function of the need for kleptocrats in a few countries to launder money, and the willful blindness on the part of various governments. That will eventually change. Even then, locality still matters. The children of chinese industrialists or party officials aren't buying property in Littleton, NH. Just in places like NYC, Miami, Vancouver, etc. Like anything real estate, boom leads to bust. Mere millionaires will be living it up in NYC penthouses again soon enough.
  - dvtv75 10y ago
    Actually, a friend of mine was looking for a flat (a rented house) about 3 years ago. He and his girlfriend were waiting to interview with a real estate/rental management agency in Dunedin, when a (probably) Chinese man walked in with an interpreter, walked over to the rental board, pointed out half a dozen houses and whipped out his cheque book. I can't recall just how much I was told the offers were, but they were significantly over the listed price of each house. The cheques were signed and handed over (presumably to make a firm offer) and they left. So, at least one wealthy Chinese family are buying up in the smaller towns. (Perhaps they had a forecast that suggested property values would go up significantly. Who knows?) It's worth noting that Dunedin's permanent population is around 75-80,000, but as it's a university town it can get as large as 120k during semester. Housing stock are small, old, cold, drafty, damp houses, and many student dwellings are literally falling apart but the rents per room can be more than $100/week (where the student loan or allowance approaches $200/week). Most landlords who own student housing expect to make a lot of money, and a number of don't care about the conditions the tenants live in. If you're curious, go to Google Maps and look up Hyde Street, Dunedin. Or Castle Street North. A friend of mine had me go and look at a flat for her, while she was out of town. It was literally a woodshed that had been reclad and had a window put in, on Castle Street North.
bigbugbag 10y ago
I'm not sure where you live, but right now on HN's front page there's a post about the housing bubble in Toronto and the 100k vacant homes in Paris. So what you say may be true where you live but it is not the case elsewhere. Many people pay more than they were willing to or have to share their place to be able to pay rent. When the choice is between paying more than you were willing to or not having a place to live, you don't really have a choice.
- Y_Y 10y ago
  I agree with your sentiment but not your language. Nobody pays "more than they're willing to" in economic terms. They have the choice to not pay rent and be homeless, and the price they pay in rent reflects their desire not to do that. But I'll agree that most people pay more than they'd like, more than is sensible and more than is fair.
  - caryhartline 10y ago
    People can also "choose" no to pay for food and eventually die of hunger. To describe paying for basics like its a choice is highly insulting to those who cannot afford those basics.
    - conanbatt 10y ago
      With the same morality it would be highly insulting to those who cant get food to worry about taxing properties in the city so middle-class have better access to them. But even more, it would be more practical to understand why are people paying such high rents, not only because of housing supply, but because of the concentration of work in the cities, once again, making it way more sustainable to live in a city than in the country side.
    - Y_Y 10y ago
      It's an economic model. If you're starving you'll choose to spend all your money on food and none of it on rent. And you'll choose to buy the cheapest food. Incidentally I don't believe it helps for you to get offended on behalf of the starving.
woodandsteel 10y ago
Except the rentier class pays off the local politicians to keep land in short supply. Are you telling me you really didn't know about that?
- mattnewton 10y ago
  I think it's less of an outright bribe and more that they are champions of protecting the value of their homes, which they see as an investment and not a commodity.
- darawk 10y ago
  Pretty sure I said that in the second and third lines of my three line comment: > If there is a problem, it's with the availability of land for building new housing. Zoning laws and NIMBYism artificially constrain the supply side of the equation, which drives up rents. There is no extortion happening - just supply constriction.
  - woodandsteel 10y ago
    Yes, but you didn't specifically say that this is to a considerable extent due to the rentier class paying for it.
badsock 10y ago
I constantly hear this argument, but I've never seen any evidence. There's been a simultaneous skyrocketing housing costs in disparate parts of the world in the last 20 years - I find it implausible that they got NIMBYed to the tune of tripling the price of real estate all at roughly the same time.
- conanbatt 10y ago
  There is definitely a global effect of house price increases. One explanation is that access to cheap credit inflated prices in the US, but after the crisis, its the feds general interest of money being low that continued that. Its interesting to see that dwelling production in the US hasnt caught up with basic demographic demand: its possible the 2008 crisis hit developers so hard that its taking time to recuperate dwelling construction (generally world wide)
  - badsock 10y ago
    But how would that affect the house prices in, say, Sydney Australia where the prices have also skyrocketed but 2008 had little effect?
    - conanbatt 10y ago
      Investors that would usually invest in the US find those assets expensive, and thus invest in other countries. Even argentina, which was definitely shielded from the financial crisis, has had price increases.
      - badsock 10y ago
        I'll agree that that the two markets aren't isolated. But you can't be claiming that NIMBYism in the US is the dominant cause of a sudden tripling of house prices in Australia, can you? The elephant in the room is that, during that same time period, China (and to a lesser extent, other BRICs) suddenly acquired a tremendous amount of wealth, and saw developed-world housing as an attractive blue-chip-investment/money-laundry. You can argue that NIMBYism made it harder for the Chinese to dump money by the freighter into the real estate market, but is that really a bad thing? It caused(/is causing) a massive bubble in an area that should be stable, on account of it being critical infrastructure. In any case, it's the giant piles of cash coming in that's the actual cause of the issue. NIMBYism (in the right-wing view), is taking the entire blame, when really it's only a factor, and it's highly debatable whether it's helping or hurting considering the potential downsides of the influx.
djrobstep 10y ago
People are "willing to pay" rents only in the sense that people are willing to give a mugger their watch. Nobody made land. So why should some people be able to demand money from others for it?
- darawk 10y ago
  > People are "willing to pay" rents only in the sense that people are willing to give a mugger their watch. That's a silly comparison. You could say that about literally any product that's charging more than you feel like paying. > Nobody made land. So why should some people be able to demand money from others for it? Now that is an interesting question. I think there is a strong case to be made against the ownership of land in general. The fact that people have been allowed to own land seems like an odd historical quirk to me. I think it should probably be changed. That, however, does not make rent into extortion. It's still a commodity regulated by the same laws of supply and demand as anything else.
  - djrobstep 10y ago
    > You could say that about literally any product that's charging more than you feel like paying. Exactly. Property is a system of violence.
- mark-r 10y ago
  The concept of property taxes is the way governments prevent you from truly owning your land. I'm paying about $450/month for the privilege of owning my house. Renters here are able to apply for a property tax refund based on their rental amount.

friedman23 10y ago

Yes, clearly the problem with housing is not enough taxes. Taxing people for owning homes will definitely not result in rents rising and fewer people owning homes.

tw04 10y ago
He didn't say tax housing, he said tax land. Specifically non-agricultural land that has no homestead. That is a double edged sword though (at least in the US). If we continue to try to divest of public lands (thank you republicans) but then tax private lands, what happens to conservation efforts? You'd at the very least need to enact something that has an exception for land conservation, but good luck keeping out the loopholes. Minimum of 100 years before the land can be built on? And then an egregiously high tax at the end if it is to be built on?
hwillis 10y ago
Fewer people owning homes is exactly what he's talking about. More taxes means a higher incentive to rent to cover that cost. A tax on ownership is a tax break on renting, and more competition among renters. Of course that also means more people looking to rent, so I don't think that will really work, but its not an absurd suggestion.
- shshhdhs 10y ago
  I disagree. If you tax the home owner, they will pass on the taxes to the family renting that home.
  - hwillis 10y ago
    Of course. But the renter and/or rentee will still be paying less in taxes than people who just own.
    - friedman23 10y ago
      Have you thought about all the outcomes that will be caused by this policy? Because one obvious one is old people and poor families being kicked out of homes because they can't afford the tax. I guess we can just increase taxes even further to pay for their safety net which will result in them living in nice beautiful public housing.

blazespin 10y ago

Policies which encourage high density are definitely the right way to go. Our cities should be filled with massive futuristic towers connected by rapid transit. If you want to live in a house or even a townhouse, move to a rural area.

fiatjaf 10y ago

Why isn't the landowning rentier class extorting everybody through higher and higher food prices?

haihaibye 10y ago
You can transport food around, so there is competition. You can't conjure up land in the middle of a city.

branchless 10y ago

Cannot blieve hn downvoted this. God this site!