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That there was ever a debate at all is still astounding. Economics has fuzzy areas, but basic principles of supply and demand are very well-established. It's cl

That there was ever a debate at all is still astounding. Economics has fuzzy areas, but basic principles of supply and demand are very well-established. It's clearly nonsensical to imagine that we can simultaneously lower prices, limit supply, and allow for demand growth. The longevity of this bizarre idea demonstrates how strongly political ideas of how the world ought to work blind us to how the world does work. We'd do well to take the wool from our eyes in other contentious disputes.

jjxw 9y ago
It is perplexing to me why the burden of proof was ever placed on "increasing supply decreases prices" when the mechanism by which rent control + limiting construction is supposed to benefit anyone besides those already occupying those units is totally unclear. I don't even think it's "ought" vs "does" - it's more NIMBY interests being more ingrained into local politics allowing them to somehow gaslight everyone into thinking the laws of supply and demand don't apply to housing.
- meric 9y ago
  The ones who occupy the residences have the votes...
  - hkmurakami 9y ago
    Don't renters also have votes? If so then it's a matter of ratio and willingness to mobilize/fund efforts.
    - notatoad 9y ago
      Not direct votes. The renters can vote for representatives, but city councils are overwhelmingly made up of homeowners. (and a disturbingly high proportion of property developers)
    - kevinburke 9y ago
      Renters vote but tend to be under-represented on City Councils and such because they are a) younger, b) have less money, c) move more often than people with homes. Renters don't vote as regularly as homeowners.
      - acover 9y ago
        Renters are the minority. 70% of households own their home in Canada.
        santaclaus 9y ago
        Using the San Francisco example from the article, renters are 62.5% of all households [1]. [1] http://www.bayareacensus.ca.gov/counties/SanFranciscoCounty.htm http://www.bayareacensus.ca.gov/counties/SanFranciscoCounty....
      - kazinator 9y ago
        d) If a place has renters that don't have their own mailbox, it's possible that only the owner will get voter registration mail.
      - hkmurakami 9y ago
        Sincere question: is this a bug or a feature?
        leetcrew 9y ago
        feature imo. it doesn't seem inherently wrong that the long term residents should have more say than people who may just be passing through. that said, the degree of difference could still be very inappropriate.
- leggomylibro 9y ago
  Yeah, it's not about economics or politics at all. People who live in an area want policies that will benefit them at the expense of newcomers, full stop. And when you concentrate value and therefore power in those existing landowners to an extreme degree, you get a political feedback loop strong enough to overpower something as trivial as reality. After all, the market can stay irrational longer than you can stay solvent.
  - JPKab 9y ago
    Here in the Denver area, we have a lot of people moving here for good jobs, strong economy, etc. The locals bitch and moan endlessly. A lady the other night at a dinner party was, in the same conversation, complaining about the "high-density" (townhouses, but she acted as if they were high-rises) housing being built in the area, and moved on to whining about how her daughter was priced out of a home in the area. I stopped myself.
    - breischl 9y ago
      I can absolutely believe that would happen. Also interesting to watch the debate around conditional removal of the parking requirements for new builds. You see people that complain about lack of affordable housing, but also demand a parking lot/structure for every new building - these things are in conflict. I do understand the bitching & moaning. I remember, and miss, the days when there wasn't a standing jam on I-25 every single Saturday, you could show up at a trailhead later than 8 AM and actually find parking, or rent a nice apartment in Wash Park for $600. But then I'm an immigrant too, so I don't have much moral authority to tell the more-recent immigrants to GTFO.
hkmurakami 9y ago
I don't think it ever truly was a debate over supply effects. I think the true debate is whether people agree or disagree on the desirability of more housing, and the "more supply won't help" argument was coopted by those who needed a more palatable argument than straight NIMBYism.
- kevinburke 9y ago
  I can tell you 100% there is a debate over supply effects. There are many people (Peter Cohen, Causa Justa, Calle 24, some folks with red roses on Twitter, others) who show up at public comment in SF who believe that more market rate housing increases displacement and causes even higher prices.
  - seiferteric 9y ago
    I see supply and demand like the Ohm's law of economics, it's always true, but can get a bit complicated when you see things like reactance and reluctance. Sure, there can be interesting discussions about housing, but ultimately supply and demand is always key, but can get complicated do to realities like lack of space (SF) and nimby's (also SF)
  - quotemstr 9y ago
    The "debate" is likely a result of motivated reasoning. Humans do it all the time. 1. Decide to stake out a position A. 2. Think of reasons that A might be true. 3. Use these arguments to claim that anyone arguing !A is wrong. 4. Feel satisfied.
    - kevinburke 9y ago
      At least for the folks in the Mission, I think they see new market rate apartments going in, watch rent rising, and conclude the new housing is causing the rent increases.
      - malyk 9y ago
        Which they can probably pretty accurately say it is causing rent increases, albeit not directly. It goes something like this: 1.) New housing starts to get built 2.) The new residents demand safer/cleaner streets or just higher quality restaurants/cafes/etc. Or, sensing a market opportunity, those businesses move in themselves. 3.) Those things happen...and more 4.) More residents want to move in 5.) Prices for the existing housing stock increases 6.) New houses are built because there is demand 7.) go to 2. QED: rents rise "because" new housing was built. There definitely IS an equilibrium that will be reached, but a city like San Francisco has an almost unlimited supply of young and wealthy residents that think the suburbs are hell and want to live in a vibrant city. So the fear of some people that oppose more housing is that the equilibrium point, even if you were very aggressively adding housing stock, would be way above what "normal" people would be able to pay. So it's really a tough problem. yes, nimbyism is a thing. Yes more housing will eventually reduce prices (or reach a steady state), but the number of houses that need to be added may very well be unrealistic for any city and end up with rents just going ever higher pricing out all but the $200k/yr techies.
tmnvix 9y ago
Forget about housing for a minute. Would you agree that a speculative boom can cause an increase in demand?
- stale2002 9y ago
  The best way to end a speculative bubble is to crash the price by increasing supply.
  - tmnvix 9y ago
    ...potentially degrading your urban environment in the process. My point is that, if a particular housing market is experiencing a shortage of supply due to a speculative boom, but has sufficient housing to actually house people, then you have two options: tackle the supply side by building more houses, or tackle the demand side by addressing the cause of the speculation (e.g. tax incentives could be encouraging this non-productive, speculative investment).
    - davidw 9y ago
      Part of the "degradation" happens because we forgot that we can build up, as well as out, in much of the US https://www.strongtowns.org/journal/2015/1/7/americas-suburban-experiment https://www.strongtowns.org/journal/2015/1/7/americas-suburb...
      - sliverstorm 9y ago
        I don't think we "forget", I think developers are after the quick buck and buyers are after most-sqft-per-dollar. Building up or down is more expensive.
        davidw 9y ago
        Developers just build places for people to live and work. Like the house you live in. They could build a lot more in places like San Francisco and Palo Alto. Yes, it's a bit more expensive, but that's a pretty minimal component of the price at 2/3/4 stories. The real problem that prevents building up and in is rampant NIMBYism.
raldi 9y ago
> That there was ever a debate at all is still astounding. It's due to the unfortunate rhetorical coincidence that it's very easy to paint this belief as "trickle down economics" (even though it's absolutely not) and many, many voters will nonetheless be fooled. Example: https://archives.sfexaminer.com/sanfrancisco/its-still-called-trickle-down-economics-even-in-san-francisco/Content?oid=2921227 https://archives.sfexaminer.com/sanfrancisco/its-still-calle... If you haven't registered to vote where you currently live, please do so now. In many states (including California) it takes just a couple minutes, you can do it entirely on the Internet, and you don't even need a local driver's license.
slg 9y ago
While I agree with your general point, I think both you and the article are glossing over part of the debate. The opponents of adding market rate supply that I have seen aren't opposed to new supply in a vacuum. They are opposed to letting the market dictate the supply because the market usually creates supply at the top. The costs of buying land and building a mid-market building is not that much cheaper than building a luxury building. This causes the free market to favor new higher price units which leads to other development that pushes out the previous residents. Sure, that new supply will trickle down and lead to more affordability throughout the whole market, but it can still lead to higher prices in that specific neighborhood due to gentrification. It is therefore a balancing act between the health of the whole market and the health of individual sub-markets within it.
- OrwellianChild 9y ago
  You're right that new construction favors luxury housing, but I don't agree that this inevitably leads to displacement of other residents. Most of the effects of "trickle-down housing" are seen in the same market as older buildings must lower rental prices as the condition/amenities age and compare poorly to the newer/nicer buildings. Individuals must move as new construction replaces an existing building, but there will be other units available to move to in a market that is actually allowing new construction. The only situation that causes significant gentrification is when new housing cannot be built and prices rise due to concentrated demand...
  - slg 9y ago
    >Individuals must move as new construction replaces an existing building, but there will be other units available to move to in a market that is actually allowing new construction I don't think the emphasized part is a given. There is likely no new construction at the bottom of the market for these displaced people to move into. For example, let's say a SRO hotel is torn down and a luxury condo goes up in its place. The result is increased supply in the luxury market and decreased price in the luxury market. That decrease in price trickles down throughout the rest of the market. However at the bottom of the market the SRO supply has now dropped and the demand is now higher due to all the displaced residents. There are too many variables involved to say the trickle down effects will always outweigh the direct effects of removing the housing from the bottom of the market.
timr 9y ago
"That there was ever a debate at all is still astounding." There never was. There are actual, valid debates around construction policy, however. Among them: 1) should you prefer subsidized housing or market-rate? 2) should you remove cheap, existing housing stock to make room for market-rate? 3) does new construction lead to gentrification of affordable neighborhoods? The article is explicit that the answer to #1 is probably "yes", and it's pretty clear that if you care about the affordability individual neighborhoods, the answers to 2 and 3 are "no" and "yes", respectively, because real estate is obviously not a commodity product. Lowering the mean rent figure for a city does not guarantee that low-income neighborhoods/people benefit from the trade.
- quotemstr 9y ago
  See, that's the problem: anti-housing advocates have the wrong moral object in mind. There's no use caring about "neighborhoods". A neighborhood doesn't dream of owning a house one day. A neighborhood doesn't have kids that have to squeeze into a single bedroom. A neighborhood feels neither happy nor sad and doesn't care whether it's preserved. Interfering with the market almost always produces poor global outcomes, even if interventions can provide an illusion of success in small localized cases. Sure, you can protect your neighborhood from gentrification or whatever, but at the cost of impoverishing an entire city. How is that fair or just? I believe in caring about people, not abstractions like neighborhoods, and so support greatly loosening zoning laws and allowing builders to build the market-rate housing that people demand.
  - timr 9y ago
    "See, that's the problem: anti-housing advocates have the wrong moral object in mind. There's no use caring about "neighborhoods" Yeah, fuck 'em. For that matter, let's not care about cities or states, either. As long as the national mean rent goes down, everything is dandy, right? After all, we all know that real estate is global. Let the poor move to North Dakota. /s When you have two affordable neighborhoods in a city, and you gentrify both, the fact that rents are a few bucks cheaper city-wide is thin gruel for the people who got evicted. Nor does it "impoverish" the rest of the city to not gentrify those neighborhoods -- they're out some small number of dollars a month. "I believe in caring about people, not abstractions like neighborhoods" That's obviously untrue. You believe in the long-term effects of markets, even if they screw actual poor people in the short term. That's fine, but don't pretend you're doing social work in the near-term. All you can really say about markets is that the only thing they "care" about is the most profitable allocation of capital.
JauntyHatAngle 9y ago
I think in some areas (cant speak for all) the debate is about whether other things are affecting the market in a way that should make them the approach to tackling affordability rather than purely worrying about supply. This then becomes politicised and people paint broad brushes of each argument, one side arguing "its not about supply! Its about x policy!" and the other side arguing "Its about supply and demand!". Both sides are extremes, when the answer may well lie somewhere along the line in the middle. Specifically, in Australia the debate is about whether the best way to tackle affordability is Supply/Demand or whether it is reducing incentives for investors (tax breaks for house investors). There are solid arguments on both "sides", but its pretty clear that housing supply plays a part in both solutions.. the real question is to what degree it has a bigger impact than changing government policy in this case. Point is the overall reason/cause doesn't mean it's the only consideration and thinking of it that way can lead to dismissal of valid joined issues/solutions.
dredmorbius 9y ago
To offer a very slim thread of credibility to the argument, there are cases in which supply and demand interact ... oddly. The canonical case is probably traffic: increasing highway capacity increases congestion. But, beyond the topical similarity, the cases fall apart. The situation with traffic involves only a small incremental cost being born by each driver, whilst in housing, the internalised costs are large. The drivers of housing inflation -- the interest of numerous parties in increasing asset values (free money for no work!) most especially -- are also highly different. Actually, that last factor tends to make me suspect that the housing arguments are at least in a significant number of cases insincere.
- pash 9y ago
  Induced demand [0], if that’s the phenomenon you have in mind, does not mean that “increasing highway capacity increases congestion.” It just means that adding capacity increases usage of the road, often to the point that so many more drivers show up to use the expanded roadway that the improvements do nothing to reduce traffic delays. There is no economic mystery in induced demand: it’s Economics 101 once you realize that drivers pay for their usage of roads in time, not money. So when a roadway is expanded, all else equal, the cost of driving on it falls—you’re no longer stuck in traffic; but the lower price (that is, travel time) increases demand for use of the road, just as low prices tend to increase demand in other markets. The result is that many more drivers use the expanded roadway, to the point that they bid the price, paid in time waiting in traffic, back up to previous equilibrium level. (That said, there are ways in which building more roadways can increase congestion itself. Since land use is closely tied to access, building new highways can spur development in far-off areas, causing people to drive more than they otherwise would. There’s also a theoretical possibility that adding new roads can change the roadway topology in ways that cause people to change their routes in ways that create congestion.) 0. https://en.wikipedia.org/wiki/Induced_demand https://en.wikipedia.org/wiki/Induced_demand
  - quotemstr 9y ago
    And it's this effect that prompts my strong support for tolling all roads. It's better for everyone to pay for scarce resources in money, not the awkward currency of time.
hanoz 9y ago
The problem the the "it's the supply and demand stupid" justification for high house prices is that it ignores the fact that on what's supposed to be the demand side we have a massive oversupply of borrowed-into-existence virtually free money.
- quotemstr 9y ago
  Absolutely. It's ridiculously risky for the economy to give people million-dollar loans for shacks in East Palo Alto when we know that prices will decline once the Bay Area finally adopts sane development policies.
pascalxus 9y ago
I completely Agree. It's absolutely insane that people think limiting the supply of housing can actually decrease prices. And that this is happening in some of the most highly educated cities where degrees are handed out to nearly 50% of the population. One big thing they don't understand. You MUST increase the supply, absolutely MUST. There's no other way, except to reduce the number of jobs in the area. Every single regulation, every single affordability requirement reduces the total amount that can be built. I've heard this: People make the argument: well every new market rate housing goes to rich people. What they dont get, is, for each so called rich person who moves into that new development, a new house comes onto the market (their old residence) and that helps push down prices. It's unthinkable that so many people are going homeless needlessly. We need to increase the supply all the way to point where housing becomes affordable to everyone. And, yes, it will take a long time and a lot of building, but It'll be worth it.
pascalxus 9y ago
Part of the problem and the confusion is this: People have their rent controlled apartments here in SF at a tiny fraction of the "real" market rate. And, so when they see market rate housing going up (hamstringed by affordability requirements, driving prices even higher), they're seeing market rates that are much much higher than rent controlled rates. This causes them to believe that increasing supply actually increases rents. Here's the distinction: Increasing supply ONLY decreases market rate rents, it does nothing for the below market/rent ceiling prices, at least not until supply can be massively increased to point where it goes below the rent ceiling.

jjxw 9y ago

It is perplexing to me why the burden of proof was ever placed on "increasing supply decreases prices" when the mechanism by which rent control + limiting construction is supposed to benefit anyone besides those already occupying those units is totally unclear. I don't even think it's "ought" vs "does" - it's more NIMBY interests being more ingrained into local politics allowing them to somehow gaslight everyone into thinking the laws of supply and demand don't apply to housing.

meric 9y ago
The ones who occupy the residences have the votes...
- hkmurakami 9y ago
  Don't renters also have votes? If so then it's a matter of ratio and willingness to mobilize/fund efforts.
  - notatoad 9y ago
    Not direct votes. The renters can vote for representatives, but city councils are overwhelmingly made up of homeowners. (and a disturbingly high proportion of property developers)
  - kevinburke 9y ago
    Renters vote but tend to be under-represented on City Councils and such because they are a) younger, b) have less money, c) move more often than people with homes. Renters don't vote as regularly as homeowners.
    - acover 9y ago
      Renters are the minority. 70% of households own their home in Canada.
      - santaclaus 9y ago
        Using the San Francisco example from the article, renters are 62.5% of all households [1]. [1] http://www.bayareacensus.ca.gov/counties/SanFranciscoCounty.htm http://www.bayareacensus.ca.gov/counties/SanFranciscoCounty....
    - kazinator 9y ago
      d) If a place has renters that don't have their own mailbox, it's possible that only the owner will get voter registration mail.
    - hkmurakami 9y ago
      Sincere question: is this a bug or a feature?
      - leetcrew 9y ago
        feature imo. it doesn't seem inherently wrong that the long term residents should have more say than people who may just be passing through. that said, the degree of difference could still be very inappropriate.
leggomylibro 9y ago
Yeah, it's not about economics or politics at all. People who live in an area want policies that will benefit them at the expense of newcomers, full stop. And when you concentrate value and therefore power in those existing landowners to an extreme degree, you get a political feedback loop strong enough to overpower something as trivial as reality. After all, the market can stay irrational longer than you can stay solvent.
- JPKab 9y ago
  Here in the Denver area, we have a lot of people moving here for good jobs, strong economy, etc. The locals bitch and moan endlessly. A lady the other night at a dinner party was, in the same conversation, complaining about the "high-density" (townhouses, but she acted as if they were high-rises) housing being built in the area, and moved on to whining about how her daughter was priced out of a home in the area. I stopped myself.
  - breischl 9y ago
    I can absolutely believe that would happen. Also interesting to watch the debate around conditional removal of the parking requirements for new builds. You see people that complain about lack of affordable housing, but also demand a parking lot/structure for every new building - these things are in conflict. I do understand the bitching & moaning. I remember, and miss, the days when there wasn't a standing jam on I-25 every single Saturday, you could show up at a trailhead later than 8 AM and actually find parking, or rent a nice apartment in Wash Park for $600. But then I'm an immigrant too, so I don't have much moral authority to tell the more-recent immigrants to GTFO.

hkmurakami 9y ago

I don't think it ever truly was a debate over supply effects. I think the true debate is whether people agree or disagree on the desirability of more housing, and the "more supply won't help" argument was coopted by those who needed a more palatable argument than straight NIMBYism.

kevinburke 9y ago
I can tell you 100% there is a debate over supply effects. There are many people (Peter Cohen, Causa Justa, Calle 24, some folks with red roses on Twitter, others) who show up at public comment in SF who believe that more market rate housing increases displacement and causes even higher prices.
- seiferteric 9y ago
  I see supply and demand like the Ohm's law of economics, it's always true, but can get a bit complicated when you see things like reactance and reluctance. Sure, there can be interesting discussions about housing, but ultimately supply and demand is always key, but can get complicated do to realities like lack of space (SF) and nimby's (also SF)
- quotemstr 9y ago
  The "debate" is likely a result of motivated reasoning. Humans do it all the time. 1. Decide to stake out a position A. 2. Think of reasons that A might be true. 3. Use these arguments to claim that anyone arguing !A is wrong. 4. Feel satisfied.
  - kevinburke 9y ago
    At least for the folks in the Mission, I think they see new market rate apartments going in, watch rent rising, and conclude the new housing is causing the rent increases.
    - malyk 9y ago
      Which they can probably pretty accurately say it is causing rent increases, albeit not directly. It goes something like this: 1.) New housing starts to get built 2.) The new residents demand safer/cleaner streets or just higher quality restaurants/cafes/etc. Or, sensing a market opportunity, those businesses move in themselves. 3.) Those things happen...and more 4.) More residents want to move in 5.) Prices for the existing housing stock increases 6.) New houses are built because there is demand 7.) go to 2. QED: rents rise "because" new housing was built. There definitely IS an equilibrium that will be reached, but a city like San Francisco has an almost unlimited supply of young and wealthy residents that think the suburbs are hell and want to live in a vibrant city. So the fear of some people that oppose more housing is that the equilibrium point, even if you were very aggressively adding housing stock, would be way above what "normal" people would be able to pay. So it's really a tough problem. yes, nimbyism is a thing. Yes more housing will eventually reduce prices (or reach a steady state), but the number of houses that need to be added may very well be unrealistic for any city and end up with rents just going ever higher pricing out all but the $200k/yr techies.

tmnvix 9y ago

Forget about housing for a minute. Would you agree that a speculative boom can cause an increase in demand?

stale2002 9y ago
The best way to end a speculative bubble is to crash the price by increasing supply.
- tmnvix 9y ago
  ...potentially degrading your urban environment in the process. My point is that, if a particular housing market is experiencing a shortage of supply due to a speculative boom, but has sufficient housing to actually house people, then you have two options: tackle the supply side by building more houses, or tackle the demand side by addressing the cause of the speculation (e.g. tax incentives could be encouraging this non-productive, speculative investment).
  - davidw 9y ago
    Part of the "degradation" happens because we forgot that we can build up, as well as out, in much of the US https://www.strongtowns.org/journal/2015/1/7/americas-suburban-experiment https://www.strongtowns.org/journal/2015/1/7/americas-suburb...
    - sliverstorm 9y ago
      I don't think we "forget", I think developers are after the quick buck and buyers are after most-sqft-per-dollar. Building up or down is more expensive.
      - davidw 9y ago
        Developers just build places for people to live and work. Like the house you live in. They could build a lot more in places like San Francisco and Palo Alto. Yes, it's a bit more expensive, but that's a pretty minimal component of the price at 2/3/4 stories. The real problem that prevents building up and in is rampant NIMBYism.

raldi 9y ago

> That there was ever a debate at all is still astounding. It's due to the unfortunate rhetorical coincidence that it's very easy to paint this belief as "trickle down economics" (even though it's absolutely not) and many, many voters will nonetheless be fooled. Example: https://archives.sfexaminer.com/sanfrancisco/its-still-called-trickle-down-economics-even-in-san-francisco/Content?oid=2921227 https://archives.sfexaminer.com/sanfrancisco/its-still-calle... If you haven't registered to vote where you currently live, please do so now. In many states (including California) it takes just a couple minutes, you can do it entirely on the Internet, and you don't even need a local driver's license.

slg 9y ago

While I agree with your general point, I think both you and the article are glossing over part of the debate. The opponents of adding market rate supply that I have seen aren't opposed to new supply in a vacuum. They are opposed to letting the market dictate the supply because the market usually creates supply at the top. The costs of buying land and building a mid-market building is not that much cheaper than building a luxury building. This causes the free market to favor new higher price units which leads to other development that pushes out the previous residents. Sure, that new supply will trickle down and lead to more affordability throughout the whole market, but it can still lead to higher prices in that specific neighborhood due to gentrification. It is therefore a balancing act between the health of the whole market and the health of individual sub-markets within it.

OrwellianChild 9y ago
You're right that new construction favors luxury housing, but I don't agree that this inevitably leads to displacement of other residents. Most of the effects of "trickle-down housing" are seen in the same market as older buildings must lower rental prices as the condition/amenities age and compare poorly to the newer/nicer buildings. Individuals must move as new construction replaces an existing building, but there will be other units available to move to in a market that is actually allowing new construction. The only situation that causes significant gentrification is when new housing cannot be built and prices rise due to concentrated demand...
- slg 9y ago
  >Individuals must move as new construction replaces an existing building, but there will be other units available to move to in a market that is actually allowing new construction I don't think the emphasized part is a given. There is likely no new construction at the bottom of the market for these displaced people to move into. For example, let's say a SRO hotel is torn down and a luxury condo goes up in its place. The result is increased supply in the luxury market and decreased price in the luxury market. That decrease in price trickles down throughout the rest of the market. However at the bottom of the market the SRO supply has now dropped and the demand is now higher due to all the displaced residents. There are too many variables involved to say the trickle down effects will always outweigh the direct effects of removing the housing from the bottom of the market.

timr 9y ago

"That there was ever a debate at all is still astounding." There never was. There are actual, valid debates around construction policy, however. Among them: 1) should you prefer subsidized housing or market-rate? 2) should you remove cheap, existing housing stock to make room for market-rate? 3) does new construction lead to gentrification of affordable neighborhoods? The article is explicit that the answer to #1 is probably "yes", and it's pretty clear that if you care about the affordability individual neighborhoods, the answers to 2 and 3 are "no" and "yes", respectively, because real estate is obviously not a commodity product. Lowering the mean rent figure for a city does not guarantee that low-income neighborhoods/people benefit from the trade.

quotemstr 9y ago
See, that's the problem: anti-housing advocates have the wrong moral object in mind. There's no use caring about "neighborhoods". A neighborhood doesn't dream of owning a house one day. A neighborhood doesn't have kids that have to squeeze into a single bedroom. A neighborhood feels neither happy nor sad and doesn't care whether it's preserved. Interfering with the market almost always produces poor global outcomes, even if interventions can provide an illusion of success in small localized cases. Sure, you can protect your neighborhood from gentrification or whatever, but at the cost of impoverishing an entire city. How is that fair or just? I believe in caring about people, not abstractions like neighborhoods, and so support greatly loosening zoning laws and allowing builders to build the market-rate housing that people demand.
- timr 9y ago
  "See, that's the problem: anti-housing advocates have the wrong moral object in mind. There's no use caring about "neighborhoods" Yeah, fuck 'em. For that matter, let's not care about cities or states, either. As long as the national mean rent goes down, everything is dandy, right? After all, we all know that real estate is global. Let the poor move to North Dakota. /s When you have two affordable neighborhoods in a city, and you gentrify both, the fact that rents are a few bucks cheaper city-wide is thin gruel for the people who got evicted. Nor does it "impoverish" the rest of the city to not gentrify those neighborhoods -- they're out some small number of dollars a month. "I believe in caring about people, not abstractions like neighborhoods" That's obviously untrue. You believe in the long-term effects of markets, even if they screw actual poor people in the short term. That's fine, but don't pretend you're doing social work in the near-term. All you can really say about markets is that the only thing they "care" about is the most profitable allocation of capital.

JauntyHatAngle 9y ago

I think in some areas (cant speak for all) the debate is about whether other things are affecting the market in a way that should make them the approach to tackling affordability rather than purely worrying about supply. This then becomes politicised and people paint broad brushes of each argument, one side arguing "its not about supply! Its about x policy!" and the other side arguing "Its about supply and demand!". Both sides are extremes, when the answer may well lie somewhere along the line in the middle. Specifically, in Australia the debate is about whether the best way to tackle affordability is Supply/Demand or whether it is reducing incentives for investors (tax breaks for house investors). There are solid arguments on both "sides", but its pretty clear that housing supply plays a part in both solutions.. the real question is to what degree it has a bigger impact than changing government policy in this case. Point is the overall reason/cause doesn't mean it's the only consideration and thinking of it that way can lead to dismissal of valid joined issues/solutions.

dredmorbius 9y ago

To offer a very slim thread of credibility to the argument, there are cases in which supply and demand interact ... oddly. The canonical case is probably traffic: increasing highway capacity increases congestion. But, beyond the topical similarity, the cases fall apart. The situation with traffic involves only a small incremental cost being born by each driver, whilst in housing, the internalised costs are large. The drivers of housing inflation -- the interest of numerous parties in increasing asset values (free money for no work!) most especially -- are also highly different. Actually, that last factor tends to make me suspect that the housing arguments are at least in a significant number of cases insincere.

pash 9y ago
Induced demand [0], if that’s the phenomenon you have in mind, does not mean that “increasing highway capacity increases congestion.” It just means that adding capacity increases usage of the road, often to the point that so many more drivers show up to use the expanded roadway that the improvements do nothing to reduce traffic delays. There is no economic mystery in induced demand: it’s Economics 101 once you realize that drivers pay for their usage of roads in time, not money. So when a roadway is expanded, all else equal, the cost of driving on it falls—you’re no longer stuck in traffic; but the lower price (that is, travel time) increases demand for use of the road, just as low prices tend to increase demand in other markets. The result is that many more drivers use the expanded roadway, to the point that they bid the price, paid in time waiting in traffic, back up to previous equilibrium level. (That said, there are ways in which building more roadways can increase congestion itself. Since land use is closely tied to access, building new highways can spur development in far-off areas, causing people to drive more than they otherwise would. There’s also a theoretical possibility that adding new roads can change the roadway topology in ways that cause people to change their routes in ways that create congestion.) 0. https://en.wikipedia.org/wiki/Induced_demand https://en.wikipedia.org/wiki/Induced_demand
- quotemstr 9y ago
  And it's this effect that prompts my strong support for tolling all roads. It's better for everyone to pay for scarce resources in money, not the awkward currency of time.

hanoz 9y ago

The problem the the "it's the supply and demand stupid" justification for high house prices is that it ignores the fact that on what's supposed to be the demand side we have a massive oversupply of borrowed-into-existence virtually free money.

quotemstr 9y ago
Absolutely. It's ridiculously risky for the economy to give people million-dollar loans for shacks in East Palo Alto when we know that prices will decline once the Bay Area finally adopts sane development policies.

pascalxus 9y ago

I completely Agree. It's absolutely insane that people think limiting the supply of housing can actually decrease prices. And that this is happening in some of the most highly educated cities where degrees are handed out to nearly 50% of the population. One big thing they don't understand. You MUST increase the supply, absolutely MUST. There's no other way, except to reduce the number of jobs in the area. Every single regulation, every single affordability requirement reduces the total amount that can be built. I've heard this: People make the argument: well every new market rate housing goes to rich people. What they dont get, is, for each so called rich person who moves into that new development, a new house comes onto the market (their old residence) and that helps push down prices. It's unthinkable that so many people are going homeless needlessly. We need to increase the supply all the way to point where housing becomes affordable to everyone. And, yes, it will take a long time and a lot of building, but It'll be worth it.

pascalxus 9y ago

Part of the problem and the confusion is this: People have their rent controlled apartments here in SF at a tiny fraction of the "real" market rate. And, so when they see market rate housing going up (hamstringed by affordability requirements, driving prices even higher), they're seeing market rates that are much much higher than rent controlled rates. This causes them to believe that increasing supply actually increases rents. Here's the distinction: Increasing supply ONLY decreases market rate rents, it does nothing for the below market/rent ceiling prices, at least not until supply can be massively increased to point where it goes below the rent ceiling.