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> Land has a perfectly inelastic supply, and thus expectations of more income will lead to increases in rent. This is a common misconception. In fact real esta

> Land has a perfectly inelastic supply, and thus expectations of more income will lead to increases in rent. This is a common misconception. In fact real estate is just as supply-elastic as everything else. New developments open up all the time. Development makes land more attractive for more people. And areas become blighted and therefore less attractive, lowering prices. Some places have sharply-constrained supply, such as San Francisco, but this isn't the norm. The norm is cities slowly expanding outwards, as new investments in the center require more time and effort to bear fruit. Politics often throws a monkey wrench into market functionality, but the vast majority of real estate markets function and clear just fine.

bduerst 9y ago
If that were true then natural monopolies would not exist. Electricity too expensive? Let's just build some electric poles in the middle of the tundra and people will move their homes there for their electricity demand. Land (as in housing) is widely accepted as being supply-elastic, especially since in addition to scarcity it's also heavily regulated. You can't wave your hands at SF and say it's an exception because you want UBI to work. Markets like SF are proof that housing pricing is income-elastic, and can't be dismissed when discussing raising the income floor for entire populations.
- conanbatt 9y ago
  California in general is supply ineslactic. Raise in prices do not transform well in increase development. I fail to see the relationship to UBI with that.
- AnthonyMouse 9y ago
  > Electricity too expensive? Let's just build some electric poles in the middle of the tundra and people will move their homes there for their electricity demand. If you built some electric poles in the middle of the tundra and by moving there people could pay significantly lower prices per KWh, people with high electricity consumption absolutely would show up there to consume it. There are companies that build data centers in cold climates just to save on air conditioning. > Land (as in housing) is widely accepted as being supply-elastic, especially since in addition to scarcity it's also heavily regulated. You can't wave your hands at SF and say it's an exception because you want UBI to work. Not all housing markets are hampered by bad regulations. Houston has much less restrictive zoning and rents are much lower there than SF. They're also lower in Tokyo despite the incredibly high demand for housing there, because Tokyo isn't afraid of density. It doesn't say anything to say the combination of UBI and terrible zoning regulations will cause rents to be high in SF. They're already high in SF because of terrible zoning regulations even without a UBI. The only way to have reasonable rents is to fix the zoning rules, after which supply will meet demand as it ought to.
nwah1 9y ago
The demand for locations changing doesn't mean that there's a different number of locations available. The number of locations is fixed. Nobody denies that within the fixed number of locations that there can be dynamism, the question is how rent functions in lieu of this scarcity. It happens to follow the Law of Rent.
- AnthonyMouse 9y ago
  > It happens to follow the Law of Rent. The Law of Rent requires a bunch of things to be true that frequently aren't true in practice, or that are only true in cities like SF with restrictive zoning laws that prevent new housing construction.
  - nwah1 9y ago
    Actually, it assumes a free market, which of course is not an ironclad assumption either, but for opposite reasons.
    - AnthonyMouse 9y ago
      How does that make any sense? Suppose there are 1,000,000 tenants and 100,000 landlords whose land can each support 100 tenants if a tall building was built there. In the absence of collusion or zoning regulations to the contrary, each of the landlords has the incentive to add more apartments to their land until the net present value of rent of an apartment falls below the building cost, because the land isn't "scarce" in the sense that it can support ten times as many tenants as there actually are, and every landlord would prefer to make more money at the expense of the others.
kamaal 9y ago
>>New developments open up all the time. Not at the same commute time and price. Home prices won't be that high, if there was fast, cheap and better public transport to far off places. That again takes a lot of tax money to build and maintain.

bduerst 9y ago

If that were true then natural monopolies would not exist. Electricity too expensive? Let's just build some electric poles in the middle of the tundra and people will move their homes there for their electricity demand. Land (as in housing) is widely accepted as being supply-elastic, especially since in addition to scarcity it's also heavily regulated. You can't wave your hands at SF and say it's an exception because you want UBI to work. Markets like SF are proof that housing pricing is income-elastic, and can't be dismissed when discussing raising the income floor for entire populations.

conanbatt 9y ago
California in general is supply ineslactic. Raise in prices do not transform well in increase development. I fail to see the relationship to UBI with that.
AnthonyMouse 9y ago
> Electricity too expensive? Let's just build some electric poles in the middle of the tundra and people will move their homes there for their electricity demand. If you built some electric poles in the middle of the tundra and by moving there people could pay significantly lower prices per KWh, people with high electricity consumption absolutely would show up there to consume it. There are companies that build data centers in cold climates just to save on air conditioning. > Land (as in housing) is widely accepted as being supply-elastic, especially since in addition to scarcity it's also heavily regulated. You can't wave your hands at SF and say it's an exception because you want UBI to work. Not all housing markets are hampered by bad regulations. Houston has much less restrictive zoning and rents are much lower there than SF. They're also lower in Tokyo despite the incredibly high demand for housing there, because Tokyo isn't afraid of density. It doesn't say anything to say the combination of UBI and terrible zoning regulations will cause rents to be high in SF. They're already high in SF because of terrible zoning regulations even without a UBI. The only way to have reasonable rents is to fix the zoning rules, after which supply will meet demand as it ought to.

nwah1 9y ago

The demand for locations changing doesn't mean that there's a different number of locations available. The number of locations is fixed. Nobody denies that within the fixed number of locations that there can be dynamism, the question is how rent functions in lieu of this scarcity. It happens to follow the Law of Rent.

AnthonyMouse 9y ago
> It happens to follow the Law of Rent. The Law of Rent requires a bunch of things to be true that frequently aren't true in practice, or that are only true in cities like SF with restrictive zoning laws that prevent new housing construction.
- nwah1 9y ago
  Actually, it assumes a free market, which of course is not an ironclad assumption either, but for opposite reasons.
  - AnthonyMouse 9y ago
    How does that make any sense? Suppose there are 1,000,000 tenants and 100,000 landlords whose land can each support 100 tenants if a tall building was built there. In the absence of collusion or zoning regulations to the contrary, each of the landlords has the incentive to add more apartments to their land until the net present value of rent of an apartment falls below the building cost, because the land isn't "scarce" in the sense that it can support ten times as many tenants as there actually are, and every landlord would prefer to make more money at the expense of the others.

kamaal 9y ago

>>New developments open up all the time. Not at the same commute time and price. Home prices won't be that high, if there was fast, cheap and better public transport to far off places. That again takes a lot of tax money to build and maintain.