5 ms·

Like most selective political actions in a market, I suspect this has good intent but will produce predictably counter-productive outcomes. The intent is obviou

by hnarn 8y ago

Like most selective political actions in a market, I suspect this has good intent but will produce predictably counter-productive outcomes. The intent is obviously to "make housing more affordable", but they're only restricting one part of the market, and that part is "newly built" homes. What about the real estate market that is simply "homes"? So if newly built houses cannot be rented out anymore, and a large driver of building homes is this customer base of "landlords", what will happen to the rate of building, and the price of older homes? It doesn't seem like a stretch to assume that the building rate will go down, and prices on older estates not affected by the law will go up. Unless the law is applied broadly across any and all estates, the end result will simply be, best case, that the market adjusts: worst case, that you end up with very unwanted and negative economical effects that no-one predicted. The article states that "It’s not yet been clarified, for example, how long an owner would have to occupy their home before being able to rent it out" -- in my opinion the problem here is not where you draw the line, the problem is the drawing of the line. It will only create synthetic movements in the market and I don't think it will help in achieving the stated goal at all. If one were inclined to be cynical, one could even assume that like with most political proposals, there are those who stand to gain from this, and they may be sponsoring it. Namely: whoever owns "old" real estate in Amsterdam. Is it also cynical to believe that politicians may know that this will not help, but are more interested in looking like they are "doing something about it", rather than resolving the issue, causing economical loss for property owners? The stated beneficiaries of this proposal are those weak in buying power claiming the "right" to live in a certain place without being priced out -- normally not a group with huge political leverage.

gekkeboom 8y ago
The key problem is the rich buying property for literal rent-seeking to become even richer. This drives prices up for homes in the city to a point that only if you are in a relationship and over 30 you might be able to buy your first 'home'. There may be downsides to the measures proposed, but the fun part of government is that you can learn, change and adapt. Because you write the rules, you can change and you can use this ability to create a better living environment for people, which is the ultimate end goal.
- hnarn 8y ago
  > The key problem is the rich buying property for literal rent-seeking to become even richer. This key problem is in no way solved by the political proposal, as "the rich" can move to buy older real estate instead. > This drives prices up for homes in the city to a point that only if you are in a relationship and over 30 you might be able to buy your first 'home'. The reason that prices are going up is because a lot of people want to spend a lot of money for the real estate, so in the end you must take a moral stand regarding who owns the right to live and/or own real estate in the city, and what this right is based on. Long term consistency is key here, because short lived stabs at the market like this one will not make any difference apart from creating volatility. As soon as you create economical impediments to achieve your "moral", or "political" goals, you must ask yourself questions almost like a penetration tester: how would I exploit this law if I wanted to stand to gain from it economically? There's almost always a way, and unless you take this into account before creating the law, you're just making the problem worse, and more complicated (normally the same thing). > the fun part of government is that you can learn, change and adapt Government shouldn't be having fun with laws. They should be enacting laws that are thoroughly studied, where the possible outcomes are weighed against eachother to minimize risk and maximize the odds of success. Of course you always need to evaluate and adapt, but this proposal is sloppy to say the least, perhaps even malicious.
  - hannasanarion 8y ago
    Let them have older real estate. That pie isn't growing. The point is that the rich can't dominate the entire market any more, there is a class of housing reserved for the middle class
    - hnarn 8y ago
      Giving the rich a monopoly on a fixed tier 1 subset of real estate in a market with huge demand is not how you solve affordable housing to the "local" middle class. It will create synthetic incentives, and escalate prices on all real estate as demand seeps over into black or grey markets. Changes like these need to be across the board, or not happen at all.
dalbasal 8y ago
I agree that most such policies are naive or populist and won't achieve their actual objectives, but... The default supply-demand dynamic doesn't generally apply to urban real estate. Supply is very slow to react to market changes, and is limited by all sorts of things that aren't price. In a lot of cities, prices (within reason) don't really affect supply at all. First, building takes time and houses last a long time, so supply is unlikely to grow by more thana couple of % pa. Second, most of the space is taken and/or limited by planning, not price. Changing planning policies and improving transport is what actually gets a city with 250k houses to 300k. Often, you'll find that people don't actually want the city to change/grow much and prevent it politically The upshot is that is a supply-insensitive-to-demand market (the opposite of the cocaine market, economics teachers like for examples). If demand goes up, prices go up. Supply stays about the same. The inverse is that if price is held artificially low, this doesn't really dampen supply much. Imagine manhatten house prices doubled tomorrow. How much extra housing do you think this would lead to? All that said, this sounds like cheap politics. Developers complaining? That's probably a political point in amsterdam. It tick the do something box. Upper middle class people will get their new house a little cheaper (less competition). The new neighborhoods will be more middle class (and ethincally dutch), because owner occupiers tend to be these things. The rental market will be marginally tighter, as this grows the own/rent ratio a little.
- tathougies 8y ago
  > Imagine manhatten house prices doubled tomorrow. How much extra housing do you think this would lead to? A lot. Rising prices would encourage the development of non-NYC cities. As those cities developed, some portion of Manhattanites and those thinking of moving to Manhattan would choose to move to the new cities. As the new city develops further, Manhattan becomes that much less attractive as a place to work until such time as Manhattan RE prices again drop / fail to rise, and vacancy rates increase. Vacant units = extra housing.
Spooky23 8y ago
Economic mumbo jumbo isn’t the only consideration for policy like this. Economic policy has left so much capital sitting around doing nothing that even marginal developments that are ultimately money losers are getting built everywhere. Local governments ultimately are accountable to the people, and it’s appropriate for them to think about the impact on the civic space of these developments, that are often ultimately bad for the community. Real estate is among the sketchiest of industries, and in the US at least almost all commercial projects are implicitly subsidized by the government. IMO anything that extracts value from developers is a good thing.
onion2k 8y ago
what will happen to the rate of building If the demand for houses from people who want to buy them to live in is greater than the supply of houses, nothing. The houses will still be built and sold, just to different people.
- barry-cotter 8y ago
  Not necessarily true. If the rate of return is changed some people who would have invested their money this will not. Properties might come to the market later because it’s not worth it to pay the premium to have workers come in on Saturday for example. Developers will be less willing to pay extra for legal services to get through the planning process faster. I’m sure there are other similar effects I’m missing as an outsider to property development.
Phemist 8y ago
This is already something well-known in the Dutch housing market though. It is known as "zelfbewoningsplicht" (self-occupation.. duty?, e.g. the contract you signed when buying the house stipulates that you, or your direct family have to live in it yourself/themselves). It is usually enforced by "woningcorporaties" (social housing corporations?) with a social mandate and does result in lower prices for the houses/appartements that have it. The odd thing here is that it's now municipalities that are enforcing it on _all_ housing, rather than just on designated social housing. It will be interesting to see the effects though.
danmaz74 8y ago
Regulation are introduced for their intended positive consequences, but they usually also have unintended negative consequences. Here you posit that the global balance will be negative, but your supposition is mostly based on the assumption that regulating the free market has always net bad consequences. Which is a point of view which has been pushed VERY strongly in the last decades, but which only the most idealogical anarcho-capitalists can fully believe: try to have no regulation in, eg, food production, and people start dying. As for this measure: we can all agree that it will depress prices for new homes, and increase prices for older homes. Is this going to be a net positive or negative for the middle class who wants to live in Amsterdam? It depends a lot on the price sensitivity of the construction of new homes. I suppose that planners in the city know more about this than me, and maybe you, and did their own projections. If they go on, we'll see the results.
ricardobeat 8y ago
The “old” property owners will have to price their properties to compete with cheap, modern, newly-built housing though. That’s absolutely in line with the end goal. You also have to bear in mind that a significant chunk of properties in NL is owned by housing associations, this new rule only applies to individuals.
Vinnl 8y ago
> they're only restricting one part of the market, and that part is "newly built" homes. An interesting sidenote is this comment from one of the municipal administrators: > It would be even better if we could also apply this rule to existing housing, but we think that requires the law to be changed. Dutch source: https://nos.nl/artikel/2275897-amsterdam-wil-verbod-op-verhuur-nieuwe-koopwoningen.html https://nos.nl/artikel/2275897-amsterdam-wil-verbod-op-verhu...
gerbilly 8y ago
> Like most selective political actions in a market, I suspect this has good intent but will produce predictably counter-productive outcomes. The status quo seems like a given, but it's maintained by actions too. We choose everyday not to change it, and this choice often produces outcomes that are counter productive. To not change things is literally a conservative programme, and this usually serves the interests of the wealthy.

by hnarn 8y ago

gekkeboom 8y ago

The key problem is the rich buying property for literal rent-seeking to become even richer. This drives prices up for homes in the city to a point that only if you are in a relationship and over 30 you might be able to buy your first 'home'. There may be downsides to the measures proposed, but the fun part of government is that you can learn, change and adapt. Because you write the rules, you can change and you can use this ability to create a better living environment for people, which is the ultimate end goal.

hnarn 8y ago
> The key problem is the rich buying property for literal rent-seeking to become even richer. This key problem is in no way solved by the political proposal, as "the rich" can move to buy older real estate instead. > This drives prices up for homes in the city to a point that only if you are in a relationship and over 30 you might be able to buy your first 'home'. The reason that prices are going up is because a lot of people want to spend a lot of money for the real estate, so in the end you must take a moral stand regarding who owns the right to live and/or own real estate in the city, and what this right is based on. Long term consistency is key here, because short lived stabs at the market like this one will not make any difference apart from creating volatility. As soon as you create economical impediments to achieve your "moral", or "political" goals, you must ask yourself questions almost like a penetration tester: how would I exploit this law if I wanted to stand to gain from it economically? There's almost always a way, and unless you take this into account before creating the law, you're just making the problem worse, and more complicated (normally the same thing). > the fun part of government is that you can learn, change and adapt Government shouldn't be having fun with laws. They should be enacting laws that are thoroughly studied, where the possible outcomes are weighed against eachother to minimize risk and maximize the odds of success. Of course you always need to evaluate and adapt, but this proposal is sloppy to say the least, perhaps even malicious.
- hannasanarion 8y ago
  Let them have older real estate. That pie isn't growing. The point is that the rich can't dominate the entire market any more, there is a class of housing reserved for the middle class
  - hnarn 8y ago
    Giving the rich a monopoly on a fixed tier 1 subset of real estate in a market with huge demand is not how you solve affordable housing to the "local" middle class. It will create synthetic incentives, and escalate prices on all real estate as demand seeps over into black or grey markets. Changes like these need to be across the board, or not happen at all.

dalbasal 8y ago

I agree that most such policies are naive or populist and won't achieve their actual objectives, but... The default supply-demand dynamic doesn't generally apply to urban real estate. Supply is very slow to react to market changes, and is limited by all sorts of things that aren't price. In a lot of cities, prices (within reason) don't really affect supply at all. First, building takes time and houses last a long time, so supply is unlikely to grow by more thana couple of % pa. Second, most of the space is taken and/or limited by planning, not price. Changing planning policies and improving transport is what actually gets a city with 250k houses to 300k. Often, you'll find that people don't actually want the city to change/grow much and prevent it politically The upshot is that is a supply-insensitive-to-demand market (the opposite of the cocaine market, economics teachers like for examples). If demand goes up, prices go up. Supply stays about the same. The inverse is that if price is held artificially low, this doesn't really dampen supply much. Imagine manhatten house prices doubled tomorrow. How much extra housing do you think this would lead to? All that said, this sounds like cheap politics. Developers complaining? That's probably a political point in amsterdam. It tick the do something box. Upper middle class people will get their new house a little cheaper (less competition). The new neighborhoods will be more middle class (and ethincally dutch), because owner occupiers tend to be these things. The rental market will be marginally tighter, as this grows the own/rent ratio a little.

tathougies 8y ago
> Imagine manhatten house prices doubled tomorrow. How much extra housing do you think this would lead to? A lot. Rising prices would encourage the development of non-NYC cities. As those cities developed, some portion of Manhattanites and those thinking of moving to Manhattan would choose to move to the new cities. As the new city develops further, Manhattan becomes that much less attractive as a place to work until such time as Manhattan RE prices again drop / fail to rise, and vacancy rates increase. Vacant units = extra housing.

Spooky23 8y ago

Economic mumbo jumbo isn’t the only consideration for policy like this. Economic policy has left so much capital sitting around doing nothing that even marginal developments that are ultimately money losers are getting built everywhere. Local governments ultimately are accountable to the people, and it’s appropriate for them to think about the impact on the civic space of these developments, that are often ultimately bad for the community. Real estate is among the sketchiest of industries, and in the US at least almost all commercial projects are implicitly subsidized by the government. IMO anything that extracts value from developers is a good thing.

onion2k 8y ago

what will happen to the rate of building If the demand for houses from people who want to buy them to live in is greater than the supply of houses, nothing. The houses will still be built and sold, just to different people.

barry-cotter 8y ago
Not necessarily true. If the rate of return is changed some people who would have invested their money this will not. Properties might come to the market later because it’s not worth it to pay the premium to have workers come in on Saturday for example. Developers will be less willing to pay extra for legal services to get through the planning process faster. I’m sure there are other similar effects I’m missing as an outsider to property development.

Phemist 8y ago

This is already something well-known in the Dutch housing market though. It is known as "zelfbewoningsplicht" (self-occupation.. duty?, e.g. the contract you signed when buying the house stipulates that you, or your direct family have to live in it yourself/themselves). It is usually enforced by "woningcorporaties" (social housing corporations?) with a social mandate and does result in lower prices for the houses/appartements that have it. The odd thing here is that it's now municipalities that are enforcing it on _all_ housing, rather than just on designated social housing. It will be interesting to see the effects though.

danmaz74 8y ago

Regulation are introduced for their intended positive consequences, but they usually also have unintended negative consequences. Here you posit that the global balance will be negative, but your supposition is mostly based on the assumption that regulating the free market has always net bad consequences. Which is a point of view which has been pushed VERY strongly in the last decades, but which only the most idealogical anarcho-capitalists can fully believe: try to have no regulation in, eg, food production, and people start dying. As for this measure: we can all agree that it will depress prices for new homes, and increase prices for older homes. Is this going to be a net positive or negative for the middle class who wants to live in Amsterdam? It depends a lot on the price sensitivity of the construction of new homes. I suppose that planners in the city know more about this than me, and maybe you, and did their own projections. If they go on, we'll see the results.

ricardobeat 8y ago

The “old” property owners will have to price their properties to compete with cheap, modern, newly-built housing though. That’s absolutely in line with the end goal. You also have to bear in mind that a significant chunk of properties in NL is owned by housing associations, this new rule only applies to individuals.

Vinnl 8y ago

> they're only restricting one part of the market, and that part is "newly built" homes. An interesting sidenote is this comment from one of the municipal administrators: > It would be even better if we could also apply this rule to existing housing, but we think that requires the law to be changed. Dutch source: https://nos.nl/artikel/2275897-amsterdam-wil-verbod-op-verhuur-nieuwe-koopwoningen.html https://nos.nl/artikel/2275897-amsterdam-wil-verbod-op-verhu...

gerbilly 8y ago

> Like most selective political actions in a market, I suspect this has good intent but will produce predictably counter-productive outcomes. The status quo seems like a given, but it's maintained by actions too. We choose everyday not to change it, and this choice often produces outcomes that are counter productive. To not change things is literally a conservative programme, and this usually serves the interests of the wealthy.