16 ms·

The price of housing is only part of it. The rising prices reflect the rising demand and the relatively static supply. Even if prices were capped, it doesn’t me

The price of housing is only part of it. The rising prices reflect the rising demand and the relatively static supply. Even if prices were capped, it doesn’t mean more people would be able to get housing. There’s still fewer units than there are people who want them, so people would get units based on some other mechanism beside price such as a lottery. The unpredictability this would entail would probably be worse than a functioning price mechanism. Imagine you get a job in San Francisco but there’s only a 20% chance you’ll be able to “win” a housing unit where you want. Versus the current reality of for sure being able to find housing given you’re willing to pay enough.

deleted 7y ago
[deleted]
freedomben 7y ago
Exactly. It surprises me how many people don't understand the basic economics of scarcity. There has to be some rationing factor. In a free market this is price. If you remove price, it will be something else besides price, such as a lottery, how politically connected you are, or something else. The only real solution that doesn't result in shortages is to increase supply (build more housing).
- pascalxus 7y ago
  Or, reduce demand by spreading out jobs to other cities and states where their more needed. (not ideal, i know, but it is a secondary option)
  - xvedejas 7y ago
    I have seen it argued in gentrifying neighborhoods that we should reject all projects which make those neighborhoods nicer to live in, to discourage new residents. This is a pretty direct way of reducing demand: making your neighborhood shittier.
    - jjgreen 7y ago
      Invite me to live there, I'll bring down the the tone.
    - ahartmetz 7y ago
      Behold the devaluation kit (German): wife beaters, satellite dishes, discount supermarket plastic bags, ... https://www.esregnetkaviar.de/relaunch/abwertungskit.html https://www.esregnetkaviar.de/relaunch/abwertungskit.html
  - geezerjay 7y ago
    > Or, reduce demand by spreading out jobs to other cities and states where their more needed. This does not happen, nor is it remotely desirable. Having a life involves much more than having a decent job. It entails living where the person chooses to live according to their personal tastes and desires. If you force the decision on where to live based on a single constraint that in theory is only a major part of your life so that you can fund your personal life and personal interests then this leads to poor quality of living for all (including spouces, offsprings and immediatr family) just to cater to a company's bottom line.
    - dsfyu404ed 7y ago
      I'd wager that many more people are moving to the cities that have housing problems for the jobs than because they genuinely want to live there.
      - lotsofpulp 7y ago
        It only matters where the people with money want to live, and in my experience they overwhelmingly choose to live in high cost of living cities. The rest have to follow, if they want high paying, upward mobility jobs.
        geezerjay 7y ago
        > [people with money] overwhelmingly choose to live in high cost of living cities. You're confounding your observations. People with money choose to live in areas that maximize their quality of life, and they don't mind paying a premium for that. Quality of life matters to all, whether rich or poor. Poor people aren't masochists.
        thedaemon 7y ago
        You keep thinking people move places and then find jobs. This is not correct in the USA. Also, the quality of life is not higher in these expensive cities.
- door5 7y ago
  Rent control prevents people who currently have homes from being displaced. It also limits the degree to which housing is a commodity investors can profit off of & the degree to which they can exploit their tenants. It is obviously not a complete solution to the housing crisis (and no housing advocate claims this) -- a complete solution means rent control and building more housing, especially high quality public housing.
  - freedomben 7y ago
    As long as rent control prices existing homes above the cost of new construction, then there won't be a problem. However if rent controls cap the price at below the cost of new construction, nobody is going to build. They would be losing money if they do that.
    - door5 7y ago
      The state can build housing then if it's not profitable. Housing is a public good and a right, it should not be a product or investment.
- camelite 7y ago
  > If you remove price, it will be something else besides price, such as a lottery, how politically connected you are, or something else. The main driver of price is not "demand" imagined as how much people willing to pay for a particular house but demand as how much people are capable of paying, which is mediated by access to debt. If access to debt is clamed down on across the board, then prices will fall accross the board. People will still compete on price but as a society a smaller fraction of income will be spent on housing.
  - freedomben 7y ago
    That is true for existing, middle class and below housing for sure. Whenever interest rates go up, we see the exact effect you are describing. it's not the whole story however. In order to increase Supply, it has to be profitable to build new homes. If building new homes is not profitable, none will be built, and the price of existing homes will be forced upward until it matches the cost of new construction. So I agree with you that access to debt is a very important factor, but I disagree that it is more important than demand when you look at the whole picture.
adrianN 7y ago
But the kind of people who can get an apartment would be normalized. Window cleaners would have a similar chance of getting an apartment as their boss. I think that would be better for the health of the city and a better solution until either demand lowers or supply grows than just excluding low income workers from the city.
- outlace 7y ago
  Unpredictability is a major cause of economic dysfunction. If no one can reliably/predictably obtain housing even if it’s cheap, I’d be surprised if the economy didn’t go haywire and then those low income workers you speak of will be no-income non-workers.
- henrikschroder 7y ago
  Rent control doesn't work in the long run. Sweden has had rent control since the 1940's, and as a result the rental housing market is completely dysfunctional by international standards. In Stockholm, demand for central inner city apartments is way, way, way higher than supply. The rationing method used is a queue administered by the city, and the queue time for the most sought-after areas is on average 17 years. Even the most remote areas have a queue-time of at least a year. SEVENTEEN YEARS. GOOD LUCK, COMRADE. This means that if you want to move to Stockholm from outside the city or outside the country, you will not get a rental apartment, unless you rent one second-hand or third-hand, unless you buy a rental apartment under the table, unless you have "contacts", or unless you buy a condo on the perfectly functional condo market. Since there's a functioning market for condos, but a dysfunctional market for rental complexes, the ROI on building a condo complex is decent, but the ROI on building a rental complex is abysmal. You're better off setting your pile of money on fire than invest in building rental apartments. No private for-profit company will voluntarily build new rental apartments. So the only actors left that could do that is the city itself. However, the city government changes politically every four years, and even if there's a left-wing majority, there is absolutely no budget to increase supply meaningfully. In addition, there's political and economical pressure to convert the city's housing stock to condos. Current renters love it, because it means they can realize the value of their rental into cold hard cash, and the city council loves it because they get a temporary cash infusion. It's zero-sum for the housing stock, and the long-term effects are shit, because the rental supply diminishes, making the queues worse. The net result is that it is incredibly hard for companies to attract outside talent, because finding a place to live if you don't already live in Stockholm, is incredibly hard. If you're a transient worker or simply doesn't want to buy an apartment, and if you don't have a decade of accumulated queue time, you have to rent from the much more expensive second-hand weird market, which means that companies have to pay you much more than they would have to pay a local for the same job. Compare this with SF, or any other large city with a functional housing market, where every company has to pay their employees a wage that covers the housing market rate, which means that there's no difference between local workers and outside workers, and it means that the city has a much easier time attracting new people who want to come there and live there. Because anyone can live there, if they just show up with enough cash to pay the market rate. Yes, market rates means you get a host of problems, gentrification most of them, but that's a positive problem compared to all the horrible problems that rent control bring.
toastal 7y ago
Are you kidding? Do you know how much housing is bought but no one is living in it?

deleted 7y ago

[deleted]

freedomben 7y ago

Exactly. It surprises me how many people don't understand the basic economics of scarcity. There has to be some rationing factor. In a free market this is price. If you remove price, it will be something else besides price, such as a lottery, how politically connected you are, or something else. The only real solution that doesn't result in shortages is to increase supply (build more housing).

pascalxus 7y ago
Or, reduce demand by spreading out jobs to other cities and states where their more needed. (not ideal, i know, but it is a secondary option)
- xvedejas 7y ago
  I have seen it argued in gentrifying neighborhoods that we should reject all projects which make those neighborhoods nicer to live in, to discourage new residents. This is a pretty direct way of reducing demand: making your neighborhood shittier.
  - jjgreen 7y ago
    Invite me to live there, I'll bring down the the tone.
  - ahartmetz 7y ago
    Behold the devaluation kit (German): wife beaters, satellite dishes, discount supermarket plastic bags, ... https://www.esregnetkaviar.de/relaunch/abwertungskit.html https://www.esregnetkaviar.de/relaunch/abwertungskit.html
- geezerjay 7y ago
  > Or, reduce demand by spreading out jobs to other cities and states where their more needed. This does not happen, nor is it remotely desirable. Having a life involves much more than having a decent job. It entails living where the person chooses to live according to their personal tastes and desires. If you force the decision on where to live based on a single constraint that in theory is only a major part of your life so that you can fund your personal life and personal interests then this leads to poor quality of living for all (including spouces, offsprings and immediatr family) just to cater to a company's bottom line.
  - dsfyu404ed 7y ago
    I'd wager that many more people are moving to the cities that have housing problems for the jobs than because they genuinely want to live there.
    - lotsofpulp 7y ago
      It only matters where the people with money want to live, and in my experience they overwhelmingly choose to live in high cost of living cities. The rest have to follow, if they want high paying, upward mobility jobs.
      - geezerjay 7y ago
        > [people with money] overwhelmingly choose to live in high cost of living cities. You're confounding your observations. People with money choose to live in areas that maximize their quality of life, and they don't mind paying a premium for that. Quality of life matters to all, whether rich or poor. Poor people aren't masochists.
        thedaemon 7y ago
        You keep thinking people move places and then find jobs. This is not correct in the USA. Also, the quality of life is not higher in these expensive cities.
door5 7y ago
Rent control prevents people who currently have homes from being displaced. It also limits the degree to which housing is a commodity investors can profit off of & the degree to which they can exploit their tenants. It is obviously not a complete solution to the housing crisis (and no housing advocate claims this) -- a complete solution means rent control and building more housing, especially high quality public housing.
- freedomben 7y ago
  As long as rent control prices existing homes above the cost of new construction, then there won't be a problem. However if rent controls cap the price at below the cost of new construction, nobody is going to build. They would be losing money if they do that.
  - door5 7y ago
    The state can build housing then if it's not profitable. Housing is a public good and a right, it should not be a product or investment.
camelite 7y ago
> If you remove price, it will be something else besides price, such as a lottery, how politically connected you are, or something else. The main driver of price is not "demand" imagined as how much people willing to pay for a particular house but demand as how much people are capable of paying, which is mediated by access to debt. If access to debt is clamed down on across the board, then prices will fall accross the board. People will still compete on price but as a society a smaller fraction of income will be spent on housing.
- freedomben 7y ago
  That is true for existing, middle class and below housing for sure. Whenever interest rates go up, we see the exact effect you are describing. it's not the whole story however. In order to increase Supply, it has to be profitable to build new homes. If building new homes is not profitable, none will be built, and the price of existing homes will be forced upward until it matches the cost of new construction. So I agree with you that access to debt is a very important factor, but I disagree that it is more important than demand when you look at the whole picture.

adrianN 7y ago

But the kind of people who can get an apartment would be normalized. Window cleaners would have a similar chance of getting an apartment as their boss. I think that would be better for the health of the city and a better solution until either demand lowers or supply grows than just excluding low income workers from the city.

outlace 7y ago
Unpredictability is a major cause of economic dysfunction. If no one can reliably/predictably obtain housing even if it’s cheap, I’d be surprised if the economy didn’t go haywire and then those low income workers you speak of will be no-income non-workers.
henrikschroder 7y ago
Rent control doesn't work in the long run. Sweden has had rent control since the 1940's, and as a result the rental housing market is completely dysfunctional by international standards. In Stockholm, demand for central inner city apartments is way, way, way higher than supply. The rationing method used is a queue administered by the city, and the queue time for the most sought-after areas is on average 17 years. Even the most remote areas have a queue-time of at least a year. SEVENTEEN YEARS. GOOD LUCK, COMRADE. This means that if you want to move to Stockholm from outside the city or outside the country, you will not get a rental apartment, unless you rent one second-hand or third-hand, unless you buy a rental apartment under the table, unless you have "contacts", or unless you buy a condo on the perfectly functional condo market. Since there's a functioning market for condos, but a dysfunctional market for rental complexes, the ROI on building a condo complex is decent, but the ROI on building a rental complex is abysmal. You're better off setting your pile of money on fire than invest in building rental apartments. No private for-profit company will voluntarily build new rental apartments. So the only actors left that could do that is the city itself. However, the city government changes politically every four years, and even if there's a left-wing majority, there is absolutely no budget to increase supply meaningfully. In addition, there's political and economical pressure to convert the city's housing stock to condos. Current renters love it, because it means they can realize the value of their rental into cold hard cash, and the city council loves it because they get a temporary cash infusion. It's zero-sum for the housing stock, and the long-term effects are shit, because the rental supply diminishes, making the queues worse. The net result is that it is incredibly hard for companies to attract outside talent, because finding a place to live if you don't already live in Stockholm, is incredibly hard. If you're a transient worker or simply doesn't want to buy an apartment, and if you don't have a decade of accumulated queue time, you have to rent from the much more expensive second-hand weird market, which means that companies have to pay you much more than they would have to pay a local for the same job. Compare this with SF, or any other large city with a functional housing market, where every company has to pay their employees a wage that covers the housing market rate, which means that there's no difference between local workers and outside workers, and it means that the city has a much easier time attracting new people who want to come there and live there. Because anyone can live there, if they just show up with enough cash to pay the market rate. Yes, market rates means you get a host of problems, gentrification most of them, but that's a positive problem compared to all the horrible problems that rent control bring.

toastal 7y ago

Are you kidding? Do you know how much housing is bought but no one is living in it?