4 ms·

I would be curious as to the basis for removing one of the largest components of the economy. There's a lot of money tied up in housing! Removing housing reduc

by runako 8y ago

I would be curious as to the basis for removing one of the largest components of the economy. There's a lot of money tied up in housing! Removing housing reduces returns seems like a tautology: if you remove one of the best-returning asset classes, returns are lower.

sien 8y ago
The argument is that there is an artificial, government imposed basis to the scarcity of housing in high value areas due to zoning. So zoning contributes substantially to wealth inequality.
innagadadavida 8y ago
Won’t this make housing more affordable and allow people to live a decent life? At least in the Bay Area, even rickety shacks now cost >$1M to buy.
knowaveragejoe 8y ago
Isn't the person you're replying to talking about saner use of land, not removing housing entirely..?
darawk 8y ago
The basis is that when people say "r >> g" they think "business owners and the stock market" rather than "the house my parents own", and they think about reforms to the business sector rather than reforms to the housing sector.
- bildung 8y ago
  It seems they would be more right than wrong, though, as business owners indeed also own the majority of US real estate, with about $30 trillion business-owned vs. $19 trillion privately owned: * Residential real estate market size was $33 trillion in 2018, of which about 80 million units are privately owned and 60 million units are not. * Commercial real estate market size (Office buildings etc.) was about $15 trillion.
  - Mirioron 8y ago
    Isn't that an unfair comparison? Businesses usually make property more valuable, because businesses provide jobs and people want to live somewhere near where they work. Businesses also congregate in the most expensive areas, because they're the only ones that can afford those prices, but people usually don't buy real estate in the most expensive areas purely as a real estate investment. How many city centres have property that sits empty? So I'm not sure that this is a good comparison.
    - AnthonyMouse 8y ago
      For one thing you're talking about two different businesses. It's very common for companies to rent the space they're in. Then the commercial tenant is providing the value you're referring to but the landlord is the one who receives the increase in property values. But even regardless of that, it doesn't change the numbers. The majority of the increase in real estate prices goes to corporations rather than individuals. An explanation of why it happens doesn't change that it does.
      - Mirioron 8y ago
        But it matters in a comparison like this, because commercial real estate gets used to run businesses. Businesses, especially in high value real estate areas, tend to increase real estate prices even further by providing well-paying jobs and useful services. The comparison is like looking at a fireplace and then saying that it's warmer in the fireplace areas. We're talking about justifying action against businesses here. It matters where the value comes from.
  - darawk 8y ago
    I'm not sure what your point is. Business ownership of real estate is irrelevant. The fundamental problem is the structure of the real estate market, not the competitive environment for business.
raphaelj 8y ago
You can remove returns generated by the housing economy and while still providing housing. Some cities and countries (e.g. Vienna, or the Netherlands) provide public housing through gouvernement and/or not for profit organisations (i.e. with 0% returns), to a large part of the population. These places also have some of the lowest inequalities, which seems to validate the parent's message.
- sachdevap 8y ago
  I'm on your side regarding your implication that the reduced inequality might be helped by public housing. Correlation, however, does not provide validation for a causal implication. Validation should require stronger evidence than correlation.
  - virgilp 8y ago
    Also it's strange to not include the Norway, Sweden, Finland in this. Do they have similar programs?
    - natmaka 8y ago
      ... and also France, where ~17% (4,5 millions) of main residences are "HLM" (habitations à loyers modérés).
- DebtDeflation 8y ago
  Henry George had that figured out over 100 years ago. I highly recommend Progress and Poverty to anyone seriously interested in political economy.
- AnthonyMouse 8y ago
  You don't even need public housing for this. The higher rents are the more profitable it is to construct new housing. The issue is currently that we literally prohibit it with zoning rules, then make construction less profitable (and therefore less common) by using property tax as opposed to LVT, then (to a much lesser but still relevant level) make construction more expensive through various regulations and trade licensing rules that increase construction costs. Make it cheaper and easier to build new housing and you'll see a lot more new housing.
deleted 8y ago
[deleted]
megaremote 8y ago
I don't think they was saying we physically remove all housing. They were saying that most of the imbalance if from housing, that a lot of people own, not just from owning stocks/bonds/etc...
ivalm 8y ago
Is that related to an increase in population driving up density and "selectivity" of highly desirable areas? What happens when population growth flattens and starts going down (for example, what is the case for Japan now?)

by runako 8y ago

sien 8y ago

The argument is that there is an artificial, government imposed basis to the scarcity of housing in high value areas due to zoning. So zoning contributes substantially to wealth inequality.

innagadadavida 8y ago

Won’t this make housing more affordable and allow people to live a decent life? At least in the Bay Area, even rickety shacks now cost >$1M to buy.

knowaveragejoe 8y ago

Isn't the person you're replying to talking about saner use of land, not removing housing entirely..?

darawk 8y ago

The basis is that when people say "r >> g" they think "business owners and the stock market" rather than "the house my parents own", and they think about reforms to the business sector rather than reforms to the housing sector.

bildung 8y ago
It seems they would be more right than wrong, though, as business owners indeed also own the majority of US real estate, with about $30 trillion business-owned vs. $19 trillion privately owned: * Residential real estate market size was $33 trillion in 2018, of which about 80 million units are privately owned and 60 million units are not. * Commercial real estate market size (Office buildings etc.) was about $15 trillion.
- Mirioron 8y ago
  Isn't that an unfair comparison? Businesses usually make property more valuable, because businesses provide jobs and people want to live somewhere near where they work. Businesses also congregate in the most expensive areas, because they're the only ones that can afford those prices, but people usually don't buy real estate in the most expensive areas purely as a real estate investment. How many city centres have property that sits empty? So I'm not sure that this is a good comparison.
  - AnthonyMouse 8y ago
    For one thing you're talking about two different businesses. It's very common for companies to rent the space they're in. Then the commercial tenant is providing the value you're referring to but the landlord is the one who receives the increase in property values. But even regardless of that, it doesn't change the numbers. The majority of the increase in real estate prices goes to corporations rather than individuals. An explanation of why it happens doesn't change that it does.
    - Mirioron 8y ago
      But it matters in a comparison like this, because commercial real estate gets used to run businesses. Businesses, especially in high value real estate areas, tend to increase real estate prices even further by providing well-paying jobs and useful services. The comparison is like looking at a fireplace and then saying that it's warmer in the fireplace areas. We're talking about justifying action against businesses here. It matters where the value comes from.
- darawk 8y ago
  I'm not sure what your point is. Business ownership of real estate is irrelevant. The fundamental problem is the structure of the real estate market, not the competitive environment for business.

raphaelj 8y ago

You can remove returns generated by the housing economy and while still providing housing. Some cities and countries (e.g. Vienna, or the Netherlands) provide public housing through gouvernement and/or not for profit organisations (i.e. with 0% returns), to a large part of the population. These places also have some of the lowest inequalities, which seems to validate the parent's message.

sachdevap 8y ago
I'm on your side regarding your implication that the reduced inequality might be helped by public housing. Correlation, however, does not provide validation for a causal implication. Validation should require stronger evidence than correlation.
- virgilp 8y ago
  Also it's strange to not include the Norway, Sweden, Finland in this. Do they have similar programs?
  - natmaka 8y ago
    ... and also France, where ~17% (4,5 millions) of main residences are "HLM" (habitations à loyers modérés).
DebtDeflation 8y ago
Henry George had that figured out over 100 years ago. I highly recommend Progress and Poverty to anyone seriously interested in political economy.
AnthonyMouse 8y ago
You don't even need public housing for this. The higher rents are the more profitable it is to construct new housing. The issue is currently that we literally prohibit it with zoning rules, then make construction less profitable (and therefore less common) by using property tax as opposed to LVT, then (to a much lesser but still relevant level) make construction more expensive through various regulations and trade licensing rules that increase construction costs. Make it cheaper and easier to build new housing and you'll see a lot more new housing.

deleted 8y ago

[deleted]

megaremote 8y ago

I don't think they was saying we physically remove all housing. They were saying that most of the imbalance if from housing, that a lot of people own, not just from owning stocks/bonds/etc...

ivalm 8y ago

Is that related to an increase in population driving up density and "selectivity" of highly desirable areas? What happens when population growth flattens and starts going down (for example, what is the case for Japan now?)