8 ms·

There is no functioning market to begin with. Housing prices and rent are through the roof in California, yet supply is not rising to meet demand, largely beca

• ralusek 7y ago
  Let's just not even talk about the fact that regulation is the reason why housing is scarce, let's just assume California is 100% at capacity. How the hell does rent control increase turnabout? It just let's people who got in at the right time have their status as a resident enforced indefinitely, when there are plenty of people who are willing and able to pay far more in order to live there.
  • jackvalentine 7y ago
    > Let's just not even talk about the fact that regulation is the reason why housing is scarce, let's just assume California is 100% at capacity. AKA ignore the entire foundation of the previous poster's point? Edit: upon re-reading your comment I think maybe you don't know what the phrase 'Turnabout is fair play.' means. https://en.wiktionary.org/wiki/turnabout_is_fair_play https://en.wiktionary.org/wiki/turnabout_is_fair_play
    • dgzl 7y ago
      Thanks for that, I didn't know this term. However I disagree with the idea that two wrongs make a right. Forcing the suffering around like that just creates more problems than it's worth.
      • jackvalentine 7y ago
        In this case two wrongs may not make a right, but at least it shares some pain with the rent-seeking property owning class and may in time cause them to accept change. It's a bit fatalistic but if we're going down anyway, we're going down together!
        • dgzl 7y ago
          I hate that mentality. It achieves nothing good in the long run.
        • sgc 7y ago
          If they are making less money, they certainly won't allow more construction to deflate prices even further. Rent is already below mortgage in California, so I am not sure what kind of deal people are looking for. As others have said here in various ways, it seems more like lashing out at someone because it sucks life is so expensive where you live rather than dealing with the root causes.
          • jackvalentine 7y ago
            How would you deal with the root causes?
            • AnthonyMouse 7y ago
              Impose relaxed zoning rules at the state level instead of imposing rent control there.
              • jackvalentine 7y ago
                I would completely agree with that, but for some reason it isn't as politically do-able as this rent control legislation was.
                • AnthonyMouse 7y ago
                  > I would completely agree with that, but for some reason it isn't as politically do-able as this rent control legislation was. The reason is that landlords know exactly what rent control does. Landlords know that the tenants with the strongest interest in local housing costs are the people who already live there and plan to continue to do so indefinitely. Rent control is a method of buying them off without actually solving the problem in general, so that overall rents and housing costs remain high but the subset of people most likely to be politically active in doing something to correct that gets a bribe to stop objecting while overall housing costs continue to rise faster than inflation. What it is, then, is not a step on the road to a real solution, it's a roadblock preventing that from happening by weakening opposition to the status quo by just enough that no actually effective reforms can be enacted.
  • human20190310 7y ago
    It hurts the owners who would be receiving the wealthy newcomers' money. It doesn't solve anything directly, but it's an attack on the prosperity of the people who are maintaining artificial restrictions on new construction. A laissez-faire approach to both construction and rent would probably be a better option. But that's already not happening, and it's not going to happen without pressuring homeowners and landlords to stop opposing construction.
    • um_ya 7y ago
      Do you really expect a place like California to reduce regulations? Their solution is a new regulation!
    • dgzl 7y ago
      Construction isn't easy anymore. we've taxed and regulated it into a luxury.
      • ravenstine 7y ago
        Lots of developers choose to build luxury buildings because it can take several years for the construction to be approved. We could build more starter homes like we used to, but it's hardly worth it for developers.
      • dcolkitt 7y ago
        Maybe, but construction may not even be necessary. Shipping containers can now be easily retrofitted into stylish apartments. They can easily be stacked eight stories tall. 95% of the work can be done in overseas factories and is subject to the same globally competitive downward price pressure as every other manufactured good. Build them in Shenzen at a wholesale cost of $30,000 per pod, ship them to San Franciso for $2000, stack and install them at a cost of $8000. At 320 square feet, that's $120 per square foot. The same cost as new homes in rural Texas. All the California legislature needs to do is pass a law zoning everywhere in the state for multi-story shipping container apartments. Then watch prices plummet. Even for single family regular construction homes, because the shipping container apartments will suck so much demand out of the market.
  • WWLink 7y ago
    I highly doubt that. At least in LA county, this place was built up in a giant friggin profit-motivated hurry. Now, if we're talking about planned cities built in the 80s in orange county, maybe we have a point! Maybe. SF has a similar story of sorts. Building code regulations were heavily relaxed after the 1906 earthquake in fear that people wouldn't rebuild otherwise. Businesses will build whatever is most profitable. If it's more profitable to de-regulate and unzone everything, then they would be lobbying like hell to get that.
  • nradov 7y ago
    Many parts of California are already beyond 100% capacity for certain pieces of infrastructure like transportation, schools, water, and sewers. So I only support more housing in those areas if building permits are directly coupled with equivalent infrastructure upgrades.
    • sgc 7y ago
      There are places in California where infrastructure can't help. There is just not enough water for more people.
      • labster 7y ago
        That's not really true except perhaps on the shallowest level. There's a lot of environmental issues, pre-1914 water rights, short-term climate issues like ENSO and MJO, and crop choices that have caused California to experience water shortages. Maybe in some cases we can put crops under solar panels to save water[0], or reclaim more water through toilet-to-tap programs. You know, through infrastructure. Reductionist statements like yours never really reflect any real-world policy environment. The real world is messy and complicated. [0]: https://arstechnica.com/science/2019/09/crops-under-solar-panels-can-be-a-win-win/ https://arstechnica.com/science/2019/09/crops-under-solar-pa...
      • tbihl 7y ago
        To push in a different direction, there isn't enough water for more people while keeping the amount and types of agriculture in California constant. Prioritize residential water use over agricultural rather than aggressively doing the reverse, and you'd probably see improvement. Singapore and Hong Kong are very strong arguments to me against the idea that California couldn't handle more.
    • 0xB31B1B 7y ago
      Lucky for us, none of these “at capacity” areas are in high cost metros like LA, San Diego or the Bay Area
      • 7y ago
  • guelo 7y ago
    Getting in at the right time is a big part of free markets and capitalism. It's the same as someone complaining that Zukerberg or Henry Ford just got in at the right time and didn't deserve their wealth.
• dgzl 7y ago
  Regulations and taxes drive developers away.
• PorterDuff 7y ago
  It's worth considering California building code in the cost of new construction.
  • sgc 7y ago
    California building code is really not that different from anywhere else in the US, since almost all states base their code off the IBC. it costs a little more to build in a seismic zone or a high fire risk zone, but that is inevitable. The code does help keep people alive and healthy, and protect against more costly damage than otherwise in case of natural disasters. In California, 25% of a new SFR is land. Another 25% easy goes to permits and municipal utility connections. 40% construction costs (including paying the boss a salary), and if you are lucky, 10% profit. Simply reducing permitting costs and streamlining the process to reduce holding costs (without even easing restrictions, just being more efficient/faster at the municipal level) could shave 20% off a new home price. That would drive down all home prices to some extent and open up a large number of people to get out of the renters pool. So CA government is the major player to blame for housing costs, and these laws are in place of just doing their jobs well. This might drive prices down too, eventually, but not nearly as quickly or fairly as bureaucratic reform would.
    • PorterDuff 7y ago
      Do they require fire suppression systems and solar panels in the rest of the US? I honestly don't know.
      • sgc 7y ago
        Fire suppression is required everywhere AFAIK. Solar is not yet required, but will be next year. So it has had no effect on current Ca housing. That is a stupid rule and should have exemptions for areas that don't receive enough sun due to fog/trees/etc. But solar will still be far, far cheaper than permits and will add value/decrease ownership costs for most homes.
• masonic 7y ago
  supply is not rising to meet demand How will that aspect not worsen with added rent control?
  • namesbc 7y ago
    We are so very very far above market equilibrium rents. Even if CA did something drastic and limited rents to say $500 per bedroom it would still be profitable to build more housing. Lack of profit incentives is NOT what is blocking housing construction in CA right now. This very minor, way above inflation, rent cap will not affect housing supply.
• AmericanChopper 7y ago
  > yet supply is not rising to meet demand, largely because existing owners oppose new construction. So when over-regulation drives up prices, the appropriate response is to introduce new regulations to fight the other regulations? Because that’s exactly what this is. It won’t even improve the problem. The problem is that there are more people who want to live in California than there is housing. The reason for that is because regulations prohibit the market from increasing supply at a rate that comes anywhere near keeping up with demand.
  • human20190310 7y ago
    > So when over-regulation drives up the costs, the appropriate response is to introduce new regulations to fight the other regulations? Yes. The effort to reduce regulations on construction has failed. As such, retaliating against the beneficiaries of those regulations with counter-regulations is appropriate. It's not pretty or efficient, this is a fight between different interests, not a group problem-solving effort.
    • AmericanChopper 7y ago
      If over regulation drove up prices, what exactly do you expect from more regulation?
      • human20190310 7y ago
        To expand the set of people suffering to include landlords and owners, instead of having own group of people benefiting from regulation (in the form of restricted supply) and another not. EDIT: to be clear, not suffering for its own sake, but to pressure owners to stop supporting the current regulations.
        • AmericanChopper 7y ago
          As long as demand for housing continues to outstrip supply, especially if demand continues to grow at a rate exceeding the growth in supply, then there will always be money to be made in housing. This law in California allows for 5% annual increases after inflation. It’s hard to see how this will even hurt landlords. Creating a pretty clear incentive to perform a maximum increase ever year doesn’t seem great for renters though.
• jeffdavis 7y ago
  > Turnabout is fair play. The biggest myth is that this kind of stuff actually helps the less-powerful. In reality, it just means they are hurt twice: government artificially suppressing supply, and government manipulating prices which has bad side effects for mamy even if its good for a few. Also, in reality, the powerful often don't get hurt, and arbitrary market manipulations just introduce new ways for them to get an advantage somehow.
  • rtpg 7y ago
    > manipulating prices which has bad side effects for many even if its good for a few. There are way more renters than owners. Prices have been going up more than 5%. Owners are most definitely not the "less-powerful" here. So in reality the gov't might be artificially surpressing supply (though it's mostly due to owner pushback), but the "manipulating prices" (trying to keep rent growth from getting out of control) is helping less-powerful. I get the point about how this can default owners to just increase prices. Well they were going to be doing that anyways! Especially with surpressed supply! Arguing that "overall price increases with this law" > "overall prices increase without this law" is non-intuitive and probably just not true. (thought experiment: if raising 5% every year with the law made sense, why would it not make sense to raise it 5% every year without the law? This law doesn't prevent other owners from offering _lower_ rents, if the market calls for it)
    • AnthonyMouse 7y ago
      > thought experiment: if raising 5% every year with the law made sense, why would it not make sense to raise it 5% every year without the law? If you don't raise it now then you can no longer do it later in the event that taxes or mortgage interest rates or some other cost increases. That creates a major risk for the landlord, which most of them would prefer to mitigate by raising rents even if it means apartments going vacant longer. And when they're all similarly situated, they all do the same thing, which means the tenants can't avoid the rent increases by moving to another apartment, which allows for more of the landlords to get in on the rent increase without incurring vacancies.
    • tylerl 7y ago
• Romanulus 7y ago
  That seems like a really clumsy way of pretending to be in a free market.
  • xvector 7y ago
    Few markets are really free, and that’s a good thing. Free markets tend to be very ugly in reality.
    • Romanulus 7y ago
      You're right. Tight nationalistic control of all markets is the only rational way to ensure sanity.
• dgzl 7y ago
  California is also one of the most taxed and regulated states. Do you think that is a coincidence?
  • guelo 7y ago
    California has also been creating high paying jobs at a fast pace, could that be a coincidence?
    • onlyrealcuzzo 7y ago
      D.C. is probably a better example here. California is 1/6th of the US economy. It's not really creating "good" jobs relative to its size. And D.C. is only doing that because it's just one city. Cities are the winners in the current economy. They happen to be liberal. Cities in Texas and Tenesee happen to be conservative, and they're doing swimmingly also. Despite how much people get worked up, policy doesn't have a huge macroeconomic effect.
      • bbreier 7y ago
        > Cities in Texas and Tenesee happen to be conservative I don't know anything about Tennessee, but cities in Texas are not conservative. See these maps of 2012 and 2016 election results by county: https://www.chron.com/politics/election/local/article/Map-comparison-Texas-2012-election-results-10604025.php#photo-11780487 https://www.chron.com/politics/election/local/article/Map-co...
        • onlyrealcuzzo 7y ago
          That's a very recent development -- starting around 2008. Even still -- beside Austin -- they are barely liberal. You do realize places like SF, Los Angeles, NYC, Philadelphia, Boston, Chicago, Seattle etc vote democratic at rates close to 75% for like 30 straight years. Even most southern cities like Atlanta, Jacksonville, Tampa, Orlando, and Miami are well into the 60s. Even if Dallas, Houston, and San Antonio are like ~52% for the last 8 years, they're a bit of an outlier as far as major cities go.
• downrightmike 7y ago
  Time to let half of Rome burn.
• camjohnson26 7y ago
  That’s just not true, of course there is a functioning market. It’s disingenuous to say that just because the market has problems that means there isn’t one at all and to justify taking away what little freedoms are left.
• davidw 7y ago
  > tenants can organize politically to control prices. That's fine for existing renters, but think about people who would like to move there to pursue a job, or live in a state friendlier to gay people or for whatever reason. They're going to find it harder to find a place to live, in all likelihood.
• breerly 7y ago
  Yes. Price controls are a race to the bottom.
• deleted 7y ago
  [deleted]
• cheriot 7y ago
  > Turnabout is fair play. If owners organize politically to control supply... It's frequently renters talking about gentrification that oppose new housing around me.
• YPCrumble 7y ago
  This is the best argument I've seen to support these price controls. They're a bad idea on their own, but as a response to another bad idea (landlord opposition to construction) they make political sense. Sometimes the system has to break down before progress happens.