5 ms·

Absolutely. A market adjusts far more rapidly to match supply and demand than any committee ever could, especially as groups of people that set prices have age

by thrill 7y ago

Absolutely. A market adjusts far more rapidly to match supply and demand than any committee ever could, especially as groups of people that set prices have agendas other than seeking movement to a balanced price.

tonyarkles 7y ago
Hmmm, I wish that were true. It seems like it would be, but my (Canadian) province’s two major cities are showing how glacially slow the market is reacting to an oversupply. Cheap interest rates mean that for a lot of builders who overbuilt, it’s cheaper to pay the 2-3% interest for the year than to lower prices 10-20%. Our prices went up like a rocket around 2006-2008, and are very very gradually dropping back down. There was, of course, no significant salary increase in the same time period, or since then, so entering the housing market for first time buyers has been much more very difficult than it was in the past.
- dantheman 7y ago
  Most markets take awhile to sort out the proper price. The proper price is not based on any one commodity, it can be seen as an optimization problem. As the price goes down certain other industries can move in, and then the price will stabalize or even begin to increase again. This is how neighborhoods go from expensive -> cheaper -> gentrification -> expensive.
- asdfasgasdgasdg 7y ago
  Which cities are these? It's (I think) pretty well known that housing prices are a little sticky. Even if the market reacts to changes in supply and demand, nobody wise says it reacts instantly. But, I think there's also a chance you've been misled as to exactly how much oversupply there is.
  - tonyarkles 7y ago
    Saskatoon (worse) and Regina (not as bad). For a long read about Saskatoon, see https://jbuc61.wordpress.com/ https://jbuc61.wordpress.com/ We recently moved from Saskatoon to Regina, and our family sold the Saskatoon house. We priced it slightly below market and it sold in 3 days, but there were many similar houses that had been on the market for months. The buyer tried to flip it (it needed love for sure); I'd guess $15-20k worth of supplies plus his own labour. It sat on the market for a long time, and ultimately sold for only $40k more than he paid us for it.
mjevans 7y ago
An absolutely free market does. Housing is NOT anything like that kind of market. Building permits, zoning, NIMBY, various minimums (aside from taxes, thanks Rs for focusing so strongly on less taxes rather than greater value for money...). Make building the desired type of housing easy; incentivize it until market conditions have been corrected... We're several decades behind at this point, so a huge boom is required to correct prices.
- chaostheory 7y ago
  > building permits Conversely, you don’t want unsound buildings in earthquake country, but yeah they’re also being abused
JMTQp8lwXL 7y ago
When local rule kills the creation of new supply, it doesn't seem far fetched to cap rents to inflation + N%.
- coryrc 7y ago
  How about, if housing isn't allowed in an area, then rent and sales price isn't allowed to increase?
  - negrit 7y ago
    How about rent increase matches property tax increase + inflation. If a property owner isn't paying fair taxes on its property value then rent isn't getting increased as well.
    - pkaye 7y ago
      So assuming 2% inflation and maximum property tax rate increase of 2%, that would by 4%. Would a 4% increase be acceptable in your opinion?
      - negrit 7y ago
        In my opinion it's fair the have a rent increase if the property owner has a tax increase.
        mjevans 7y ago
        I see what you're thinking; a tax rate increase to the current market rate, as if it weren't locked in by that one California law (IIRC Prop 30?).
weatherlight 7y ago
more than 11% of all rental apartments in New York City — sit either empty or scarcely occupied, even as many New Yorkers struggle to find an apartment they can afford.” One reason for the growing vacancy rates, as the article states, is the city’s high rent, which has risen twice as fast as inflation.
cortesoft 7y ago
Sure, if your only goal is the most efficient allocation of scarce resources. However, 'supply and demand' doesn't care at all about fairness. Richer people will get more of the desired resource than poor people. Poor people might be priced out of the market entirely. The 'free market' might end up with entire communities being forced to move to a cheaper area because their current location is highly desirable to wealthier people. In a free market, this might be determined to be a fine outcome: people willing (and able) to pay more for that area get to live there. Citizens might not think this is an ideal outcome. They might, with valid reasons, feel that poorer, existing, residents should be allowed to stay where they are, even if wealthier people from other areas want to move there. I am not saying one side is right and the other is wrong, I am saying a free market only solves the efficient use of resources part of the equation, not the other parts.

by thrill 7y ago

tonyarkles 7y ago

Hmmm, I wish that were true. It seems like it would be, but my (Canadian) province’s two major cities are showing how glacially slow the market is reacting to an oversupply. Cheap interest rates mean that for a lot of builders who overbuilt, it’s cheaper to pay the 2-3% interest for the year than to lower prices 10-20%. Our prices went up like a rocket around 2006-2008, and are very very gradually dropping back down. There was, of course, no significant salary increase in the same time period, or since then, so entering the housing market for first time buyers has been much more very difficult than it was in the past.

dantheman 7y ago
Most markets take awhile to sort out the proper price. The proper price is not based on any one commodity, it can be seen as an optimization problem. As the price goes down certain other industries can move in, and then the price will stabalize or even begin to increase again. This is how neighborhoods go from expensive -> cheaper -> gentrification -> expensive.
asdfasgasdgasdg 7y ago
Which cities are these? It's (I think) pretty well known that housing prices are a little sticky. Even if the market reacts to changes in supply and demand, nobody wise says it reacts instantly. But, I think there's also a chance you've been misled as to exactly how much oversupply there is.
- tonyarkles 7y ago
  Saskatoon (worse) and Regina (not as bad). For a long read about Saskatoon, see https://jbuc61.wordpress.com/ https://jbuc61.wordpress.com/ We recently moved from Saskatoon to Regina, and our family sold the Saskatoon house. We priced it slightly below market and it sold in 3 days, but there were many similar houses that had been on the market for months. The buyer tried to flip it (it needed love for sure); I'd guess $15-20k worth of supplies plus his own labour. It sat on the market for a long time, and ultimately sold for only $40k more than he paid us for it.

mjevans 7y ago

An absolutely free market does. Housing is NOT anything like that kind of market. Building permits, zoning, NIMBY, various minimums (aside from taxes, thanks Rs for focusing so strongly on less taxes rather than greater value for money...). Make building the desired type of housing easy; incentivize it until market conditions have been corrected... We're several decades behind at this point, so a huge boom is required to correct prices.

chaostheory 7y ago
> building permits Conversely, you don’t want unsound buildings in earthquake country, but yeah they’re also being abused

JMTQp8lwXL 7y ago

When local rule kills the creation of new supply, it doesn't seem far fetched to cap rents to inflation + N%.

coryrc 7y ago
How about, if housing isn't allowed in an area, then rent and sales price isn't allowed to increase?
- negrit 7y ago
  How about rent increase matches property tax increase + inflation. If a property owner isn't paying fair taxes on its property value then rent isn't getting increased as well.
  - pkaye 7y ago
    So assuming 2% inflation and maximum property tax rate increase of 2%, that would by 4%. Would a 4% increase be acceptable in your opinion?
    - negrit 7y ago
      In my opinion it's fair the have a rent increase if the property owner has a tax increase.
      - mjevans 7y ago
        I see what you're thinking; a tax rate increase to the current market rate, as if it weren't locked in by that one California law (IIRC Prop 30?).

weatherlight 7y ago

more than 11% of all rental apartments in New York City — sit either empty or scarcely occupied, even as many New Yorkers struggle to find an apartment they can afford.” One reason for the growing vacancy rates, as the article states, is the city’s high rent, which has risen twice as fast as inflation.

cortesoft 7y ago

Sure, if your only goal is the most efficient allocation of scarce resources. However, 'supply and demand' doesn't care at all about fairness. Richer people will get more of the desired resource than poor people. Poor people might be priced out of the market entirely. The 'free market' might end up with entire communities being forced to move to a cheaper area because their current location is highly desirable to wealthier people. In a free market, this might be determined to be a fine outcome: people willing (and able) to pay more for that area get to live there. Citizens might not think this is an ideal outcome. They might, with valid reasons, feel that poorer, existing, residents should be allowed to stay where they are, even if wealthier people from other areas want to move there. I am not saying one side is right and the other is wrong, I am saying a free market only solves the efficient use of resources part of the equation, not the other parts.