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The economics of supply and demand work very differently when supply is fixed. You cannot create more land regardless of the demand. More buildings upon that

The economics of supply and demand work very differently when supply is fixed. You cannot create more land regardless of the demand. More buildings upon that land means more space and thus a longer commute with increased traffic.

lotsofpulp 7y ago
The supply of areas with sufficient economic opportunities to make them desirable can be increased, at least within the US, in my opinion. Also, the supply of dwellings in a given land area can be increased by building up. However, you are correct that the supply of land for single family homes with garages, driveways, and yards, within commuting distance to a major city is supply constrained. But the solution is still to shift supply and demand curves.
- austincheney 7y ago
  This is a distraction. The bay area's problem is not demand and not so much supply. Seattle area has much greater supply limitations with far less of a housing crisis. The largest problem is pricing. This is true even in economically depressed areas of California. The state of taxes in California encourage price inflation: high income taxes and low property taxes. That is a property owner's and land lords dream. On the contrary if income taxes were sacrificed for increase in property taxes real estate holdings and value both become cost prohibitive. In this case increase value only benefits an owner when selling, but otherwise is prohibitive. This causes people to seek lower value properties, without regard for selling price, and for people to petition the tax assessor for value depletion of their property holdings. Without realistic pricing controls it only makes sense for a property owner to continuously increase the value of their property.
  - lotsofpulp 7y ago
    How can supply and demand curves be a distraction to a discussion about price, when supply and demand curves determine the price? Yes, some of CA's tax laws helps contribute to higher prices, but at the end of the day, the low supply of available houses is compared to the large number of prospective buyer is what makes it so high. Nebraska could adopt all the same taxes as CA, and prices might barely budge, because there's lots of supply compared to demand. Tackling CAs idiotic property tax restrictions is important, but the elephant in the room is the widening gap in economic opportunity in a handful of urban areas (globally) versus non urban areas. One can help lower price by increasing the supply of regions with more economic opportunity, and one can increase the supply of dwellings in regions with economic opportunity. Other solutions will just paper over the problem temporarily.
    - austincheney 7y ago
      Natural pricing is determined by supply/demand, but prices can be artificially adjusted without regard for economic considerations. Housing is more open to artificial adjustments in price, because of its fixed nature. There is only one given property at a given address and the owner can set any price they want until somebody pays irrespective of currently available demand. Everything in the housing industry is a commission rate based upon property value percentage so everybody in that business will push for the highest price possible. The only motivators to reducing pricing are timeliness and government interference. As a vaguely related example the 2008 housing crash was the result of artificially adjusted supply without regard for demand or prices. Pricing is also directly adjusted when the FED changes interest rates.
      - lotsofpulp 7y ago
        > The only motivators to reducing pricing are timeliness and government interference. Additional supply of housing would not?

lotsofpulp 7y ago

The supply of areas with sufficient economic opportunities to make them desirable can be increased, at least within the US, in my opinion. Also, the supply of dwellings in a given land area can be increased by building up. However, you are correct that the supply of land for single family homes with garages, driveways, and yards, within commuting distance to a major city is supply constrained. But the solution is still to shift supply and demand curves.

austincheney 7y ago
This is a distraction. The bay area's problem is not demand and not so much supply. Seattle area has much greater supply limitations with far less of a housing crisis. The largest problem is pricing. This is true even in economically depressed areas of California. The state of taxes in California encourage price inflation: high income taxes and low property taxes. That is a property owner's and land lords dream. On the contrary if income taxes were sacrificed for increase in property taxes real estate holdings and value both become cost prohibitive. In this case increase value only benefits an owner when selling, but otherwise is prohibitive. This causes people to seek lower value properties, without regard for selling price, and for people to petition the tax assessor for value depletion of their property holdings. Without realistic pricing controls it only makes sense for a property owner to continuously increase the value of their property.
- lotsofpulp 7y ago
  How can supply and demand curves be a distraction to a discussion about price, when supply and demand curves determine the price? Yes, some of CA's tax laws helps contribute to higher prices, but at the end of the day, the low supply of available houses is compared to the large number of prospective buyer is what makes it so high. Nebraska could adopt all the same taxes as CA, and prices might barely budge, because there's lots of supply compared to demand. Tackling CAs idiotic property tax restrictions is important, but the elephant in the room is the widening gap in economic opportunity in a handful of urban areas (globally) versus non urban areas. One can help lower price by increasing the supply of regions with more economic opportunity, and one can increase the supply of dwellings in regions with economic opportunity. Other solutions will just paper over the problem temporarily.
  - austincheney 7y ago
    Natural pricing is determined by supply/demand, but prices can be artificially adjusted without regard for economic considerations. Housing is more open to artificial adjustments in price, because of its fixed nature. There is only one given property at a given address and the owner can set any price they want until somebody pays irrespective of currently available demand. Everything in the housing industry is a commission rate based upon property value percentage so everybody in that business will push for the highest price possible. The only motivators to reducing pricing are timeliness and government interference. As a vaguely related example the 2008 housing crash was the result of artificially adjusted supply without regard for demand or prices. Pricing is also directly adjusted when the FED changes interest rates.
    - lotsofpulp 7y ago
      > The only motivators to reducing pricing are timeliness and government interference. Additional supply of housing would not?