4 ms·

I agree that my earlier argument is simplistic in its presentation, (here I would treat 'construction costs' as to build and operate an apartment, amortized ove

I agree that my earlier argument is simplistic in its presentation, (here I would treat 'construction costs' as to build and operate an apartment, amortized over lifetime and apartments in a building -- I understand I could have phrased that better but terseness is necessary lest every comment devolve into an essay) but is still correct in its assessment: CA rents are far in excess of any reasonable economic equilibrium, per 'amortized cost of providing the rental property, including land acquisition, construction, maintenance, etc.' Given in particular that in CA (the bay area and SF too) land is in surplus[0]. [0]Regulatory-allowed access to said land, on the other hand, is less permissive.

dragonwriter 7y ago
> CA rents are far in excess of any reasonable economic equilibrium, per 'amortized cost of providing the rental property, including land acquisition, construction, maintenance, etc.' Really? Show the numbers. I was under the impression that the Bay Area had a very high land ownership premium, that is, that land acquisition costs are very high compared to rents. Plus, real prices are usually out of line with economic equilibria in dynamic markets, the equilibrium is the price that a market would achieve if it was in a steady state with no changes for an infinite period. A sustained market distortion raises the equilibrium, it doesn't maintain prices above the equilibrium. Prices above (or below) equilibrium are so are do to frictional forces which cause prices to adjust toward equilibrium at a limited rate. So, I'm not sure why you are harping on equilibrium, it seems to be the wrong issue for what you seem to be concerned about. > Given in particular that in CA (the bay area and SF too) land is in surplus[0]. Even if that was true, regulatory permitted access largely effects rent through land acquisition costs, not independently of it, so it would explain why both land acquisition costs and rents were higher than they would otherwise be, but not why rents are higher than they would be expected to be given costs to landlords including land acquisition costs.
- thereisnospork 7y ago
  >Even if that was true, regulatory permitted access largely effects rent through land acquisition costs, not independently of it, so it would explain why both land acquisition costs and rents were higher than they would otherwise be, but not why rents are higher than they would be expected to be given costs to landlords including land acquisition costs. >>reasonable economic equilibrium Sorry for the delayed reply: Please see >reasonable in the above, there is nothing economically reasonable about the CA market distortion. Rents are higher than they would expected to be given costs not unjustifiably burdened by regulatory permitting. Which would be the (or at least a) reasonable standard for determining what rents should be at equilibrium which provides a basis for what rents should be in the real world and clearly indicates that rents in the real world are excessively high and not economically justified. I don't see where I've been unclear about this.

dragonwriter 7y ago

> CA rents are far in excess of any reasonable economic equilibrium, per 'amortized cost of providing the rental property, including land acquisition, construction, maintenance, etc.' Really? Show the numbers. I was under the impression that the Bay Area had a very high land ownership premium, that is, that land acquisition costs are very high compared to rents. Plus, real prices are usually out of line with economic equilibria in dynamic markets, the equilibrium is the price that a market would achieve if it was in a steady state with no changes for an infinite period. A sustained market distortion raises the equilibrium, it doesn't maintain prices above the equilibrium. Prices above (or below) equilibrium are so are do to frictional forces which cause prices to adjust toward equilibrium at a limited rate. So, I'm not sure why you are harping on equilibrium, it seems to be the wrong issue for what you seem to be concerned about. > Given in particular that in CA (the bay area and SF too) land is in surplus[0]. Even if that was true, regulatory permitted access largely effects rent through land acquisition costs, not independently of it, so it would explain why both land acquisition costs and rents were higher than they would otherwise be, but not why rents are higher than they would be expected to be given costs to landlords including land acquisition costs.

thereisnospork 7y ago
>Even if that was true, regulatory permitted access largely effects rent through land acquisition costs, not independently of it, so it would explain why both land acquisition costs and rents were higher than they would otherwise be, but not why rents are higher than they would be expected to be given costs to landlords including land acquisition costs. >>reasonable economic equilibrium Sorry for the delayed reply: Please see >reasonable in the above, there is nothing economically reasonable about the CA market distortion. Rents are higher than they would expected to be given costs not unjustifiably burdened by regulatory permitting. Which would be the (or at least a) reasonable standard for determining what rents should be at equilibrium which provides a basis for what rents should be in the real world and clearly indicates that rents in the real world are excessively high and not economically justified. I don't see where I've been unclear about this.