4 ms·

Maybe it's time we admit that without a thorough reform, the idea of a "housing market" is completely fictional. Furthermore, at least with the way our current

by swiley 6y ago

Maybe it's time we admit that without a thorough reform, the idea of a "housing market" is completely fictional. Furthermore, at least with the way our current laws are written, we prefer having a large homeless population because it maintains the wealth of some group of people.

epistasis 6y ago
What is fictional about the market? It seems to be behaving exactly like any and all other markets, with exactly the same tricks for exploiting them. It's really just textbook!
simonh 6y ago
It's a real market, it's just heavily supply constrained. Conventional market theory assumes that supply will rise to meet demand, but between green belt laws, NIMBY movements and the difficulty of crating new land where people want to live, that's often a big problem in property markets. There's also the fact that we all need somewhere to live, and once we have a family we'll devote a very large fraction of our resources to get the best place to bring up our children in. So we have a limited resource we all (many of us) want. The result is people, us, compete with each other to bid up the price. We do it to each other. Yes there's definitely an impact from buy-to-let purchasers bidding up prices. Here in the UK the government recently revised property taxes to make it less advantageous to own and rent out property, which is a good start. How do homeless people maintain wealthy people?
- bsanr2 6y ago
  >It's a real market, it's just heavily supply constrained. >Conventional market theory assumes that supply will rise to meet demand, but between green belt laws, NIMBY movements and the difficulty of crating new land where people want to live, that's often a big problem in property markets. So... It's not a real market. Would we call a situation, wherein rice is $100/bag because local oligarchs have taken the bulk of imports/production and sequestered it in some private warehouse, a "real market"? Because that's essentially what's happening here. >How do homeless people maintain wealthy people? If your labor produces wealth that someone else claims, forcing you to become unhoused, your homelessness is intrinsically connected to their affluence.
  - epistasis 6y ago
    Yes, these are "real" markets and this is exactly how real markets behave when they are not well regulated. Vancouver and other cities in the West Coast have chosen regulations that ensure that the housing market channels maximum amounts of wealth from the less wealthy to the already wealthy. They started doing this when the middle class could be homeowners. After several decades of this sort of housing market, all those "middle class" homeowners from the last century are now asset capitalists worth millions. And they pretend that they didn't cause all the homelessness when they insisted on regulations to keep new people out, let only super wealthy people in, and maximize the growth of their housing assets. This is exactly how markets behave. Incumbents collude to maximize their profit, unless regulations hold them back from doing that. It's a tale as old as time, and it doesn't get any more "real" than that.
  - asdff 6y ago
    It is a real market, but it's a captive market.
    - bsanr2 6y ago
      It is not. It's essentially a planned economy.
  - sokoloff 6y ago
    The price of corn goes up when weather is unfavorable for corn farming (reducing near-future supply). The price of oil falls when COVID lockdowns reduce driving. Oil and corn are real markets. Real markets do not require immediate adjustment in supply to match demand.
    - bsanr2 6y ago
      Those are externalities. They're not controlled by the suppliers.
- neilparikh 6y ago
  > Conventional market theory assumes that supply will rise to meet demand The supply of land (in the economic sense) is fixed, and will never increase. > How do homeless people maintain wealthy people? It's not homeless people that maintain land wealth, but rather those without land. Land only has any value at all because it commands a rent (in excess of its holding costs), and that is only the case because there are people who don't own in land (in areas they'd like to be), and thus have to pay rents to those with land. The "increasing supply by increasing density" route will reduce costs on units, but it will leave the portion of wealth owned by the landed class untouched.
neilparikh 6y ago
The funny thing is, this isn't a new insight at all! Early capitalist thinkers such as Smith and Ricardo already came upon the insight that the fixed supply of land means "regular" market forces don't work.
- swiley 6y ago
  I'm not convinced the fixed supply of land causes the high housing prices. Here in North America all but the most developed places have a ton of undeveloped space and mostly < three story often detached housing. Most of land isn't built on at all. Just go through west Virginia, even the stuff that is built is largely abandoned.
  - neilparikh 6y ago
    > Here in North America all but the most developed places have a ton of undeveloped space and mostly < three story often detached housing. How many cities have both undeveloped space (that isn't protected land like parks), and high housing costs? > Most of land isn't built on at all. Just go through west Virginia, even the stuff that is built is largely abandoned. Sure, but land in West Virginia doesn't really do much for people who want to live in San Francisco or New York. All land isn't equal, what's also important is where the land is. While land in the US as a whole is abundant, land in urban areas (where most people are wanting to live) isn't.

by swiley 6y ago

epistasis 6y ago

What is fictional about the market? It seems to be behaving exactly like any and all other markets, with exactly the same tricks for exploiting them. It's really just textbook!

simonh 6y ago

It's a real market, it's just heavily supply constrained. Conventional market theory assumes that supply will rise to meet demand, but between green belt laws, NIMBY movements and the difficulty of crating new land where people want to live, that's often a big problem in property markets. There's also the fact that we all need somewhere to live, and once we have a family we'll devote a very large fraction of our resources to get the best place to bring up our children in. So we have a limited resource we all (many of us) want. The result is people, us, compete with each other to bid up the price. We do it to each other. Yes there's definitely an impact from buy-to-let purchasers bidding up prices. Here in the UK the government recently revised property taxes to make it less advantageous to own and rent out property, which is a good start. How do homeless people maintain wealthy people?

bsanr2 6y ago
>It's a real market, it's just heavily supply constrained. >Conventional market theory assumes that supply will rise to meet demand, but between green belt laws, NIMBY movements and the difficulty of crating new land where people want to live, that's often a big problem in property markets. So... It's not a real market. Would we call a situation, wherein rice is $100/bag because local oligarchs have taken the bulk of imports/production and sequestered it in some private warehouse, a "real market"? Because that's essentially what's happening here. >How do homeless people maintain wealthy people? If your labor produces wealth that someone else claims, forcing you to become unhoused, your homelessness is intrinsically connected to their affluence.
- epistasis 6y ago
  Yes, these are "real" markets and this is exactly how real markets behave when they are not well regulated. Vancouver and other cities in the West Coast have chosen regulations that ensure that the housing market channels maximum amounts of wealth from the less wealthy to the already wealthy. They started doing this when the middle class could be homeowners. After several decades of this sort of housing market, all those "middle class" homeowners from the last century are now asset capitalists worth millions. And they pretend that they didn't cause all the homelessness when they insisted on regulations to keep new people out, let only super wealthy people in, and maximize the growth of their housing assets. This is exactly how markets behave. Incumbents collude to maximize their profit, unless regulations hold them back from doing that. It's a tale as old as time, and it doesn't get any more "real" than that.
- asdff 6y ago
  It is a real market, but it's a captive market.
  - bsanr2 6y ago
    It is not. It's essentially a planned economy.
- sokoloff 6y ago
  The price of corn goes up when weather is unfavorable for corn farming (reducing near-future supply). The price of oil falls when COVID lockdowns reduce driving. Oil and corn are real markets. Real markets do not require immediate adjustment in supply to match demand.
  - bsanr2 6y ago
    Those are externalities. They're not controlled by the suppliers.
neilparikh 6y ago
> Conventional market theory assumes that supply will rise to meet demand The supply of land (in the economic sense) is fixed, and will never increase. > How do homeless people maintain wealthy people? It's not homeless people that maintain land wealth, but rather those without land. Land only has any value at all because it commands a rent (in excess of its holding costs), and that is only the case because there are people who don't own in land (in areas they'd like to be), and thus have to pay rents to those with land. The "increasing supply by increasing density" route will reduce costs on units, but it will leave the portion of wealth owned by the landed class untouched.

neilparikh 6y ago

The funny thing is, this isn't a new insight at all! Early capitalist thinkers such as Smith and Ricardo already came upon the insight that the fixed supply of land means "regular" market forces don't work.

swiley 6y ago
I'm not convinced the fixed supply of land causes the high housing prices. Here in North America all but the most developed places have a ton of undeveloped space and mostly < three story often detached housing. Most of land isn't built on at all. Just go through west Virginia, even the stuff that is built is largely abandoned.
- neilparikh 6y ago
  > Here in North America all but the most developed places have a ton of undeveloped space and mostly < three story often detached housing. How many cities have both undeveloped space (that isn't protected land like parks), and high housing costs? > Most of land isn't built on at all. Just go through west Virginia, even the stuff that is built is largely abandoned. Sure, but land in West Virginia doesn't really do much for people who want to live in San Francisco or New York. All land isn't equal, what's also important is where the land is. While land in the US as a whole is abundant, land in urban areas (where most people are wanting to live) isn't.