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Investing in housing is GOOD for society, because housing is not a scarce resource - the more is invested the more is built. It's precisely those places that ha

Investing in housing is GOOD for society, because housing is not a scarce resource - the more is invested the more is built. It's precisely those places that have put up the most barriers to investing and building housing that have seen the greatest deterioration in housing affordability: https://www.econlib.org/library/Enc/RentControl.html https://www.econlib.org/library/Enc/RentControl.html https://www.aeaweb.org/articles?id=10.1257/mac.20170388 https://www.aeaweb.org/articles?id=10.1257/mac.20170388 Beware of the anti-profit bias: https://digest.bps.org.uk/2017/08/04/we-have-an-ingrained-anti-profit-bias-that-blinds-us-to-the-social-benefits-of-free-markets/ https://digest.bps.org.uk/2017/08/04/we-have-an-ingrained-an...

taurath 5y ago
Obviously having housing stock is probably good. Housing however IS a scarce resource, especially housing when it comes to being close to things like transit, views, natural amenities, parks, businesses and other amenities - and one of the most important things that doesn't seem like its talked about: neighborhoods of similar social classes. There are myriad reasons one area does great, and I don't think its entirely due to barriers in investing and building, else those with no barriers would see massive movement towards them. Often times the desirability of living in a place is almost directly inversely related to how little regulation they have.
- CryptoPunk 5y ago
  >>Housing however IS a scarce resource, especially housing when it comes to being close to things like transit, views, natural amenities, parks, businesses and other amenities Obviously density can compromise something like having good views, or the benefit of a relaxed low-density neighbourhood, but almost any other kind of housing scarcity can be addressed through densification. The study in the aeaweb link above estimates that increased housing restrictions in just three cities in the US; New York, San Francisco and San Jose, caused the US to have 36% less economic growth between 1964 and 2009 than it otherwise would have, by inhibiting population growth in these cities, which all provide settings for higher productivity due to agglomeration effects and being coastal cities with low logistical costs. A report by the White House's Council of Economic Advisors in 2016 largely came to the same conclusion: https://obamawhitehouse.archives.gov/sites/whitehouse.gov/files/images/Housing_Development_Toolkit%20f.2.pdf https://obamawhitehouse.archives.gov/sites/whitehouse.gov/fi... >>else those with no barriers would see massive movement towards them We see a massive movement of people from New York and California to Texas: https://www.northamerican.com/migration-map https://www.northamerican.com/migration-map It's hard to isolate factors behind this move, but I don't think it's a leap to assume lower housing costs, largely due to fewer restrictions on housing investment and construction, is one of them. In contrast to San Francisco, which is notorious for zoning restrictions and rent control mandates instituted by extreme-left city governments, and unsurprisingly, has the highest rental rates in the world (while not having the highest average income rates), Houston is renowned for its pro-free-market housing policy, and communersately affordable housing: https://www.sightline.org/2017/09/21/yes-you-can-build-your-way-to-affordable-housing/ https://www.sightline.org/2017/09/21/yes-you-can-build-your-...
- Ensorceled 5y ago
  It's artifically scarce in North America. Houses are being used as investments and are often sitting empty as, for instnace, the owners (or the foreclosing bank) don't want to deal with renters. https://www.huffingtonpost.ca/2017/02/11/empty-homes-canada-vancouver-toronto_n_14691034.html https://www.huffingtonpost.ca/2017/02/11/empty-homes-canada-... https://247wallst.com/housing/2019/09/30/there-are-over-17-million-vacant-homes-in-america/ https://247wallst.com/housing/2019/09/30/there-are-over-17-m...
  - CryptoPunk 5y ago
    The percentage of housing sitting empty is quite low, and well within the range for any asset. 100% utilization is not a realistic expectation and would not be a healthy situation. Markets need the flexibility of owners being able to wait before committing a resource to a particular usage. But there is artificial scarcity in housing, and that's almost solely down to regulatory restrictions that suppress private property rights, whether that's rent control that make it less profitable than it should be to invest in housing, onerous permitting processes for building a new house, or zoning restrictions limiting the density of a new housing development. Economists have chronicled the problems created by these interventions, in detail.
Ensorceled 5y ago
"Investing in housing is GOOD" but speculation in housing is very bad. Having anyone middle class or lower completely priced out of home ownership because the upper middle class want "a safe investment" or "the real estate market is HOT HOT HOT" is not good for society no matter how you want to spin it.
- CryptoPunk 5y ago
  The secondary market for any asset, whether housing or equity, is what allows the primary market to raise large amounts of capital, so no, speculation is not bad at all. It indirectly leads to more investment in housing construction.
cloudfifty 5y ago
The [city] government can build housing according to need just as any other infrastructure. This would however go against a lot of interests, both institutional and citizens with a large mortgage, that depends on high housing prices. So it's rare. But one can see Vienna, Austria, as a good example of where the government takes an active role in building housing and can show a great result in low rents and high availability.
- CryptoPunk 5y ago
  Yes, the state can embark on massive construction of housing. The advantage is it gets around zoning restrictions on building height. State-funded housing tends to be unimaginative/repetitive in design and lower quality though. The same outcome, of higher density housing, can be achieved by simply repealing zoning restrictions, and if that doesn't do enough, by replacing sales taxes with land taxes, which discourage sprawling land-inefficient housing. There may be advantages, in political economy, that makes overcoming special interests opposed to densification easier, with the state-led approach though. As for special interests in general, there are plenty in and close to the state itself that would massively profit from large public projects, so I don't see this as a question of whether or not we support special interests. It's simply a question of which special interests.

taurath 5y ago

Obviously having housing stock is probably good. Housing however IS a scarce resource, especially housing when it comes to being close to things like transit, views, natural amenities, parks, businesses and other amenities - and one of the most important things that doesn't seem like its talked about: neighborhoods of similar social classes. There are myriad reasons one area does great, and I don't think its entirely due to barriers in investing and building, else those with no barriers would see massive movement towards them. Often times the desirability of living in a place is almost directly inversely related to how little regulation they have.

CryptoPunk 5y ago
>>Housing however IS a scarce resource, especially housing when it comes to being close to things like transit, views, natural amenities, parks, businesses and other amenities Obviously density can compromise something like having good views, or the benefit of a relaxed low-density neighbourhood, but almost any other kind of housing scarcity can be addressed through densification. The study in the aeaweb link above estimates that increased housing restrictions in just three cities in the US; New York, San Francisco and San Jose, caused the US to have 36% less economic growth between 1964 and 2009 than it otherwise would have, by inhibiting population growth in these cities, which all provide settings for higher productivity due to agglomeration effects and being coastal cities with low logistical costs. A report by the White House's Council of Economic Advisors in 2016 largely came to the same conclusion: https://obamawhitehouse.archives.gov/sites/whitehouse.gov/files/images/Housing_Development_Toolkit%20f.2.pdf https://obamawhitehouse.archives.gov/sites/whitehouse.gov/fi... >>else those with no barriers would see massive movement towards them We see a massive movement of people from New York and California to Texas: https://www.northamerican.com/migration-map https://www.northamerican.com/migration-map It's hard to isolate factors behind this move, but I don't think it's a leap to assume lower housing costs, largely due to fewer restrictions on housing investment and construction, is one of them. In contrast to San Francisco, which is notorious for zoning restrictions and rent control mandates instituted by extreme-left city governments, and unsurprisingly, has the highest rental rates in the world (while not having the highest average income rates), Houston is renowned for its pro-free-market housing policy, and communersately affordable housing: https://www.sightline.org/2017/09/21/yes-you-can-build-your-way-to-affordable-housing/ https://www.sightline.org/2017/09/21/yes-you-can-build-your-...
Ensorceled 5y ago
It's artifically scarce in North America. Houses are being used as investments and are often sitting empty as, for instnace, the owners (or the foreclosing bank) don't want to deal with renters. https://www.huffingtonpost.ca/2017/02/11/empty-homes-canada-vancouver-toronto_n_14691034.html https://www.huffingtonpost.ca/2017/02/11/empty-homes-canada-... https://247wallst.com/housing/2019/09/30/there-are-over-17-million-vacant-homes-in-america/ https://247wallst.com/housing/2019/09/30/there-are-over-17-m...
- CryptoPunk 5y ago
  The percentage of housing sitting empty is quite low, and well within the range for any asset. 100% utilization is not a realistic expectation and would not be a healthy situation. Markets need the flexibility of owners being able to wait before committing a resource to a particular usage. But there is artificial scarcity in housing, and that's almost solely down to regulatory restrictions that suppress private property rights, whether that's rent control that make it less profitable than it should be to invest in housing, onerous permitting processes for building a new house, or zoning restrictions limiting the density of a new housing development. Economists have chronicled the problems created by these interventions, in detail.

Ensorceled 5y ago

"Investing in housing is GOOD" but speculation in housing is very bad. Having anyone middle class or lower completely priced out of home ownership because the upper middle class want "a safe investment" or "the real estate market is HOT HOT HOT" is not good for society no matter how you want to spin it.

CryptoPunk 5y ago
The secondary market for any asset, whether housing or equity, is what allows the primary market to raise large amounts of capital, so no, speculation is not bad at all. It indirectly leads to more investment in housing construction.

cloudfifty 5y ago

The [city] government can build housing according to need just as any other infrastructure. This would however go against a lot of interests, both institutional and citizens with a large mortgage, that depends on high housing prices. So it's rare. But one can see Vienna, Austria, as a good example of where the government takes an active role in building housing and can show a great result in low rents and high availability.

CryptoPunk 5y ago
Yes, the state can embark on massive construction of housing. The advantage is it gets around zoning restrictions on building height. State-funded housing tends to be unimaginative/repetitive in design and lower quality though. The same outcome, of higher density housing, can be achieved by simply repealing zoning restrictions, and if that doesn't do enough, by replacing sales taxes with land taxes, which discourage sprawling land-inefficient housing. There may be advantages, in political economy, that makes overcoming special interests opposed to densification easier, with the state-led approach though. As for special interests in general, there are plenty in and close to the state itself that would massively profit from large public projects, so I don't see this as a question of whether or not we support special interests. It's simply a question of which special interests.