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I'm skeptical of this author's claim: that inflation will make housing more affordable. The core problem of housing is limited supply, mainly driven by zoning,

I'm skeptical of this author's claim: that inflation will make housing more affordable. The core problem of housing is limited supply, mainly driven by zoning, parking requirements, and NIMBY actions. Inflation by printing money is a tax. In recent times, this tax was used for things like giant unemployment programs and PPP loans. You can argue whether or not those were good things, but all things being equal more taxes are bad. (for example, if the fed printed trillions and gave them to politicians, nobody would purport that it was good).

nabla9 5y ago
> Inflation by printing money is a tax. Inflation is tax on lazy money. As it should be. Money should be put into work or lose value.
- randomhodler84 5y ago
  For most of human history, a fine gentleman’s suit cost 1troy oz of gold. It’s still the same today. I don’t agree that savers must take on risk in order to maintain value. Take on Risk for treading water? I feel like this is financial engineering to ensure the continuous capital injection into equities markets.
dnautics 5y ago
I don't know if there is, but if there is also a "foreign real estate investment sops up housing supply" and/or "makes prices slow down supply churn" then inflation might making housing LESS affordable, by making it nominally cheaper for foreign investment participate in the market.
nwah1 5y ago
Those supply issues you mention are true but ultimately not the key. Cities are expensive, but we have endless amounts of cheaper suburbs. Yet people still want to live in cities despite the price. Why is that? Because they get a value from that, and that value is reflected in higher land values Adding more supply of buildings doesn't make the land any cheaper. In fact it would make it more expensive via agglomeration effects. So the issue for affordability is land value. And the way to reduce it without destroying the underlying desirability is to clamp down on land speculation. This can be done by shifting taxes off of buildings and onto land.
- randomhodler84 5y ago
  By George I think you might be on to something there…
- jakecopp 5y ago
  > Yet people still want to live in cities despite the price. Why is that? Because they get a value from that, and that value is reflected in higher land values Yep agreed. > Adding more supply of buildings doesn't make the land any cheaper. We don't need land to be any cheaper - we need more dwellings (apartments). Nobody cares about land prices in the middle of large cities (but developers), they care about apartment prices/rent. > In fact it would make it more expensive via agglomeration effects. If by agglomeration effects you mean zoning for allowing more buildings - yes, relaxed zoning laws increase land prices AND increase supply of apartments. This is a good thing for housing affordability! > So the issue for affordability is land value. This does not follow as I believe the previous points are incorrect. > This can be done by shifting taxes off of buildings and onto land. Land taxes are an excellent idea - because they encourage building the maximum number of apartments allowed (more housing => more supply => cheaper housing), rather that sitting on an empty block of land speculating (which does greater society no good). Feel free to correct me if I've missed something!
sjg007 5y ago
Inflation eats the interest rate right? If your mortgage is less than inflation that's basically free money, assuming your wages increase.
- naveen99 5y ago
  Real interest rates are more useful when trying to decide to leverage or delever. Will real interest rates stay negative ? I think they will. Inflation can be more easily contained with globalization than with higher interest rates.

nabla9 5y ago

> Inflation by printing money is a tax. Inflation is tax on lazy money. As it should be. Money should be put into work or lose value.

randomhodler84 5y ago
For most of human history, a fine gentleman’s suit cost 1troy oz of gold. It’s still the same today. I don’t agree that savers must take on risk in order to maintain value. Take on Risk for treading water? I feel like this is financial engineering to ensure the continuous capital injection into equities markets.

dnautics 5y ago

I don't know if there is, but if there is also a "foreign real estate investment sops up housing supply" and/or "makes prices slow down supply churn" then inflation might making housing LESS affordable, by making it nominally cheaper for foreign investment participate in the market.

nwah1 5y ago

Those supply issues you mention are true but ultimately not the key. Cities are expensive, but we have endless amounts of cheaper suburbs. Yet people still want to live in cities despite the price. Why is that? Because they get a value from that, and that value is reflected in higher land values Adding more supply of buildings doesn't make the land any cheaper. In fact it would make it more expensive via agglomeration effects. So the issue for affordability is land value. And the way to reduce it without destroying the underlying desirability is to clamp down on land speculation. This can be done by shifting taxes off of buildings and onto land.

randomhodler84 5y ago
By George I think you might be on to something there…
jakecopp 5y ago
> Yet people still want to live in cities despite the price. Why is that? Because they get a value from that, and that value is reflected in higher land values Yep agreed. > Adding more supply of buildings doesn't make the land any cheaper. We don't need land to be any cheaper - we need more dwellings (apartments). Nobody cares about land prices in the middle of large cities (but developers), they care about apartment prices/rent. > In fact it would make it more expensive via agglomeration effects. If by agglomeration effects you mean zoning for allowing more buildings - yes, relaxed zoning laws increase land prices AND increase supply of apartments. This is a good thing for housing affordability! > So the issue for affordability is land value. This does not follow as I believe the previous points are incorrect. > This can be done by shifting taxes off of buildings and onto land. Land taxes are an excellent idea - because they encourage building the maximum number of apartments allowed (more housing => more supply => cheaper housing), rather that sitting on an empty block of land speculating (which does greater society no good). Feel free to correct me if I've missed something!

sjg007 5y ago

Inflation eats the interest rate right? If your mortgage is less than inflation that's basically free money, assuming your wages increase.

naveen99 5y ago
Real interest rates are more useful when trying to decide to leverage or delever. Will real interest rates stay negative ? I think they will. Inflation can be more easily contained with globalization than with higher interest rates.