4 ms·

There's a path dependency problem. In principle, had you just been building housing like that all along, investing in housing is not appealing as you shouldn't

by jerf 5y ago

There's a path dependency problem. In principle, had you just been building housing like that all along, investing in housing is not appealing as you shouldn't see significant gains in general. However, now that it is appealing, the investment itself pushes up demand, which pushes up the appeal of investing because now prices are going up, which pushes up demand, etc. Again, in principle, if you just keep building, the market would eventually sort this out. Of course, in the process, you'll overbuild housing proportionally to the investment demand. Once the investment demand leaves, the market will crash, which isn't necessarily a great plan either. And we are talking about a lot of finite resources being misallocated in the meantime, while the market forces figure this out. If you'd like to resolve this problem faster than the market would naturally sort it out, and harness market forces to do so rather than naively fighting them, it makes sense to cut out the excess, artificial investment demand in the meantime. Sure, it would be better to have not created that problem in the first place, but, here we are.

worik 5y ago
Market forces are not magic, nor the only method of economic planning. When markets work they are very good at finding prices. But when they fail you get this sort of thing. There needs to be a lot of planned intervention in the housing sector. Entities with a lot of capital need to build the houses that people need to live in where they need to live in them and then let them live in them. The market will not do that.
- jefftk 5y ago
  The market ("people who would stand to earn a lot of money") would be happy to do that, but it's not allowed to (zoning: height limits, parking requirements, lot coverage, maximum floor area...)
- handmodel 5y ago
  I live in Los Angeles and am lucky enough to rent on a street that is single family houses. It is illegal to build a duplex here, or a structure above 2 stories, even though each house must be 2500 sqft still. People who are pro-market forces (such as myself) believe strongly that if you were allowed to build apartment buildings in neighborhoods like this that enough capital absolutely would be raised to raise supply. After all, you could take the current house I rent now and put in two walls for under 50k and start renting it out as a duplex two families but that is currently illegal. Hard to blame the market forces for this.
  - bhewes 5y ago
    SB 9 pasted in Sept of last year that allows for duplexes on single unit lots. Here is the info for LA County https://planning.lacounty.gov/view/sb_9 https://planning.lacounty.gov/view/sb_9
    - handmodel 5y ago
      I am very happy about SB9! Though as a maximalist on this I'm still upset this is the best compromise we can get since the lot of this house is definitely big enough for more than just 2/4 units. The house I live in is rented which means it actually wouldnt be eligible since the owner must live in the house for 3 years after turning it into a duplex. Maybe this will incentivize owners of houses like this to sell to people who are willing to divide it in two? I hope so! But not sure.
      - bhewes 5y ago
        I agree. I lived in Houston and their are a lot of infill Townhomes. I think LA would be great for townhomes vs high rises or those terrible downtown DaVinci Apartments between the 101 and 110. Ha, did not know about the three year ownership requirement, classic CA NIMBYism. Still progress.
- _3u10 5y ago
  Vancouver and Toronto isn’t a housing market in any real sense of the word. Supply is fixed by government, interest rates are fixed by government, etc. If you took government control out of the market prices would plummet. Any plank will do, supply, financial backing or interest rates and the whole thing comes crashing down. That’s the real problem, how to cause a 20% “correction” and not 80%. My house is 8 hours from Vancouver, 8 hours from Calgary, 5 hours from Banff, it’s a town of 10,000 people, it was built in 1904 and is 2500 sqft. It’s been modestly renovated and is worth $950,000. The market is insane.
  - worik 5y ago
    Everybody blaming zoning. What is happening in Dallas which has no zoning rules? (Or am I thinking of Austin Texas?) I do not know, but it would be useful for this debate
    - bombcar 5y ago
      Houston is usually the one they point to, but is the equivalent of zoning in other ways such as covenants, etc. Houston is booming I hear.
      - majormajor 5y ago
        Right, cities in Texas aren't cheaper because they don't have zoning (they either explicitly do, as well as HOAs in new developments and all sorts of other NIMBYism, or they do in indirect ways like you mention). They're cheaper because they can still expand outward more than SF, LA, NY, etc before hitting inconvenient geography. Lots of other places that benefit from this too, of course, not just Texas.
    - xapata 5y ago
      The housing crisis 15 years ago shrank the building industry and it hasn't recovered, yet. Further, construction has historically used a significant amount of immigrant labor, and immigration has shrank recently, increasing costs.
    - 5y ago
- jerf 5y ago
  I feel like you saw the word "market" and just knee-jerked a standard anti-market cant, instead of reading what I actually said. I was defending a "planned intervention".

by jerf 5y ago

worik 5y ago

Market forces are not magic, nor the only method of economic planning. When markets work they are very good at finding prices. But when they fail you get this sort of thing. There needs to be a lot of planned intervention in the housing sector. Entities with a lot of capital need to build the houses that people need to live in where they need to live in them and then let them live in them. The market will not do that.

jefftk 5y ago
The market ("people who would stand to earn a lot of money") would be happy to do that, but it's not allowed to (zoning: height limits, parking requirements, lot coverage, maximum floor area...)
handmodel 5y ago
I live in Los Angeles and am lucky enough to rent on a street that is single family houses. It is illegal to build a duplex here, or a structure above 2 stories, even though each house must be 2500 sqft still. People who are pro-market forces (such as myself) believe strongly that if you were allowed to build apartment buildings in neighborhoods like this that enough capital absolutely would be raised to raise supply. After all, you could take the current house I rent now and put in two walls for under 50k and start renting it out as a duplex two families but that is currently illegal. Hard to blame the market forces for this.
- bhewes 5y ago
  SB 9 pasted in Sept of last year that allows for duplexes on single unit lots. Here is the info for LA County https://planning.lacounty.gov/view/sb_9 https://planning.lacounty.gov/view/sb_9
  - handmodel 5y ago
    I am very happy about SB9! Though as a maximalist on this I'm still upset this is the best compromise we can get since the lot of this house is definitely big enough for more than just 2/4 units. The house I live in is rented which means it actually wouldnt be eligible since the owner must live in the house for 3 years after turning it into a duplex. Maybe this will incentivize owners of houses like this to sell to people who are willing to divide it in two? I hope so! But not sure.
    - bhewes 5y ago
      I agree. I lived in Houston and their are a lot of infill Townhomes. I think LA would be great for townhomes vs high rises or those terrible downtown DaVinci Apartments between the 101 and 110. Ha, did not know about the three year ownership requirement, classic CA NIMBYism. Still progress.
_3u10 5y ago
Vancouver and Toronto isn’t a housing market in any real sense of the word. Supply is fixed by government, interest rates are fixed by government, etc. If you took government control out of the market prices would plummet. Any plank will do, supply, financial backing or interest rates and the whole thing comes crashing down. That’s the real problem, how to cause a 20% “correction” and not 80%. My house is 8 hours from Vancouver, 8 hours from Calgary, 5 hours from Banff, it’s a town of 10,000 people, it was built in 1904 and is 2500 sqft. It’s been modestly renovated and is worth $950,000. The market is insane.
- worik 5y ago
  Everybody blaming zoning. What is happening in Dallas which has no zoning rules? (Or am I thinking of Austin Texas?) I do not know, but it would be useful for this debate
  - bombcar 5y ago
    Houston is usually the one they point to, but is the equivalent of zoning in other ways such as covenants, etc. Houston is booming I hear.
    - majormajor 5y ago
      Right, cities in Texas aren't cheaper because they don't have zoning (they either explicitly do, as well as HOAs in new developments and all sorts of other NIMBYism, or they do in indirect ways like you mention). They're cheaper because they can still expand outward more than SF, LA, NY, etc before hitting inconvenient geography. Lots of other places that benefit from this too, of course, not just Texas.
  - xapata 5y ago
    The housing crisis 15 years ago shrank the building industry and it hasn't recovered, yet. Further, construction has historically used a significant amount of immigrant labor, and immigration has shrank recently, increasing costs.
  - 5y ago
jerf 5y ago
I feel like you saw the word "market" and just knee-jerked a standard anti-market cant, instead of reading what I actually said. I was defending a "planned intervention".