3 ms·

If rent was illegal, you would buy.

by th0ma5 3y ago

readthenotes1 3y ago
Buy what? If rent were illegal, there would be far less housing because most people cannot (or will not) save enough capital to create or buy their own.
- th0ma5 3y ago
  You need to challenge your assumptions more, why couldn't you just make single family dwellings illegal in high demand areas? And have the state in charge of housing? Unless you mean to argue about current laws and situations, the main point of these discussions and this post is that they are not working.
  - AnthonyMouse 3y ago
    The existing problem is that multi-family dwellings are illegal in many high demand areas. Otherwise it would be highly profitable to build them there. If you fix that you don't need to do anything else. Putting the state in charge of housing is the cause of the existing problem. They become captured by landlords, or favor higher property values because they increase property tax revenues. What you need is some constitutional restraint on local zoning rules.
    - th0ma5 3y ago
      Why isn't more regulation the answer? If children misbehave at school we don't give them more freedom. There are widely published opinions that state this just makes landlords richer and housing rarer to further deregulate.
      - AnthonyMouse 3y ago
        In general competitive pressure makes things better. If you can choose between two things that are similar but one costs less, you can save money. If they cost the same but one is better, you can choose the better one. The easier it is for you to switch, the less the provider can get away with before you do. Governments have weak competitive pressure. You have to uproot your whole life and move to another jurisdiction. When you vote, you're making a choice about every issue under the sun at once and it's impossible to change your vote on only one issue by itself. You can also easily end up "represented" by the candidate you voted against. As a result they're extremely inefficient by default and should only be used when the alternative is catastrophic. This is doubly true in markets that could be competitive, because the incumbents have the incentive to use the government to reduce competition so they make more money. The obviously relevant example is zoning rules that restrict housing supply. It's critical to not allow that to happen, or to undo it when it already has. Trying to cancel it out with even more regulations is just another opportunity for incumbents to sneak in some new way of screwing you. When you screw up a market this badly, people get desperate and angry and start proposing all kinds of aggressive "solutions" because they fail to understand the cause of the problem but want something done about it. The most ridiculous of these are generally filtered out, but the ones that make it through are the ones that don't work or make it worse because those are the ones the incumbents fight the least. You have to fight the cause of the problem, which is a government captured by land owners imposing rules that make housing more expensive. The solution is to remove those rules. > There are widely published opinions that state this just makes landlords richer and housing rarer to further deregulate. One of the main reasons "deregulation" has a bad name is that its purpose is to increase competition and lower prices, which is exactly the thing the incumbents don't want, so instead they propose a "compromise" that prevents exactly the thing you're trying to get. For example, suppose you have two rules. One says that new housing construction is utterly prohibited, the other says that all rental properties must have working plumbing. In a competitive market the second rule is inefficient because all it really does is prohibit anyone from offering a storage unit with no plumbing. There would be enough apartments with running water that nobody would have any reason to consider one that didn't. But in a market where increasing the housing supply is inhibited, there are more tenants than rental units and that allows abusive slumlords to find tenants willing to live under such conditions. Much "deregulation" is the corruption in which you only remove the second rule and not the first, which of course makes things worse, because the first one is the one that matters and the second one is just an inefficient attempt to mitigate the damage. Increase the housing supply until rents go down. Accept no substitutes.
        th0ma5 3y ago
        Why does no one want to increase the housing supply then unless they can get federal money to do so?
        AnthonyMouse 3y ago
        Plenty of people do, but zoning rules make it expensive. Suppose you want to build a 20 story condo. The most efficient thing to do is to find an empty plot of land or a single family home and build it there, but that's prohibited by zoning. 20 story buildings aren't allowed there. Now what you have to do is find an existing 10 story condo and knock that down, because it's in a place zoned for tall buildings. But that costs a lot more, and you also have to remove all the people who are already living there instead of just buying one house from someone who is already moving. It's so much more expensive than the first thing that it's not profitable, so it doesn't happen without a subsidy. Not only that, even if it does happen, you've now paid to build a 20 story building and only added 10 stories worth of housing.
        th0ma5 3y ago
        You're trying to make some kind of libertarian point, I'm talking about what real people are saying is really actually happening and what is needed. https://thehill.com/opinion/congress-blog/3499112-solving-the-housing-crisis-requires-long-term-federal-investment/ https://thehill.com/opinion/congress-blog/3499112-solving-th... ... You're saying that demand isn't high enough for them to justify spending the money? That's exactly my point but you're saying they are beholden to do nothing and blame the government when by your own logic they just want more money.
        AnthonyMouse 3y ago
        > You're saying that demand isn't high enough for them to justify spending the money? What I'm saying is that they passed laws that make increasing supply so outrageously expensive that demand has to remain at outrageously high levels to trigger construction. You can't get to reasonable housing costs that way because construction companies can't sustainably operate at a loss. You have to make it sustainable by not prohibiting construction where it's the most cost effective. > by your own logic they just want more money. Of course they want money. They have to pay for land and construction crews. But if you increase their costs by prohibiting them from building on the most cost effective sites, the amount they want before they'll be willing to do it goes up. Construction companies don't make anything by not building. But they also don't make anything if government regulations increase their costs above real estate prices. So every time you increase their costs with a new regulation, real estate prices go up -- and stay there until you remove the rule that keeps their costs high. (Or something causes demand to go down, which is typically only something bad.)
    - pandaman 3y ago
      >The existing problem is that multi-family dwellings are illegal in many high demand areas This is technically correct but the areas mentioned are the size of a block or a subdivision so it's hardly the limiting factor. You can build high rise apartments in any big city and multi-family anywhere. The reason prices on housing go up is that it costs a lot to build housing and it's pretty hard to secure financing for a housing project which you plan to sell/rent below cost. It's combined code compliance, materials, labor, and financing. If it costs $300 to build a square foot just in the labor and materials then it comes up at $150K for a tiny 500 sqf 1br and you'd need to rent that for more than $2000 per month to break even on the commercial loan you took. Throw in maintenance, lapses in occupancy and some profit and you are looking at close to $3K for a 500 sqf 1br. Unless it's on Manhattan or on an ocean beach somewhere, it's going to be very hard to find tenants. It appears that America had ran up its credit card to the limit. Mass produced goods from China are still cheap but the hoses are just expensive, can't ship those in containers from Shenzhen. Playing with zoning is rearranging chairs on the deck of Titanic, it's not going to lower the cost of construction. And yes, adding more housing would lower the price but the problem is that adding housing is held up by the cost mostly and the developers only want to build in very limited prestigious areas where they hope to get tenants/buyers willing to pay their cost. It's not sustainable.
      - AnthonyMouse 3y ago
        > You can build high rise apartments in any big city and multi-family anywhere. You can't build them except in the places they already are. Converting existing high density housing to even higher density housing is prohibitively expensive. What you need to do is go to the edge of the high density area where it meets the low density area and convert the low density housing to high density. But that area is only zoned for low density, so you can't. > The reason prices on housing go up is that it costs a lot to build housing and it's pretty hard to secure financing for a housing project which you plan to sell/rent below cost. Who is requiring them to sell below cost? Just build more housing at the market rate as long as the market rate is above your construction costs. If you want a lower market rate, find a way to lower construction costs. > If it costs $300 to build a square foot But what causes that?
  - UncleEntity 3y ago
    > ...why couldn't you just make single family dwellings illegal in high demand areas? Because this isn't how things work in civil society. They can't just decree that all single family homes in San Jose are now illegal and you have to vacate by the end of the month.
    - th0ma5 3y ago
      I guess you remind me of imminent domain, and the also other legal and not so legal ways people manipulate property values like cash for houses signs.
  - readthenotes1 3y ago
    "why couldn't you just make single family dwellings illegal in high demand areas? And have the state in charge of housing? " Because I've seen Soviet era housing and War on Poverty projects. Challenge my assumptions? I think the burden is on you to show that somehow next time will be different

If rent was illegal, you would buy.

by th0ma5 3y ago

If rent was illegal, you would buy.

Buy what? If rent were illegal, there would be far less housing because most people cannot (or will not) save enough capital to create or buy their own.

th0ma5 3y ago
You need to challenge your assumptions more, why couldn't you just make single family dwellings illegal in high demand areas? And have the state in charge of housing? Unless you mean to argue about current laws and situations, the main point of these discussions and this post is that they are not working.
- AnthonyMouse 3y ago
  The existing problem is that multi-family dwellings are illegal in many high demand areas. Otherwise it would be highly profitable to build them there. If you fix that you don't need to do anything else. Putting the state in charge of housing is the cause of the existing problem. They become captured by landlords, or favor higher property values because they increase property tax revenues. What you need is some constitutional restraint on local zoning rules.
  - th0ma5 3y ago
    Why isn't more regulation the answer? If children misbehave at school we don't give them more freedom. There are widely published opinions that state this just makes landlords richer and housing rarer to further deregulate.
    - AnthonyMouse 3y ago
      In general competitive pressure makes things better. If you can choose between two things that are similar but one costs less, you can save money. If they cost the same but one is better, you can choose the better one. The easier it is for you to switch, the less the provider can get away with before you do. Governments have weak competitive pressure. You have to uproot your whole life and move to another jurisdiction. When you vote, you're making a choice about every issue under the sun at once and it's impossible to change your vote on only one issue by itself. You can also easily end up "represented" by the candidate you voted against. As a result they're extremely inefficient by default and should only be used when the alternative is catastrophic. This is doubly true in markets that could be competitive, because the incumbents have the incentive to use the government to reduce competition so they make more money. The obviously relevant example is zoning rules that restrict housing supply. It's critical to not allow that to happen, or to undo it when it already has. Trying to cancel it out with even more regulations is just another opportunity for incumbents to sneak in some new way of screwing you. When you screw up a market this badly, people get desperate and angry and start proposing all kinds of aggressive "solutions" because they fail to understand the cause of the problem but want something done about it. The most ridiculous of these are generally filtered out, but the ones that make it through are the ones that don't work or make it worse because those are the ones the incumbents fight the least. You have to fight the cause of the problem, which is a government captured by land owners imposing rules that make housing more expensive. The solution is to remove those rules. > There are widely published opinions that state this just makes landlords richer and housing rarer to further deregulate. One of the main reasons "deregulation" has a bad name is that its purpose is to increase competition and lower prices, which is exactly the thing the incumbents don't want, so instead they propose a "compromise" that prevents exactly the thing you're trying to get. For example, suppose you have two rules. One says that new housing construction is utterly prohibited, the other says that all rental properties must have working plumbing. In a competitive market the second rule is inefficient because all it really does is prohibit anyone from offering a storage unit with no plumbing. There would be enough apartments with running water that nobody would have any reason to consider one that didn't. But in a market where increasing the housing supply is inhibited, there are more tenants than rental units and that allows abusive slumlords to find tenants willing to live under such conditions. Much "deregulation" is the corruption in which you only remove the second rule and not the first, which of course makes things worse, because the first one is the one that matters and the second one is just an inefficient attempt to mitigate the damage. Increase the housing supply until rents go down. Accept no substitutes.
      - th0ma5 3y ago
        Why does no one want to increase the housing supply then unless they can get federal money to do so?
        AnthonyMouse 3y ago
        Plenty of people do, but zoning rules make it expensive. Suppose you want to build a 20 story condo. The most efficient thing to do is to find an empty plot of land or a single family home and build it there, but that's prohibited by zoning. 20 story buildings aren't allowed there. Now what you have to do is find an existing 10 story condo and knock that down, because it's in a place zoned for tall buildings. But that costs a lot more, and you also have to remove all the people who are already living there instead of just buying one house from someone who is already moving. It's so much more expensive than the first thing that it's not profitable, so it doesn't happen without a subsidy. Not only that, even if it does happen, you've now paid to build a 20 story building and only added 10 stories worth of housing.
        th0ma5 3y ago
        You're trying to make some kind of libertarian point, I'm talking about what real people are saying is really actually happening and what is needed. https://thehill.com/opinion/congress-blog/3499112-solving-the-housing-crisis-requires-long-term-federal-investment/ https://thehill.com/opinion/congress-blog/3499112-solving-th... ... You're saying that demand isn't high enough for them to justify spending the money? That's exactly my point but you're saying they are beholden to do nothing and blame the government when by your own logic they just want more money.
        AnthonyMouse 3y ago
        > You're saying that demand isn't high enough for them to justify spending the money? What I'm saying is that they passed laws that make increasing supply so outrageously expensive that demand has to remain at outrageously high levels to trigger construction. You can't get to reasonable housing costs that way because construction companies can't sustainably operate at a loss. You have to make it sustainable by not prohibiting construction where it's the most cost effective. > by your own logic they just want more money. Of course they want money. They have to pay for land and construction crews. But if you increase their costs by prohibiting them from building on the most cost effective sites, the amount they want before they'll be willing to do it goes up. Construction companies don't make anything by not building. But they also don't make anything if government regulations increase their costs above real estate prices. So every time you increase their costs with a new regulation, real estate prices go up -- and stay there until you remove the rule that keeps their costs high. (Or something causes demand to go down, which is typically only something bad.)
  - pandaman 3y ago
    >The existing problem is that multi-family dwellings are illegal in many high demand areas This is technically correct but the areas mentioned are the size of a block or a subdivision so it's hardly the limiting factor. You can build high rise apartments in any big city and multi-family anywhere. The reason prices on housing go up is that it costs a lot to build housing and it's pretty hard to secure financing for a housing project which you plan to sell/rent below cost. It's combined code compliance, materials, labor, and financing. If it costs $300 to build a square foot just in the labor and materials then it comes up at $150K for a tiny 500 sqf 1br and you'd need to rent that for more than $2000 per month to break even on the commercial loan you took. Throw in maintenance, lapses in occupancy and some profit and you are looking at close to $3K for a 500 sqf 1br. Unless it's on Manhattan or on an ocean beach somewhere, it's going to be very hard to find tenants. It appears that America had ran up its credit card to the limit. Mass produced goods from China are still cheap but the hoses are just expensive, can't ship those in containers from Shenzhen. Playing with zoning is rearranging chairs on the deck of Titanic, it's not going to lower the cost of construction. And yes, adding more housing would lower the price but the problem is that adding housing is held up by the cost mostly and the developers only want to build in very limited prestigious areas where they hope to get tenants/buyers willing to pay their cost. It's not sustainable.
    - AnthonyMouse 3y ago
      > You can build high rise apartments in any big city and multi-family anywhere. You can't build them except in the places they already are. Converting existing high density housing to even higher density housing is prohibitively expensive. What you need to do is go to the edge of the high density area where it meets the low density area and convert the low density housing to high density. But that area is only zoned for low density, so you can't. > The reason prices on housing go up is that it costs a lot to build housing and it's pretty hard to secure financing for a housing project which you plan to sell/rent below cost. Who is requiring them to sell below cost? Just build more housing at the market rate as long as the market rate is above your construction costs. If you want a lower market rate, find a way to lower construction costs. > If it costs $300 to build a square foot But what causes that?
- UncleEntity 3y ago
  > ...why couldn't you just make single family dwellings illegal in high demand areas? Because this isn't how things work in civil society. They can't just decree that all single family homes in San Jose are now illegal and you have to vacate by the end of the month.
  - th0ma5 3y ago
    I guess you remind me of imminent domain, and the also other legal and not so legal ways people manipulate property values like cash for houses signs.
- readthenotes1 3y ago
  "why couldn't you just make single family dwellings illegal in high demand areas? And have the state in charge of housing? " Because I've seen Soviet era housing and War on Poverty projects. Challenge my assumptions? I think the burden is on you to show that somehow next time will be different