3 ms·

I thought of a sort of interesting idea. In Mountain View the home of Google the city for some reason blocked housing construction for a decade. Meanwhile Googl

I thought of a sort of interesting idea. In Mountain View the home of Google the city for some reason blocked housing construction for a decade. Meanwhile Google added 16k jobs to the city. The housing market in the whole area went batshit. What if the city had tried to permit 1 new housing start per new job? In Portugal what if every tech immigrant builds a house? Every unit of increased demand comes with a unit of increased supply. Theoretically that should flood the housing market with exactly as many new units as there are new immigrants. When we frame it as “driving up housing prices” we miss the simple idea of supply and demand. If supply always equals demand housing should stabilize.

somewhereoutth 3y ago
Unfortunately the housing market is rather more complicated than simple supply and demand. Houses aren't lemons or bicycles. Where you sit on the 'available income for housing' curve determines the location and quality of the house/apartment/tent you live in. If lots of people with higher incomes appear, then you get moved down accordingly. If lots of tourists with higher propensity to spend on temporary accommodation appear, you get moved down accordingly. If lots of 'funny money' turns up looking for a place to be parked, you get moved down accordingly. Where people get distressed if is the location and quality that they can afford is not reasonable to them (either actually or by their perception). Building high quality well-located homes may help (if that is even possible), as everyone can 'move up' to the next rung on the quality/location ladder. However you may get induced demand, as the slight drop in prices brings more high earners/tourists/funny-money, in which case normal earners will not see the benefit. Alternatively, restricting high-earners/tourists/funny-money will move normal earners up the ladder, without having to lay a single brick. However there may be some economic downsides to that, depending on what exactly is proposed. For example banning AirBnB would likely be a large net positive to most European cities.

somewhereoutth 3y ago

Unfortunately the housing market is rather more complicated than simple supply and demand. Houses aren't lemons or bicycles. Where you sit on the 'available income for housing' curve determines the location and quality of the house/apartment/tent you live in. If lots of people with higher incomes appear, then you get moved down accordingly. If lots of tourists with higher propensity to spend on temporary accommodation appear, you get moved down accordingly. If lots of 'funny money' turns up looking for a place to be parked, you get moved down accordingly. Where people get distressed if is the location and quality that they can afford is not reasonable to them (either actually or by their perception). Building high quality well-located homes may help (if that is even possible), as everyone can 'move up' to the next rung on the quality/location ladder. However you may get induced demand, as the slight drop in prices brings more high earners/tourists/funny-money, in which case normal earners will not see the benefit. Alternatively, restricting high-earners/tourists/funny-money will move normal earners up the ladder, without having to lay a single brick. However there may be some economic downsides to that, depending on what exactly is proposed. For example banning AirBnB would likely be a large net positive to most European cities.