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I see. Thank you for the detailed comment. Let's say I accept your phrasing and naming of the problem & solution. Given that one big consequence of managed ho

I see. Thank you for the detailed comment. Let's say I accept your phrasing and naming of the problem & solution. Given that one big consequence of managed housing economics is depressed profits, how can "free market" supply increases lower housing costs? Won't profits suffer then? Reducing incentives to build? As I see it, and said in the original comment, for supply to increase, price cannot decrease. It can only increase for building to be more enticing than with rent stabilization/control. Not sure how this is beneficial to future generations.

scoofy 3y ago
People seem to think I'm arguing for "free markets" because I'm arguing against rent controls. I'm not. In fact, quite the opposite. I'm just recognizing that people respond to incentives, and we need the incentives to be aimed at lowering housing costs and not just "protecting" incumbents. The problem of unaffordable housing is solved by creating and incentivizing an artificial oversupply of housing. There are many ways to do this. Vienna, for example, did this with public housing. Econ nerds will argue for a land value tax. Houston, Texas, does it in the worst way possible... by creating an unsustainable sprawling mess that will collapse in exactly the way that Strong Towns predicts. >how can "free market" supply increases lower housing costs? Ultimately, if we eliminate the political/regulatory constraints for the sake of argument, the cost of housing is just the marginal cost of building the next unit of housing. There isn't any way around that, so if you want to live in Manhattan, say where high rises exists, the marginal cost of housing will be more expensive than, say, a tiny house in woods somewhere. If that marginal cost of housing becomes unaffordable, even for the government, then we have a real economic problem that needs to be solved apart from housing. We are dealing with that in California, as simply the cost to actually build something is has become so inflated, that it is unaffordable for the city to even build public housing. How we can get people to create an oversupply of housing in a private market, we could do in various ways. Property taxes is the easiest: land value taxes, or say, high property taxes with a large discount for each resident that lives in the taxable area. Ultimately, in this view, housing should be a cost... not an investment. Because under the rubric I put forward, there is no reason housing should appreciate in price in real terms far beyond the marginal cost of the housing itself. While there are ways to do this practically, the problem is that they tend to be politically unpopular for the reasons I listed earlier... people don't actually like change, or density, and will often vote against it whenever they can. Dealing with this is a political problem... one that requires having difficult conversations with both capitalists and socialists about what we actually want, and whether we want affordable housing, or whether we want a "kind of place" to live in, because we usually can't do both in the most desirable areas to live. It's a tough problem, and it's one I've thought deeply about for decades as I've unfortunately grown up in, and live in since, high-demand areas with increasingly unattainable housing situations, and I've heard all the argument, and think most people are not typically concerned about creating sustainable solution over quick-fixes.
- emmacharp 3y ago
  And do you think prices have to increase so that you can have an "artifical oversupply" of housing? And I thought you were advocating for free markets, yes, since you talked about "market rate". Sorry for the wrong inference. And just to be clear, I'm not a proponent of rent control, maybe rent stabilization as you said. I think, in general, people being able to keep living where the lived for a long time is a social good of great value and that we should try to implement housing policies that will make that possible.
  - scoofy 3y ago
    >And do you think prices have to increase so that you can have an "artifical oversupply" of housing? No, prices and rents in the most desirable areas should creep down toward "the marginal cost to create housing" as we create an oversupply. It will never actually get there, because people will need/want to create a profit, but it should find its way toward an equilibrium near there. The only reason why they might bump up temporarily is only that new housing is more expensive than "used" (existing) housing, so when new housing comes on the market it, it becomes the most desirable, and is priced the highest, but that should reduce the price of existing housing. This is your basic supply curve, though many people will argue (without much sense), that supply curves somehow don't apply to housing. >And I thought you were advocating for free markets, yes, since you talked about "market rate". Sorry for the wrong inference. I'm a strong believer in markets generally, though not necessarily "free" markets, because I think incentivizing and disincentivizing things we collectively want/don't want is one of the best ways to create general welfare for most people. The reason I advocate for markets in housing is two-fold. Firstly, housing is notoriously easy to hoard and sublet, which makes it ripe for abuse in a subsidized system. If we give people housing at significantly below market prices (that is prices below what they could get an equivalent unit for today), we should expect "dishonest" people to sublease that housing to capture that value. This is commonplace in San Francisco, where I live, that folks with rent-controlled units regularly bring in roommates or subtenants and charge them market rates, and just pocket the difference. Yes it's illegal, but it's a civil matter, and would require an expensive lawsuit against your roommate to solve, which would then likely end up with you looking for another unit at market rate anyway, so it's impractical to enforce. The other reason is land-hoarding. As we see in Stockholm, and in long-term rent controlled tenants in San Francisco, we see people paying below market rates, and then they tend to have more space than average. This is simply cause by the fact that, all things being equal (in price), more space is desirable to less. So this is a major inefficiency for everyone else who needs housing and would be willing to settle for less space. My utilizing markets, we will see people more willing to use space efficiently being allocated more units. This is why I want to see markets (or at least lotteries), with at least semi-regular lease renewals, even in socialist systems. When housing isn't perpetual, people will vote to provide that good to everyone, and not just themselves (especially when difficult trade-offs must be made to do this). I want people to have skin in the game, where they know that if we aren't taking care of everyone, they themselves are at risk of being left behind.

scoofy 3y ago

People seem to think I'm arguing for "free markets" because I'm arguing against rent controls. I'm not. In fact, quite the opposite. I'm just recognizing that people respond to incentives, and we need the incentives to be aimed at lowering housing costs and not just "protecting" incumbents. The problem of unaffordable housing is solved by creating and incentivizing an artificial oversupply of housing. There are many ways to do this. Vienna, for example, did this with public housing. Econ nerds will argue for a land value tax. Houston, Texas, does it in the worst way possible... by creating an unsustainable sprawling mess that will collapse in exactly the way that Strong Towns predicts. >how can "free market" supply increases lower housing costs? Ultimately, if we eliminate the political/regulatory constraints for the sake of argument, the cost of housing is just the marginal cost of building the next unit of housing. There isn't any way around that, so if you want to live in Manhattan, say where high rises exists, the marginal cost of housing will be more expensive than, say, a tiny house in woods somewhere. If that marginal cost of housing becomes unaffordable, even for the government, then we have a real economic problem that needs to be solved apart from housing. We are dealing with that in California, as simply the cost to actually build something is has become so inflated, that it is unaffordable for the city to even build public housing. How we can get people to create an oversupply of housing in a private market, we could do in various ways. Property taxes is the easiest: land value taxes, or say, high property taxes with a large discount for each resident that lives in the taxable area. Ultimately, in this view, housing should be a cost... not an investment. Because under the rubric I put forward, there is no reason housing should appreciate in price in real terms far beyond the marginal cost of the housing itself. While there are ways to do this practically, the problem is that they tend to be politically unpopular for the reasons I listed earlier... people don't actually like change, or density, and will often vote against it whenever they can. Dealing with this is a political problem... one that requires having difficult conversations with both capitalists and socialists about what we actually want, and whether we want affordable housing, or whether we want a "kind of place" to live in, because we usually can't do both in the most desirable areas to live. It's a tough problem, and it's one I've thought deeply about for decades as I've unfortunately grown up in, and live in since, high-demand areas with increasingly unattainable housing situations, and I've heard all the argument, and think most people are not typically concerned about creating sustainable solution over quick-fixes.

emmacharp 3y ago
And do you think prices have to increase so that you can have an "artifical oversupply" of housing? And I thought you were advocating for free markets, yes, since you talked about "market rate". Sorry for the wrong inference. And just to be clear, I'm not a proponent of rent control, maybe rent stabilization as you said. I think, in general, people being able to keep living where the lived for a long time is a social good of great value and that we should try to implement housing policies that will make that possible.
- scoofy 3y ago
  >And do you think prices have to increase so that you can have an "artifical oversupply" of housing? No, prices and rents in the most desirable areas should creep down toward "the marginal cost to create housing" as we create an oversupply. It will never actually get there, because people will need/want to create a profit, but it should find its way toward an equilibrium near there. The only reason why they might bump up temporarily is only that new housing is more expensive than "used" (existing) housing, so when new housing comes on the market it, it becomes the most desirable, and is priced the highest, but that should reduce the price of existing housing. This is your basic supply curve, though many people will argue (without much sense), that supply curves somehow don't apply to housing. >And I thought you were advocating for free markets, yes, since you talked about "market rate". Sorry for the wrong inference. I'm a strong believer in markets generally, though not necessarily "free" markets, because I think incentivizing and disincentivizing things we collectively want/don't want is one of the best ways to create general welfare for most people. The reason I advocate for markets in housing is two-fold. Firstly, housing is notoriously easy to hoard and sublet, which makes it ripe for abuse in a subsidized system. If we give people housing at significantly below market prices (that is prices below what they could get an equivalent unit for today), we should expect "dishonest" people to sublease that housing to capture that value. This is commonplace in San Francisco, where I live, that folks with rent-controlled units regularly bring in roommates or subtenants and charge them market rates, and just pocket the difference. Yes it's illegal, but it's a civil matter, and would require an expensive lawsuit against your roommate to solve, which would then likely end up with you looking for another unit at market rate anyway, so it's impractical to enforce. The other reason is land-hoarding. As we see in Stockholm, and in long-term rent controlled tenants in San Francisco, we see people paying below market rates, and then they tend to have more space than average. This is simply cause by the fact that, all things being equal (in price), more space is desirable to less. So this is a major inefficiency for everyone else who needs housing and would be willing to settle for less space. My utilizing markets, we will see people more willing to use space efficiently being allocated more units. This is why I want to see markets (or at least lotteries), with at least semi-regular lease renewals, even in socialist systems. When housing isn't perpetual, people will vote to provide that good to everyone, and not just themselves (especially when difficult trade-offs must be made to do this). I want people to have skin in the game, where they know that if we aren't taking care of everyone, they themselves are at risk of being left behind.