4 ms·

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, si

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.
- emmacharp 3y ago
  My question still lingers: since housing prices as they are now disincentivize building because of poor profit opportunities, how can removing rent control spell more profit opportunities for private interests without increasing price? If prices stay somewhat the same without rent control, where is the incentive to build more housing?
  - scoofy 3y ago
    >since housing prices as they are now disincentivize building because of poor profit opportunities I'm confused by this. Housing prices are high, exactly because it's effectively impossible to build housing in the most expensive cities. Building housing in these cities is extremely profitable, it's just difficult, if not impossible, to build. 627 days, just for the permit: This data shows the staggering timeline to build homes in S.F.: https://www.sfchronicle.com/sf/article/housing-permits-san-francisco-17652633.php https://www.sfchronicle.com/sf/article/housing-permits-san-f... >The typical applicant currently waits a staggering 627 calendar days before obtaining a full building permit from the city to construct a multifamily housing project, and 861 days before gaining the same approval for a single-family residence, the analysis found. This has little to do with poor profit opportunities insofar as housing is concerned, and everything to do with incumbents (both home-owners and rent-controlled renter) explicitly trying to thwart new construction wherever possible. Home-owners want shortages to protect their property values. Rent-controlled renters want to block development because it might incentivize their landlords to redevelop the property they live in (this is specific to California laws). >how can removing rent control spell more profit opportunities for private interests without increasing price? >If prices stay somewhat the same without rent control, where is the incentive to build more housing? The answer is volume. If I have one unit that rents for $4000/month, but I redevelop to create 3 units that rent at $3000/month, I effectively increase my profits by $5000/month, while lowering local rents by $1000/month. Everybody wins. Now, if someone has rent-control at $1000/month, then I'm not going to argue that their rent isn't going to go up. It will, but it should. Because someone somehow living at a price that is artificially $3000/month cheaper than their neighbors is obviously unjust, I see little reason to preserve this inequality beyond political practicalities. Were these volume discounts don't exist, rent-controls are generally benign, however, as discussed before, they won't be benign for long, because the cause a lack of development, which will create a shortage over time. I obviously think these systems are entrenched, and should be phased out. I don't think that rent controls should be preserved indefinitely, but even if we were to completely change the system tomorrow, I understand that people have built their lives around these inequalities, and should have 5-10 years (minimum) for these inequalities to be eliminated.

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.

emmacharp 3y ago
My question still lingers: since housing prices as they are now disincentivize building because of poor profit opportunities, how can removing rent control spell more profit opportunities for private interests without increasing price? If prices stay somewhat the same without rent control, where is the incentive to build more housing?
- scoofy 3y ago
  >since housing prices as they are now disincentivize building because of poor profit opportunities I'm confused by this. Housing prices are high, exactly because it's effectively impossible to build housing in the most expensive cities. Building housing in these cities is extremely profitable, it's just difficult, if not impossible, to build. 627 days, just for the permit: This data shows the staggering timeline to build homes in S.F.: https://www.sfchronicle.com/sf/article/housing-permits-san-francisco-17652633.php https://www.sfchronicle.com/sf/article/housing-permits-san-f... >The typical applicant currently waits a staggering 627 calendar days before obtaining a full building permit from the city to construct a multifamily housing project, and 861 days before gaining the same approval for a single-family residence, the analysis found. This has little to do with poor profit opportunities insofar as housing is concerned, and everything to do with incumbents (both home-owners and rent-controlled renter) explicitly trying to thwart new construction wherever possible. Home-owners want shortages to protect their property values. Rent-controlled renters want to block development because it might incentivize their landlords to redevelop the property they live in (this is specific to California laws). >how can removing rent control spell more profit opportunities for private interests without increasing price? >If prices stay somewhat the same without rent control, where is the incentive to build more housing? The answer is volume. If I have one unit that rents for $4000/month, but I redevelop to create 3 units that rent at $3000/month, I effectively increase my profits by $5000/month, while lowering local rents by $1000/month. Everybody wins. Now, if someone has rent-control at $1000/month, then I'm not going to argue that their rent isn't going to go up. It will, but it should. Because someone somehow living at a price that is artificially $3000/month cheaper than their neighbors is obviously unjust, I see little reason to preserve this inequality beyond political practicalities. Were these volume discounts don't exist, rent-controls are generally benign, however, as discussed before, they won't be benign for long, because the cause a lack of development, which will create a shortage over time. I obviously think these systems are entrenched, and should be phased out. I don't think that rent controls should be preserved indefinitely, but even if we were to completely change the system tomorrow, I understand that people have built their lives around these inequalities, and should have 5-10 years (minimum) for these inequalities to be eliminated.