10 ms·

> industry The fact that providing people with housing is even seen as an "industry" is a big sign of what is wrong with the world right now. It is essential

by Carrok 2y ago

> industry The fact that providing people with housing is even seen as an "industry" is a big sign of what is wrong with the world right now. It is essential to living a decent life. It should not be a driver of lining the pockets of people who are already rich.

diogocp 2y ago
It being an industry is what allows people to live a decent life. Just like farming being an industry allows you to sit at a desk all day instead of being out there foraging.
Manuel_D 2y ago
Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? If there's no profit to be made in building housing, why would anyone want to build housing? This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. If it's proven that landlords colluded to fix prices, that should be addressed. But the reality is, prices are only going up in a select few metros. And it's because lots of people want to live in those areas, which leads to rising demand which has not been satisfied by new housing construction. People desperately want to believe that there's a silver bullet that will bring prices down without actually addressing the mismatch between supply and demand.
- toomuchtodo 2y ago
  Profits are fine, excessive profits at the cost of people who need housing are not. There is no silver bullet, but increasing supply along with strong regulation to protect renters is welcome vs them being cattle to be squeezed by for profit entities. Human rights are a thing, there is no right to profit. > The six largest publicly traded apartment companies in the U.S. — all of which are linked to an alleged rental price-fixing scandal — experienced profit increases during the first three months of the year, according to an analysis from left-leaning watchdog group Accountable US exclusively shared with The Hill. > In the analysis, the companies earned a combined $300 million in profit during the first quarter of the year, in part, due to rent increases. Lots of profit to squeeze out with regulation, based on the evidence. The Vienna model is a proven model if for profit enterprises walk away from housing. https://thehill.com/business/housing/4718252-large-apartment-companies-rental-fixing-scheme-profits-analysis/ https://thehill.com/business/housing/4718252-large-apartment... https://accountable.us/report-top-corporate-landlords-see-profits-soar-amid-rent-hikes-and-fees/ https://accountable.us/report-top-corporate-landlords-see-pr...
  - itake 2y ago
    strong regulation increases costs (see all the permits and surveys required in SF). What are "excessive profits"? 10%? 15%? 25%? > experienced profit increases during the first three months of the year Does this even mean anything? This could mean their vacancy rate decreased and thus their business is more profitable. I don't see the issue with companies reducing vacancies and providing more housing to more people.
    - toomuchtodo 2y ago
      I cannot say, but experts can, and suggest to legislators and regulators implementation details. To operate a business in a jurisdiction is a privilege, not an entitlement.
      - itake 2y ago
        I'd love to see the data on this. Usually when you increase construction costs, via additional regulation, you're going to increase the price of rent/sale. What expert thinks increasing costs will lower prices?
        toomuchtodo 2y ago
        It's the other way around. Regulation around pricing forces housing providers to provide housing within a constrained cost model (land + materials + labor + cost of capital + permitting/AHJ requirements [regulation]). If they cannot meet the market (or choose not to, for whatever reason), public housing is an option, with muni bonds issued to finance construction. This removes the profit component, which a for profit enterprise needs, but public housing does not.
        itake 2y ago
        where does the public housing come from? WA and CA can't seem to figure out how to build public housing. In WA, the best I've seen is the gov buying hotels and having the hotel sit empty for years [0]. If regulations make it impossible to build housing and public housing has the same regulations, who is paying that bill? The existing residents via sales and property taxes? you can google construction costs in sf. how does regulations reduce any of those numbers? [0] - https://www.kiro7.com/news/local/king-county-taxpayers-paying-roughly-330k-month-empty-hotel-renton/ZKZ7IE4QANDW3M2XUFJB55YBYU/ https://www.kiro7.com/news/local/king-county-taxpayers-payin...
- deepsun 2y ago
  > If there's no profit to be made in building housing, why would anyone want to build housing? To live in it.
  - from-nibly 2y ago
    You want to live in an apartment complex by yourself?
    - failuser 2y ago
      You’ll need a construction cooperative. IDK if those can compete with large construction companies due to the economy of scale. The construction cooperatives were a staple of late Soviet and post-Soviet Russia, but were essentially outlawed later to make way for large construction business and mortgages-backed construction.
      - bluGill 2y ago
        I'm not against them, but they are not the right answer for everyone. They are great if you want to live in the same apartment for a few decades, but if you move they become tricky.
    - deepsun 2y ago
      It's called cooperative. If I'd like to live in apartment complex, I'd post an ad like "Buy an apartment in a future complex for a low price of X! Move in in only 2 years!". (Cost to build Y, number of apartments Z, X = Y/Z). And it's not something new. When price is lower than market, people do buy it.
  - bluGill 2y ago
    What if I only want to live someplace for a couple years? Building a house that I want to live in for the next 40 years makes sense, but if you have no reason to think life will keep you in the one place for 40 years renting may be a better deal - let someone else take the risk of building a house and hoping someone comes to live in to.
- jmole 2y ago
  There is a lot more to San Francisco's housing crisis than price controls: lengthy permitting processes, environmental reviews, NIMBY community outreach, etc.
  - mistrial9 2y ago
    San Francisco has always been a crooked city.. fleecing newbies is sport.. they have jokes and murals and parties around it and always have.. in the American era.. source: personal testimony by someone born and raised there around 1900
- Carrok 2y ago
  If price controls on housing exist in SF but not elsewhere, and this causes developers to not build there, then the issue is not that price controls exist in SF. The issue is that price controls do not exist elsewhere. Set the same price controls across the entire nation, suddenly there is no disincentive to not build in any one area.
  - Quinner 2y ago
    Suddenly there's no incentive to build in all areas.
  - margalabargala 2y ago
    You appear to be making an incorrect assumption that there is some consistent amount of housing which will be built each year, and the question is only how to distribute it among different localities. That's not the case. If you add the same price controls everywhere, then the same near-zero housing gets built everywhere. Construction companies will shut down, they will not continue paying people to build housing at a loss.
    - Carrok 2y ago
      You appear to be making an incorrect assumption that price controls must be so onerous that they will result in zero new housing being built.
      - RhodesianHunter 2y ago
        I'm not trying to be snarky, I'm genuinely curious. Have you ever read the economics literature on price controls?
        Alupis 2y ago
        They have not... and unfortunately this viewpoint is shared by too many these days. Removing the profit-motive from the equation does not magically net increased benefits for everyone. It's usually the opposite in reality... landlords end up doing the absolute bare minimum because sinking a bunch of money into renovating the bathrooms or kitchen will not yield increased rent under these proposed policies. Or people looking to invest in housing/apartments for rental income decide it's ROI is far too low to be worth the hassle and risks... so less housing is built. This line of thinking looks at some minority of people living in slums, and assumes every rental owner is actually a slumlord. So, the solution is obviously to degrade the situation for everyone because some small minority of people have it rough...
- BobbyJo 2y ago
  I agree with most of what you said, and do think supply is ultimately the fix, however, we also have to acknowledge the extreme inelasticity of demand for housing, and the massive shoe leather cost, both of which leave consumers at a massive disadvantage in price discovery.
  - Manuel_D 2y ago
    How are consumers at a disadvantage in price discovery? Hop on Zillow, craiglist, FB marketplace, etc. set your filters and sort by price.
    - BobbyJo 2y ago
      Price discovery as in the market converging on a price, not as in an individual seeing how much something would cost at present. https://en.m.wikipedia.org/wiki/Price_discovery https://en.m.wikipedia.org/wiki/Price_discovery Since the good has very inelastic demand, suppliers have an easier time influencing the market. Small changes in supply should cause big changes in price, in both directions. However, prices go higher much faster during high demand than they go lower during low demand.
- raincom 2y ago
  Realpage is involved in a vicious loop, not a virtuous loop. Even in the Bay Area, corporate landlords jack up rent like 10% every year, whereas small landlords are happy to raise rent by 3%. That's the difference due to algorithmic collusion set and controlled by RealPage.
  - Manuel_D 2y ago
    How are the corporate landlords able to rent their units if the small landlords are selling equal quality units for substantially less? Wouldn't everyone just rent from the small landlords while the corporate apartments stay vacant? This is the hole in the price-fixing argument: price-fixing only works when everyone is onboard, otherwise the parties not involved in price fixing will gobble up the market share. I wouldn't be surprised if corporate-run apartments are more expensive. They're are usually renting much nicer buildings with amenities like air conditioning, parcel delivery rooms, gated parking, etc.
    - Carrok 2y ago
      > Wouldn't everyone just rent from the small landlords while the corporate apartments stay vacant? If there was enough supply, they absolutely would. > They're are usually renting much nicer buildings with amenities like air conditioning, parcel delivery rooms, gated parking, etc. It sure sounds like you've never rented. This is, in the vast majority of cases, not reality.
      - Manuel_D 2y ago
        Exactly: prices are rising because there isn't enough supply to satisfy demand. I have, in fact, rented in San Francisco. I rented from a small landlord in a building that had no A/C, no package room, no parking. I had to fix my refrigerator and shower mixer myself because she barely spoke English. But it was a cheap apartment! I also rented from a corporate landlord. It had a lot of amenities like a gym, a package room, and parking. But I paid a lot more for that apartment.
    - kelnos 2y ago
- kelnos 2y ago
  > This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. Not sure what "price controls" you're talking about, but the reason it's expensive to build in SF (which reduces the appeal for builders) is zoning, the byzantine planning process, the ability of local residents to effectively block or delay projects, and weaponized environmental review. > Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? Building housing doesn't need to be an investment opportunity. In a better world, I'm sure there would be plenty of people who would be happy to build housing with only enough profit to pay employees a comfortable wage. These sorts of people don't have the ability to break into the industry, though.
  - Manuel_D 2y ago
    Policy restricting housing is indeed another factor impeding housing. The price controls I'm referring to are rent controls (which applies to ~70% of apartments in SF, and the threat of reintroducing rent controls looms) and affordable housing mandates. The affordable housing mandates require that a certain percentage of units are rented at set prices. Again, if housing isn't an investment opportunity, then why would anyone build new housing? Sometimes people get together and build co-ops. But those are rare, and it's only available to people with a lot of capital on-hand. Plus, it runs the risk of the project going over-budget.
    - asadotzler 2y ago
      Lots of businesses make less than stock market index returns. You can be a builder that doesn't want to beat the S&P and still support your family doing it. Not everything has to be about massive accumulation of wealth or "growth at all costs". Plenty of people are OK doing a day's work for a day's creature comforts and leaving it at that.
      - Manuel_D 2y ago
        Sure you can deliberately invest in a way that doesn't generate the best returns. You can be a philanthropist and build housing for free! But the vast majority of people are indeed looking to maximize returns.
- biggoodwolf 2y ago
  Like Manhattan? They've built a lot, and it's getting cheaper every year
  - Manuel_D 2y ago
    Manhattan rents tanked during the pandemic, but rebounded pretty quickly after covid subsided. Supply and demand is such that prices may rise even if you build a lot of housing if there's even more people that want to live there. Big supply coupled with even bigger demand will still see prices rise.
- dwallin 2y ago
  This is not a binary situation. There are plenty of reasonable approaches that help limit abusive landlord behavior without damaging the prospect of profitable real estate development.
  - Manuel_D 2y ago
    I wholeheartedly agree that landlords should not engage in abusive behavior: Landlords should not discriminate on the basis of protected class. They should keep units safe and up-to-code. They should not engage in deceptive practices like advertising one unit and selling a different one, or falsifying facts about the unit. But where I'm not going to agree is the notion that setting rent above a certain threshold is "abusive landlord behavior". If a landlord is setting the rent too high, the consequence should be that the unit stays vacant. If someone is willing to pay that rent, then evidently the rent wasn't too high.
    - dwallin 2y ago
      Except that there are significant switching costs. A person moving has to pay moving costs, might have to replace furniture that doesn't work for the new place, can affect your children's schools etc. This means the value of a unit to someone living there can often be significantly higher than the market rate. This can led to situations where the most profitable move for landlords is to take advantage of the discrepancy to regularly raise the rent for existing renters by more than the market, in attempt to maximize profit. Sure they might have to deal with the hassle of finding a new tenant every couple of years when someone gets priced out, but if it leads overall to slightly higher profits it's the winning capitalist move. The rentiers are ostensibly following the law, but the overall cost to the population and quality of life loss to renters can be significantly outsized compared to a sliver of additional profit for the rentiers. This is a great example of externalized costs in a free market and exactly where government should generally be attempting sensible regulation.
- bdcravens 2y ago
  > Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? No, but this doesn't change the fact that housing is a basic good like gasoline and insurance. Controls in those industries don't prevent companies from investing. Profit regulation doesn't mean no profit. > price controls on housing lead to few developers willing to build there Because there are alternate places without those controls. If housing were treated like the essential good that it is, there wouldn't be any ROI havens, and developers would adapt (or die if they can't accept reducing the typical ROI, which averages around 15%) > rising demand which has not been satisfied by new housing construction There's plenty of demand, just not for the houses that are being built. (That's not to say there aren't specific cities where there is no supply). Based on most affordability standards, many can't afford the typical rent or mortgage. If those prices can't come down, or income can't go up, then new types of much cheaper housing must be built.
  - Manuel_D 2y ago
    Gasoline isn't subject to price controls, though! They were in the past, and the results were disastrous. This is what price-controls on gasoline look like: https://www.federalreservehistory.org/-/media/images/essays/oil-shock-of-1978-79/oil_shock_1978_79_1_720x450.jpg https://www.federalreservehistory.org/-/media/images/essays/... The way that the government influences gas prices is that they stockpile or release oil from the US strategic reserves. They don't regulate prices. They influence supply in order to influence prices. The analogy would be building public housing. I'm not sure what you mean by treating housing like an "essential good". Most essential goods aren't subject to price controls. There aren't price controls on food, for example. Most countries that set price controls on food experience famines (or the price controls are widely ignored and the black market becomes the normal market).
    - bdcravens 2y ago
      You can be prosecuted for price gouging of essential goods.
      - 2y ago
- skeeter2020 2y ago
  >> leads to rising demand which has not been satisfied by new housing construction we seem to accept this at face value, but there's lots of evidence that supply is not the only issue, or even the biggest. Example: in Toronto this year there's been over 220 large real estate projects go insolvent. There's clearly a limit on the demand side.
- trilobyte 2y ago
  So you would be ok with contractors who are building the houses (often as subcontractors) coordinating their prices for the work to maximize the cost to the developer?
  - chgs 2y ago
    Sounds like a union
- washadjeffmad 2y ago
  You're missing that they didn't use this to build or expand housing, but to limit it. Just look at the occupancy rates. They colluded with property management companies to capture 80% of existing multi-family dwellings and raised rents to inflate hard asset values of PE owned properties nationwide. Just because this is the closest that homeowners have had to a bailout in their lifetimes doesn't mean they didn't profit even more. It was a scam.
bequanna 2y ago
Well, housing needs to mostly be handled by the private sector if we want high quality. Government housing should absolutely exist, but only as a safety net as their management is incredibly inefficient. Private housing isn’t the issue here: collusion is. Collusion should generally not be tolerated in a well regulated capitalist system.
- mistrial9 2y ago
  there are massive and documented scandals at the US Federal level with the departments assigned to regulate and serve those markets (HUD etc).. an easy and relevant start is the Savings and Loan collapse of the 80s, directly on top of mortgage monies
  - bequanna 2y ago
    I don’t disagree but not sure what point you’re trying to make here. Problems with regulation are the expected consequence of living in the real world and not a model. They should be fixed and we can do better. I just don’t see how any of this leads us to more regulation. More government control means less efficiency and likely MORE corruption.
JackYoustra 2y ago
I don't see why this is an important point: food is an industry and it's never been cheaper in human history than in developed capitalist countries with vibrant agribusiness.
- RhodesianHunter 2y ago
  True but, look up the price fixing that's been going on in big AG via AgriStats. Similar story as OP.
  - JackYoustra 2y ago
    yup. Cartels always bad!
legitster 2y ago
Modern housing is a direct development of the industrial revolution. In that sense it is an industry. You could provide housing like undeveloped nations do, where large families live in cramped hovels without electricity or running water. In the sense that someone should want an apartment with 2 bathrooms, a fireplace, and a pool - it's easier to treat housing overall as a consumer good.
- Carrok 2y ago
  This is quite the straw man you've constructed. You seem to be suggesting that either housing must be exploitatively expensive, or people must live in squalor.
  - legitster 2y ago
    You are strawmanning me. Nothing in my statement suggests that treating housing as a product means it has to be exploitatively expensive or given away for free. If anything, most industrial products are supposed to get cheaper over time.
    - kelnos 2y ago
      > If anything, most industrial products are supposed to get cheaper over time. And yet the cost of housing more or less always increases. Isn't that enough to suggest that there's something about this "industry" that doesn't quite make sense the way it's handled?
- sangnoir 2y ago
  ...vs "providing" housing like developed nations in cramped shelters, in cars and on the street? FYI: multigenerational households are a cultural artifact, not an economic one. As one might assume, hovels without water or electricity don't break the bank, they aren't "provided" by anyone either. Yours is a false dichotomy, and is easily disproved by examples in other developed countries where shelter is considered a right.
  - 2y ago
Alupis 2y ago
> The fact that providing people with housing is even seen as an "industry" > It is essential to living a decent life. What troublesome phrasing. "Provide" implies people should get housing for free, and "decent" implies getting "decent" housing for free... Well, so who is actually paying for it then? Magical handwavy "government" money? Everyone knows where government money comes from, right? Right? Do we want more printed money and uncontrollable inflation? No? Oh so we should just steal this money from people who worked hard, because some others didn't? > It should not be a driver of lining the pockets of people who are already rich. Ah yes, the ol' "rich people bad" whipping horse. Despite the tens of millions of jobs created by "rich people" and the millions and millions of people who live in actually decent housing in exchange for market rates. The fact that some people actually truly believe "free government housing" is going to be "decent" is absolutely tragic. Yes, let's doom millions to the "projects" because it makes us feel better knowing those darn rich people aren't making money! If anyone wants a porthole view into what government housing looks like - take a look at the plethora of stories and pictures from our military barracks, across all branches. Mold, bugs, broken appliances, holes in walls, locks that don't work... and nobody cares despite the very vocal, highly visible complaints. There's a reason our service men and women scramble to off-base housing the moment they are allowed.
- switch007 2y ago
  I'll totally accept you're speaking just in the context of the USA but... > The fact that some people actually truly believe "free government housing" is going to be "decent" is absolutely tragic Council houses are fairly highly regarded in the UK (i.e. the property, in terms of space, light, build quality. The estates/tenants, not so much...). They also have a track record of maintaining them far better than private/social landlords - I can personally attest to that. It is the large homebuilder companies that build truly awful, "tragic" homes, cutting every single possible corner imaginable for an extra penny of profit.
  - Alupis 2y ago
    Wikipedia indicates most of these Council Homes were built in the early 1900's - and are not modern construction. An additional average of a around 100 homes total were built per year from the 40's through 1980. So these don't appear to be helping a significant portion of the population. Wikipedia also indicates in the 1970's the UK government dramatically and suddenly cut back on funding for these homes (among other things), which led to some very poor living conditions. Your quality of life being dependent on the whims of politicians and budgets outside-your-control seems awful...

by Carrok 2y ago

diogocp 2y ago

It being an industry is what allows people to live a decent life. Just like farming being an industry allows you to sit at a desk all day instead of being out there foraging.

Manuel_D 2y ago

Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? If there's no profit to be made in building housing, why would anyone want to build housing? This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. If it's proven that landlords colluded to fix prices, that should be addressed. But the reality is, prices are only going up in a select few metros. And it's because lots of people want to live in those areas, which leads to rising demand which has not been satisfied by new housing construction. People desperately want to believe that there's a silver bullet that will bring prices down without actually addressing the mismatch between supply and demand.

toomuchtodo 2y ago
Profits are fine, excessive profits at the cost of people who need housing are not. There is no silver bullet, but increasing supply along with strong regulation to protect renters is welcome vs them being cattle to be squeezed by for profit entities. Human rights are a thing, there is no right to profit. > The six largest publicly traded apartment companies in the U.S. — all of which are linked to an alleged rental price-fixing scandal — experienced profit increases during the first three months of the year, according to an analysis from left-leaning watchdog group Accountable US exclusively shared with The Hill. > In the analysis, the companies earned a combined $300 million in profit during the first quarter of the year, in part, due to rent increases. Lots of profit to squeeze out with regulation, based on the evidence. The Vienna model is a proven model if for profit enterprises walk away from housing. https://thehill.com/business/housing/4718252-large-apartment-companies-rental-fixing-scheme-profits-analysis/ https://thehill.com/business/housing/4718252-large-apartment... https://accountable.us/report-top-corporate-landlords-see-profits-soar-amid-rent-hikes-and-fees/ https://accountable.us/report-top-corporate-landlords-see-pr...
- itake 2y ago
  strong regulation increases costs (see all the permits and surveys required in SF). What are "excessive profits"? 10%? 15%? 25%? > experienced profit increases during the first three months of the year Does this even mean anything? This could mean their vacancy rate decreased and thus their business is more profitable. I don't see the issue with companies reducing vacancies and providing more housing to more people.
  - toomuchtodo 2y ago
    I cannot say, but experts can, and suggest to legislators and regulators implementation details. To operate a business in a jurisdiction is a privilege, not an entitlement.
    - itake 2y ago
      I'd love to see the data on this. Usually when you increase construction costs, via additional regulation, you're going to increase the price of rent/sale. What expert thinks increasing costs will lower prices?
      - toomuchtodo 2y ago
        It's the other way around. Regulation around pricing forces housing providers to provide housing within a constrained cost model (land + materials + labor + cost of capital + permitting/AHJ requirements [regulation]). If they cannot meet the market (or choose not to, for whatever reason), public housing is an option, with muni bonds issued to finance construction. This removes the profit component, which a for profit enterprise needs, but public housing does not.
        itake 2y ago
        where does the public housing come from? WA and CA can't seem to figure out how to build public housing. In WA, the best I've seen is the gov buying hotels and having the hotel sit empty for years [0]. If regulations make it impossible to build housing and public housing has the same regulations, who is paying that bill? The existing residents via sales and property taxes? you can google construction costs in sf. how does regulations reduce any of those numbers? [0] - https://www.kiro7.com/news/local/king-county-taxpayers-paying-roughly-330k-month-empty-hotel-renton/ZKZ7IE4QANDW3M2XUFJB55YBYU/ https://www.kiro7.com/news/local/king-county-taxpayers-payin...
deepsun 2y ago
> If there's no profit to be made in building housing, why would anyone want to build housing? To live in it.
- from-nibly 2y ago
  You want to live in an apartment complex by yourself?
  - failuser 2y ago
    You’ll need a construction cooperative. IDK if those can compete with large construction companies due to the economy of scale. The construction cooperatives were a staple of late Soviet and post-Soviet Russia, but were essentially outlawed later to make way for large construction business and mortgages-backed construction.
    - bluGill 2y ago
      I'm not against them, but they are not the right answer for everyone. They are great if you want to live in the same apartment for a few decades, but if you move they become tricky.
  - deepsun 2y ago
    It's called cooperative. If I'd like to live in apartment complex, I'd post an ad like "Buy an apartment in a future complex for a low price of X! Move in in only 2 years!". (Cost to build Y, number of apartments Z, X = Y/Z). And it's not something new. When price is lower than market, people do buy it.
- bluGill 2y ago
  What if I only want to live someplace for a couple years? Building a house that I want to live in for the next 40 years makes sense, but if you have no reason to think life will keep you in the one place for 40 years renting may be a better deal - let someone else take the risk of building a house and hoping someone comes to live in to.
jmole 2y ago
There is a lot more to San Francisco's housing crisis than price controls: lengthy permitting processes, environmental reviews, NIMBY community outreach, etc.
- mistrial9 2y ago
  San Francisco has always been a crooked city.. fleecing newbies is sport.. they have jokes and murals and parties around it and always have.. in the American era.. source: personal testimony by someone born and raised there around 1900
Carrok 2y ago
If price controls on housing exist in SF but not elsewhere, and this causes developers to not build there, then the issue is not that price controls exist in SF. The issue is that price controls do not exist elsewhere. Set the same price controls across the entire nation, suddenly there is no disincentive to not build in any one area.
- Quinner 2y ago
  Suddenly there's no incentive to build in all areas.
- margalabargala 2y ago
  You appear to be making an incorrect assumption that there is some consistent amount of housing which will be built each year, and the question is only how to distribute it among different localities. That's not the case. If you add the same price controls everywhere, then the same near-zero housing gets built everywhere. Construction companies will shut down, they will not continue paying people to build housing at a loss.
  - Carrok 2y ago
    You appear to be making an incorrect assumption that price controls must be so onerous that they will result in zero new housing being built.
    - RhodesianHunter 2y ago
      I'm not trying to be snarky, I'm genuinely curious. Have you ever read the economics literature on price controls?
      - Alupis 2y ago
        They have not... and unfortunately this viewpoint is shared by too many these days. Removing the profit-motive from the equation does not magically net increased benefits for everyone. It's usually the opposite in reality... landlords end up doing the absolute bare minimum because sinking a bunch of money into renovating the bathrooms or kitchen will not yield increased rent under these proposed policies. Or people looking to invest in housing/apartments for rental income decide it's ROI is far too low to be worth the hassle and risks... so less housing is built. This line of thinking looks at some minority of people living in slums, and assumes every rental owner is actually a slumlord. So, the solution is obviously to degrade the situation for everyone because some small minority of people have it rough...
BobbyJo 2y ago
I agree with most of what you said, and do think supply is ultimately the fix, however, we also have to acknowledge the extreme inelasticity of demand for housing, and the massive shoe leather cost, both of which leave consumers at a massive disadvantage in price discovery.
- Manuel_D 2y ago
  How are consumers at a disadvantage in price discovery? Hop on Zillow, craiglist, FB marketplace, etc. set your filters and sort by price.
  - BobbyJo 2y ago
    Price discovery as in the market converging on a price, not as in an individual seeing how much something would cost at present. https://en.m.wikipedia.org/wiki/Price_discovery https://en.m.wikipedia.org/wiki/Price_discovery Since the good has very inelastic demand, suppliers have an easier time influencing the market. Small changes in supply should cause big changes in price, in both directions. However, prices go higher much faster during high demand than they go lower during low demand.
raincom 2y ago
Realpage is involved in a vicious loop, not a virtuous loop. Even in the Bay Area, corporate landlords jack up rent like 10% every year, whereas small landlords are happy to raise rent by 3%. That's the difference due to algorithmic collusion set and controlled by RealPage.
- Manuel_D 2y ago
  How are the corporate landlords able to rent their units if the small landlords are selling equal quality units for substantially less? Wouldn't everyone just rent from the small landlords while the corporate apartments stay vacant? This is the hole in the price-fixing argument: price-fixing only works when everyone is onboard, otherwise the parties not involved in price fixing will gobble up the market share. I wouldn't be surprised if corporate-run apartments are more expensive. They're are usually renting much nicer buildings with amenities like air conditioning, parcel delivery rooms, gated parking, etc.
  - Carrok 2y ago
    > Wouldn't everyone just rent from the small landlords while the corporate apartments stay vacant? If there was enough supply, they absolutely would. > They're are usually renting much nicer buildings with amenities like air conditioning, parcel delivery rooms, gated parking, etc. It sure sounds like you've never rented. This is, in the vast majority of cases, not reality.
    - Manuel_D 2y ago
      Exactly: prices are rising because there isn't enough supply to satisfy demand. I have, in fact, rented in San Francisco. I rented from a small landlord in a building that had no A/C, no package room, no parking. I had to fix my refrigerator and shower mixer myself because she barely spoke English. But it was a cheap apartment! I also rented from a corporate landlord. It had a lot of amenities like a gym, a package room, and parking. But I paid a lot more for that apartment.
  - kelnos 2y ago
kelnos 2y ago
> This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. Not sure what "price controls" you're talking about, but the reason it's expensive to build in SF (which reduces the appeal for builders) is zoning, the byzantine planning process, the ability of local residents to effectively block or delay projects, and weaponized environmental review. > Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? Building housing doesn't need to be an investment opportunity. In a better world, I'm sure there would be plenty of people who would be happy to build housing with only enough profit to pay employees a comfortable wage. These sorts of people don't have the ability to break into the industry, though.
- Manuel_D 2y ago
  Policy restricting housing is indeed another factor impeding housing. The price controls I'm referring to are rent controls (which applies to ~70% of apartments in SF, and the threat of reintroducing rent controls looms) and affordable housing mandates. The affordable housing mandates require that a certain percentage of units are rented at set prices. Again, if housing isn't an investment opportunity, then why would anyone build new housing? Sometimes people get together and build co-ops. But those are rare, and it's only available to people with a lot of capital on-hand. Plus, it runs the risk of the project going over-budget.
  - asadotzler 2y ago
    Lots of businesses make less than stock market index returns. You can be a builder that doesn't want to beat the S&P and still support your family doing it. Not everything has to be about massive accumulation of wealth or "growth at all costs". Plenty of people are OK doing a day's work for a day's creature comforts and leaving it at that.
    - Manuel_D 2y ago
      Sure you can deliberately invest in a way that doesn't generate the best returns. You can be a philanthropist and build housing for free! But the vast majority of people are indeed looking to maximize returns.
biggoodwolf 2y ago
Like Manhattan? They've built a lot, and it's getting cheaper every year
- Manuel_D 2y ago
  Manhattan rents tanked during the pandemic, but rebounded pretty quickly after covid subsided. Supply and demand is such that prices may rise even if you build a lot of housing if there's even more people that want to live there. Big supply coupled with even bigger demand will still see prices rise.
dwallin 2y ago
This is not a binary situation. There are plenty of reasonable approaches that help limit abusive landlord behavior without damaging the prospect of profitable real estate development.
- Manuel_D 2y ago
  I wholeheartedly agree that landlords should not engage in abusive behavior: Landlords should not discriminate on the basis of protected class. They should keep units safe and up-to-code. They should not engage in deceptive practices like advertising one unit and selling a different one, or falsifying facts about the unit. But where I'm not going to agree is the notion that setting rent above a certain threshold is "abusive landlord behavior". If a landlord is setting the rent too high, the consequence should be that the unit stays vacant. If someone is willing to pay that rent, then evidently the rent wasn't too high.
  - dwallin 2y ago
    Except that there are significant switching costs. A person moving has to pay moving costs, might have to replace furniture that doesn't work for the new place, can affect your children's schools etc. This means the value of a unit to someone living there can often be significantly higher than the market rate. This can led to situations where the most profitable move for landlords is to take advantage of the discrepancy to regularly raise the rent for existing renters by more than the market, in attempt to maximize profit. Sure they might have to deal with the hassle of finding a new tenant every couple of years when someone gets priced out, but if it leads overall to slightly higher profits it's the winning capitalist move. The rentiers are ostensibly following the law, but the overall cost to the population and quality of life loss to renters can be significantly outsized compared to a sliver of additional profit for the rentiers. This is a great example of externalized costs in a free market and exactly where government should generally be attempting sensible regulation.
bdcravens 2y ago
> Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? No, but this doesn't change the fact that housing is a basic good like gasoline and insurance. Controls in those industries don't prevent companies from investing. Profit regulation doesn't mean no profit. > price controls on housing lead to few developers willing to build there Because there are alternate places without those controls. If housing were treated like the essential good that it is, there wouldn't be any ROI havens, and developers would adapt (or die if they can't accept reducing the typical ROI, which averages around 15%) > rising demand which has not been satisfied by new housing construction There's plenty of demand, just not for the houses that are being built. (That's not to say there aren't specific cities where there is no supply). Based on most affordability standards, many can't afford the typical rent or mortgage. If those prices can't come down, or income can't go up, then new types of much cheaper housing must be built.
- Manuel_D 2y ago
  Gasoline isn't subject to price controls, though! They were in the past, and the results were disastrous. This is what price-controls on gasoline look like: https://www.federalreservehistory.org/-/media/images/essays/oil-shock-of-1978-79/oil_shock_1978_79_1_720x450.jpg https://www.federalreservehistory.org/-/media/images/essays/... The way that the government influences gas prices is that they stockpile or release oil from the US strategic reserves. They don't regulate prices. They influence supply in order to influence prices. The analogy would be building public housing. I'm not sure what you mean by treating housing like an "essential good". Most essential goods aren't subject to price controls. There aren't price controls on food, for example. Most countries that set price controls on food experience famines (or the price controls are widely ignored and the black market becomes the normal market).
  - bdcravens 2y ago
    You can be prosecuted for price gouging of essential goods.
    - 2y ago
skeeter2020 2y ago
>> leads to rising demand which has not been satisfied by new housing construction we seem to accept this at face value, but there's lots of evidence that supply is not the only issue, or even the biggest. Example: in Toronto this year there's been over 220 large real estate projects go insolvent. There's clearly a limit on the demand side.
trilobyte 2y ago
So you would be ok with contractors who are building the houses (often as subcontractors) coordinating their prices for the work to maximize the cost to the developer?
- chgs 2y ago
  Sounds like a union
washadjeffmad 2y ago
You're missing that they didn't use this to build or expand housing, but to limit it. Just look at the occupancy rates. They colluded with property management companies to capture 80% of existing multi-family dwellings and raised rents to inflate hard asset values of PE owned properties nationwide. Just because this is the closest that homeowners have had to a bailout in their lifetimes doesn't mean they didn't profit even more. It was a scam.

bequanna 2y ago

Well, housing needs to mostly be handled by the private sector if we want high quality. Government housing should absolutely exist, but only as a safety net as their management is incredibly inefficient. Private housing isn’t the issue here: collusion is. Collusion should generally not be tolerated in a well regulated capitalist system.

mistrial9 2y ago
there are massive and documented scandals at the US Federal level with the departments assigned to regulate and serve those markets (HUD etc).. an easy and relevant start is the Savings and Loan collapse of the 80s, directly on top of mortgage monies
- bequanna 2y ago
  I don’t disagree but not sure what point you’re trying to make here. Problems with regulation are the expected consequence of living in the real world and not a model. They should be fixed and we can do better. I just don’t see how any of this leads us to more regulation. More government control means less efficiency and likely MORE corruption.

JackYoustra 2y ago

I don't see why this is an important point: food is an industry and it's never been cheaper in human history than in developed capitalist countries with vibrant agribusiness.

RhodesianHunter 2y ago
True but, look up the price fixing that's been going on in big AG via AgriStats. Similar story as OP.
- JackYoustra 2y ago
  yup. Cartels always bad!

legitster 2y ago

Modern housing is a direct development of the industrial revolution. In that sense it is an industry. You could provide housing like undeveloped nations do, where large families live in cramped hovels without electricity or running water. In the sense that someone should want an apartment with 2 bathrooms, a fireplace, and a pool - it's easier to treat housing overall as a consumer good.

Carrok 2y ago
This is quite the straw man you've constructed. You seem to be suggesting that either housing must be exploitatively expensive, or people must live in squalor.
- legitster 2y ago
  You are strawmanning me. Nothing in my statement suggests that treating housing as a product means it has to be exploitatively expensive or given away for free. If anything, most industrial products are supposed to get cheaper over time.
  - kelnos 2y ago
    > If anything, most industrial products are supposed to get cheaper over time. And yet the cost of housing more or less always increases. Isn't that enough to suggest that there's something about this "industry" that doesn't quite make sense the way it's handled?
sangnoir 2y ago
...vs "providing" housing like developed nations in cramped shelters, in cars and on the street? FYI: multigenerational households are a cultural artifact, not an economic one. As one might assume, hovels without water or electricity don't break the bank, they aren't "provided" by anyone either. Yours is a false dichotomy, and is easily disproved by examples in other developed countries where shelter is considered a right.
- 2y ago

Alupis 2y ago

> The fact that providing people with housing is even seen as an "industry" > It is essential to living a decent life. What troublesome phrasing. "Provide" implies people should get housing for free, and "decent" implies getting "decent" housing for free... Well, so who is actually paying for it then? Magical handwavy "government" money? Everyone knows where government money comes from, right? Right? Do we want more printed money and uncontrollable inflation? No? Oh so we should just steal this money from people who worked hard, because some others didn't? > It should not be a driver of lining the pockets of people who are already rich. Ah yes, the ol' "rich people bad" whipping horse. Despite the tens of millions of jobs created by "rich people" and the millions and millions of people who live in actually decent housing in exchange for market rates. The fact that some people actually truly believe "free government housing" is going to be "decent" is absolutely tragic. Yes, let's doom millions to the "projects" because it makes us feel better knowing those darn rich people aren't making money! If anyone wants a porthole view into what government housing looks like - take a look at the plethora of stories and pictures from our military barracks, across all branches. Mold, bugs, broken appliances, holes in walls, locks that don't work... and nobody cares despite the very vocal, highly visible complaints. There's a reason our service men and women scramble to off-base housing the moment they are allowed.

switch007 2y ago
I'll totally accept you're speaking just in the context of the USA but... > The fact that some people actually truly believe "free government housing" is going to be "decent" is absolutely tragic Council houses are fairly highly regarded in the UK (i.e. the property, in terms of space, light, build quality. The estates/tenants, not so much...). They also have a track record of maintaining them far better than private/social landlords - I can personally attest to that. It is the large homebuilder companies that build truly awful, "tragic" homes, cutting every single possible corner imaginable for an extra penny of profit.
- Alupis 2y ago
  Wikipedia indicates most of these Council Homes were built in the early 1900's - and are not modern construction. An additional average of a around 100 homes total were built per year from the 40's through 1980. So these don't appear to be helping a significant portion of the population. Wikipedia also indicates in the 1970's the UK government dramatically and suddenly cut back on funding for these homes (among other things), which led to some very poor living conditions. Your quality of life being dependent on the whims of politicians and budgets outside-your-control seems awful...