4 ms·

My point is that immigration is a distraction from the nonfunctioning economy.

by Qwertious 2y ago

cudgy 2y ago
And yet the non-functioning economy might be a result of the excessive immigration. Which one is easiest to address?
- Qwertious 2y ago
  >And yet the non-functioning economy might be a result of the excessive immigration. It's not. If you have a narrative for how immigration could explain why there's record-high home prices and yet there isn't a corresponding spike in construction, then please post it. Because this is pretty obviously a problem of suppressed supply.
  - cudgy 2y ago
    I’m not implying that immigration is the only reason for higher housing prices. My opinion is that 0% interest rates and loose credit are the primary reason. However, simple supply/demand would suggest that immigration AND 0% interest rates both affect demand quickly while supply requires securing land, building homes and getting approval to build homes takes significant time. Migrations are happening at a faster rate than housing can be built so it definitely has an impact on prices.
    - rhubarbtree 2y ago
      On HN and on tech twitter I often see this statement: “the reason rents are high is because we don’t build enough houses.” But I don’t think that’s really true, I think that’s very simplistic. The missing observation is that housing has become an asset class in a way it wasn’t in the past. Large numbers of people purchase houses to rent seek as landlords, and the only limit to the demand for rent seeking is the ability of those landlords to borrow money. So a major determinant of rent is now the ability to borrow money, the interest rate, and the number of people wanting to be rent seeking landlords. Increasing the housing supply by the amount physically practical in say the course of a decade is probably unlikely to make much difference to rents if the primary driver of rent prices is the ability of rent seekers to borrow to buy the new properties. First time buyers can’t compete on borrowing because they have smaller deposits or less access to capital, so they are forced to rent, which means the rent seekers can continue to buy up properties. In the UK, buy to let mortgages have become a substitute for pensions for the baby boomer generation. Encouraged by the government, housing as a yielding asset has essentially taxed the young to pay for the boomers retirement. Whilst housing can be used as a rent seeking asset, it is very unlikely building new houses is going to lower rents. Landlords will simply always be able to outbid renters, so rent will remain at the height of whatever the renters can afford, I.e. extract the maximum rent possible. There is an endless demand for housing from rent seekers, provided they can rent out that property. Couple this with the fact that the government in the UK at least has used the property market to hide the reality of the economy - that the economy is basically collapsing - there is so much vested interest in maintaining the status quo that no regulation will be introduced that will cause rents to drop, such as limiting the access of rent seekers to capital, or preserving properties for owner buyers etc. Tl;dr - rents are expensive not because there is too little housing, but because we need them to be expensive.
      - noisy_boy 2y ago
        Then why doesn't the government put limits on the no. of houses/flats a canadian family can buy? Allowing wealthy individuals to keep buying housing for rent-seeking isn't going to help the problem. Beyond the one for staying, how many more should they be able to own, if any? From the houseowners' perspective, if they can only own one that they stay in, what alternatives the government needs to structure to balance the restriction, assuming the restriction is put in place? Should everyone put their savings in stock market etc and be subject to losses due to it? Because they too need a stable and inflation pegged income for their retirement.
        rhubarbtree 2y ago
        > Then why doesn't the government put limits on the no. of houses/flats a canadian family can buy? Well, mainly the answer to this in public discourse is the same reason people say "we just need to build more flats" --- because people believe in the magical powers of "markets", like there's some natural law that leaving things to the market will lead to desirable outcomes. But the actual politics of it is that if you did this, then where are you going to get the boomers pensions from? And where is the economic "growth" going to come from? See my other comment. We're all in a big ponzi scheme because we exported most of our real welath-generating activity.
        swat535 2y ago
        The thing is even if the government did this, it’s easy to get around it, many landlords simple setup an incorporation or even multiple ones to purchase properties. It’s easy and cheap in Canada.
      - maxerickson 2y ago
        Why are rents going down in Austin then? Lots of rent to seek there with all the new housing being built.
        rhubarbtree 2y ago
        We've seen London prices drop recently. That's mainly because we've seen higher interest rates and a flight of capital from the UK. People aren't as confident in the ponzi scheme continuing. It may also be in part because of huge drop in population post-brexit, although AFAICT there are no accurate numbers on that because the government doesn't want to admit that Brexit is a disaster. I would guess Austin might be seeing a drop because it was "the big thing" for a while but now the consensus is it is not going to rival San Francisco. The rent seekers are moving elsewhere because there are bigger capital gains to be made? Just a guess, but you can probably verify it by checking house prices in Austin vs San Francisco.
Tiktaalik 2y ago
Exactly. Can I create a small company of a half a dozen new immigrant trades, buy single family homes, tear them down and build new fourplexes? Nope this is largely banned (though ever so slowly changing in some areas). The severe regulation has distorted the market and created a housing shortage that is legally prevented from being addressed no matter what available new immigrant talent is at hand.

My point is that immigration is a distraction from the nonfunctioning economy.

cudgy 2y ago

And yet the non-functioning economy might be a result of the excessive immigration. Which one is easiest to address?

Qwertious 2y ago
>And yet the non-functioning economy might be a result of the excessive immigration. It's not. If you have a narrative for how immigration could explain why there's record-high home prices and yet there isn't a corresponding spike in construction, then please post it. Because this is pretty obviously a problem of suppressed supply.
- cudgy 2y ago
  I’m not implying that immigration is the only reason for higher housing prices. My opinion is that 0% interest rates and loose credit are the primary reason. However, simple supply/demand would suggest that immigration AND 0% interest rates both affect demand quickly while supply requires securing land, building homes and getting approval to build homes takes significant time. Migrations are happening at a faster rate than housing can be built so it definitely has an impact on prices.
  - rhubarbtree 2y ago
    On HN and on tech twitter I often see this statement: “the reason rents are high is because we don’t build enough houses.” But I don’t think that’s really true, I think that’s very simplistic. The missing observation is that housing has become an asset class in a way it wasn’t in the past. Large numbers of people purchase houses to rent seek as landlords, and the only limit to the demand for rent seeking is the ability of those landlords to borrow money. So a major determinant of rent is now the ability to borrow money, the interest rate, and the number of people wanting to be rent seeking landlords. Increasing the housing supply by the amount physically practical in say the course of a decade is probably unlikely to make much difference to rents if the primary driver of rent prices is the ability of rent seekers to borrow to buy the new properties. First time buyers can’t compete on borrowing because they have smaller deposits or less access to capital, so they are forced to rent, which means the rent seekers can continue to buy up properties. In the UK, buy to let mortgages have become a substitute for pensions for the baby boomer generation. Encouraged by the government, housing as a yielding asset has essentially taxed the young to pay for the boomers retirement. Whilst housing can be used as a rent seeking asset, it is very unlikely building new houses is going to lower rents. Landlords will simply always be able to outbid renters, so rent will remain at the height of whatever the renters can afford, I.e. extract the maximum rent possible. There is an endless demand for housing from rent seekers, provided they can rent out that property. Couple this with the fact that the government in the UK at least has used the property market to hide the reality of the economy - that the economy is basically collapsing - there is so much vested interest in maintaining the status quo that no regulation will be introduced that will cause rents to drop, such as limiting the access of rent seekers to capital, or preserving properties for owner buyers etc. Tl;dr - rents are expensive not because there is too little housing, but because we need them to be expensive.
    - noisy_boy 2y ago
      Then why doesn't the government put limits on the no. of houses/flats a canadian family can buy? Allowing wealthy individuals to keep buying housing for rent-seeking isn't going to help the problem. Beyond the one for staying, how many more should they be able to own, if any? From the houseowners' perspective, if they can only own one that they stay in, what alternatives the government needs to structure to balance the restriction, assuming the restriction is put in place? Should everyone put their savings in stock market etc and be subject to losses due to it? Because they too need a stable and inflation pegged income for their retirement.
      - rhubarbtree 2y ago
        > Then why doesn't the government put limits on the no. of houses/flats a canadian family can buy? Well, mainly the answer to this in public discourse is the same reason people say "we just need to build more flats" --- because people believe in the magical powers of "markets", like there's some natural law that leaving things to the market will lead to desirable outcomes. But the actual politics of it is that if you did this, then where are you going to get the boomers pensions from? And where is the economic "growth" going to come from? See my other comment. We're all in a big ponzi scheme because we exported most of our real welath-generating activity.
      - swat535 2y ago
        The thing is even if the government did this, it’s easy to get around it, many landlords simple setup an incorporation or even multiple ones to purchase properties. It’s easy and cheap in Canada.
    - maxerickson 2y ago
      Why are rents going down in Austin then? Lots of rent to seek there with all the new housing being built.
      - rhubarbtree 2y ago
        We've seen London prices drop recently. That's mainly because we've seen higher interest rates and a flight of capital from the UK. People aren't as confident in the ponzi scheme continuing. It may also be in part because of huge drop in population post-brexit, although AFAICT there are no accurate numbers on that because the government doesn't want to admit that Brexit is a disaster. I would guess Austin might be seeing a drop because it was "the big thing" for a while but now the consensus is it is not going to rival San Francisco. The rent seekers are moving elsewhere because there are bigger capital gains to be made? Just a guess, but you can probably verify it by checking house prices in Austin vs San Francisco.

Tiktaalik 2y ago

Exactly. Can I create a small company of a half a dozen new immigrant trades, buy single family homes, tear them down and build new fourplexes? Nope this is largely banned (though ever so slowly changing in some areas). The severe regulation has distorted the market and created a housing shortage that is legally prevented from being addressed no matter what available new immigrant talent is at hand.