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> it itself is not the cause in the sense that income levels directly cause housing prices to go up. It quite literally is directly the cause. The price of rea

> it itself is not the cause in the sense that income levels directly cause housing prices to go up. It quite literally is directly the cause. The price of real estate in an area is overwhelmingly defined by the productivity of the local area. Productivity goes up → income goes up → real estate prices go up.

no_wizard 2y ago
Thats too linear and ignores quite a few things: What really happens is: Productivity goes up → income goes up → real estate prices go up -> existing home owners and realtor organizations (at minimum) lobby for regulations to keep those prices up -> stricter zoning laws and build approval processes get passed -> demand isn't met as housing supply is artificially constrained to protect existing owners over new entrants, including new housing styles that maximize land usage (e.g., multi story condominiums or dense town house projects) What should happen is: Productivity goes up → income goes up → real estate prices go up temporarily -> new builds to meet current and future demand go up (as you would see in any other type of marketplace) -> housing prices come down as there is always going to be incentives to maximize land value in desirable places in a myriad of ways, and doesn't always mean building cookie cutter single family homes as we often see now (due to the aforementioned regulatory constraints that zoning regulations impose) There is an artificial cap on how it works, and its done through zoning laws and other build regulations that make it anywhere from onerous to illegal to build housing in a maximally efficient way, all in service to protect existing owners home values as much as possible, at the expense of anything else. This is why I will always advocate for a land value tax. Because it acts as a forcing function: you either pay the tax (which gets higher as time goes on) or you maximize the value of the land (which usually means selling off parcels to meet the tax obligation / lower future obligations, and/or building something to utilize the land, of which the most straightforward is often more housing, and denser the better as it increases utilization)
- llamaimperative 2y ago
  No, seriously. I am a landlord. How do I set rent? I ask myself: "How much do people around here earn?" And I set my price at ~30% of that. I am currently selling a house. How do I set my price? I ask myself: "What salary would someone moving to this area likely be making?" And I set my price accordingly. Literally none of the zoning laws are necessary. This method is how price is set in 100% of real estate transactions in 100% of localities, regardless of any other regulations. FWIW I'm also an LVT zealot. Have you read Progress & Poverty yet?
  - no_wizard 2y ago
    I would have been part of a development project that had it been approved[0], would have been involved in selling a high rise of condos, and the question that kept coming up for me is: "how hasn't someone undercut this market yet?" which is why I pursued it. Because for instance, you'll rent at 30%, but if there was honest market pressure (and lets face it, there isn't) why wouldn't someone else rent at 28%? Or 25%? etc. Zoning has real hidden costs, as do all the review stages etc. Whats funny is how stable all this has been for landlords, builders (to some degree) and realtors. If an area is desirable to live in, you would see economies of scale trickle in - like I mentioned in other comments, why do you think we don't see 25 story condos in desirable areas? Thats zoning in action. You literally can't build it even if you had all the money in the world, because the local laws won't allow it[1] >Progress & Poverty The Georgism book? I have read it, been some time since I have and should really revisit it. [0]: fellow local citizenry ultimately rejected my proposal - I knew it was likely but I had to try. Thats why I have a niche business on that plot now. [1]: and I have some first hand experience here, its what I originally wanted to do with an aforementioned plot of land that is now a niche little farm growing speciality apple varieties
    - llamaimperative 2y ago
      > Because for instance, you'll rent at 30%, but if there was honest market pressure (and lets face it, there isn't) why wouldn't someone else rent at 28%? Or 25%? etc. They do! And then like all other markets, equilibrium is found, and that equilibrium point is what moves up as incomes move up.
      - no_wizard 2y ago
        They don’t though not really. We didn’t allow housing to have the same elastic market fluctuations all other markets do. Yes, there can be minor variations in prices (especially with renting) but the fact of the matter is unlike any other market there is artificial scarcity up and down the chain with real estate
        2y ago

no_wizard 2y ago

Thats too linear and ignores quite a few things: What really happens is: Productivity goes up → income goes up → real estate prices go up -> existing home owners and realtor organizations (at minimum) lobby for regulations to keep those prices up -> stricter zoning laws and build approval processes get passed -> demand isn't met as housing supply is artificially constrained to protect existing owners over new entrants, including new housing styles that maximize land usage (e.g., multi story condominiums or dense town house projects) What should happen is: Productivity goes up → income goes up → real estate prices go up temporarily -> new builds to meet current and future demand go up (as you would see in any other type of marketplace) -> housing prices come down as there is always going to be incentives to maximize land value in desirable places in a myriad of ways, and doesn't always mean building cookie cutter single family homes as we often see now (due to the aforementioned regulatory constraints that zoning regulations impose) There is an artificial cap on how it works, and its done through zoning laws and other build regulations that make it anywhere from onerous to illegal to build housing in a maximally efficient way, all in service to protect existing owners home values as much as possible, at the expense of anything else. This is why I will always advocate for a land value tax. Because it acts as a forcing function: you either pay the tax (which gets higher as time goes on) or you maximize the value of the land (which usually means selling off parcels to meet the tax obligation / lower future obligations, and/or building something to utilize the land, of which the most straightforward is often more housing, and denser the better as it increases utilization)

llamaimperative 2y ago
No, seriously. I am a landlord. How do I set rent? I ask myself: "How much do people around here earn?" And I set my price at ~30% of that. I am currently selling a house. How do I set my price? I ask myself: "What salary would someone moving to this area likely be making?" And I set my price accordingly. Literally none of the zoning laws are necessary. This method is how price is set in 100% of real estate transactions in 100% of localities, regardless of any other regulations. FWIW I'm also an LVT zealot. Have you read Progress & Poverty yet?
- no_wizard 2y ago
  I would have been part of a development project that had it been approved[0], would have been involved in selling a high rise of condos, and the question that kept coming up for me is: "how hasn't someone undercut this market yet?" which is why I pursued it. Because for instance, you'll rent at 30%, but if there was honest market pressure (and lets face it, there isn't) why wouldn't someone else rent at 28%? Or 25%? etc. Zoning has real hidden costs, as do all the review stages etc. Whats funny is how stable all this has been for landlords, builders (to some degree) and realtors. If an area is desirable to live in, you would see economies of scale trickle in - like I mentioned in other comments, why do you think we don't see 25 story condos in desirable areas? Thats zoning in action. You literally can't build it even if you had all the money in the world, because the local laws won't allow it[1] >Progress & Poverty The Georgism book? I have read it, been some time since I have and should really revisit it. [0]: fellow local citizenry ultimately rejected my proposal - I knew it was likely but I had to try. Thats why I have a niche business on that plot now. [1]: and I have some first hand experience here, its what I originally wanted to do with an aforementioned plot of land that is now a niche little farm growing speciality apple varieties
  - llamaimperative 2y ago
    > Because for instance, you'll rent at 30%, but if there was honest market pressure (and lets face it, there isn't) why wouldn't someone else rent at 28%? Or 25%? etc. They do! And then like all other markets, equilibrium is found, and that equilibrium point is what moves up as incomes move up.
    - no_wizard 2y ago
      They don’t though not really. We didn’t allow housing to have the same elastic market fluctuations all other markets do. Yes, there can be minor variations in prices (especially with renting) but the fact of the matter is unlike any other market there is artificial scarcity up and down the chain with real estate
      - 2y ago