3 ms·

If a minority has most of the wealth then the equilibrium supply may include a lot of supply of second homes, very large homes on large plots for the rich, prop

If a minority has most of the wealth then the equilibrium supply may include a lot of supply of second homes, very large homes on large plots for the rich, properties sold at a premium based on how much they can extract from renters, and even investment properties occupied by nobody whilst still having insufficient small basic homes and dense housing. Capital that could be invested in better serving the bottom half has to compete not only with the use of those resources to further enrich the rich but other investment opportunities.

zozbot234 7mo ago
If you want second homes to be used productively, just allow folks to list them on AirBnb for planned short-term rental. Long-term rentals are a total non-starter politically for second homes, since you obviously can't ethically throw out someone who regards that rental space as their home. But short-term is actually fine. As for larger homes, people should be allowed to live in there as larger, extended family groups - a common pattern in non-Anglo cultures. Ban "single family" restrictions since they amount to unconscionable discrimination against such reasonable living arrangements.
sophrosyne42 7mo ago
There is more than enough land for everyone, and rich people aren't really competing for the kind of housing that poor people are competing for, e.g. smaller plots with smaller homes. The demand of the rich does not eliminate demand of the poor, so the market produces different kinds of housing for different clientele. Think about it this way: assume you supply all the housing to all the rich people. Then there still remains untapped demand of others that can be fulfilled by further production of homes for those specific people. This story fails when land becomes restricted, which is exactly what zoning laws cause. Zoning is a big harm to the poor.
- baq 7mo ago
  But zoning is required to maintain order. Nobody wants anybody to live in favelas. As with everything the regulator needs to strike a balance to make the market work.
  - deleted 7mo ago
    [deleted]
  - btilly 7mo ago
    Given the choice between being homeless and living in favelas, millions in Brazil have chosen to live in favelas. The reality of zoning laws in Western countries is to provide a target for regulatory capture by the NIMBY crowd. With the result that we're systemically underbuilding housing, then wonder why we wound up with homelessness.
    - baq 7mo ago
      Favelas are a local optimum which systemically is very difficult to get out of and is a sign that the regulator is powerless. It's a great example of a market failure.
- michaelmrose 7mo ago
  Rich and poor alike are competing for scarce land near where people actually live and work.
- tsimionescu 7mo ago
  > rich people aren't really competing for the kind of housing that poor people are competing for, e.g. smaller plots with smaller homes. This disregards basic geometry. Sure, in some rare situations you only have one small plot of land surrounded by existing construction or natural boundaries. But, in the majority of cases, you have one large plot of land, and you can either construct one big house on it, 5 smaller houses, 10 small houses, or 200 apartments in a block. The rich are absolutely competing for this lot with the poor. And as inequality goes up, the rich can even start contemplating buying up surrounding properties, tearing down construction, and transforming a small plot into a much larger one.
roenxi 7mo ago
There's a couple of "ifs" there and the scenario seems implausible. If I look at the prime real estate in a city it tends to be a lot of skyscrapers rather than very large homes (with occasional exceptions like say a Buckingham Palace). But it looks like the economic equilibrium is lots of cheaper apartments rather than large homes for rich people. > ... and even investment properties occupied by nobody ... Not much of an investment. Something is wrong if that is happening, probably manifesting as a lack of supply. Otherwise what is the point of an "asset" that doesn't generate income, degrades over time and could easily be rented out at a profit rather than sitting unused? Whatever scenario there is where it makes sense to have an empty property, assuming a sane policy backdrop, it'd always be better for the owner do what they were going to do anyway but also rent it out.
- zozbot234 7mo ago
  People don't want to rent those homes out because once you're doing so it's difficult to evict a long-term tenant. You just lose out a lot on flexibility - even if you try and manage that risk by leasing out housing e.g. on a yearly basis, landlord-tenant law often overrides that since there are strong ethical reasons for not evicting someone who has since come to treat that rental space as their home. Short term rentals are better on that score: no one sensible forms a long-term expectation that they're going to live in an Airbnb that they've rented for a few days. (If you think short-term rentals are "bad" for the long-term market or have negative side-effects on the neighborhood, then tax them to manage that tradeoff. But banning them altogether is unconscionable and just leads to houses sitting empty and unused.)
  - graemep 7mo ago
    There are some places in the UK (mostly new developments in London) that have a significant number of deliberately empty investment properties despite the law here making it easy to evict tenants. They are not being used for short term rentals either. Although the easiest route (no-fault eviction) is being abolished soon, wanting to sell a property remains a valid reason to evict. Some people just buy property as a speculative investment. I do not think it is the main cause of shortages in London - that is people buying holiday homes, which are often large and centrally located. London provides a lot (restaurants, nightclubs, gambling, prostitution, financial services...) that attracts people with a lot of money to spend from all over the world.

zozbot234 7mo ago

If you want second homes to be used productively, just allow folks to list them on AirBnb for planned short-term rental. Long-term rentals are a total non-starter politically for second homes, since you obviously can't ethically throw out someone who regards that rental space as their home. But short-term is actually fine. As for larger homes, people should be allowed to live in there as larger, extended family groups - a common pattern in non-Anglo cultures. Ban "single family" restrictions since they amount to unconscionable discrimination against such reasonable living arrangements.

sophrosyne42 7mo ago

There is more than enough land for everyone, and rich people aren't really competing for the kind of housing that poor people are competing for, e.g. smaller plots with smaller homes. The demand of the rich does not eliminate demand of the poor, so the market produces different kinds of housing for different clientele. Think about it this way: assume you supply all the housing to all the rich people. Then there still remains untapped demand of others that can be fulfilled by further production of homes for those specific people. This story fails when land becomes restricted, which is exactly what zoning laws cause. Zoning is a big harm to the poor.

baq 7mo ago
But zoning is required to maintain order. Nobody wants anybody to live in favelas. As with everything the regulator needs to strike a balance to make the market work.
- deleted 7mo ago
  [deleted]
- btilly 7mo ago
  Given the choice between being homeless and living in favelas, millions in Brazil have chosen to live in favelas. The reality of zoning laws in Western countries is to provide a target for regulatory capture by the NIMBY crowd. With the result that we're systemically underbuilding housing, then wonder why we wound up with homelessness.
  - baq 7mo ago
    Favelas are a local optimum which systemically is very difficult to get out of and is a sign that the regulator is powerless. It's a great example of a market failure.
michaelmrose 7mo ago
Rich and poor alike are competing for scarce land near where people actually live and work.
tsimionescu 7mo ago
> rich people aren't really competing for the kind of housing that poor people are competing for, e.g. smaller plots with smaller homes. This disregards basic geometry. Sure, in some rare situations you only have one small plot of land surrounded by existing construction or natural boundaries. But, in the majority of cases, you have one large plot of land, and you can either construct one big house on it, 5 smaller houses, 10 small houses, or 200 apartments in a block. The rich are absolutely competing for this lot with the poor. And as inequality goes up, the rich can even start contemplating buying up surrounding properties, tearing down construction, and transforming a small plot into a much larger one.

roenxi 7mo ago

There's a couple of "ifs" there and the scenario seems implausible. If I look at the prime real estate in a city it tends to be a lot of skyscrapers rather than very large homes (with occasional exceptions like say a Buckingham Palace). But it looks like the economic equilibrium is lots of cheaper apartments rather than large homes for rich people. > ... and even investment properties occupied by nobody ... Not much of an investment. Something is wrong if that is happening, probably manifesting as a lack of supply. Otherwise what is the point of an "asset" that doesn't generate income, degrades over time and could easily be rented out at a profit rather than sitting unused? Whatever scenario there is where it makes sense to have an empty property, assuming a sane policy backdrop, it'd always be better for the owner do what they were going to do anyway but also rent it out.

zozbot234 7mo ago
People don't want to rent those homes out because once you're doing so it's difficult to evict a long-term tenant. You just lose out a lot on flexibility - even if you try and manage that risk by leasing out housing e.g. on a yearly basis, landlord-tenant law often overrides that since there are strong ethical reasons for not evicting someone who has since come to treat that rental space as their home. Short term rentals are better on that score: no one sensible forms a long-term expectation that they're going to live in an Airbnb that they've rented for a few days. (If you think short-term rentals are "bad" for the long-term market or have negative side-effects on the neighborhood, then tax them to manage that tradeoff. But banning them altogether is unconscionable and just leads to houses sitting empty and unused.)
- graemep 7mo ago
  There are some places in the UK (mostly new developments in London) that have a significant number of deliberately empty investment properties despite the law here making it easy to evict tenants. They are not being used for short term rentals either. Although the easiest route (no-fault eviction) is being abolished soon, wanting to sell a property remains a valid reason to evict. Some people just buy property as a speculative investment. I do not think it is the main cause of shortages in London - that is people buying holiday homes, which are often large and centrally located. London provides a lot (restaurants, nightclubs, gambling, prostitution, financial services...) that attracts people with a lot of money to spend from all over the world.