5 ms·

> High rents are created by high local productivity. Wrong. High rents have many reasons and also good policies to get them down and have affordable housing fo

by shafyy 2mo ago

> High rents are created by high local productivity. Wrong. High rents have many reasons and also good policies to get them down and have affordable housing for more people, also in otherwise expensive and popular cities.

vlovich123 2mo ago
OP has the demand part of the equation if supply remains fixed. The reason supply remains fixed is the US as a whole made policy changes in the 1970s that slowed down construction, specifically zoning laws and environmental laws swept the country. The 2008 recession also cancelled what little construction remained ongoing for a long time. When you combine that with spiking wealth in Silicon Valley, you’ve got the perfect storm in Silicon Valley. With OpenAI and Anthropic both based in SF, it’s going to be worse than ever once they IPO.
- estearum 2mo ago
  The equilibrium for new housing construction will always be "just enough to keep it expensive by local standards [i.e. by local wages]." That's especially true with rising labor, material, and capital costs. It was actually the post-war housing boom that was abnormal, fueled by aggressive federal funding of suburban buildout. US municipalities are now broadly doomed to bankruptcy trying to maintain sprawling infrastructure that was never cost-effective to create in the first place. Look at Austin TX. Influx of new building, prices stabilized, and now construction is dropping off a cliff. No one can afford to build into a stable or potentially falling local market. Construction will start again when local productivity grows enough for people to bid the prices back up again.
- shafyy 2mo ago
  Fundamentally, housing should not be a free market area that is profit-driven. Housing, like energy, food, healthcare and public transport is a basic need. Therefore, government policies making sure people with lower income can still get housing in a city they grew up in, where they work, live and have family, is important. Yes, one part of this is also building new housing and making sure that housing is built efficiently in terms of cost (but not throwing them on the free market, but making sure a certain % of it is desginated as social housing).
  - estearum 2mo ago
    Ah, so your prior comment about productivity not driving high rents is similar to how government paying for healthcare just makes it not-expensive!
estearum 2mo ago
Nope. Rents cannot (at meaningful scale) exceed local productivity, or else there will be widespread vacancies and landlords will reduce their rents. Rents cannot (at meaningful scale) fall below local productivity, or else landlords will simply raise their rents. Go talk to a landlord about how they site prices. Step 1. Look up income of your target demographic Step 2. Eat 30% of their income Can you show me a place with high local productivity and low rent? Can you show me a place with high rent and low local productivity (that's not e.g. a vacation destination for people with high productivity elsewhere)? You can certainly artificially suppress prices with rent control. But that just gets fed back into the system in the form of reduced supply, so it ends up raising rents on the non-controlled housing stock anyway.
- don_esteban 2mo ago
  > Can you show me a place with high local productivity and low rent? Put the following prompt into your favourite AI and enjoy the reading: "How do rents relate to productivity in the area? How does Vienna compare to San Francisco?"
  - estearum 2mo ago
    Vienna? World famous for publicly-funded housing construction? Try this one: "Create a simple analysis approximating how much higher rents would be in Vienna if not for the aggressive public subsidization of supply" In any case, Vienna has a good system! But it's not that it avoids high productivity → high rent, it's that it splits rent into subsidy costs and rent. In other words, the amount of subsidy + rent required will grow with local productivity.
    - don_esteban 2mo ago
      My point is: Your post reeked by defeatist 'nothing can be done against market forces'. Yes, it can be done, and if we want to have a reasonable future, it should be done.
      - 2mo ago

by shafyy 2mo ago

vlovich123 2mo ago

OP has the demand part of the equation if supply remains fixed. The reason supply remains fixed is the US as a whole made policy changes in the 1970s that slowed down construction, specifically zoning laws and environmental laws swept the country. The 2008 recession also cancelled what little construction remained ongoing for a long time. When you combine that with spiking wealth in Silicon Valley, you’ve got the perfect storm in Silicon Valley. With OpenAI and Anthropic both based in SF, it’s going to be worse than ever once they IPO.

estearum 2mo ago
The equilibrium for new housing construction will always be "just enough to keep it expensive by local standards [i.e. by local wages]." That's especially true with rising labor, material, and capital costs. It was actually the post-war housing boom that was abnormal, fueled by aggressive federal funding of suburban buildout. US municipalities are now broadly doomed to bankruptcy trying to maintain sprawling infrastructure that was never cost-effective to create in the first place. Look at Austin TX. Influx of new building, prices stabilized, and now construction is dropping off a cliff. No one can afford to build into a stable or potentially falling local market. Construction will start again when local productivity grows enough for people to bid the prices back up again.
shafyy 2mo ago
Fundamentally, housing should not be a free market area that is profit-driven. Housing, like energy, food, healthcare and public transport is a basic need. Therefore, government policies making sure people with lower income can still get housing in a city they grew up in, where they work, live and have family, is important. Yes, one part of this is also building new housing and making sure that housing is built efficiently in terms of cost (but not throwing them on the free market, but making sure a certain % of it is desginated as social housing).
- estearum 2mo ago
  Ah, so your prior comment about productivity not driving high rents is similar to how government paying for healthcare just makes it not-expensive!

estearum 2mo ago

Nope. Rents cannot (at meaningful scale) exceed local productivity, or else there will be widespread vacancies and landlords will reduce their rents. Rents cannot (at meaningful scale) fall below local productivity, or else landlords will simply raise their rents. Go talk to a landlord about how they site prices. Step 1. Look up income of your target demographic Step 2. Eat 30% of their income Can you show me a place with high local productivity and low rent? Can you show me a place with high rent and low local productivity (that's not e.g. a vacation destination for people with high productivity elsewhere)? You can certainly artificially suppress prices with rent control. But that just gets fed back into the system in the form of reduced supply, so it ends up raising rents on the non-controlled housing stock anyway.

don_esteban 2mo ago
> Can you show me a place with high local productivity and low rent? Put the following prompt into your favourite AI and enjoy the reading: "How do rents relate to productivity in the area? How does Vienna compare to San Francisco?"
- estearum 2mo ago
  Vienna? World famous for publicly-funded housing construction? Try this one: "Create a simple analysis approximating how much higher rents would be in Vienna if not for the aggressive public subsidization of supply" In any case, Vienna has a good system! But it's not that it avoids high productivity → high rent, it's that it splits rent into subsidy costs and rent. In other words, the amount of subsidy + rent required will grow with local productivity.
  - don_esteban 2mo ago
    My point is: Your post reeked by defeatist 'nothing can be done against market forces'. Yes, it can be done, and if we want to have a reasonable future, it should be done.
    - 2mo ago