Excessive regulation is 90% of it.
Here's how a rational market works. If I build an apartment complex, eventually those apartments will get older and more affordable. And even before that upper middle class folks will move in, freeing up their previous homes.
But that's not how many in local governments see it. So you have affordable housing quotas on new developments.
You have developers building units for the homeless at 600k each. https://abc7news.com/post/new-high-rise-building-house-skid-...
Affordable housing vouchers, section 8, etc, become a dystopian nightmare.
11 year waiting list. https://laist.com/news/section-8-waiting-list
The problem is twofold, first it's too difficult to build homes. In California you can literally just claim a new highrise will block your sunlight and make you sad. That's enough to delay a construction.
Parking requirements ensure space that could be occupied by people is instead reserved for vehicles. Plus the parking structure itself drives up the cost to build, 30% of your construction cost isn't unreasonable.
On a macro level, many cities should of fixed their issues with inadequate housing construction decades ago.
On a personal level, you need to go where you can afford.
After about 4 generations of living in LA about half my family has left. It's more than possible to make it off a middle class salary, but you need to make that choice.
If you stay in an unaffordable city you can't wait around waiting for politicians to fix it.
> Here's how a rational market works.
Might regulations be the result of these "rational markets"? After all, if I invest a lot of money to build apartments, I might want to protect that investment by lobbying for regulations to make it harder for competitors, increasing the value of my investment. Or if I buy an apartment, I might want to prevent others from ruining my view, prevent noise, etc. All completely rational.
I think this is the thing these types of arguments miss. Regulations are the result of another type of market, the vote market. That's the whole point, to counteract hidden failures of the market with another feedback mechanism.
For what it's worth, imho Thompson presents a strawman argument about oligopolies to avoid the real critiques. He even kinda contradicts himself at the end because it's convenient for his argument.
It's never really about oligopolies writ large, it's about the players in the local decision in the moment (which is all that matters) and who profits at whose expense with what consequences.
What is the strawman
> It's never really about oligopolies writ large…
Then why is the anti abundance crowd crowing about how it’s about oligopolies and monopolies?
Whether it is or isn't seems immaterial if you're of the opinion that government should step in to solve issues where the market has proved ineffective.
If it's the case that market participants have an imperative to convince the government to screw everyone else over: a solution preventing the government from being convinced by small petty nonsense seems remarkably simple, relative to the other kinds of policy challenges that exist.
For years in Washington DC there was one single crank who went to every community engagement meeting and prevented hundreds of units of housing from getting built.
I’ll be so interested to see what happens to this kind of thing.
I feel like we saw the absurd version of it over the past decade, where society at large had acted as though highly online reactionaries are quality signals of an underlying current.
It seems as though market share in that model is failing. I predict the pendulum will swing the other way across the board, and loud minorities in in-person forums will be given less credence… for good (by my estimation in this case) and bad.
Perhaps they have not been given the credence that you assume. It is typically not the NIMBY complainers who have the capacity to hire powerful experts to argue their cases in Councils and courtrooms ad nauseam. That is heavily weighted towards the developer side. I say that having worked for such developers, to further their cases in great detail.
Factors like failing or under-capacity infrastructure are coming to the fore a lot more in recent years. I've been in land development for about 25 years, and an increasingly common theme in my region is that a landowner wants a new suburb, but is not willing to upgrade all the necessary pipes and roads in order to not overwhelm existing upstream/downstream systems, and conversely the public are literally not able to subsidise that for them - public money is almost always stretched very thin already.
These people were only ever given credence as a pretext for whatever the entrenched interests wanted to do in the first place.
Every avenue of life has it’s weirdoes, but why have we as a society decided a single weirdo can stop a hundred homes from being built?
I don’t think a decision was made, we just fell down the slippery slope to Vetocracy.
It requires active energy to keep a thing alive and we haven’t been fighting hard for building things.
> Excessive regulation is 90% of it.
Housing crisis is observed in almost all what is called "first world" (europe, japan, usa). I believe that 90% of the issue is more global than a regulation.
Japan doesn't have a housing crisis. I'm in a great location in Tokyo, the rent is under $750/month, and it's been the same for the decade+ I've been in this specific place.
If there's a problem, it's too many empty homes in aging rural areas. Cities are doing just fine, even with a growing population in Tokyo.
It didn't. But it's entering one now.
New apartment prices in Tokyo are double what they were a few years ago. [1] The reason is foreign investors buying up loads of properties and sitting on them or turning them into AirBNBs. Locals can't afford them because wages aren't increasing. The concept of buying a property to resell it also isn't a thing amongst locals, so it's clueless rich people and corporations buying up properties and thinking they can flip them, which won't be happening any time soon.
But after a few years of squeezing, locals may have no choice but to pay their entire paycheck to foreign investors. Though thankfully the government is planning to take steps to potentially outlaw foreign buyers. If we're lucky, and some parties get their way, they might just strip the properties from them. If you're not living here, you have no business owning dozens of homes.
[1] https://www.nikkei.com/article/DGXZQOUC183D80Y4A110C2000000/
My shallow experience of Japan tells me that if there's one country that can regulate the shit of the airbnb problem, it's this one. We're so used in the west to see properties as an asset that only appreciates that we've lost sight of what homes are meant to be. Meanwhile the whole Mediterranean coast is being bought by foreigners with the help of greedy local fucks. I've been told the Portuguese have it much worse even.
Nothing vents off like a bit of class hate, doesnt it. Locals from your description act legally within the limits of the law, if you dont like situation change laws, thats the way for a change.
Everybody maximizes their profit and thinks first and foremost about themselves and only then about the rest. Case point - a better half of this forum works/worked for faangs and their variants who destroy privacy and more of whole mankind for the sake of profit for themselves, and even pat themselves in the back how effectively they helped the 'the goal'.
It's my class that I'm blaming.
> if you dont like situation change laws, thats the way for a change
Which is done by protesting and advocating for it. Not being in a "that's the way things are" attitude.
> Everybody maximizes their profit and thinks first and foremost about themselves and only then about the rest.
What a sad way to see life. It is so easy to find countless examples of people doing exactly not that. American individualism really got to your brain.
I see a difference in-between selling your property at current market rate and having a business which relies on destroying the housing supply to make profit. I don't work for companies who "destroy privacy and more" even though it would be in my interest, many of us are not pure profit-maximizers.
> it's clueless rich people and corporations buying up properties and thinking they can flip them
so the original owner got a nice priced deal out of the sale. Then, when said clueless rich person decides to sell in the future due to being unable to hold on to it any more, they make a loss (which is a gain for that future buyer, whoever they are).
> after a few years of squeezing, locals may have no choice but to pay their entire paycheck to foreign investors
why the squeeze? If the airBNB is being occupied, then it simply means the price for the rental was correct, and it was artificially low before (due to the demand not being met for short term stays).
An AirBNB can be occupied for 2 days a week and make more than typical rent.
People who see homes as a mere unit of value meant to be priced on a global scale, and not something people should be living in, are simply inhuman. People in cities around the world are getting fed up with it, with justified protests and even riots happening.
Rentseeking has no limit. Unimaginably rich corporations can buy up every property and leave almost everyone homeless. They can take 90% of the paychecks of everyone else. And they'll say "well prices were artificially low before." No. Now they're artificially high. People in desperate situations pay more and take out debt because they have no other reasonable choice.
The global issue is that elected representatives are becoming weaker.
The idea that a city hall would need to organize some sort of public meeting before approving a construction project is a fairly new one. The city council is elected to represent the people. If they need "community input" why are they even here? (Nevermind the obvious problem with such participatory process - sane and normal people can't participate in every local government decision unless it's their job. Hence why we have representative democracy.)
If you told someone in the 1980s that the British parliament couldn't impose its will on QUANGOs and local governments to build a rail line, they'd look at you as if you were insane. Parliament's power is supposed to be absolute. Yet that's what's happening with HS2.
"Sane and normal people can't participate in every local government decision unless it's their job. Hence why we have representative democracy".
While true, times have changed. The information flow is orders of magnitude faster and have you seen any sane and normal people lately? The norm is spending hours scrolling social media. The argument that nobody has spare time/attention and thus we all need representatives falls flat to me.
We need to explore alternative forms of representation to allow people to choose their level of engagement in various levels of government. Perhaps I'm happy to delegate all national matters to a representative I trust but want to regularly weigh in on local decisions.
Between the technical challenge of trust/security and the inevitable political resistance to such ideas, I sadly don't expect to see them implemented any time soon.
Is this because the representatives are becoming weaker - or is it because we're asking the government to get involved in such a huge portion of what used to be free (as in speech) that it's impractical for them to pay attention themselves at the necessary level, and have to offload the work somehow?
That is, I'm claiming that government can't scale to the levels that the 20th Century escalated it to, with any degree of efficiency at all.
UPD I'm wrong about Japan. Thanks for pointing out.
Add UK, Australia, Canada, the Netherlands to the list of countries with housing crisis.
> Housing crisis is observed in almost all what is called "first world" (europe, japan, usa).
You mentioning Japan gives out that you maybe don't know what you are talking about.
> I believe that 90% of the issue is more global than a regulation.
Or maybe the case it, that also globally most urban areas tend to develop a version of excessive regulation.
And excessive regulation is the norm in all of those (at least US and EU, no idea about Japan).
Is there a housing specific crisis? Or is inflation impacting housing like it impacts everything?
Housing prices have skyrocketed in the developed world since the 90s, and it has nothing to do with inflation (as the inflation in the 90s — early 2000s was very limited).
> Housing prices have skyrocketed in the developed world since the 90s
And in many parts of what we might label as third world.
Japan does not. But it's also the place that didn't (fully) decide to try to keep it's population growing into perpetuity with migration and also has some other more unique market and monetary conditions.
Most of the first world has a habit of mimicking the US.
where is the housing crises in japan?
> you can literally just claim a new highrise
> will block your sunlight and make you sad
If a high-rise blocks a single electron of my apartment's normal sunlight, it would definitely make me sad.
Good news! You can't perceive the electrons in sunlight, only the photons.
> If you stay in an unaffordable city you can't wait around waiting for politicians to fix it.
Sadly this is the best advice for personal well-being. 'Sadly' because it disrupts families.
> In California you can literally just claim a new highrise will block your sunlight and make you sad. That's enough to delay a construction
So what's the problem?
Land use should be regulated imho, just like air pollution and other commons phenomena.
I don't care what kind of towel you buy to dry yourself off with, but I do care if a developer affects the environment and housing around it.
>So what's the problem?
That is not a sufficient justification to infringe upon property rights.
While I'm sympathetic to the whining about "well they're a big business interest they oughta be able to work around the constraints" we are at least nominally all equal under the law where those things trickle down and at the end of the day that type of garbage winds up most applying to the little guy who can't afford lawyers and convolution
But you are infringing on others property rights just because you consider your rights higher and better than others and your cause holier than theirs. May be true or not, not something I nor you can judge objectively. Your rights end where others' begin and so on.
If by property rights you mean your right to have house/apartment where you like it, otherwise no idea what you mean.
I don’t care what kind of towel you buy to dry yourself off with, I do care that you inherited a house from your ancestors who moved into the area 200 years ago and now a major metro area can’t build enough housing because you like the view.
> Excessive regulation is 90% of it.
If it was, then the housing price would be correlated with the level of regulation, but it's not (housing less dense places is always cheaper than housing in big cities, even if you compare the most heavily regulated place on earth with the least regulated big city in the world.
> Here's how a rational market works.
A rational market made from human is as realistic as “dry water”.
The key issue is that housing is treated as an asset, and the policies made to boost housing construction are designed around building a market in a way that gives housing the same kind of financial yields as stocks. But while stock prices can grow because productivity increase, housing value can only increase if housing becomes more expensive.
> The key issue is that housing is treated as an asset, and the policies made to boost housing construction are designed around building a market in a way that gives housing the same kind of financial yields as stocks. But while stock prices can grow because productivity increase, housing value can only increase if housing becomes more expensive.
I like your thesis, but can you give more information on the nature of the policies that drive the housing market in the manner you describe, but which aren't just "regulation" that makes it directly harder (e.g. you can't build housing in this zone) or more expensive (e.g. minimum plot sizes, parking requirements, building codes)?
Interest rates is the biggest one, but also most fiscal policies related to housing (fiscal exemptions on the revenues coming from rents, the possibility for an individual to deduce the interests of their mortgage from their income taxes, or the absence of taxes on the benefits you make from selling a house).
There are as many such policies as there are countries so not all the above examples necessarily exist in your country (my country — France — having the first and the last one above but not the one about mortgage interests for instance) but they all share the same underlying world model of housing being an “asset you invest on” instead of the “commodity that slowly but surely loses value over time” it really is.
No. The key issue is just the rise and rise of inequality. As more money funnels to the top (thanks covid) the top buy more of the available assets leading to asset inflation.
Nothing will reverse this other than a tax on wealth. Tax wealth, not income.
This is way too narrow of an explanation.
Yes rising inequalities are a problem, but the housing price being absurdly high is a much broader problem: when a middle class family spends $500k+ for a house, they are part of the systemic problem. Same when the same family expects such a sum when selling the old house they inherited from their boomer parents.
Throw out a made up percentage and proceed to start talking about rational markets as if they exist in the real world. I immediately know this analysis is going to be great. Older houses are obviously cheaper for some reason even though housing prices in city centers keep increasing. Poor people are the real problem for needing a place to live. With the conclusion that there is nothing that can be done and people just have to take it. That's abundance (jazz hands)
>With the conclusion that there is nothing that can be done and people just have to take it. That's abundance (jazz hands)
The conclusion is you should go to where affordable housing exist.
The other option is to get on that 11 year waiting list.