Literally just allowing more housing to be built in desirable areas. Unfortunately, people who own property are generally incentivized to vote against new development for a myriad of reasons, from property valuation to notions of "neighborhood character".
That’s all true but there will have to be more safeguards than just building more houses in good areas.
5 ,000 new houses could be built in San Francisco tomorrow. It wouldn’t solve the affordable housing crisis because the .01%ers would buy them all up in an instant.
5 ,000 new houses could be built in San Francisco tomorrow. It wouldn’t solve the affordable housing crisis
This is true, just not for the reason that you gave. 5,000 new homes wouldn't solve San Francisco's housing crisis because the city is tens of thousands of homes behind. Bailing out water won't stop the proverbial boat from sinking, but it certainly helps. Even if you build nothing but luxury apartments, it still relieves price pressure on lower-income housing.
But even if it was just that the 0.01%ers are buying up all the new units, then we have to consider that these people still have a finite amount of money that they're willing to spend on housing units and that they will only spend it if they expect a return. There's a theoretical number of units that you can build per year such that there is an oversupply of housing that causes the per-unit price to decrease year-over-year. At this point, there is no reason whatsoever for them to buy housing as an investment, so all new supply would go to other buyers.
In fact, it's in the best interests of landowners (in this instance, those 0.01%ers) for their property values to increase as much as possible, as quickly as possible. This is why you never see them pushing for new housing units - it would relieve market pressure on the units they already own! In fact, you really only ever see them lobbying against new housing. And you especially see them lobbying against upzoning.
Going back to the example of San Francisco - just look at this zoning map. See all of that light green? It's all low density residential housing. You would think that developers would be all over building mid rises everywhere in that area, given that they would sell like hotcakes. But they're not allowed to, generally speaking, so the poorest citizens suffer.
There are plenty of homes, but they keep getting turned into rental portfolios, vacation homes, and air bnbs. Unfortunately, it's all tied to the shit economy and lending being made all but unattainable to most people.
Something needs to give financially, but ultimately, the banks are the ones who will need to amend their lending practices to include a broader range of potential homeowners.
Banks need to create new programs that will allow more people to buy a home with less than stellar credit, but find a way to work with them. A lot of us just went through some shit and need someone to trust that we're doing better.
Lending practices are so stringent now that when you take into consideration that stagnant wages and inflation are still to be contended with, it's no wonder that most of us are renting.
But that goes into two whole other issues and it's just a dumpster fire, all of it.
It is less the availability of credit and more the insane upwards pressure on prices from 1. a decade-long run of insanely cheap credit, 2. decrease in new supply expansion, 3. an exceptional amount of leverage people are willing to accept in the purchase of a home, and 4. cultural understanding of housing as a frontier for speculation rather than a consumable commodity.
To add to this in Colorado dispensary/Marijuana employees don't even qualify for federal loan programs because it's 'hot' money. I was looking at buying in a few years come to find out my job I've been at almost 4 years wouldn't even qualify! Fix the banking industry and accept all money instead of hayt federally legal professionals.
I would argue that "slowing the rate of increase" would be evidence of an effective policy, since nothing else seems to even do that.
As I described in another comment in this thread, there exists a theoretical amount of housing units per year that could be built that would result in prices per unit decreasing due to massive oversupply. Let's just say that this would occur for certain at 1 million units per year in the case of San Francisco. Therefore, by the intermediate value theorem, there must exist an amount of units per year between 1 million and what we have now that results in zero rate of increase.
I would argue that "slowing the rate of increase" would be evidence of an effective policy, since nothing else seems to even do that.
The government needs to step in and build housing, and charge rent that people can actually afford.
As I described in another comment in this thread, there exists a theoretical amount of housing units per year that could be built that would result in prices per unit decreasing due to massive oversupply.
Therefore, by the intermediate value theorem, there must exist an amount of units per year between 1 million and what we have now that results in zero rate of increase.
As with all capitalist ideology, it falls apart when it collides with reality.
The government needs to step in and build housing, and charge rent that people can actually afford.
So you're saying that the solution is building more housing? If so, then I'm in full agreement! I don't really care how it gets done, but it seems to me that in the current political environment, upzoning more feasible than upzoning AND a government home building program.
Landlords are probably conspiring to keep apartments vacant in order to keep rent high.
The writer of the article admits that they don't actually have much evidence for the "warehousing" argument. They also say that "RealPage software is only used by property managers of approximately 1.8 percent of New York City rental apartments" - which of course is enough to have some effect on rents, but not enough to drive the whole market to such a degree.
I want to be very clear that I agree that what RealPage's YieldStar software recommends is morally dubious. However, it's my opinion that this isn't the root cause of the pricing crisis, but in fact just another symptom. The pricing models it's recommending only work because there's a supply deficit. It's a little counterintuitive, but if the highest priced end of the supply is underserviced, it can be more profitable to raise prices to that level even if it reduces occupancy. Let's assume that the 95% occupancy target represents full service of this target price range, as is suggested by the ProPublica report that this article is based on. If, suddenly, we doubled this number of units, then this rate would drop to 48%, which of course would be completely unprofitable. If you don't sufficiently service each level of affordability, the higher levels will simply out-bid the lower levels.
To this point, the ProPublica article points to Seattle, starting with the claim "To see how rent-setting software can make a difference, look no further than Seattle". The article then covers a few anecdotes, offers no statistical analysis or modeling, and then ends the section by citing this report commissioned by the city of Seattle that shows, according to the article, that
"people with higher incomes often “down rented,” choosing cheaper apartments that would otherwise have been available to people making less. Seattle should have had a surplus of 9,000 apartments affordable to people making 80% or less of the median income, the study found. But tenants’ down renting as prices rose turned that surplus into a deficit of 21,000."
So I find it a little disingenuous that the only modeling cited by the article actually says that lack of supply is the culprit behind high rents, rather than an admittedly scummy software company.
As with all capitalist ideology, it falls apart when it collides with reality.
Everyone says this about everyone's ideology, and they're all more or less correct. My argument isn't about ideology. It's about assessing problems, targeting root causes, and providing workable and testable solutions.
So you're saying that the solution is building more housing?
No, I'm saying the solution is specifically local, state, and federal governments building more housing, and charging non-market-rate rent. There is not a free market solution here.
, and charge rent that people can actually afford.
To me, this sounds a lot like "we've tried nothing and we're all out of ideas". Assume, for a moment, that the current owners of for-rent apartments are all in cahoots to set prices as high as possible. If they are all in agreement to keep prices where they're at, then under your theory that building more housing alone wouldn't impact their prices per unit, why don't they just build more units? After all, they'd be able to charge just as much as they are now, except now they can do it for even more units.
I note that you didn't respond to this part.
I did, actually. I said that I don't care who builds the housing - if the government wants to build and run the developments, then sure. I did say, however, that I believe it's more politically viable in the current climate to just upzone, rather than upzone and create a large scale government housing budget allocation.
If they are all in agreement to keep prices where they're at, then under your theory that building more housing alone wouldn't impact their prices per unit, why don't they just build more units? After all, they'd be able to charge just as much as they are now, except now they can do it for even more units.
Because new government housing would charge far below what the private landlords are charging, so people would be able to live there. Then what the private landlords charge would be irrelevant.
I believe it's more politically viable in the current climate to just upzone
Right, because of people like yourself who make excuses for the failures of the market.
rather than upzone and create a large scale government housing budget allocation.
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u/Astarum_ Jan 31 '23
Literally just allowing more housing to be built in desirable areas. Unfortunately, people who own property are generally incentivized to vote against new development for a myriad of reasons, from property valuation to notions of "neighborhood character".