Very interesting but I want to push back on the language of how many houses we "need". In my experience talking about how many houses are needed encourages a view amoung the general public that development plans should figure out how many houses are needed and only authorize development for that many rather than just zone to allow building and let the market determine if it makes economic sense to build more.
And yes, there is obviously going to be some socially optimal level of housing so I don't mean to suggest anything is wrong with what you said but I just think it would be better to talk about how many houses would be ideal as I think people react to that language differently.
Yes. That’s a good point. It also might encourage the ridiculous implication that seems to have even affected the academy in 2008 that if you build too many houses the market will collapse.
But there is a basis for writing that way. It’s the amount of housing that would reverse excess rents.
Sorry, but what exactly do you mean by excess rents? I mean the more housing that gets built the lower the rents.
Of course you can ask what the rents would be without some specific distortion. Are you suggesting that is the number of units which if built would eliminate any premium as a result of zoning restrictions or what?
The key is those scatterplots of LA and Phoenix. Blocking housing is a peculiar issue historically. When it happens it creates that peculiar regressive cost inflation. Rents and prices rise in the poorer neighborhoods. Every city used to look somewhat like Phoenix before 2008. Where the correlation is especially negative between price/income and income, that’s all land rents going to a land cartel. We will have enough housing when the cartel isn’t collecting rents.
Surely that can't be the definition of "enough." I mean one world in which you might not have enough housing is one in which the local municipalities simply pass laws which impose lots of unnecessary cost on developers (say tons of various studies and impact reports).
No cartel is collecting any rents in this situation though. Sure, the municipalities could have choosen to collect rents instead of simply imposing wasteful costs but they often don't because it prevents the excuse that the extra requirements are actually important.
High costs wouldn’t create the price/income pattern I highlight. High costs would lead to either smaller units or prices that were elevated across the board, depending on how they were imposed. This pattern only occurs where new housing is so obstructed that rising rents are broadly displacing residents who are simply trying to remain in place. It’s a very peculiar signal.
Very interesting but I want to push back on the language of how many houses we "need". In my experience talking about how many houses are needed encourages a view amoung the general public that development plans should figure out how many houses are needed and only authorize development for that many rather than just zone to allow building and let the market determine if it makes economic sense to build more.
And yes, there is obviously going to be some socially optimal level of housing so I don't mean to suggest anything is wrong with what you said but I just think it would be better to talk about how many houses would be ideal as I think people react to that language differently.
Yes. That’s a good point. It also might encourage the ridiculous implication that seems to have even affected the academy in 2008 that if you build too many houses the market will collapse.
But there is a basis for writing that way. It’s the amount of housing that would reverse excess rents.
Sorry, but what exactly do you mean by excess rents? I mean the more housing that gets built the lower the rents.
Of course you can ask what the rents would be without some specific distortion. Are you suggesting that is the number of units which if built would eliminate any premium as a result of zoning restrictions or what?
The key is those scatterplots of LA and Phoenix. Blocking housing is a peculiar issue historically. When it happens it creates that peculiar regressive cost inflation. Rents and prices rise in the poorer neighborhoods. Every city used to look somewhat like Phoenix before 2008. Where the correlation is especially negative between price/income and income, that’s all land rents going to a land cartel. We will have enough housing when the cartel isn’t collecting rents.
Surely that can't be the definition of "enough." I mean one world in which you might not have enough housing is one in which the local municipalities simply pass laws which impose lots of unnecessary cost on developers (say tons of various studies and impact reports).
No cartel is collecting any rents in this situation though. Sure, the municipalities could have choosen to collect rents instead of simply imposing wasteful costs but they often don't because it prevents the excuse that the extra requirements are actually important.
High costs wouldn’t create the price/income pattern I highlight. High costs would lead to either smaller units or prices that were elevated across the board, depending on how they were imposed. This pattern only occurs where new housing is so obstructed that rising rents are broadly displacing residents who are simply trying to remain in place. It’s a very peculiar signal.