this post was submitted on 28 Oct 2023
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Libertarians: Always finding the rarest of occurrences to continue their dismantling of government and the systems that gave them everything they have. lmao
The rarest of occurrences?
Ubiquitous government meddling (in the form of, among other things, rules like “no more than one dwelling per half acre”) in the real estate market has resulted in this housing crisis we all face. People are dying of stress related illnesses and self inflicted gunshot wounds, and the survivors are dealing with enormous amounts of anxiety and hopelessness, because rents keep rising and rising,
Supply is artificially, heavily suppressed and people wonder why prices skyrocket.
Everyone attributes it to “landlord greed” but provider greed is regulated by market competition when supply is allowed to follow market forces.
A person having to spend $1500/mo just to sleep when they’re trying to run a business, when they’re perfectly willing to crash on a couch in their office, means the threshold for going into business for oneself is artificially raised.
I could rant about other markets too but there’s plenty of government-created horror to be found in real estate alone.
Also the notion that the government “gave them everything they have” is ridiculous. The government gave us the Drug War and a nuclear-armed Israel. Other governments gave us The Holocaust, the Rape of Nanking, the Trail of Tears, and other unimaginably horrific acts of human savagery.
Humans’ ability to negotiate and make deals to trade resources and cooperate on projects — willingly — is what gave us what we have today.
I have a counter-point that I’d like to hear your thoughts on: at least to some degree, it seems like part of the housing crisis is caused by private equity firms not being restricted from buying up property, artificially reducing the supply of housing that can be purchased by then renting it out, which artificially increases the cost of housing and making it less accessible. More of the population then has less wealth, while smaller portions of the population end up with more wealth, again making homeownership farther out of reach.
Yeah, that’s the proximal cause. A small cartel gains control of the limited supply, allowing them to set higher prices.
This happens all the time. The thing is, free markets have a solution for that. It’s a negative feedback loop that goes like:
The problem I’m talking about in our housing market is that step 3 is blocked. Despite other companies or individuals wanting to get in on this gravy train, by building their own housing to start producing profit, they can’t because there are laws prohibiting them from doing so.
Now, it’s not impossible to do new construction. But it is far more expensive than it naturally would be.
Like, let’s say a certain area is highly sought after. Let’s say there’s 1000 people who’d like to live there. But there are only 100 units (houses, apartments). Some billionaire buys all 100 units, and now controls the supply of housing. For each apartment they have ten candidates willing to outbid one another. They get to crank those prices up like mad.
The solution in a free market would be that a different billionaire (or maybe a lowly millionaire, or a coop composed of twenty fifty-thousandaires), or a big corporation, or whoever, decides they’re gonna build 500 more apartments.
Now you’ve got 600 apartments for those 1000 who want to live there, and you don’t have quite the same power to ask ridiculously high prices.
But the way our housing market works, it’s either extremely costly (like you need an environmental impact statement and you don’t know how it will turn out and if it turns out against your favor you can’t proceed, losing everyone you’ve invested so far), or zoning says “you can’t do more than ten dwellings per block here” and instead of 500 new units you can only build 50, or it’s just straight-up impossible to get permission to build.
That’s what I mean by an artificially-constrained supply.
The real ideal is for those 1000 people who want to live there, you’ve got 1100 housing units, and now the landlords are in competition with one another to attract tenants. 100 units are vacant and that is a source of negotiating power for the tenants.
But because we’re so stuck seeing that would-be investment — that would expand the supply — in terms of rich people getting richer, (and for many other reasons) we block that new construction and keep supply limited, which is to the benefit of the people who control that supply, and to the detriment to both (a) the people who would like to come in as alternate suppliers, and (b) to the people who need to use that supply.
I mean, even if we don’t want to think about incentives or negotiation, if we only want to focus on physical events in the world you can see, if there’s a housing problem the solution is to build more housing, and laws against building more housing are a problem.
It's artificially limited, but I don't think the number of housing units is necessarily how the limitation is imposed. You see, landlords aren't actually interested in tenants, they're interested in property values going up. Why? Because land and housing are legally considered capital, the value of which they can leverage for loans. That results in what we see happening in NYC and many other places, where apartments and retail spaces can lie vacant for years because the rent demanded by the owner is absurd, but to ask for less rent would lower the building's valuation. It's also why we have far more empty housing units than homeless people in this country, about 27 empty units for each homeless person. If these landlords were honestly participating in the market, or if housing wasn't considered capital, housing prices never would have gotten this high - and I suspect the same is true of the number of homeless.
The hyper-wealthy basically gave themselves a cheat code decades ago and have been abusing it to the detriment of markets and regular people ever since. We have a government body, the FTC, that's supposed to put a stop to this kind of market abuse, but the last time it really did its job at all was when it broke up Ma Bell forty years ago. For far too long it's been content to let corporations that are already far too big and have far too much influence over the market continue buying up their competitors or colluding to inflate bubbles.
All problems created by deregulation
How does deregulation restrict the housing supply?
By giving corporations and foreign investors the ability to buy up all they want, create scarcity, and tyrn the country into a high rent environment....you know, LIKE HAS ALREADY HAPPENED
Were there regulations at some point in US history that prevented that?
Yes. There have been rent controls and outside investor restrictions. Lots of restrictions were lifted after the 2008 crisis, turning the housing industry iver to banks and private equity firms. And while you might be prone to saying that zoning restrictions caused urban sprawl, it should be noted that developers and real estate corporations wrote those laws and not a government serving the people. Today I learned from my Canadian friends that foreign investors are not allowed to buy Canadian properties. Meanwhile US is selling to anyone with the money no matter where they're from.
Not allowing foreign investment is reducing capital for construction. Living in Canada this is not helping like you think.
No it isnt. That makes no sense, and housing shouldnt be an investment scheme anyway. Their values cannot rise indefinitely. That's the root of our housing problem right now.
What economic reality results in more houses being built with less investment.
We have a lack of houses. Lowering the price will not make houses materialize or do you think some magic will happen?
What economic reality makes housing affordable when used as a corporate investment scheme? What percentage of framing or roofing is provided by foreign-held stock portfolio? I can see we're gonna yell past each other as you refuse to recognize what the housing shortage actually is. I lived in a country that built houses just fine and met the demand just fine until Reagan deregulated finance and manufacturing. Your concepts will find no purchase here, as they are a proven failure.
Landlords being allowed to permanently take rentals off the market (by pretending to do construction work on them forever) to artificially reduce supply and drive up prices is a major problem. This practice used to be blocked by inspection laws that were removed.