tag:blogger.com,1999:blog-1110014885778996459.post4676635552753668568..comments2024-03-28T04:16:11.729-07:00Comments on Idiosyncratic Whisk: Housing: Part 264 - Rent is how we consume housing services!Kevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-1110014885778996459.post-11859025816367880762017-10-21T05:17:46.822-07:002017-10-21T05:17:46.822-07:00"This is why the solution probably entails im..."This is why the solution probably entails imposing open access from a higher level of governance, like the state or federal level. That creates its own problems, because if that is the solution, and it works, no city will sit idly by and watch its collective net worth drop by 50% without fighting."--Kevin Erdmann<br /><br />Yes---and perhaps not just the city and its property owners. Lenders too. That why I alway say there is a propertied-financial class addicted to tight property zoning.<br /><br />I am reading more on Hong Kong, where there is an obvious and screaming need to up zone everything everywhere (or simply unzone). BTW, Hong Kong has land zoned for farming. <br /><br />Here is a glimpse into HK land values: "Li Ka-Shing’s CK Asset Holdings sold its 75 per cent holding in The Center to a Chinese-led group for $HK40.2 billion ($6.56 billion), a record for a Hong Kong office tower, the Hong Kong Economic Journal reported."<br /><br />Yes, buying 75% of a single office tower in HK costs $6.5 billion. The whole building will set you back $8.6 billion <br /><br />Why does not HK unzone? I don't know yet, but I surmise property owners and lenders are trapped. <br /><br />A version of this is underway in closed-accesss cities in the US. <br /><br /><br /><br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-40305331765352556122017-10-20T18:44:56.990-07:002017-10-20T18:44:56.990-07:00I think this is correct. I like to look at this t...I think this is correct. I like to look at this through the North, Wallis, and Weingast prism of "limited access" vs. "open access" - I have sort of borrowed their terminology. Even without the problem you are talking about, I think these cities would be in a tough bind, because, as NWW note, we really don't know how to transition from limited access to open access governance. Once governance becomes focused on claims on rents instead of on universal access, a collective action problem ensues, and all parties must play within the perverse rules of limited access in order to keep from being taken advantage of. It's a miracle that any society ever moved from limited to open access governance. These cities have happened a sort of strange new version of limited access governance where access is limited, but it is available to the highest bidder. So, I would expect their options to be rather dim in any case. This is why the solution probably entails imposing open access from a higher level of governance, like the state or federal level. That creates its own problems, because if that is the solution, and it works, no city will sit idly by and watch its collective net worth drop by 50% without fighting.<br /><br />So, this problem, that it might take a tripling or quadrupling of current production to actually move prices much, is an additional headwind on top of a hurricane's worth of headwinds already in place.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-91176427664795273712017-10-20T17:00:41.676-07:002017-10-20T17:00:41.676-07:00Your last remarks seem to place closed access citi...Your last remarks seem to place closed access cities in a conceptual rut, as each modest wave of supply growth is accompanied by the social outcomes its opponents predicted. Policymakers and the public, if not outright hostile to supply growth, will turn indifferent to that variable and feel justified in their focus on demand side solutions. Meanwhile the rut deepens and the traction needed to get out of it (4x growth, say) is harder to generate. Might this be the historical pattern that turns open access cities closed, or do contingencies of law and local politics have more to do with it?Jason Treithttp://tagfu.orgnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-40117370162254946262017-10-20T04:46:55.912-07:002017-10-20T04:46:55.912-07:00Egads, this puts me in a state of catatonic hyster...Egads, this puts me in a state of catatonic hysterics. <br /><br />Yes, marginal increases in the supply of housing, or anything, might not bust down prices. Even oil markets (a commodity) act in odd ways for seasons at a time. <br /><br />But to say the supply does not affect rents? <br /><br />Yet the macroeconomics profession has ossified around wage-watching, What is driving inflation (and driving down living standards) in Hong Kong, or Los Angeles? <br /><br />Not wages! It is housing! Yes, it would take a bunch of housing to fix matters. And that is what the US should be doing. Building forests of luxury condo towers in closed access cities. Same in Hong Kong. Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.com