tag:blogger.com,1999:blog-1110014885778996459.post8078932272950363070..comments2024-03-28T11:48:09.419-07:00Comments on Idiosyncratic Whisk: Closed Access and Public Sentiment - TaxesKevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-1110014885778996459.post-29607279847966699242017-12-25T21:17:21.372-07:002017-12-25T21:17:21.372-07:00OT but related to earlier post of yours.
I commen...OT but related to earlier post of yours.<br /><br />I commented on Sumner's blog: <br /><br />"Add on:<br /><br />"Oct 26, 2017 - Nano flats, or apartments each smaller than 200 square feet, will be the new norm in Hong Kong as 2100 of such complexes are on drawing boards through 2020."<br /><br />http://www.scmp.com/business/article/2116992/nano-flats-expected-flood-hong-kong-market-first-time-buyers-continue<br /><br />Are Hong Kongers obtaining higher standards of living in the city-state frequently deferred to as the freest economy on Earth? <br /><br />So why the nano-flats? <br /><br />Are 100-sq-ft. flats in the future when even higher living standards are obtained? <br /><br />----30----<br /><br />Earlier, you asked why people are buying houses on small lots in Phoenix, if land was not the key variable. I noted some of the housing developments of the Inland Empire housing tracts 1980s and 1990s already had to houses crammed together on tiny lots. <br /><br />Now, when one builds a condo tower in Hong Kong, I would guess the land is important (very expensive in HK), can be spread among many units. Why nano-flats? <br /><br />There must be something going on in economies of scale, consumer preferences, regulations, or what I call "situational leverage." <br /><br />Situational leverage is when in the Old West you came to a small town with one bar in it, after a long trail ride. You order a whiskey, and you know it is rot gut at Hyde Park prices, but the next town and bar is a 25-mile ride by horse. And no one dares open up another bar in town. <br /><br />So when there is constrained supply, the builders have situational leverage. They choose to maximize profits to the last dime and if that means cramming people together, and they can still sell their wares, then they do that (as I or you would if we were risking capital on a property development).<br /><br />It remains that orthodox macroeconomists keep hailing Hong Kong as the freest economy in the world. Something about property and property zoning----it is just off the radar of orthodox macroeconomists. <br /><br /><br /><br /><br /><br /><br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-83522491333741508392017-12-20T09:57:43.321-07:002017-12-20T09:57:43.321-07:00Yes. I think you are basically right. At the mar...Yes. I think you are basically right. At the margin, the city is designed to force them out, and so any extra income will have to filter through their cash flows to be applied to the bidding war on housing.<br /><br />Here, I think it is the incongruity created by subsidized housing that leads to polarization. For individuals in subsidized housing, they probably do keep most of those other subsidies, and the bidding war is squeezed into the housing stock that rents at market rates. So, for those who prefer state-based solutions, it appears as if the combination of below market rate units and public income subsidies is an effective way to get resources into the hands of less fortunate households. But, that just makes it worse on everyone else. When you get to a point where the only way to survive in a city is to either make six-figures or to get below market rate housing, then it really does look like market-based solutions only help the rich and state-based solutions help the poor, because effectively any poor family that could have benefitted from a functional housing market has already moved away to another city that does have a functional housing market. This leaves the Closed Access locals with the impression that their horrible policies are necessary.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-42650754782874865532017-12-20T08:54:37.452-07:002017-12-20T08:54:37.452-07:00I think about this,in cities were too little build...I think about this,in cities were too little building is allowed some part of any subsidy of the lowest 30% of earners will be captured by landlords? SNAP, TANF, EITC etc.JWOhttps://www.blogger.com/profile/00004178958481335795noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-31473749025871507542017-12-19T23:41:40.038-07:002017-12-19T23:41:40.038-07:00Thanks, Ben.Thanks, Ben.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-8274064395136510742017-12-19T21:12:36.388-07:002017-12-19T21:12:36.388-07:00I'll say it again: Kevin Erdmann is playing in...I'll say it again: Kevin Erdmann is playing in a higher league than other macroeconomic bloggers (certainly as pertains to real estate). <br /><br />This is a very insightful post, IMHO. <br /><br />Worse, there are large but entirely unexplored ramifications of property-zoned limited access regions for monetary and trade policy.<br /><br />Let's close our eyes and shoot! <br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.com