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plummbob t1_ituog0y wrote

Reply to comment by Matt5sean3 in Rent too damn high? Landlords have formed an illegal cartel according to several reports by cogitator_tertius

> barred from further collusion resulting in a more competitive rental market in which landlords have to lower prices to be competitive.

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rents are set by the marginal renter. so if that renter has a high willingness-to-pay, existing landlords have no incentive to lower prices.

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and because its hard to build in the city, and demand is ever increasing, renters will face higher and higher prices.

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Matt5sean3 t1_itv6by6 wrote

Nonetheless, despite difficulties, new housing does get built in the city (but yes, likely not at the needed rate). This should still mean there's an improvement over what would happen otherwise.

However, if a person did want to push faster creation of new housing as a solution to housing affordability, preventing price fixing is a definite pre-requisite to that working as a solution.

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plummbob t1_itv876z wrote

Entry of new is the solution to any kind of price fixing. Like, if a subset of the market sets their price above the equilibrium price, then of course homes will get built because the inputs to housing construction have not changed. Price fixing literally only works if there are large barriers to entry, and for housing, the only actual barrier is zoning (you could build a code-compliant home entirely from stuff bought at big box store).

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Buts it not even that -- its that these firms are able to raise prices because they were underestimating people's willingness to pay. So that means that upzoning (ie legalizing housing more broadly) would be even more effective than we would expect because it means there is a larger gap between the cost of building and demand (in other words, the zoning tax/deadweight loss is bigger than we think).

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The city legalizes housing on the extremes, but little is done for starter size homes. By way of example, prices in my neighborhood have grown but the supply hasn't despite an abundance of lot space (approx 3x the space consumed by housing). And its not because its impossible to build 700sqft homes due to lack of supplies/labor. Its because the city fixed the quantity of housing.

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I just find it baffling that the "just legalize more housing" as a solution to a housing shortage is the most controversial take.

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ttd_76 t1_itwgbe3 wrote

>I just find it baffling that the "just legalize more housing" as a solution to a housing shortage is the most controversial take.

Because the problem is more complicated than that. Ultimately, yes there needs to be more housing but there is not one simple path to get there.

No matter what you build someone will complain. If you build a small apartment unit, people will complain it's not a high rise. If you build a high rise, people will complain about corporate landlords.

If we issue vouchers or reserve some units for. affordable housing, people complain. If it has too much parking, people complain. If it's not in the city, people complain about car culture. If you upzone an area and the wrong business moves in, people complain.

No one actually wants more housing in a generic sense. They just want more housing of the kind they personally want, at a price that is affordable for them. And if they cannot get it...they'd rather have no housing.

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plummbob t1_itwhlxy wrote

The economic problem is easy to solve ... when there is a legally mandated shortage, just lift the mandate. Vouchers for people below the market.

Why can't ppl just be more utilitarian :(

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ttd_76 t1_itvuapt wrote

>This should still mean there's an improvement over what would happen otherwise.

Yes, but in this case it most likely means prices would be going up even more without that construction. So new construction helps, but it's not going to slow rent increases much.

>However, if a person did want to push faster creation of new housing as a solution to housing affordability, preventing price fixing is a definite pre-requisite to that working as a solution.

Increasing new housing is the solution to price fixing. The more landlords in the market, and the more options available, the harder it is to control supply.

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