https://www.nature.com/articles/s41467-022-31572-1
and you might even come to the conclusion that you should actively make life in a city worse to make it affordable to the poor.
At the same time, gentrification is inevitable when neighborhoods become more desirable. Better housing, amenities, schools etc. will inevitably attract people who would not have previously wanted to live there.
In cities without a lot of demand pressure on housing, building new housing makes the older housing less attractive. That can at least give displaced renters a place to go. But in cities where demand outstrips supply, it takes a lot of new housing to make a noticeable dent in rents. (I suspect this is where the impression comes from that new housing doesn't help with prices -- in places where demand outstrips supply by a lot, prices can go up even while new housing is being built -- but without that new housing the prices would have gone up even more!)
There are not easy solutions to this. Rent control might appear to be a good solution but in the long term it makes things worse. Building new housing often does change the character of neighborhoods economically, demographically, etc. But if we let that stop us, nothing new will get built except on unused land.
Supply and demand really does work for housing. We are just in a massive backlog on supply, which has built up over decades, and it will take decades to build our way out of it. During that time it will look like the new building isn't helping very much -- but that's because of how bad the backlog is.
For example, in the San Jose area tons of new housing is being built, on unused shopping centers like Cambrian Plaza and former industrial areas like Santa Clara Square. It's dense housing for the area too -- 3-5 story apartment blocks with their own underground parking, sometimes shops and restaurants on the first floor. Thousands of units are coming online. But I still expect rents and housing prices to increase next year. They would have increased even more if we hadn't built that housing, but the backlog is decades deep and demand is also still increasing.
I generally agree with your comment overall however.
If you want to solve the housing crisis you need to reverse the bad policy and add good policy.
Land value tax is one such policy. There are many other, changing in regulation for housing, changes in land use policy, like minimal parking requirements, changes in urban design, changes in transport priorities, the list goes on.
Some of the most beautiful and most admired parts of old cities like Boston are all illegal to build now. Policy has mostly made it impossible to build the kind of places people travel to other arts of the world to experience.
Why would a tax increase on rentals lower rents?
Consider San Francisco, where it takes years just to get permission to build housing: https://www.sfchronicle.com/opinion/openforum/article/sf-hou...
San Francisco is an extreme example, but many other cities are bad about this too.
With a land value tax we are basically telling landowners that they aren't allowed to build and also they will be taxed for not building. Stop hitting yourself! Stop hitting yourself!
A land-value tax would be a lot more reasonable if we allowed people to do what the tax incentivizes them to do.
> With a land value tax we are basically telling landowners that they aren't allowed to build and also they will be taxed for not building. Stop hitting yourself! Stop hitting yourself!
Ok, and with the current system you hurt the people who have managed to build things even more.
Its not like actually impossible to make something productive with your land.
Land value tax, any way you look at it, is fairer and better for society then property tax.
But yes, regulation are also a problem. But just because bad regulation exists, shouldn't mean you should not improve the tax system.
Eh. My landlord is already stuck unable to raise rent because there are ~4 brand new mid-rise complexes within a 3 block radius.
Why would I agree to their rent increase, if for that same price I can just move to a brand new managed property? So every year we negotiate and rent stays about sameish. Actually lower now than when we moved in pre-pandemic.
This is in SF.
A) illegal, and
B) would have to be extremely widespread to not just serve to keep those units unrentable.
The more vacancies across the city, the more difficult collusion is.
I imagine the various property owners in an area see each other more as competition than buddies. Or even targeting different demographics.
Why would owners of a big building collude with some rando who happens to own a place or two?
More than that, and somebody always breaks the pact fairly soon.
There is a good rundown here, written earlier this week: https://www.sfchronicle.com/opinion/openforum/article/sf-hou...
This bit is only situationally true. It's true for infill development: the 2018 condo next door to a 1918 brownstone is likely going to sell for more. But generally "next door" doesn't happen.
In fact in most large urban areas, the more central and accessible areas (SF, say) with (by definition) older housing stock are the most expensive. The new construction in Livermore or Concord is where the cheap housing is.
Think ski resort towns full of million dollar winter dachas that ban poor people housing, ending up full of vacationing millionaires who are wondering why the four-star steakhouse is now only open three days a week. (It's because nobody working there can afford to live in town. And because the vacationers are, for some reason, unwilling to man the grill. Or pay $120 for a steak.)
That's surprising. I see $120 steaks on the menu in Las Vegas restaurants. Why not at the ski resort?
> million dollar winter dachas
Perhaps because the alternative to a $120 restaurant steak is buying nice groceries and cooking at the dacha?
Dunno, but if you've figured out why, you should get in touch with the guys in this article.
https://www.outsideonline.com/culture/essays-culture/how-to-...
That's, I think, the heart of these economic dislocation problems. The destination is fine, but the transition is painful.
Hair salons raise prices (e.g. from $20 to $30) and people pay them.
Or, hair salons move to a cheaper nearby neighborhood to keep prices the same (e.g. $20), because customers would rather travel nearby if it means a cheaper haircut.
Or in reality some of both -- some raise prices and some move, since some people can afford to pay and some would rather travel further instead.
This is what always happens as rent rises. Services and goods get more expensive as well or their providers move geographically.
Each new building adds to the total value of the city, but also competes with the other buildings.
However, if the newer housing is better than the older housing elsewhere in the city, which is usually the case, that older housing should become less attractive.
An extreme historical example of that is the decay of urban cores caused by white flight to suburbs (which were often only a short drive away from the urban cores, and therefore part of the same overall housing market with the same pool of buyers) in the postwar period. Some of the areas now being gentrified in major cities are becoming desirable for the second time.
Land ownership beyond the home you live in is effectively equivalent to a privatized, purchaseable license to tax others.
https://en.wikipedia.org/wiki/Henry_George_theorem?wprov=sft...