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Comment by itake | Hacker News Reader

strong regulation increases costs (see all the permits and surveys required in SF).

What are "excessive profits"? 10%? 15%? 25%?

> experienced profit increases during the first three months of the year

Does this even mean anything? This could mean their vacancy rate decreased and thus their business is more profitable. I don't see the issue with companies reducing vacancies and providing more housing to more people.

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I cannot say, but experts can, and suggest to legislators and regulators implementation details. To operate a business in a jurisdiction is a privilege, not an entitlement.

I'd love to see the data on this. Usually when you increase construction costs, via additional regulation, you're going to increase the price of rent/sale.

What expert thinks increasing costs will lower prices?

It's the other way around. Regulation around pricing forces housing providers to provide housing within a constrained cost model (land + materials + labor + cost of capital + permitting/AHJ requirements [regulation]). If they cannot meet the market (or choose not to, for whatever reason), public housing is an option, with muni bonds issued to finance construction. This removes the profit component, which a for profit enterprise needs, but public housing does not.

where does the public housing come from? WA and CA can't seem to figure out how to build public housing. In WA, the best I've seen is the gov buying hotels and having the hotel sit empty for years [0].

If regulations make it impossible to build housing and public housing has the same regulations, who is paying that bill? The existing residents via sales and property taxes?

you can google construction costs in sf. how does regulations reduce any of those numbers?

[0] - https://www.kiro7.com/news/local/king-county-taxpayers-payin...

Washington has at least done a better job than San Francisco. Seattle has built over twice (IIRC three) times as many homes per-capita than SF over the last decade, despite lower population. The fact that rent control is banned statewide has a big role to play there.

It's not "despite" lower population. The thing that drives the costs up isn't evil landlords or the dreaded "profit motive". It's just demand massively outstripping supply, and high wages.

The natural interest rate plus a bit.

If you can earn 25% percent in profits in the current environment then it is a clear indication of an inefficient market - a market that needs to be regulated in order to create efficiency (like in this case as with many other cases: remove monopolistic behavior).

While it is problematic if you can't derive profits from productive activities it is also problematic when entities derive unsustainable profits - also for the party deriving the profits.

If there is not a bit middle class to consume products, then there will not be be a market to supply products to.

Targeting profit rarely helps. The big players can afford the financial engineers to make the profits negligible from an accounting perspective. Likely funneled into growth. The small players cannot, so you put them in a situation where selling to a big player is rational. And the oligopoly grows.

The current economic environment definitely over indexes on very abstract metrics to steer, which is problematic.

I am also not proposing any formal system.

I am saying that it is quite easy to spot profits that are too high.

I am also saying that the governments role is to ensure efficient markets.

In this case it is suing RealPage.

It could also be making it easier to make housing in a specific area to counter under supply.

it is all regulation.

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