| I have been upset by how quickly many people have concluded that the problem in San Francisco (et al) is something something supply/demand and not about speculation, and that the solution is to open up zoning laws and allow new development. The existence of enormous wealth inequality means a few billionaires can easily scoop up all the available property on the market in San Francisco, and thus the housing price is extremely vulnerable to speculation. Since land is the most valuable thing you can own, and thus the most lucrative thing to speculate on, I am sure this is happening. Here http://voxeu.org/sites/default/files/schularick_fig1.png is a figure from a recent paper showing a dramatic rise in the price of housing since 2000. The authors of this paper again conclude that something about movement or building or zoning needs to change. I disagree. To me it is obvious that this shift after 2000 is the result of speculation. Specifically, we know that the Commodity Futures Modernization Act of 2000 opened up a vast new derivatives market in the hundreds of trillions of dollars. This market contributed to a series of enormous bubbles and speculative bursts - e.g. the energy market speculation that Enron caused, and later the housing bubble that destroyed the global economy, still ongoing. It seems obvious to me that the sudden and dramatic rise in land price is at least partially, and probably mostly, related mostly to derivatives and speculation. We didn't change much since 2008 - it stands to reason this would still be ongoing. It is also my belief that the recent push to "build build build" and "rezone" in SF is a result of this speculative putsch, which wants new and valuable property in SF to make good on the bubble of speculation. Since this bubble is driven by billionaires in tight markets (not poor people being given fraudulent mortgages nationwide), it's probably harder to see and pop. But I really, really wish people were paying attention to this more. We haven't learned the lesson of 2008 - things have changed, and not for the better. |
