[ajmurmann]

I'm totally with you on the market needing "corrected" incentives in some cases to get us what we want/need as a society. A example to me are the broken ISP market because of physical constraints. Another different category of cases are issues were the prisoner's dilemma applies where we have negative externalities like pollution. I don't see how that's the case here. I believe industrial needs to be its own, separated zone because of the pollution. Commercial and residential can be happily mixed though and if the market is telling us to build a giant apartment building somewhere because people want to live there and pay for it then why would you second guess that? Turning an entire city into hotels would of course never happen because there is no demand for that. Why not allow building of hotels everywhere though?

[jessedhillon]

The purpose of zoning is to segregate property bidders into classes by purpose, or willingness to pay. Otherwise, you have someone whose purpose with the property is to generate $100k/mo, bidding on the same property as someone whose purpose is simply to live with no intention to generate profit. It serves society to set aside a zone of property wherein people with residential purpose only can bid on the same property.

Likewise, it serves society to have bidders who are offering a long-term lease at a monthly price for an apartment to not have to compete against a stream of tourists who are spending out of their leisure budget. If a city needs new hotels, it can zone and permit the construction of them. The answer isn't to force renters to enter bidding wars against vacationers to discover the "true" price.

[troydavis]

At least in the US, most housing zoning failures aren’t residential vs. other uses, they’re about protecting certain types of residential housing (generally detached single family houses) at the expense of other residential housing. Here’s more: https://www.nytimes.com/2018/08/21/upshot/home-ownership-nim...

[stale2002]

If someone thinks they can generate 100k/month I absolutely want that individual to win the auction on that property.

That is a lot of extra tax revenue which would be generated and able to be spent on the population.

[jessedhillon]

I agree, in a single instance it sounds like the obvious thing to do. But it's not obvious that the cumulative effect of putting commercial and residential bidders against each other at a city scale will lead to desirable outcomes for society. In fact, what's obvious is that it won't.

[ajmurmann]

It's not obvious at all that it won't. There is only that much demand for commercial space.

[jessedhillon]

You know, a lot has been written about the effect of cryptocurrency mining on GPU prices.

If you were a gamer entering the market in 2018, you would've seen prices several hundred dollars in excess of what your counterpart from six months earlier paid. Games hadn't gotten, say, 50% better. Performance hadn't either. You and your peer are going to have roughly identical experiences. The cost of your gaming experience is going up due to reasons uncorrelated with the value delivered to you.

The point is that pure market forces are volatile and unpredictable, in the extreme. It's up to you if you want to make the case that housing, being a commodity essential to the proper functioning of a society (unlike gaming), doesn't require at least some protection from pure demand forces. IMO most people would find it obvious that this would be undesirable.