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by zjaffee
2848 days ago
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The problem here is that land is a scarce resource that can only be redeveloped once it is put back on the market. It's not like other consumer goods where there aren't really many resource constraints. In turn, something needs to be done to drive down the incentive to speculate on land prices. Such tools can range from rent control which makes landlordism unprofitable to land value and vacancy taxes return lost value from lack of properly developed land back to the public. Lastly, there is a negative aspect to overbuilding housing, as it can be expensive to maintain real estate when people aren't actually using it. |
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But it is on the market. There are no regions where land is unavailable at any price. The price may be high, but if it is, all the more money to be made by subdividing it into twenty times as many housing units that each sell for most of the original price.
> In turn, something needs to be done to drive down the incentive to speculate on land prices.
That thing is to eliminate zoning regulations that prohibit high density construction.
> Such tools can range from rent control which makes landlordism unprofitable
Economists almost universally agree that rent control is a terrible idea.
What you end up with is ten apartment units that could be rebuilt into fifty condos, but the prerequisite to rent control functioning is that you can't kick out the tenants (and they will never want to leave), so that can never happen.
It also makes new construction in general less profitable by removing all the landlords from the purchasing market, and makes all non-rent-controlled apartments scarce and outrageously overpriced.
> land value and vacancy taxes return lost value from lack of properly developed land back to the public.
Vacancy taxes are a spectacular idea in theory. Rich people would probably find various ways to avoid them, but they seem to have almost no downside. Particularly if you have sensible exceptions like for property that was occupied for more than 24 of the last 36 months. I'm not sure why they don't exist in all urban areas.
But that only works on the vacant properties. Doesn't work when you have a bunch of occupied properties and the issue is the incumbents capturing the local government to keep rents high by preventing new construction.
> Lastly, there is a negative aspect to overbuilding housing, as it can be expensive to maintain real estate when people aren't actually using it.
This is a benefit. That cost has to be paid by the people owning but not using it, giving them the incentive to put it on the market (at any price they can get) so that someone who can use it will have it.