[lotsofpulp]

Masking the true price (cost) of something is what causes the market to be inefficient, resulting in excess or insufficient supply.

If anything, rents indicate true cost compared to mortgage costs which can accurately signal for more (or less) construction needed. In the US, ownership costs are masked by subsidizing interest rates, loan repayment periods, down payment amounts, and mortgage interest tax deductions. Also, property tax limits subsidize existing owners.

There is a bit of a conflict in the mechanics of democracy with zoning laws and taxes, with existing owners having an incentive to limit supply, especially in booming markets. It’s a very tough problem to solve, but making clear the costs of all the subsidies would help.

[bobthepanda]

Homeowners don’t really care about the cost of subsidies since they benefit the most from it.

The real problem is that zoning is decided at the local level; local turnout is not very high, so it doesn’t take that many concerned homeowners to overthrow someone who is too pro-growth. And usually local municipalities are balkanized subsets of the region, who want all the upside of regional growth but none of the downside. In the most extreme example, the Bay Area, this leads to lots of permits for job expansion in small localities but not for housing, since residents need a lot more in the way of services.

It would be much more healthy to have zoning laid out at the state or regional level, but regional level governments don’t even really exist in the American context, and only a few cities in America have continued annexing suburban areas into the 21st century.

[asdff]

Power is completely fucked at the local level in a lot of places. In LA councilmen have basically unilateral power on what gets built in their district, and of the people who vote something crazy like 70% are homeowners (which only make up 30% of the population of LA iirc). So NIMBYism in LA ends up with grossly disproportionate representation that isn't going to ever change until the city charter does, probably long after the city is completely fucked from being unable to build housing supply or transit needed to sustain economic development. It's hard not to be a cynic when these people have just so much entrenched power.

[lotsofpulp]

>The real problem is that zoning is decided at the local level; local turnout is not very high, so it doesn’t take that many concerned homeowners to overthrow someone who is too pro-growth.

Hence removing the subsidies or at least making explicit the cost of subsidies, so people are incentivized to go out and vote for increases in supply. Another option is to hand over ownership to government and make everyone do land leases to make them participate in the market and therefore vote the “right” way. Not a perfect solution of course.

[bobthepanda]

The problem is that, in general, wealthy and older people are more likely to turnout and vote, and more likely to participate in lower level elections, and this class of people is well-correlated with owning homes. So homeowners have quite a lot of power even compared to renters, and they are more than happy to flex it. They don't really care that there are subsidies, because they're the primary beneficiaries.

[dsfyu404ed]

>It would be much more healthy to have zoning laid out at the state or regional level, but regional level governments don’t even really exist in the American context, and only a few cities in America have continued annexing suburban areas into the 21st century.

Not just zoning, soooooo much shit would be better done at the regional level because it would allow the urban areas to do what they think is best for them without pissing off the rural areas (or needing their approval) and vise versa.

[pytester]

>Masking the true price (cost) of something is what causes the market to be inefficient, resulting in excess or insufficient supply.

This is why the Land Value Tax is such an effective solution to this problem. It's fair, economically efficient and reduces inequality:

https://en.wikipedia.org/wiki/Land_value_tax

[apexalpha]

The true cost of something depends on the market, and the market is created and shaped by law. If the law changes to disallow foreign direct investment in residential housing and the prices drop then this IS the new true price.

Not the other way around.

[Retric]

True cost in economic terms is not the market price. It includes negative externalities that are not included in the market price. https://www.investopedia.com/terms/t/truecosteconomics.asp

[lotsofpulp]

I agree, but my intention was to point out downsides of current US home ownership mechanisms.

[TomMckenny]

The equilibrium market price will displace owner-residents because the return on a property that is bought and rented is always greater than one which is bought and lived in (ie not rented).

There was very little urban home ownership until twentieth century incentives and regulation directly changed that. Efforts made by people like FDR, William Beveridge and influenced by Keynes who would all be called vociferously denounced as socialist today.

So unless we want to return to that historic lack of home ownership, those are the kinds of policies needed. This because the eventual outcome of an uncontrolled hosing market is as problematic as an uncontrolled market is to climate.

[rayiner]

> There is a bit of a conflict in the mechanics of democracy with zoning laws and taxes

There’s really not. All extant democracies recognize private property, with certain limits for the public interest. Zoning is an extreme imposition on private property rights, of a sort that ordinarily would only be consciences in light of equally compelling public interests. Unfortunately, we had a few bad Supreme Court decisions at the height of white panic about desegregation that normalized such impositions. You’d hesitate greatly before taxing someone half the value of their property, but local governments think nothing of eliminating half the value (or more) of private property through zoning or historical preservation ordinances.

[lotsofpulp]

The extremely high prevalence of HOAs in the US indicate to me the population not only wants zoning, they want to go further than what normal zoning does. The conflict I’m talking about though is two fold: the voter voting in their own interest which is opposite to those of society as a whole, and the voter voting for gain in the short term while sacrificing the long term.

[TomMckenny]

All democracies allow personal property but this does not extend to land. In fact, all democracies have always put controls on land ownership and treatment of tenants. Even the US itself taxed land before income.

The only places with no protections were medieval societies and their resultant immense inequality.