I am going to postulate something and I would love for someone to tell me I've got it all wrong or reading too much into the ideas suggested in The NY Times.
The goal is not "affordable" housing. The goals are to institute central planning, wealth/income redistribution, and all but eliminate free markets. Once in place, affordable housing will be a desirable byproduct of this preferred way of allocating resources. The same for healthcare, the environment, labor markets etc. People can't come right out and say this (as most Americans think socialism doesn't work) so let's try to get there by making the rose by any other name...
One of the Bad Ideas did have a possibility of merit - while "relief from the cost of local laws..." doesn't impact demand, it would have a small impact on supply by increasing the return to owners, therefore making it slightly more attractive to create supply.
The problem with dense urban areas is they are too costly for everything and there’s a profile that will never thrive in that environment.
HENCE, fund a relocation organization that will get people away from a place they will never thrive to get to a place where they have a better opportunity. Plus, there are cities like Tulsa and others that will pay you an amount to move there It’s not for everyone but how many people have muttered “I gotta get out of this place”.
One thing I love about Vegas is when it comes to building structures, there are few sacred cows. They blow it up. Mirage is next. A person who chaired a committee in charge of giving rehab money to structures 100 years old or more couldn't find any.
when you look at a caterpillar it's hard to tell whether it's going to become a beautiful butterfly, on one hand, or a ninja death moth with teeth, hair, and attitude, on the other
in 1776 all we had was a caterpillar
now we've got this sort of thing in NYC, but not just there
It's everywhere
NGOs, charitable blobs, hand-wringers, grifters, nodes of "social justice" suck, and so on, all of which are getting funded by someone, somehow, all of which have some sort of legal community connection of some kind
bad ideas will not stop until the funding of people who have them dries up
Remember in NYC the primaries are owned by the party. No voting cross-over. Democrats control the city and that means progressives control the primaries since they are mostly who vote. A sad reality. It's how diBlasio got elected... Twice.
Great interview with CBC today. Kathleen and I really enjoyed this one 40-ideas great fun. We live in Manhattan, of course—some really great ideas here (NOT). But, hey, I grew up in Detroit; give them some love—won'tcha? My grandmother's old house is affordable. A second story apt in it. A brick house (as The Commodores might sing) and a covered front porch, a low-ceiling basement. Dining room, bath, two bedrooms. Back yard used to have flowers and a cherry tree. Buy this magnificent Detroit residence in the heart of a former Italian neighborhood! It can be yours for $1,000. No that's not to rent for $1,000/mo. That is the sale price, $1000, according to Zillow. Oh God I need an Exedrin - or a drink.
They can't get out of their own way. Chicago is trodding down this path. Except, there is no demand and no one wants to build anything. The latest scam is only allowing minorities and women to invest in a potential Bally's Casino. The Casino will be taxed so viciously there won't be any net profit.
“ Allow housing in backyards…Homeowners should be able to allow their adult children to erect a foldable, tiny home in their backyards with a simple permit.The Rev. R. Simone Lord Marcelle, president of the Southeast Queens Chamber of Commerce
This is really interesting as it reveals so much of the public policy mindset. Yes, allow housing in backyards. but why only “homeowners,” why only “their adult children” and why only “foldable tiny homes?” Progressives seem to need to paint a picture of some deserving unfortunate to allow simple economic advancement.”
In CA these are called accessory dwelling units (ADU). My lovely wife and I have considered one for our back yard. But, because of CA’s onerous regulation of landlords, we decided to just leave it empty. The birds, squirrels, and occasional fox seem to enjoy it.
A week or so ago I left a comment carping about how Republicans don’t really care about good social outcomes. So let me take a free shot to get on the right side of good economics. The goofiest public policy I see every day is the demand-side subsidies for “affordable” housing. Squeeze the supply, load expenses and restrictions of every kind onto developers, and then use scarce public money to build housing that is either allocated by lottery to a few lucky people or loaded up with more restrictions about who qualifies (“nurses and teachers under the age of 50 with at least two kids”). For the sake of all of us, just let builders build and the market work. Geez. This one should not be difficult.
"People like you just don't care" (or "care only about your evil rich friends") is about the lowest form of our political rhetoric, and has very little explanatory power for political views. If I have helped to heal you of this habit, I am glad.
Point taken and I apologize for having been too strident. My beef is not with you or economists or economic analysis, all of which I respect and enjoy. My beef is with a political party that caters to the wealthiest among us and, in my view, offers little benefit to the rest (other than cultural). Low tax rates at the top and labor efficiency at the bottom; rinse and repeat decade after decade. But this was the wrong forum for that expression. I enjoy your work. Best regards.
Great commentary on the ideas provided by individuals who do not realize how markets work because if they live in NYC they never encounter unfettered markets in their daily lives unless they shop on Amazon.🙂🙂🙂 As your commentary consistently indicates, it is both unsurprising and terribly disappointing that no one suggested the obvious - remonstrance=ve all possible impediments to supply and let market forces create a balance and let price discovery determine appropriate rental prices. The Girdian knot wil never be untied, it must be severed.
My daughter just moved to Bushwick, where I would never have set foot when I lived in NYC. But the place is amazing; a thriving mini economy of bodegas, junk stores and thrift shops. Mostly Hispanic. The incredible thing about NYC is not how badly it's run, but that it works at all. As always, it's because of the immigrants. By the way, I think we may know each other.
Maybe a developer can educate me on this, but why don’t the buildings saddled with the “X% of units must be affordable” requirements, just stick a bunch of extra walls between the units on the bottom few floors, and charge the market rate for a 300 square foot apartment (which I imagine will be low enough to satisfy the requirements)?
Is it problems with construction? People don’t want the “affordable units” tenants in their building? Or does this already happen?
Not a developer, but there are generally very strict regulations on how big apartments must be, distances between parts, features they must have, etc. I recall about 20 years ago some CA developers had the idea that college kids kind of like dorms, so why not build a place with ~300-500 sqft apartments with mini bathrooms and a microwave/fridge in them, with a 24 hour cafeteria and shared kitchen space, so that all the young tech workers can keep living that kind of life after school for a while? Well, they tried, but after the regulators and inspectors got through they were forced to build either 1000 sqft full apartments or nothing; apparently it is illegal to build dorm style living for adults who are not in college.
Surprisingly, Lauren Melodia has an MA in economics (but a BA in foreign service). Unsurprisingly, she works for the Roosevelt Institute, the leading employer of people who managed to get through an economics program without learning anything.
Her master's program offers courses like "Global Capitalism, Gender and Debt" and "Political Economy of the Environment". I am sure they're just delightful.
"The Master of Arts in Economics provides students with a comprehensive and foundational knowledge of applied economics. The program is distinct in that it requires students to examine the unjust and just application of economic analysis and subsequent policies. The program utilizes a heterodox/pluralist approach that focuses primarily on issues of justice such as diversity, equality and sustainability."
Housing really is simple; so is health care; so is everything else. Prof. Cochrane, as always, fleshes out why and how the simple truth is both simple and correct. Forget public policy, which is a euphemism for "let me tell you how to do it." The simple truth is voluntary exchange without interference and direction from others. Period.
First, I am now working on a piece about our residential real estate market. Yes, prices are a function of demand and supply. But measuring those with any precision is virtually impossible.
Second, hundreds, if not thousands of NYC apartments are sitting vacant because rent control makes it impossible for landlords to raise rents enough to maintain the places as interest rates have risen . This is why New York Community Bank has had such troubles (I know some folks who worked there). The problem relates to a change in rent control rules a couple of years back. My next project is to try to quantify this problem, but it's big.
"Rent control is always popular — the best way known to ruin a city short of bombing." Well, in one major sense, it is worse. Bombing reduces demand as well as supply whereas rent control only reduces supply.
I am going to postulate something and I would love for someone to tell me I've got it all wrong or reading too much into the ideas suggested in The NY Times.
The goal is not "affordable" housing. The goals are to institute central planning, wealth/income redistribution, and all but eliminate free markets. Once in place, affordable housing will be a desirable byproduct of this preferred way of allocating resources. The same for healthcare, the environment, labor markets etc. People can't come right out and say this (as most Americans think socialism doesn't work) so let's try to get there by making the rose by any other name...
yes the idea is to control the city from a city council position ( or some other agency) and gain economic power and influence (manahattan resident)
Too conspiratorial. More likely that they're just saying things that sound nice without having really put any thought into it.
One of the Bad Ideas did have a possibility of merit - while "relief from the cost of local laws..." doesn't impact demand, it would have a small impact on supply by increasing the return to owners, therefore making it slightly more attractive to create supply.
The problem with dense urban areas is they are too costly for everything and there’s a profile that will never thrive in that environment.
HENCE, fund a relocation organization that will get people away from a place they will never thrive to get to a place where they have a better opportunity. Plus, there are cities like Tulsa and others that will pay you an amount to move there It’s not for everyone but how many people have muttered “I gotta get out of this place”.
Just an idea.
Sorry. Too complicated. At your convenience, you can find my phone in the Appraisal Institute online directory.
One thing I love about Vegas is when it comes to building structures, there are few sacred cows. They blow it up. Mirage is next. A person who chaired a committee in charge of giving rehab money to structures 100 years old or more couldn't find any.
As the great Yankee philosopher Yogi Berra might have said, "Nobody lives in New York anymore because it's too crowded.
Wait, isn't this all in the UN Declaration of Human Rights already?
when you look at a caterpillar it's hard to tell whether it's going to become a beautiful butterfly, on one hand, or a ninja death moth with teeth, hair, and attitude, on the other
in 1776 all we had was a caterpillar
now we've got this sort of thing in NYC, but not just there
It's everywhere
NGOs, charitable blobs, hand-wringers, grifters, nodes of "social justice" suck, and so on, all of which are getting funded by someone, somehow, all of which have some sort of legal community connection of some kind
bad ideas will not stop until the funding of people who have them dries up
Remember in NYC the primaries are owned by the party. No voting cross-over. Democrats control the city and that means progressives control the primaries since they are mostly who vote. A sad reality. It's how diBlasio got elected... Twice.
Great interview with CBC today. Kathleen and I really enjoyed this one 40-ideas great fun. We live in Manhattan, of course—some really great ideas here (NOT). But, hey, I grew up in Detroit; give them some love—won'tcha? My grandmother's old house is affordable. A second story apt in it. A brick house (as The Commodores might sing) and a covered front porch, a low-ceiling basement. Dining room, bath, two bedrooms. Back yard used to have flowers and a cherry tree. Buy this magnificent Detroit residence in the heart of a former Italian neighborhood! It can be yours for $1,000. No that's not to rent for $1,000/mo. That is the sale price, $1000, according to Zillow. Oh God I need an Exedrin - or a drink.
They can't get out of their own way. Chicago is trodding down this path. Except, there is no demand and no one wants to build anything. The latest scam is only allowing minorities and women to invest in a potential Bally's Casino. The Casino will be taxed so viciously there won't be any net profit.
“ Allow housing in backyards…Homeowners should be able to allow their adult children to erect a foldable, tiny home in their backyards with a simple permit.The Rev. R. Simone Lord Marcelle, president of the Southeast Queens Chamber of Commerce
This is really interesting as it reveals so much of the public policy mindset. Yes, allow housing in backyards. but why only “homeowners,” why only “their adult children” and why only “foldable tiny homes?” Progressives seem to need to paint a picture of some deserving unfortunate to allow simple economic advancement.”
In CA these are called accessory dwelling units (ADU). My lovely wife and I have considered one for our back yard. But, because of CA’s onerous regulation of landlords, we decided to just leave it empty. The birds, squirrels, and occasional fox seem to enjoy it.
Well, it's California!
A week or so ago I left a comment carping about how Republicans don’t really care about good social outcomes. So let me take a free shot to get on the right side of good economics. The goofiest public policy I see every day is the demand-side subsidies for “affordable” housing. Squeeze the supply, load expenses and restrictions of every kind onto developers, and then use scarce public money to build housing that is either allocated by lottery to a few lucky people or loaded up with more restrictions about who qualifies (“nurses and teachers under the age of 50 with at least two kids”). For the sake of all of us, just let builders build and the market work. Geez. This one should not be difficult.
"People like you just don't care" (or "care only about your evil rich friends") is about the lowest form of our political rhetoric, and has very little explanatory power for political views. If I have helped to heal you of this habit, I am glad.
Point taken and I apologize for having been too strident. My beef is not with you or economists or economic analysis, all of which I respect and enjoy. My beef is with a political party that caters to the wealthiest among us and, in my view, offers little benefit to the rest (other than cultural). Low tax rates at the top and labor efficiency at the bottom; rinse and repeat decade after decade. But this was the wrong forum for that expression. I enjoy your work. Best regards.
Great commentary on the ideas provided by individuals who do not realize how markets work because if they live in NYC they never encounter unfettered markets in their daily lives unless they shop on Amazon.🙂🙂🙂 As your commentary consistently indicates, it is both unsurprising and terribly disappointing that no one suggested the obvious - remonstrance=ve all possible impediments to supply and let market forces create a balance and let price discovery determine appropriate rental prices. The Girdian knot wil never be untied, it must be severed.
My daughter just moved to Bushwick, where I would never have set foot when I lived in NYC. But the place is amazing; a thriving mini economy of bodegas, junk stores and thrift shops. Mostly Hispanic. The incredible thing about NYC is not how badly it's run, but that it works at all. As always, it's because of the immigrants. By the way, I think we may know each other.
Maybe a developer can educate me on this, but why don’t the buildings saddled with the “X% of units must be affordable” requirements, just stick a bunch of extra walls between the units on the bottom few floors, and charge the market rate for a 300 square foot apartment (which I imagine will be low enough to satisfy the requirements)?
Is it problems with construction? People don’t want the “affordable units” tenants in their building? Or does this already happen?
Not a developer, but there are generally very strict regulations on how big apartments must be, distances between parts, features they must have, etc. I recall about 20 years ago some CA developers had the idea that college kids kind of like dorms, so why not build a place with ~300-500 sqft apartments with mini bathrooms and a microwave/fridge in them, with a 24 hour cafeteria and shared kitchen space, so that all the young tech workers can keep living that kind of life after school for a while? Well, they tried, but after the regulators and inspectors got through they were forced to build either 1000 sqft full apartments or nothing; apparently it is illegal to build dorm style living for adults who are not in college.
Already done that. The problem is you can't cut it in half again and expect someone to live in 150 square feet. (Just ask King Solomon)
This is the funniest Econ article I have ever read.
Surprisingly, Lauren Melodia has an MA in economics (but a BA in foreign service). Unsurprisingly, she works for the Roosevelt Institute, the leading employer of people who managed to get through an economics program without learning anything.
Her master's program offers courses like "Global Capitalism, Gender and Debt" and "Political Economy of the Environment". I am sure they're just delightful.
"The Master of Arts in Economics provides students with a comprehensive and foundational knowledge of applied economics. The program is distinct in that it requires students to examine the unjust and just application of economic analysis and subsequent policies. The program utilizes a heterodox/pluralist approach that focuses primarily on issues of justice such as diversity, equality and sustainability."
Delightful indeed!
(lol)
Housing really is simple; so is health care; so is everything else. Prof. Cochrane, as always, fleshes out why and how the simple truth is both simple and correct. Forget public policy, which is a euphemism for "let me tell you how to do it." The simple truth is voluntary exchange without interference and direction from others. Period.
First, I am now working on a piece about our residential real estate market. Yes, prices are a function of demand and supply. But measuring those with any precision is virtually impossible.
Second, hundreds, if not thousands of NYC apartments are sitting vacant because rent control makes it impossible for landlords to raise rents enough to maintain the places as interest rates have risen . This is why New York Community Bank has had such troubles (I know some folks who worked there). The problem relates to a change in rent control rules a couple of years back. My next project is to try to quantify this problem, but it's big.
If so, then New York might experience the miracle of Buenos Aires: Eliminate rent control and rents actually go down.
"Rent control is always popular — the best way known to ruin a city short of bombing." Well, in one major sense, it is worse. Bombing reduces demand as well as supply whereas rent control only reduces supply.