February 16, 2006
It's in the P-I
Today's Seattle Post-Intelligencer has this article "San Francisco housing out of reach -- Seattle should heed the warning"
"We all know we don't want to have a housing unaffordability situation as San Francisco does," said Adrienne Quinn, director of the city of Seattle's Office of Housing. "We don't want to become that."
Oddly, the article does not contain the two most important words for understanding San Francisco's unusually high housing prices: RENT CONTROL. San Francisco has rent control for tenants
and what is essentially rent control for property owners -- Proposition 13
. Independent of the overall level of taxes collected by Prop. 13, the way it apportions the tax burden is equivalent to rent control. Both forms of rent control offer perverse incentives for a dweller to remain in their current home longer they would otherwise. Thus the supply of available housing is artificially suppressed, thereby raising prices for anybody who is seeking housing. Seattle would do well to learn from this experience and in general to think about the consequences of obstructing a free market in its quest to make housing more affordable (to some).
Posted by Stefan Sharkansky at February 16, 2006
12:15 PM | Email This
1. "Seattle would do well to learn from this experience." What are the chances? Imagine 50 megatons of PC heads exploding.
As long as the poor and needy are provided for, who cares how much the middle class has to pay for rent or housing?! Stefan is just being selfish.
3. I hate it when they apply liberal solutions to 'problems' and then they create more problems from that. And so on and so on it goes with more and more problems the more they try to 'fix' it.
Correllation does not imply causation. In the early 80's auto insurance companies pushed for mandatory insurance laws claiming that that would decrease rates because the risk would be shared by more people. When they got the laws they promptly raised rates nationwide.
Another Republican betrayal of the little guy at the behest of big business. Forgive me if I look at all your proposed "solutions" with more than a grain of salt.
5. bullcrap. It's not people who stay put, but it's people who flip houses that are causing this crisis in hot markets around the country. It's created wealth that makes it possible for people to afford whatever the asking price and then some that's driven up the cost of real estate. I bought a house in Oakland, sold it 3 years later and doubled my money, came to Seattle and bought a bungalow in Wallingford for an outrageous that I could afford only because I struck it rich in real estate. The free market is creating this crisis, buddy.
The San Francisco article focused, of course, on low-income folks who had found older, unfashionable, less desireable digs to live in. Naturally these are cheaper than the structures seen in the 'architectural wonder' section of the newspapers.
The article suppressed any mention of the historical processes by which the original residents of the now-cheap digs had worked their way into better economic circumstances, and had moved away into more comfortable suburbs.
Now that the intellectual purveyors of growth 'management' (Jim Miller very accurately fingers them as urban colonists) have succeeded in politically abolishing such outward movement, those who work their way into more prosperity are forced into competition for living space with the residents of low-tech, low-glamor, low-rent properties. Surprise! Rising demand, fixed supply, and of course the price goes up.
Watch those intellectuals closely. See what part of the laws of supply and demand and free economic exchange they'll try next to abolish politically.
Is there anyone, other than a screaming commie, that doesn't understand that rent controls are horrible, pathetic, stupid ideas that do nobody any good at all?
Want to create slums? Institute rent control and wait 30 years.
8. After seeing that numbnutz LEFTIST PINHEADED KLOWN of an SF Supervisor, Gerardo Sandoval, on Hannity & Colmes the other night....this is nothin'!!
That KLOWN wanted the US to unilaterally disarm & disband the military. When pressed on who would protect SF from an invasion, Sandoval answered, "The Cops". Even Alan Colmes ripped on him big-time and pleaded with viewers not to believe that this idiot speaks for the Dems...or does he???
This is a great illustration of liberal policy / leftist worldview / structually unsound philosophy.
Liberal dogma tends to look at the trees instead of the forest. They view the problem of housing cost within the framework of entitlement. It's a forgone conclusion in their minds that rent control and Prop 13 are permanent fixtures, so then, the challenge becomes how to band-aid housing costs, while ignoring the ecomomic reality, as if that is even possible.
The same is true for how they view social security.
The word for their overall philosophy is: totaled.
Don’t worry, they're heeding SF’s mess all right . . . and they're copying it.
You know the liberal econ 101 creed. Why let economics take their more natural
and sensible course when you can interfere and screw everyone up.
I agree wholeheartedly with the the Rent Control issue. Berkeley is another city that has rent controls and it contributes to blight in a few neighborhoods.
When it comes to your statement that "Both forms of rent control offer perverse incentives for a dweller to remain in their current home longer they would otherwise" ... I take exception.
Regarding Prop 13, you need to bear in mind what was happening when this thing passed in California, is we had a slew of retirees who could not afford to pay the taxes on the homes where they expected to live out their lives. On top of this, California also has a state income tax, PLUS their sales tax is almost as high as Washingtons!
With a fixed tax rate of 1.25% (and that is misleading, because they DO add accessments)I have little sympathy for a government that has to learn to budget. Home ownership is part of the American Dream and I don't believe that when I reach the age of retirement I should be expected to be taxed out of my home.
Let's try this again: If workers can't afford to live in Seattle, they will either work elsewhere or commute in. If they leave, wages will need to be increased to attract a labor supply. The cost of goods & services will increase. This will force out consumers at the margin. This exodus will force businesses to lower prices, reducing their profits, or leave town. Their leaving town will decrease the city's quality of life. This, in combination of the flight of the marginal consumers, will lower property values, allowing workers heightened affordability to buy or rent in the city.
It's called Economics, stupid. I can't believe I live in a town whose leaders have never failed to fawn over every dumb idea that comes along. God help us all.
13. Does anybody think it might be a simple supply and demand. Start by drawing an imaginary line around the cities inwhich all building outside of will be discouraged. Lets call this the urban growth boundry. Lets take an unaccountable agency in charge of all land use, we'll call them DDES. Let's limit mobile home parks (were low income have historicaly lived). With these factors are you realy suprised!
14. California has it's faults.
15. Does anybody think it might be a simple supply and demand.
And yet, folks get mad that Paul Allen wants to build 10,000 condos on South Lake Union. Do you know what dumping 10,000 condos onto the market will do to area prices?
Wow!! - more condo's -- gloried tenements -- I can guarantee that those condos will NOT be low or even median income level housing and will infact pretty much drive up the real estate prices even more -- 10,000 condo units eh? -- that would require at least 400-500-- new Starbucks - wow! - Seattle is just SOOO sophisticated. I predict these units will range in price from $500,000++ for ground level single bedroom to the several millions -- and the morons at city hall will suck it all in -- what's the plan for the "Mercer Mess" -- oh yeh taxpayer subsidized 'streetcars' from Lake Union to downtown --
Of course there will be the typical allenesque rip off of the TAXPAYER >> supported "low income" units tossed in to show the "civic" mindedness of the whole joke --
One of the biggest reasons for the high real estate prices is that people are having to pay for real property with paper money - combined with just plain greed on the part of people who own several housing units and gov't agencies who never miss a chance to artificially drive up values and increase housing densities in order to increase tax revenues.
SF and NYC are oft-cited examples of rent-control boosting housing costs. It's not clear to me if this is causal. "Free market" is an ideology, not an action plan or prescription. I'd want to see examples roughly analogous to Seattle / King Co where housing costs weren't nutty. Compare and contrast. Does somewhere else have a pretty good idea that we can copy?
A friend from NYC once advised me that the way to create more low-income housing is to create more high-income housing. Then new stuff pushes the older stuff "down market". That sounds like a pretty reasonable market-based solution. It's esay, makes sense, appears to have the correct incentives, etc. I just don't know if it'd work until it's tried.
I firmly believe that people should have an opportunity to live near where they work. I despair that couples starting out won't be able to afford a home. (It was quite the stretch for us 15 years ago. It's so much worse now.) Or, even worse, spend their lives driving between work, daycare, and the house, instead of with their families. And I have zero problems helping people who need help, like the homeless, poor, and disabled.
That said, even though I currently support low-income housing efforts, I'm dubious of their effectiveness. I'm definitely keen to try new ideas, like my friend's suggestion.
18. The LEFTIST PINHEADS love to complicate this and every other issue beyond recognition.
Try this on for size.....
Supply and demand works!
Entry costs (Fees, permits & excessie government regulations) all impact the cost of housing (buying & renting).
Property Taxes, utilities and other related housing costs all must be considered.
It ain't that complicated.
Smaller, less intrusive government===LOWER COST OF HOUSING!
"I firmly believe that people should have an opportunity to live near where they work."
And when the political economy (meaning one controlled by cliques doing their best to abolish supply and demand by fiat) forces stratospheric pricing onto in-City real estate, this means that businesses need to move outward to suburban locations where workers can find lower-cost housing - provided the cliques don't succeed in prohibiting the willing sale of building lots to willing buyers.
And to my fellow Sierra Clubbers who desperately trumpet the 'urban sprawl' mantra, I say, look at the demographics of the USA for the last 70 years. Urban sprawl is more than balanced by the enormous migration of rural residents into cities, leaving vast acreage to undisturbed possession of its flora and fauna. That's a feature, not a bug.
What looks like "liberal complexity" is really just a complete incapacity to reason.
Of course you are correct about supply and demand, but that's because you paid attention in Econ 101.
Zappini, I appreciate your obvious sincerity, but I proffer that the solution is not building high-end or low-cost housing, it is to allow private developers to build units that serve a market need. It truly is that simple. If the high end of the market is where the dough is to be made, they'll appear. Often too many, causing the developers to lose money and the consumers to find a deal. That's the risky free market at work. The system is imperfect and displaces some people, often those at the lower income levels. But, (1) it is far less imperfect that governmental mandates and (2) it's self-correcting (and usually in a manner that is fair more quicker and more equitable than government intervention).
One more time: It's not the government's role to try and solve every problem. That is why we're America and not Sweden. (A beautiful place that is screwed up beyond belief, economically and politically. Don't believe me? Talk to a Swede.)
22. Your analysis is exactly correct, Stefan. Somebody needs to explain that to Lynn Kessler, who introduced a Prop 13-type bill in the current legislative session. Fortunately it appears to be dead.