[Truth To Power]

@Truth To Power does not disagree with the fact that the high rise developments on Hastings disprove the notion that high rises cannot be built along said street.

That notion is something you made up. I identified the FACT that the owners of dilapidated one- and two-story commercial structures on Hastings cannot get permission to build high-rise apartment buildings -- housing -- on their sites. The fact that a literal handful of politically connected developers can get permission to build a literal handful of high-rise apartment buildings in a city with a construction shortfall of thousands of housing units per year does not prove you right and me wrong. It proves me right and you wrong.

Clear?

Nor does he disagree with the claim that said high rises are not affordable housing.

If someone was really bag-o'-hammers stupid or breathtakingly dishonest, they would claim that because new cars are more expensive than used ones, increased production of new cars would not make used cars more plentiful and affordable.

However, I am sure you cannot be that stupid or dishonest.

This disproves the claim that a lack of affordable housing along Hastings is due to a lack of high rise development.

No, of course it doesn't.

[Truth To Power]

What free market solutions are there for this problem?

A free market would remove the subsidy to idle landowning, so landowners would have to make just compensation to the community for depriving everyone else of the opportunity to use the land. They would therefore have to either use their sites productively enough (especially by producing accommodation on residential land) to pay the compensation, yield them to someone who would, or lose money.

[Pants-of-dog]

I identified the FACT that the owners of dilapidated one- and two-story commercial structures on Hastings cannot get permission to build high-rise apartment buildings -- housing -- on their sites. The fact that a literal handful of politically connected developers can get permission to build a literal handful of high-rise apartment buildings in a city with a construction shortfall of thousands of housing units per year does not prove you right and me wrong.

This seems like a very weak argument for zoning laws being a cause of high housing costs.

[Truth To Power]

OK, but at some point someone will buy it to build something.

At which point the user meets the owner's extortion demand just for his permission to use the site, and the owner pockets the subsidy for doing nothing.

Speculation/aiming for capital gains can only get you so far.

In the case of land, it gets you quite far: the majority of millionaires have obtained the bulk of their net worth by owning land.

[Truth To Power]

Do you have an example?

California before Proposition 13.

[Truth To Power]

This seems like a very weak argument for zoning laws being a cause of high housing costs.

It seems that way to you, because you are committed to not knowing the facts.

[Pants-of-dog]

California before Proposition 13.

Do you have evidence that this proposition 13 significantly raised housing costs for low income people?

[wat0n]

You are trying to evade the fact that the landowner charges the user full market value just for permission to use the land. The fact that the landowner qua landowner does nothing and contributes nothing doesn't mean that nobody else does, either. The subsidy resides in the fact that the landowner is legally privileged to charge the user for the desirable services and infrastructure the user's own taxes just paid for.

It is certain that you will now try to contrive some other means to prevent yourself from knowing these facts.

The landowner charges the user for - even if it is redundant - using the land but it's not independent of how the land is being used. There are clear differences between e.g. commercial and residential uses and also based on improvements made on the land. This is where zoning definitely plays a role.

No, they are merely aware, as you are not, that they will have to pay a landowner full market value for permission to work where there are employers prepared to pay decent wages, just as those employers have to pay landowners full market value for permission to hire the local workers.

Because economic opportunity is lacking in low-rent locations.

True but only to an extent. It was truer before the pandemic, but keep in mind a substantial share of US workers work remotely, at least part-time, now.

https://mitsloan.mit.edu/ideas-made-to- ... g-remotely

This possibility means economic opportunities are less tied to location than they used to be - I myself have plenty of colleagues who work remotely while living in different states (in both coasts at that).

Having said that, this does help to explain part of the problem - but now that remote work is more feasible, will this help alleviate housing? This is an interesting question that has yet to be answered as the change to remote work is still ongoing.

At which point the user meets the owner's extortion demand just for his permission to use the site, and the owner pockets the subsidy for doing nothing.

The owner does need to do something - it's not the same to rent a commercial and residential property and in both cases rent will also depend on amenities, size, quality, etc.

In the case of land, it gets you quite far: the majority of millionaires have obtained the bulk of their net worth by owning land.

And making the correct improvements on it, too. That's one of the risks the landowner faces.

[Truth To Power]

Do you have evidence that this proposition 13 significantly raised housing costs for low income people?

It raised housing costs for everyone but homeowners, which low-income people tend not to be.

[Pants-of-dog]

@Truth To Power

Do you have evidence?

[Truth To Power]

The landowner charges the user for - even if it is redundant - using the land

False. The landowner charges for not depriving the tenant of the opportunity to use the land, whether or not the tenant actually uses it, or how.

but it's not independent of how the land is being used.

Yes it is. The tenant pays for permission however he uses it, and whether he uses the land or not.

There are clear differences between e.g. commercial and residential uses and also based on improvements made on the land.

Improvements are typically required to use land to its potential, but they are not necessarily provided by the landowner. The term, "rack rent" originally referred to rent charged for use of improvements (like a hay rack) that the tenant himself had made.

This is where zoning definitely plays a role.

Zoning defines how the land may be used, and usually what kind of improvements are permitted. In that sense, it limits the opportunity the user has access to. The rationale for zoning is that infrastructure and geography limit the uses that will be appropriate for the community on a given site; but in reality, most zoning has very little relation to appropriate use, and is mostly about granting economically valuable permissions to politically connected landowners and denying them to the unconnected ones. It just transfers land value from less favored locations to more favored ones.

True but only to an extent.

Like everything else that is true.

It was truer before the pandemic, but keep in mind a substantial share of US workers work remotely, at least part-time, now.
This possibility means economic opportunities are less tied to location than they used to be - I myself have plenty of colleagues who work remotely while living in different states (in both coasts at that).

Location-dependent opportunity includes proximity not only to employers' premises but to shopping and other consumption opportunities, health care and education, government services, even social opportunities. The landowner is privileged to charge users for permission to access all such opportunities, but does not provide any of them. That makes the land title a subsidy.

Having said that, this does help to explain part of the problem - but now that remote work is more feasible, will this help alleviate housing?

Very little. Almost all work still requires the worker's physical presence, and even if they don't have to live near their workplace, almost everyone wants to live where they have ready access to the kind of non-work opportunities I listed above.

The owner does need to do something

Sign the lease and collect the rent. That's all. He does not have to make any contribution.

- it's not the same to rent a commercial and residential property and in both cases rent will also depend on amenities, size, quality, etc.

Those are dependent on improvements, which the landowner qua landowner does not provide. The user does.

And making the correct improvements on it, too. That's one of the risks the landowner faces.

No. The landowner charges the user for permission to make improvements. The fact that the same person might fill both roles does not alter the fact that the landowner qua landowner gets a subsidy equal to the unimproved rental value of the location.

[Truth To Power]

@Truth To Power

Do you have evidence?

Of course. There's tons of it, such as:
https://www.kqed.org/news/11700683/too- ... g-shortage
https://marginalrevolution.com/marginal ... risis.html
https://www.bloomberg.com/graphics/2019 ... ng-crisis/
https://www.ocregister.com/2017/03/29/a ... pert-says/
https://calmatters.org/california-divid ... hborhoods/
https://www.kalw.org/show/crosscurrents ... ing-crisis

You just blankly refuse to know any of it.

[Pants-of-dog]

@Truth To Power

Let us start with the first link.

Please quote the relevant text so that everyone here can see it and they can no longer “blankly refuse to know any of it.”

[Truth To Power]

@Truth To Power

Let us start with the first link.

Please quote the relevant text so that everyone here can see it and they can no longer “blankly refuse to know any of it.”

Providing the relevant text will not stop you or anyone else here from blankly refusing to know any of the facts. Watch:

"After Proposition 13, all California properties — even vacant ones — are taxed based on the original purchase price, not their current value. That makes it relatively inexpensive to hold onto land, even when the market is hot.
“In other markets where Prop. 13 policies aren’t in effect, the taxes on that property would continue to go up with land value,” says Ralph McLaughlin, a housing economist with Veritas Urbis Economics and former chief economist for the real estate website Trulia. “And that incentivizes development, it increases holding costs, it makes it more expensive to hold it vacant.”
...
"Proposition 13 changed how California cities get their money. Before the initiative passed, 90 percent of local government revenue came from property taxes. Today, that share is less than two-thirds — and has been replaced by things like sales taxes and hotel taxes, according to the Legislative Analyst’s Office.
Big-box stores also don’t generate the need for expensive things like schools and libraries and parks that accompany new housing. So when a city is deciding between allowing a Target or a new apartment building, the math isn’t so friendly to the apartment building.
“If it’s gonna cost the city ‘X’ amount of tax dollars over time to provide services for the [apartment building], versus the tax revenue that it generates, Target is gonna win, hands down,” says McLaughlin, the housing economist."
...
"Before Proposition 13, a good deal of that infrastructure was paid for with property taxes. After Proposition 13, and increasingly in recent years, cities have levied high “impact” fees on developers to pay for those costs.
Oakland currently levies a fee of at least $10,000 per unit, up to a max of $28,000 per unit. That money goes toward a fund for subsidized, below-market-rate housing. Critics of impact fees say those costs get passed onto renters or future homeowners, and only inflate housing prices."
...
"The city of Irvine in Orange County, on average, charges more than $80,000 in impact fees on new single-family homes, according to an analysis by the UC Berkeley Terner Center for Housing Innovation. The city of Fremont, in the Bay Area, charges more than $140,000 per home."

See? Even when I quote them, you still refuse to know the facts.

[Pants-of-dog]

@Truth To Power

So the hypothesis is that Proposition 13 incentivizes holding vacant land, thereby reducing land supply, thereby increasing housing prices.

And the facts, as outlined in the article, are consistent with this hypothesis, so we know that this hypothesis is not contradicted by observation.

And as shown by the text you quoted, other incentives exist to limit housing, such as the increased infrastructure investment for municipalities.

And as noted by the text you quoted, these other incentives can work with the incentive you mention to bolster these other incentives.

This is why it is difficult to determine if this particular Proposition 13 is a significant factor.

Does Vancouver have a similar tax? It would be interesting to compare the Bay Area and Vancouver and see if both had significant price increases even though only one had this tax freeze.

[wat0n]

False. The landowner charges for not depriving the tenant of the opportunity to use the land, whether or not the tenant actually uses it, or how.

Yes it is. The tenant pays for permission however he uses it, and whether he uses the land or not.

And he can only use for the purposes defined by the landowner and the law. As such, uses do affect land values.

Improvements are typically required to use land to its potential, but they are not necessarily provided by the landowner. The term, "rack rent" originally referred to rent charged for use of improvements (like a hay rack) that the tenant himself had made.

Indeed, it depends on the project. But some landowners do invest in improvements.

Zoning defines how the land may be used, and usually what kind of improvements are permitted. In that sense, it limits the opportunity the user has access to. The rationale for zoning is that infrastructure and geography limit the uses that will be appropriate for the community on a given site; but in reality, most zoning has very little relation to appropriate use, and is mostly about granting economically valuable permissions to politically connected landowners and denying them to the unconnected ones. It just transfers land value from less favored locations to more favored ones.

Indeed, that's why these laws need to be reformed. And by extension, zoning does affect land values, it's not unheard for land prices pretty much immediately being affected by zoning changes (itself interesting since the prices of land assets are not as flexible as e.g. the prices of financial assets).

Like everything else that is true.

Location-dependent opportunity includes proximity not only to employers' premises but to shopping and other consumption opportunities, health care and education, government services, even social opportunities. The landowner is privileged to charge users for permission to access all such opportunities, but does not provide any of them. That makes the land title a subsidy.

Very little. Almost all work still requires the worker's physical presence, and even if they don't have to live near their workplace, almost everyone wants to live where they have ready access to the kind of non-work opportunities I listed above.

This is still changing, but I think it's clear we're moving to a new equilibrium, at least in the US. Some of the change on the mode of work seems to be permanent, many are just not going to work in person anymore and this should affect home prices down the line at some point - several years from now of course.

Sign the lease and collect the rent. That's all. He does not have to make any contribution.

Those are dependent on improvements, which the landowner qua landowner does not provide. The user does.

No. The landowner charges the user for permission to make improvements. The fact that the same person might fill both roles does not alter the fact that the landowner qua landowner gets a subsidy equal to the unimproved rental value of the location.

Not always. If the landowner takes the risk to do improvements, he of course does it for a profit and takes the risk.

It depends on the case, really.

[Truth To Power]

And as shown by the text you quoted, other incentives exist to limit housing, such as the increased infrastructure investment for municipalities.

Most infrastructure investment increases aggregate land value by more than its cost. If municipalities were able to recover the increased land value that such infrastructure investment creates to pay for the infrastructure, they would have an incentive to invest in such infrastructure. Prop 13 legally denies CA municipalities that option.

This is why it is difficult to determine if this particular Proposition 13 is a significant factor.

Not if you can find a willingness to know facts.

Does Vancouver have a similar tax? It would be interesting to compare the Bay Area and Vancouver and see if both had significant price increases even though only one had this tax freeze.

Vancouver does not have a law equivalent to Proposition 13. It has merely acted as if it had something similar, relentlessly reducing (especially residential) property tax rates. Proposition 13 does have three provisions that Vancouver has not emulated:
1. The immediate halving of property tax rates when it passed;
2. The ceiling on assessment increases until a property is sold or otherwise transferred; and
3. The classification of property by use for tax purposes (Vancouver also has a classification system, but it is different, and unlike Proposition 13, reduces the property tax rate more on residential property than other types, thus increasing housing prices more than that of other real estate).

[Truth To Power]

And he can only use for the purposes defined by the landowner and the law. As such, uses do affect land values.

Permitted uses do. Not actual uses.

Indeed, it depends on the project. But some landowners do invest in improvements.

Of course. Just as some priests molest children. But being a priest is quite different from being a child molester, just as being a landowner is quite different from investing in improvements. The fact that there are obvious practical reasons why a landowner is more likely to invest in improvements on land he owns does not mean owning land is the same as investing in improvements.

Indeed, that's why these laws need to be reformed. And by extension, zoning does affect land values, it's not unheard for land prices pretty much immediately being affected by zoning changes (itself interesting since the prices of land assets are not as flexible as e.g. the prices of financial assets).

Yes, the major reason for zoning changes is to confer increased land value on politically favored landowners.

This is still changing, but I think it's clear we're moving to a new equilibrium, at least in the US. Some of the change on the mode of work seems to be permanent, many are just not going to work in person anymore and this should affect home prices down the line at some point - several years from now of course.

It's not having any discernible effect on urban home prices, but has had a large impact on prices in certain areas that were formerly mostly recreational/retirement communities in rural areas.

If the landowner takes the risk to do improvements, he of course does it for a profit and takes the risk.

But he does that in his economic role as land user, not landowner. They are not the same thing. See the priest, above.

[wat0n]

Permitted uses do. Not actual uses.

Sure, yet illegal uses are costlier than they'd be if they were legal, also affecting land prices.

Of course. Just as some priests molest children. But being a priest is quite different from being a child molester, just as being a landowner is quite different from investing in improvements. The fact that there are obvious practical reasons why a landowner is more likely to invest in improvements on land he owns does not mean owning land is the same as investing in improvements.

Certainly not - but because investing in improvements can be profitable, this mere possibility affects land prices. Do you agree?

Yes, the major reason for zoning changes is to confer increased land value on politically favored landowners.

That is one reason but there are others. E.g. residents may want to change zoning, and even vote for it, because they want to have greater control on who works or lives in the area by defining how land can be used.

It's not having any discernible effect on urban home prices, but has had a large impact on prices in certain areas that were formerly mostly recreational/retirement communities in rural areas.

Indeed, although it could be alleviating the urban situation. That is, urban prices would be even higher if the shift to remote work wasn't happen.

There is an interesting paper on the role of location on earnings, this last bolded part of its abstract is easily the most interesting part of it all:

We use data from the Longitudinal Employer-Household Dynamics program to study the causal effects of location on earnings. Starting from a model with employer and employee fixed effects, we estimate the average earnings premiums associated with jobs in different commuting zones (CZs) and different CZ-industry pairs. About half of the variation in mean wages across CZs is attributable to differences in worker ability (as measured by their fixed effects); the other half is attributable to place effects. We show that the place effects from a richly specified cross sectional wage model overstate the causal effects of place (due to unobserved worker ability), while those from a model that simply adds person fixed effects understate the causal effects (due to unobserved heterogeneity in the premiums paid by different firms in the same CZ). Local industry agglomerations are associated with higher wages, but overall differences in industry composition and in CZ-specific returns to industries explain only a small fraction of average place effects. Estimating separate place effects for college and non-college workers, we find that the college wage gap is bigger in larger and higher-wage places, but that two-thirds of this variation is attributable to differences in the relative skills of the two groups in different places. Most of the remaining variation reflects the enhanced sorting of more educated workers to higher-paying industries in larger and higher-wage CZs. Finally, we find that local housing costs at least fully offset local pay premiums, implying that workers who move to larger CZs have no higher net-of-housing consumption.

Their data ends in 2018, so this was the pre-COVID situation. It's kind of fucked up, if you ask me, that housing takes pretty much take all the local pay premiums and that consumption sans housing is basically the same regardless of location for the same level of educational attainment. Of course "housing consumption" here includes land values and also more than that - such as improvements, access to amenities, etc which certainly affect quality of life.

But he does that in his economic role as land user, not landowner. They are not the same thing. See the priest, above.

It doesn't matter that much, because it will affect the market price of land either way. That is, a speculative landowner - one who just wants to rent or outright sell without making improvements - will most definitely be affected by the decision of other landowners to improve or not improve their land.

[Pants-of-dog]

Most infrastructure investment increases aggregate land value by more than its cost. If municipalities were able to recover the increased land value that such infrastructure investment creates to pay for the infrastructure, they would have an incentive to invest in such infrastructure. Prop 13 legally denies CA municipalities that option.

The text you quoted mentioned a few other ways that municipalities generate money from property, such as fees.

Vancouver does not have a law equivalent to Proposition 13. It has merely acted as if it had something similar, relentlessly reducing (especially residential) property tax rates. Proposition 13 does have three provisions that Vancouver has not emulated:
1. The immediate halving of property tax rates when it passed;
2. The ceiling on assessment increases until a property is sold or otherwise transferred; and
3. The classification of property by use for tax purposes (Vancouver also has a classification system, but it is different, and unlike Proposition 13, reduces the property tax rate more on residential property than other types, thus increasing housing prices more than that of other real estate).

Then it seems that property tax is even less significant as a cause of the significant increase in housing prices in Vancouver.