Market Urbanism

There absolutely is a whole area of study of the economics of housing and land use. https://en.wikipedia.org/wiki/Real_estate_economics . In the US we have chosen not to implement any of the recommended policies. There are whole blogs dedicated to the interaction between economics and the built environment https://marketurbanism.com/ My favorite novel policy for addressing land markets is the Land Value Tax. https://en.wikipedia.org/wiki/Land_value_tax

There's a lot of coverage of this kind of thing on http://marketurbanism.com/ for those interested in following it more. I think it's one of the issues facing a lot of cities in the US right now.

There are too few billionaires for this to have any significant effect. http://marketurbanism.com/2016/06/27/do-the-rich-cause-high-rents/ NYC has 5,600 ultra high net worth individuals. If each of these people has 10 flats in NYC (rather than the 3 you hypothesized), that's only 56,000 flats taken off the market. NYC has 3.4 million housing units. http://www.nycrgb.org/downloads/research/pdf_reports/16HSR.pdf The rich are just a tiny drop in a very large bucket. The more inequality we have, the fewer rich people there are and the smaller this problem becomes.

Housing is a very different matter, one primarily defined by zoning. Zoning rules in major metros prevented supply from meeting demand by preventing new construction. Zoning rules outside major metros made the average new home 2X bigger. [1] Combined these make houses dramatically more expensive even though the cost per square foot on average, adjusted for inflation, is exactly the same as it has been since the 1970s. Japan for instance has seen their M2 money supply 3X from 1990 to 2022, while the affordability of a house there hasn't decreased since 1995. [2] This is due to their federal zoning rules which permit housing construction practically everywhere. [3] The increase in price of housing is what's driving inflation, not vv imo. And for what it's worth, I think Glass-Steagall (brought in as part of the post-Great Depression reforms) did a very good job of preventing retail banks from investing in toxic garbage and its repeal in 1999 was IMO a major contributing factor to the crisis in the first place. [4] [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-pe… [2] https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI [3] https://marketurbanism.com/2019/03/19/why-is-japanese-zoning-more-libe… [4] https://www.federalreservehistory.org/essays/glass-steagall-act

Japan does real estate development with banks and loans like the US does, and interest rates are even lower so it's easier to borrow a large sum of money. Can you explain what you meant about the finance industry not allowing prices to appreciate? Their zoning is where they have obvious huge differences. The zoning categories are set at a national level and limit how restrictive local cities can be (there's 12 categories based on nuisance level). The higher zoning usually allows lower density also, so cities just start with a little extra zoning headroom that allows them to grow over time. They also automatically permit things that follow zoning. [1] In the US zoning is more local, often there are many more zone types that are much more restrictive about what they allow (it's more micromanaged and often prohibits things like mixed-use in addition to multi family). In many of the biggest markets even projects that follow zoning are usually not allowed, every project is an individual years long fight. Also in cities like Los Angeles the zoned-for capacity has actually dramatically decreased over time, even as the population grew. [2] Some of these policies may be a legacy of people deliberately not wanting it to be too affordable, because neighborhoods didn't want low-income people to move in. Of course now in many places even middle-income people can't afford it. I think, from a social justice perspective, the US policy has been an abject failure. It's increased…

So the linked article doesn't directly cite any work but does provide highlighted notes for an article, which I followed... which also doesn't actually cite anything. So I went down a rabbit hole of researching early zoning laws to evaluate a very specific claim: that the origin of zoning laws is racist. In 1917 Buchanan v Warley mades directly racist zoning illegal... which affected a single city in Kentucky and otherwise had very little effect. In addition, the very first zoning laws didn't get passed until 1910 in the US and zoning didn't exist much until the 1920s [1] so that seems to undermine that claim as an emotional, not a factual one. Everyone seems to suggest that the fix for high housing prices is to simply build more densely (more supply, same demand, therefore prices should go down right?). Yet that appears to not be the case either - as buildings get taller and more dense, costs seem to increase outside the direct supply/demand system [3] and those units which are built are typically more expensive then low density options. [1] - https://www.dartmouth.edu/~wfischel/Papers/02-03.pdf [3] - https://www.forbes.com/sites/joelkotkin/2017/08/31/high-rise-glut-affo… -- [2] - http://marketurbanism.com/2017/11/01/does-density-raise-housing-prices…

The Limits of the Singapore Housing Model https://marketurbanism.com/2020/08/05/the-limits-of-the-singapore-hous…

Minimal zoning has made Houston fantastic. Whatever mild downsides of mixed-use there has been, development, diversity, growth, opportunity, home value, and quality of life here is phenomenal. https://unherd.com/2022/04/texas-is-the-future/ https://www.governing.com/community/houston-is-the-nations-most-divers… https://marketurbanism.com/2022/03/14/houston-impressions/ https://houston.culturemap.com/news/real-estate/02-22-22-houston-first… https://youtu.be/Z0k7M_Xwx4k

This is a good summary of land use goods and bads in Houston - https://marketurbanism.com/2016/09/19/how-houston-regulates-land-use/

Fight for mixed zoning[0] and to repeal laws against boarding houses[1]. Let people solve the problem, we're only in this mess because our hands are tied by regulations that favour certain interest groups. [0] https://marketurbanism.com/2019/03/19/why-is-japanese-zoning-more-libe… [1] https://www.econlib.org/the-case-for-boarding-houses/

What about Japan, in which over 87% of rail passenger transits in three metropolitan areas are provided by private operators? https://marketurbanism.com/2010/12/22/japanese-transit-and-what-it-can…

Federal Highway subsidies. Federal Mortgage & insurance rules. Tax structures. Federal building guidelines for FHA / HUD programs. Destroying dense mixed use black neighborhoods to build highway interchanges. Federally funded highways and interstates that enable suburban living to be convenient. The built environment of the United States was a choice. "Forced" through top down "market" incentives. Not to mention oil subsidies etc From American Conservative: https://www.theamericanconservative.com/urbs/we-have-always-subsidized… https://marketurbanism.com/2017/09/05/subsidizing-suburbia-a-forgotten…

Houston doesn't have official zoning. It does have land use regulations, including off-street parking mandates, which act like de facto zoning. https://marketurbanism.com/2016/09/19/how-houston-regulates-land-use/ > Here’s the doozy: Houston mandates off-street parking for just about every form of development. This is probably the number one regulation holding back the city’s rapid densification and a major reason that car-dependence remains the norm. By requiring developers to build either parking deserts and garages, this policy encourages developers to bypass exciting infill and downtown opportunities in favor of developing in the suburbs where land is cheap.

Houston doesn't have zoning, but does have fairly stringent land-use regulations on single-family homes (min. lot size, setbacks, etc.) See: https://marketurbanism.com/2016/09/19/how-houston-regulates-land-use/ Houston is also surrounded by sparsely-populated countryside, rather than on three sides by water like SF, giving it more room to grow cheaply.

Obligatory liberal hypocrisy link: http://marketurbanism.com/2017/01/27/the-disconnect-between-liberal-as…

I commented just before you, so you probably didn't see it. But Houston mandates parking minumum, setbacks of houses, very wide roads, and long blocks. Those are all pro-sprawl. My dense, walkable neighbourhood in Montreal would be illegal in Houston. https://marketurbanism.com/2016/09/19/how-houston-regulates-land-use/

> YIMBY: Build more housing and higher density in desirable places (places next to transit, places close to work). This will raise rents in areas that are more desirable (to market rates) and lower rents overall as there is more supply in the city. Not entirely true. New units would cause rents to rise if rent has been kept artificially low by rent control, but for the last 23 years a California law has prevented vacant units from being rent controlled: Even rent-controlled units are market rate if you are trying to move to a new home. https://la.curbed.com/2018/1/12/16883276/rent-control-california-costa… But building higher density is inherently how you get lower rents when land is restricted. http://marketurbanism.com/2018/02/05/density-working-poor-outbid-rich-…

What works in Japan may supremely fail in US. This article looks promising, but then think about the disaster that is the private ISP industry or the red-light camera industry in the US. The US is bad at privatization, we tend to turn it into exploitative subsidies of crony capitalists. http://marketurbanism.com/2010/12/22/japanese-transit-and-what-it-can-…

Someone else posted this link in response to another comment, but I think it's more relevant to yours: http://marketurbanism.com/2017/01/27/the-disconnect-between-liberal-as… Here's a quote: In many metro areas, household emissions in the suburbs are roughly double those of city households.

IIRC, SNCF, the French consortium, had offered up a plan to build the HSR from SF to LA. They asked for no public funding. http://marketurbanism.com/2012/07/10/what-i-learned-today-about-sncf-a…

Enforced zoning is just one of the cited laws encouraging sprawl. Houston still has many others: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=837244 http://www.freepresshouston.com/parking-wars/ http://marketurbanism.com/2008/12/10/is-houston-really-unplanned/

This is a pretty good resource: http://marketurbanism.com/2015/11/05/how-land-use-regulations-hurt-the…

One response to this piece (not by me, to be clear): http://marketurbanism.com/2015/12/26/a-response-to-interfluidity/

one rising up 11 stories This is hardly "giant," even by the terms of low-rise SF (http://marketurbanism.com/2015/04/20/travel-update-a-tale-of-two-latin… 60+ stories qualifies as giant. In Seattle, the core downtown / First Hill / Belltown area has seen a spate of 20+ story buildings—which is precisely what's needed in high rent areas: more supply.

The problem in SV and much of SF is the unwillingess of property owners to tolerate too much upward building and their use of the private right of action granted by the California Environmental Quality Act to stymie development at the planning permission stage. Incumbent landowners try to maintain the value of their investment by limiting any increases in density. We might, for example, do better to abandon zoning and instead set up mechanisms to auction development rights, eg http://marketurbanism.com/2012/01/06/the-coase-theorem-in-land-use/

I still can't believe that they didn't jump on the French national rail operator's plan to build the thing. http://marketurbanism.com/2012/07/10/what-i-learned-today-about-sncf-a…

This question was made for me. It's not the market; obviously there's demand for higher density housing, and were it allowed, people would make more of it. It's almost always local regulations that make producing such housing difficult, or more commonly, flat out impossible. Most American residential land is zoned for exclusively large single family homes in big lots. This is true even in most major metro areas. You can read a little bit about this here in this article that compared American zoning with Japanese zoning: https://marketurbanism.com/2019/03/19/why-is-japanese-zoning-more-libe… The gist of how it got this way is: racism and classism. The racism used to be more relevant, these days the classism is. You see, if you require that to live in a neighborhood, you must be able to own or rent a property with a minimum amount of land, it's easy to keep out people of lesser economic resources. A poorer family that might be willing to live an apartment in a nicer area will find that no such housing exists there, and being unable to afford a full house, they are excluded, hence the term 'exclusionary zoning'. This also has the effect of keeping those poor kids out of local schools. So yeah, it's economic segregation that America pretends doesn't count as segregation somehow, even though the effects are plain as day.

> Conversely, as I will show, data show that local infections were negatively correlated with subway use, even when controlling for demographic data. Although this correlation study does not establish causation, it more reliably characterizes the spread of the virus than the intuitions and visual inspections that Harris relies on. https://marketurbanism.com/2020/04/19/automobiles-seeded-the-massive-c… > New York and other subways > In multiple other countries, one cannot see the transit cities in the virus infection rates. In Germany the rates in the largest cities are collectively the same as in the rest of the country. In South Korea, the infection is centered on Daegu; Seoul’s density and high transit usage are compatible with an infection rate of about 700 in a city of 9.5 million, about 1.5 orders of magnitude less per capita than in most Western countries and 2.5 orders of magnitude less than in New York. In Taipei, the MRT remains crowded, with weekday ridership in February and March down by 15-16%. In Italy, car usage is high outside a handful of very large cities like Milan, and Milan’s infection rate isn’t high by the standards of the rest of Lombardy. > However, rest-of-world evidence does not mean that the New York City Subway is safe. The Taipei MRT has mandatory mask usage and very frequent cleaning. German U- and S-Bahn networks are a lot dirtier than anything I’ve seen in Asia, but much cleaner than anything I’ve seen…

Well, not alt right... De-urbanization was spurred by housing shortages post-WW2 and federal policy seeking to stabilize the housing market. The FHA was created to insure home loans that met a long list of requirements[1], which had biases towards increasing consumption (including cars) and racial segregation. The marketing and growth of suburbia was then promoted by various business interests that would benefit from that increased consumption[2]. The new suburban lifestyle led to the rise of modern conservatism[3]. Most (~85% [3]) of the US lives in metropolitan areas, so rural lifestyles are not typical and it would be vastly less efficient if everyone lived there rather than in cities. 1: https://marketurbanism.com/2017/09/12/financing-suburbia-how-governmen… 2: https://www.washingtonpost.com/news/made-by-history/wp/2017/07/20/the-… 3: http://americanhistory.oxfordre.com/view/10.1093/acrefore/978019932917…

If you see the phrase positive externality and think to yourself, "Oh, that's good!"—then I hope I can help you see things differently. Externalities, both positive and negative, mean that somebody other than the owner of an economic resource is affected by its use. A negative externality means that somebody else bears part of the resource's cost, and a positive externality means that somebody else reaps part of its reward. In this sense, positive externalities (just like negative externalities) are a failure of property rights with perverse consequences; part of the return to the investor's investment is placed in the public domain, as economists say. So positive externalities lead to underinvestment, as rayiner noted, because the externalized benefit is captured by someone other than the investor. And indeed there is an emerging narrative that claims a combination of corruption and over-regulation contributed to the demise of America's early streetcar systems by eroding the property rights of streetcar operators to the point that they could not profitably run their lines. That is, regulation externalized the benefits of streetcars to such an extent that their owners went bankrupt and streetcars disappeared. A recent article from Vox makes the case [0]. It goes like this: (1) streetcar operators sought monopolies from cities, accepting regulation in return; then (2) regulators fixed fares at a nickel and required streetcar operators to pave and maintain the roads along…