June 17, 2017
How Land Use Restrictions Drive Up Housing Costs
William Kay
There is a new posting at ecofascism.com
http://www.ecofascism.com/article36.html
Researching this posting involved reading 2,000 pages of recently published land/housing literature from pro-market think-tanks like the Cato Institute, Fraser institute etc. advocates of deregulation, privatization and limited government. Such groups focus on taxation, education, energy, healthcare, etc. much less on housing.
Nevertheless certain truths they convey about housing are found nowhere else.
The consensus is that housing unaffordability results from land rationing. Increased demand doesn’t necessarily increase price. Where supply is elastic increased demand summons more supply and prices stabilize. Housing markets cursed with restrictive land-use policies respond to increased demand with increased prices. If land functioned in a proper market increased demand would summon new homes on newly developed land.
While many profit from land price inflation, it’s a policy catastrophe predicated upon the suppression of wealth creation. High land prices cause: poverty, overcrowding, unaffordable housing, restricted labour mobility, reduced discretionary spending, low homeownership rates, antiquated and ill-situated housing stock and retarded economic growth.
The consensus flounders on the question of who benefits from, and drives, restrictive land-use policies. Landlordism is the orb around which urban containment revolves; however fearsome prejudices eclipse this orb from the free-market intellectuals’ perspective. Thus the free-market movement’s principal enemies, big residential and commercial landlords, receive less than .1% of the free-market movement’s attention! They daren’t name their Devil….
A NOTE FROM TIM:
As a former real estate agent in St. Louis I can attest to this fact.
Restrictions also lead to an inevitable decline. Nobody is going to build a new house if the surrounding area is full of criminals and scumbags.
The population of the City of st. Louis (as opposed to St. Louis County, a completely separate entity) continues to sharply decline as the City tightens the building codes and whatnot. Prices are too high for what you get in the City, which is largely an old crumbling building (since they won't let builders tear down these "historic" structures) You get a better property if you go to the suburbs, so most decent people leave and the city property owners are forced to turn to Section 8, meaning those on government assistance continue to inhabit St. Louis. It's a long-term instability and it won't change any time soon. Naturally, the Democrats who have run the city for 70 years like it because it guarantees they stay in power. But at what cost in the end?
Let me offer a cople other points to ponder. Home ownership is anathema to the socialist, who wants us all to be owners of everything together. A house is a major investment, often the greatest concentration of wealth many people will have. When a person owns a house he or she has a stake in the free market and that is unacceptable. It has always been a socialist dream to get everyone into rental properties.
That can be accomplished by driving up prices. It can also be accomplished by getting everyone burned. The housing bubble was a great thing to a socialist because so many people lost so much wealth, and many turned against the banks, the brokers, and ultimately against free market capitalism.
In the process the government could crack down on the whole industry to "protect" consumers. Well, it was government policy which drove the bubble in the first place; overly low interest rates forced banks to lend seek volume in lending, and of course the Community Reinvestment Act and laws against redlining forced banks to lend to unqualified applicants. To cover potential losses they bundled the bad loans with good, and made their money accordingly. The rise in housing prices caused by the bubble allowed them to make some money before the house of cards collapsed.. It would have been insane for the lenders to NOT have done what they did; they would have collapsed years earlier.
Another point to ponder; the Agenda 21 scheme of herding the public into restricted housing zones is not about the environment or a cleaner city but about corraling the public. Keep them under the watchful eye of government, and get them used to living cheek by jowel under the Great Eye. Of course, this encourages the elimination of private transportation , another goal of the Totalitarian Left. You can't control what you can't catch! The Left has always sought to restrict the ability of people to move about. If they are forced to ride buses and trains they are forced to accept the government yoke.
These utopian communities have been tried before and found wanting; here in St. Louis they built Laclede Town, a mixed use residential community designed to hosue large numbers of people - both middle class and poor. The end result was there were nothing but poor within a couple of years and the paradise turned into a hellhole of crime and decay. It was eventually bulldozed, as was the late, unlamented Pruitt Igo, a giant high rise slice of Hades that symbolizes everything that is wrong with the logic of the Left. These new land use policies are just a newer way of doing Pruitt Igo.
In St. Louis we have the Housing Conservation districts. In them, decaying buildings are forcibly retained and a regiment of inspections and draconian zoning laws abide. The result? Much of St. Louis is decrepid and under occupied because you can get a nicer place outside of the city for just a little more if not for the same money. So, St. Louis has seen a continual decline in population as everyone seeks to get away from crime and decay. The response is to double down on this, and now almost every part of the city - including the once exempt north side - is subject to this hosuing conservation regime. It drives up prices and makes people less willing to sink money into the city.
Naturally, the stately old homes in historic neighborhoods still flourish (and can be picked up for a song sometimes) but the working class parts of the city are decayed and crime riddled. For a while St. Louis held ground by bringing in refugees from Bosnia, but they have all moved out and there is nobody to bring (except the Syrians, and a lot of city leaders pushed to make STL a refugee center) but this is a short-term solution to a long term problem.
In the end, housing is like butterfly wings; the more you touch them the harder it is to get off the ground. The endless regulation of the housing market has driven up prices, driven down quality, and will continue to do so. I do not believe it is a matter of myopia or good intentions gone bad, either. I think there is a long-term strategy at work.
After all, cattle must first be sent to the stockades before reaching the slaughter house.
There is a new posting at ecofascism.com
http://www.ecofascism.com/article36.html
Researching this posting involved reading 2,000 pages of recently published land/housing literature from pro-market think-tanks like the Cato Institute, Fraser institute etc. advocates of deregulation, privatization and limited government. Such groups focus on taxation, education, energy, healthcare, etc. much less on housing.
Nevertheless certain truths they convey about housing are found nowhere else.
The consensus is that housing unaffordability results from land rationing. Increased demand doesn’t necessarily increase price. Where supply is elastic increased demand summons more supply and prices stabilize. Housing markets cursed with restrictive land-use policies respond to increased demand with increased prices. If land functioned in a proper market increased demand would summon new homes on newly developed land.
While many profit from land price inflation, it’s a policy catastrophe predicated upon the suppression of wealth creation. High land prices cause: poverty, overcrowding, unaffordable housing, restricted labour mobility, reduced discretionary spending, low homeownership rates, antiquated and ill-situated housing stock and retarded economic growth.
The consensus flounders on the question of who benefits from, and drives, restrictive land-use policies. Landlordism is the orb around which urban containment revolves; however fearsome prejudices eclipse this orb from the free-market intellectuals’ perspective. Thus the free-market movement’s principal enemies, big residential and commercial landlords, receive less than .1% of the free-market movement’s attention! They daren’t name their Devil….
A NOTE FROM TIM:
As a former real estate agent in St. Louis I can attest to this fact.
Restrictions also lead to an inevitable decline. Nobody is going to build a new house if the surrounding area is full of criminals and scumbags.
The population of the City of st. Louis (as opposed to St. Louis County, a completely separate entity) continues to sharply decline as the City tightens the building codes and whatnot. Prices are too high for what you get in the City, which is largely an old crumbling building (since they won't let builders tear down these "historic" structures) You get a better property if you go to the suburbs, so most decent people leave and the city property owners are forced to turn to Section 8, meaning those on government assistance continue to inhabit St. Louis. It's a long-term instability and it won't change any time soon. Naturally, the Democrats who have run the city for 70 years like it because it guarantees they stay in power. But at what cost in the end?
Let me offer a cople other points to ponder. Home ownership is anathema to the socialist, who wants us all to be owners of everything together. A house is a major investment, often the greatest concentration of wealth many people will have. When a person owns a house he or she has a stake in the free market and that is unacceptable. It has always been a socialist dream to get everyone into rental properties.
That can be accomplished by driving up prices. It can also be accomplished by getting everyone burned. The housing bubble was a great thing to a socialist because so many people lost so much wealth, and many turned against the banks, the brokers, and ultimately against free market capitalism.
In the process the government could crack down on the whole industry to "protect" consumers. Well, it was government policy which drove the bubble in the first place; overly low interest rates forced banks to lend seek volume in lending, and of course the Community Reinvestment Act and laws against redlining forced banks to lend to unqualified applicants. To cover potential losses they bundled the bad loans with good, and made their money accordingly. The rise in housing prices caused by the bubble allowed them to make some money before the house of cards collapsed.. It would have been insane for the lenders to NOT have done what they did; they would have collapsed years earlier.
Another point to ponder; the Agenda 21 scheme of herding the public into restricted housing zones is not about the environment or a cleaner city but about corraling the public. Keep them under the watchful eye of government, and get them used to living cheek by jowel under the Great Eye. Of course, this encourages the elimination of private transportation , another goal of the Totalitarian Left. You can't control what you can't catch! The Left has always sought to restrict the ability of people to move about. If they are forced to ride buses and trains they are forced to accept the government yoke.
These utopian communities have been tried before and found wanting; here in St. Louis they built Laclede Town, a mixed use residential community designed to hosue large numbers of people - both middle class and poor. The end result was there were nothing but poor within a couple of years and the paradise turned into a hellhole of crime and decay. It was eventually bulldozed, as was the late, unlamented Pruitt Igo, a giant high rise slice of Hades that symbolizes everything that is wrong with the logic of the Left. These new land use policies are just a newer way of doing Pruitt Igo.
In St. Louis we have the Housing Conservation districts. In them, decaying buildings are forcibly retained and a regiment of inspections and draconian zoning laws abide. The result? Much of St. Louis is decrepid and under occupied because you can get a nicer place outside of the city for just a little more if not for the same money. So, St. Louis has seen a continual decline in population as everyone seeks to get away from crime and decay. The response is to double down on this, and now almost every part of the city - including the once exempt north side - is subject to this hosuing conservation regime. It drives up prices and makes people less willing to sink money into the city.
Naturally, the stately old homes in historic neighborhoods still flourish (and can be picked up for a song sometimes) but the working class parts of the city are decayed and crime riddled. For a while St. Louis held ground by bringing in refugees from Bosnia, but they have all moved out and there is nobody to bring (except the Syrians, and a lot of city leaders pushed to make STL a refugee center) but this is a short-term solution to a long term problem.
In the end, housing is like butterfly wings; the more you touch them the harder it is to get off the ground. The endless regulation of the housing market has driven up prices, driven down quality, and will continue to do so. I do not believe it is a matter of myopia or good intentions gone bad, either. I think there is a long-term strategy at work.
After all, cattle must first be sent to the stockades before reaching the slaughter house.
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