It hurts the owners who would be receiving the wealthy newcomers' money.
It doesn't solve anything directly, but it's an attack on the prosperity of the people who are maintaining artificial restrictions on new construction.
A laissez-faire approach to both construction and rent would probably be a better option. But that's already not happening, and it's not going to happen without pressuring homeowners and landlords to stop opposing construction.
Pernicious attacks on landlords because of some perceived collusion amongst them is ugly. The landlords aren't any more to blame for the lack of supply than their tenants or the politicians.
There's obviously money to be had in leveling a block of houses and increasing the population density by 10-30 times the amount. The market demand is extremely high. Real estate developers would jump at the chance to do so if they thought they could get through all the red tape. The landlords owning those houses would certainly sell for the right price.
The entire society is abandoning free market principles in favor of social engineering. If they're not careful, they'll kill the goose that lays the golden egg.
Ruthless capitalism and fundamental human needs do not mix well.
I dunno. I don't have much trouble finding reasonably priced, nutritious, and tasty food (cooked or as ingredients) anywhere I've visited in the world. Yet food is governed by ruthless capitalism, no? Surely we wouldn't argue that farm subsidies are all that's standing in the way between people getting a decent meal and chaos?
What about...petroleum? Like it or not, it's necessary for survival today. Absolutely ruthless capitalism at play, and at the hands of a lot of people we don't like. And yet...the system works pretty ok, I think? The last major oil shock we had was in the '70s -- not bad, considering how many financial crises we've had since then.
I don't get what is your proposed alternative to "ruthless capitalism" for housing. Are you proposing "single payer housing"? Or a "guaranteed public option"? Or is the idea to have more of a "centrally planned" housing market, where the means of production^W^W^Whousing stock is owned by The People but decisions about how to employ the housing stock is made by the government?
To refresh the point that I am making: OP said "Ruthless capitalism and fundamental human needs do not mix well." The implication being, housing should not be subject to ruthless capitalism. And I use the ready and cheap availability of food and oil as a counterargument.
Your point seems to be that food and oil are beneficiaries of subsidies in the US, therefore are not "ruthless capitalism".
The US government pays $20B/yr in farm subsidies. HUD has a budget of $40B, and the mortgage interest deduction is a $110B/yr subsidy to homeowners.
If food in the US is subsidized such that it is not "ruthless capitalism", then on this basis it would seem to me that housing has been subsidized well beyond the point of "ruthless capitalism" as well. Yet OP (and you) seem to think that food is subsidized to a far greater degree than housing. I challenge you to make a concrete case that this is true, either in the US or globally in general.
Yet food is governed by ruthless capitalism, no? Surely we wouldn't argue that farm subsidies are all that's standing in the way between people getting a decent meal and chaos?
Are you in fact arguing that US farm subsidies are all that's standing in the way between people getting a decent meal and chaos?
Petroleum is literally exhibit number one of the failures of ruthless capitalism in that its negative externalities have led to the possibly irreversible destruction of our climate. This is not a good start to your argument.
> Or a "guaranteed public option"? Or is the idea to have more of a "centrally planned" housing market, where the means of production^W^W^Whousing stock is owned by The People but decisions about how to employ the housing stock is made by the government?
Basically yes. The “progressive” position on affordable housing generally calls for major government investment in housing. This is not a new idea; in the U.S., much of the big buildout of middle class housing last century was heavily subsidized by HUD.
Oh really? I didnt realize it was the petroleum companies who forced people to buy petroleum and not the fact that fossil fuel based transit and energy is technologically superior and easier than any alternative.
No it didn't. The responsibility of negative externalities due to petroleum does not belong to the oil companies. It mainly rests on the shoulders of the vast majority of people who demand oil, cheaply and widely available.
Demand for petroleum is not explained by capitalism, but rather by humanity's collective laziness
You're saying that the system we have for oil would work but for the fact that governments don't attach a price to oil's negative externalities?
This does not seem like much of an argument against a capitalist system! I would call this a win for capitalism then, and a loss for governments sidestepping their obligations to, you know, govern.
I am the first person to agree that oil companies have used their money and influence to buy favorable regulations, putting the whole world in danger. On the other hand, this again seems like a failure of government rather than a failure of capitalism. Indeed, the powerful using their influence to protect their interests is something that has happened under every economic system ever tried, no?
>> Or a "guaranteed public option"? Or is the idea to have more of a "centrally planned" housing market [...]
> Basically yes.
Are you familiar with the notion of "the projects"? I wouldn't say this turned out well for anyone...
The good news is that the major driver of cost in places like SF isn't actually the cost of building per se but instead is the cost of absurd regulations, causing it to take many years of fighting with NIMBYs just to get a permit to build anything. Solving this morass would be a huge effective subsidy to developers and would cost the public literally nothing. If you're in favor of subsidizing housing development, I hope you're in favor of starting with this?
"Capitalism" doesn't mean profit motivated action. Advocating for government restrictions on private property rights, in order to restrict supply growth and increase profits, is not capitalism. It's cronyism.
Lots of developers choose to build luxury buildings because it can take several years for the construction to be approved. We could build more starter homes like we used to, but it's hardly worth it for developers.
Maybe, but construction may not even be necessary. Shipping containers can now be easily retrofitted into stylish apartments. They can easily be stacked eight stories tall.
95% of the work can be done in overseas factories and is subject to the same globally competitive downward price pressure as every other manufactured good. Build them in Shenzen at a wholesale cost of $30,000 per pod, ship them to San Franciso for $2000, stack and install them at a cost of $8000. At 320 square feet, that's $120 per square foot. The same cost as new homes in rural Texas.
All the California legislature needs to do is pass a law zoning everywhere in the state for multi-story shipping container apartments. Then watch prices plummet. Even for single family regular construction homes, because the shipping container apartments will suck so much demand out of the market.
Prefabricated easily moveable homes are already a thing. You can go on https://factorydirectmobilehomes.com/ right now and buy a home larger than a shipping container for less than $30k.
Modular apartment buildings also exist and can be thrown together quickly and affordably.
Not to be rude, but the problem is likely going to take a bit more to solve than throwing shipping containers at it..
A shipping container is 320 square feet. Two pods can be joined into a single 740 square foot unit. That's a total cost of $80,000. Let's round to $100,000. Assume a rental yield of 12%.
$1000 a month for a brand new 740 square foot apartment in the middle of San Francisco. Plus with modern finishes that are frankly much nicer than anything you'll find in the low-end SF rental market. I'd imagine quite a lot of people would sign up.
I don't think shipping container housing is the panacea the marketing makes it out to be. The savings aren't as crazy as you might think because of all the retrofitting involved to make them pleasant for human occupancy. Square feet are a nice shorthand for certain aspects of habitability, but floor area is not the only relevant factor.
That seems like a lot of money compared to existing prefab options. For the same or less money, why not use something designed to be a dwelling to begin with?
Why do you think construction price, and not land price, is the limiting factor?
I'm in a high-demand city in Canada. The house I'm in right now is worth about $70k. The land it sits on is worth $900k. Shipping containers aren't going to help with that.
Don't know where you live, but I doubt it's more expensive land than San Francisco, where the average acre of land costs $3.2 million[1]. Taking that acre of land, save half the area for green-space and courtyard. Use half the footprint for shipping containers. Stack the containers 8 high.
You now have 242 double-pod units. The amortized land cost per unit is $13,000. Assuming a generous rental yield of 12%, the land cost only adds $130 a month to the rent. That's hardly anything for a 720 square foot apartment.
The lesson is that even San Francisco land costs are no match for the power of high-rise high-density housing.
Same ballpark ($2-3 million/acre) - and yeah, you're not wrong that if you can get approval for 250 units in an acre you can have reasonably priced housing. But the hard part in that equation is convincing whoever controls zoning to allow for it - once you do that, whether it's shipping containers or traditional construction you can have affordable housing.
The kind of people who move to San Francisco from new york or connecticut, or wherever, to get rich then immediately start complaining that San Francisco isn't like wherever it is they immigrated from.
In zoning-restricted markets like the Bay Area, housing supply is extremely price inelastic. The coefficient is at least 2.0 if not higher.
If cheap, abundant, shipping containers pull 25% of the demand out of the low-end multi-family segment, that's a 50% drop in prices. Low-end housing is a substitute good with mid-end housing for at least some of the demand.
The prime example are people who live with roommates in mid-end housing, who with cheap enough low-end prices, would get their own place. A 50% price shock to low-end multi-family at the very least would pull 10% of the demand out of the mid-end. That would lead to a 20% drop in mid-end multi-family prices.
Just the same there's at least some substitutability between mid-end multi-family and mid-to-high-end single family. A prime example are empty-nesters looking to downsize. With a 20% price shock to multi-family, that would suck at least 5% of the demand out of the single-family segment. That's a minimum of a 10% price reduction.
Hence a positive supply shock in the form of cheap, abundant shipping container homes would reduce the price of mid-high-end single family homes by at least 10%. This is all micro-econ 101.
Oh my god. When Hacker News begins literally suggesting the Stacks from Ready Player One as a solution to anything it's time for me to close my browser.
Getting back at owners for opposing new construction by instituting rent control is cutting off your nose to spite your face. Rent control adds even more people who have no financial incentive to reduce the cost of housing in their neighborhood, thus making new construction even more politically difficult.
That is only true if you assume the housing market under rent control is otherwise efficient. In reality it is painfully inefficient. Scarcity due to rent control (due to existing tenants holding on to leases) allows landlords to price gouge on everything from open units to parking to laundry.
If you play that dynamic forward you end up in a situation where everyone is overpaying compared to a more fluid market, even those longer term tenants.
It doesn't solve anything directly, but it's an attack on the prosperity of the people who are maintaining artificial restrictions on new construction.
A laissez-faire approach to both construction and rent would probably be a better option. But that's already not happening, and it's not going to happen without pressuring homeowners and landlords to stop opposing construction.