I missed this reply, sorry.tragabigzanda wrote:Do you think that politicians block construction, or that they incentivize one sort of construction over another? And if the incentives were changed -- to better encourage more affordable housing (with a mix of condo/townhome/singe family developments), and to curb the purchase of secondary vacation/rental homes by the affluent -- couldn't that address some of the problems?4/5 wrote:I think if somebody snapped their fingers and removed the ability of politicians at all levels of government throughout the country to block housing constructiontragabigzanda wrote:i'd say it's both4/5 wrote:If only the US had anything approaching a free market in housing. If only. We would have much more housing available and it would be much more affordable. Housing shortages and high prices in the US are a result of political, not economic, forces.
I don't think politicians are usually evil or stupid in their actions regarding housing. We all know about NIMBY-ism, we see opposition to new housing construction by current residents who worry about declining property values, increased traffic congestion, the poors getting too close to them, etc. And local officials respond to the people who show up to town halls opposing that construction for the basic reason that they are voters whereas the people who would directly benefit from the new construction aren't there because they don't live there yet. There's a weird coalition on the left and right of opposition to housing for very different reasons, some selfish and others I think well-intentioned but that lack an understanding of economic incentives. I don't think positive policies explicitly intended to encourage "affordable" housing are necessary; removing the multitude of barriers and streamlining the political approval process would do far more good than a policy that requires some ratio of luxury to new "affordable" housing or something similar.
But yes, I think they incentivize expensive/luxury housing. Not intentionally, but that's the result of the long, expensive process of getting new construction approved. Take that away and you'd see middle/working class housing increase very quickly. Imagine that there was a government policy that led to the up front costs of new cars rising by $10,000 due to whatever lobbying, compliance, government fees, legal fees, etc. New cars would still get made, but they would be more expensive and it would be the lowest cost cars that would be impacted the most. That $15,000 Nissan Versa just can't be made and sold at that price anymore and is going to end up pricing out the buyers who need a budget car. That same policy makes a luxury car more expensive too but that market is better able to handle that $10,000 increase than the budget market. So Nissan is likely to divert their manufacturing away from budget models and towards luxury. I'm arguing that this is analogous to what's happened in housing.