Comment Rescue: On “Affordable” Housing
In Saul’s The New Fight In San Francisco post, percipient commenter DavidTC tells us:
Here’s the little secret that most people are ignoring: The problem isn’t ‘affordable housing’. Not really.
The problem is that a large segment of the population cannot actually afford housing. Not because it mysteriously became too expensive for no reason. (That really doesn’t make any sense, market-wise.)
It’s because large segments of the population have slowly become poorer and poorer. And the people (and banks) who *do* have the houses are not willing to sell with them. (Why should they, they have plenty of money already, and housing prices always go up, right? So better to hold on to the investment.)
Producing more houses will only ‘reduce’ housing prices relative to poor people if the houses are produced faster than the people who own massive amounts of them are buying them, and if the purchasing power of the poor didn’t get less and less each year.
Otherwise they will only slow the relative increase in prices. The poor, hell, the ‘middle class’, will never be able to buy houses at this rate.
It’s housing inflation. There is too much money chasing *expensive* houses (For no damn reason at all), which results in people *building* expensive houses. Meanwhile, while there is as much demand for cheaper houses, much less profit happens down there, so why would anyone do that? (Despite the fact it’s those houses that are *actually needed*.)
It used to be that if a large part of the market wanted housing for $X, the market would come up with that, somehow. Now, granted, it might not be *exactly* where you want it, and that’s some of the issue here…people want affordable housing *in San Francisco*, which is a bit silly. That’s understandable, and I wish the left wouldn’t get drawn into this nonsense. The poor do not have more right to live at a specific address than the rich, and if the rich outbid on a specific location, that’s how the system should work.
But people should, in general, be able to get affordable *housing close enough* to San Francisco, close enough to any random location…and they can’t. Both because what is ‘affordable’ to them is literally not enough to build a house with (Which means they are very underpaid) and because there is the *other* market for houses, the speculator market, with massive profits to be made, so why the hell would anyone build a house for anyone else?
tl;dr: Inequality often causes *very weird and almost inexplicable* problems, where markets behave in what are actually rational manners, but sure as hell do not *look* rational.
This is because the markets cannot distinguish the *life or death requirements* of the poor to have a damn $100,000 house from the idle whims of the rich to own their fifth $1.5 million dollar estate or an empty penthouse taking up a half of the floor of a Manhattan skyscraper. So when you get way too many idle rich, with epic amounts of money, markets get a little…cockeyed.
It’s hard to tell in the housing market exactly what’s going on, though. But think of it as the rich constantly…I dunno, purchasing the *entire contents* of the local grocery store once a week for $10 million dollars, so they don’t have to do shopping, and then throwing out 95% of it. And the grocery store just eventually stop dealing with anyone not willing to buy $10,000 of food at once, because why the hell *would* they? So now people can’t buy food.
And, despite me being pretty far on the left, the solution isn’t to try to legislate the market to act ‘better’…the solution is to stop the damn inequality.
(Picture is “” by hobvias sudoneighm used under a creative commons license.)