Inequality and Housing Mini-Update

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24 Responses

  1. Avatar Damon says:

    I think you failed to mention one significant exception to the mono or diverse economy-the proximity to Wash DC and the federal gov’t. There are so many federal workers, or those that derive their livelihood from Fedgov largess in the area, that I see little likelihood that housing costs in the MD and VA counties surrounding DC will ever decline, baring something cataclysmic. The costs may drop, like they did during the last crash, but, crater, like they did in Fla and AZ, I doubt.Report

  2. Avatar LeeEsq says:

    2. The article underwhelmed. Shanty-towns like those that exist in Brazil and other places never really existed in the United States because property rights were always strong enough to prevent it. We did have lots of sub-standard housing for the poor but the land was always properly owned. Real slums require some very informal property arrangements. Building codes are also strong enough to prevent too sub-standard housing.Report

  3. Avatar North says:

    #1 is nausea inducing. Trading subsidies that’re being used to build more upper end units for greater rent control? Can’t both sides lose?Report

    • Avatar Saul Degraw in reply to North says:

      Seemingly not. My guess is that you would just see more luxury condos and people buying them for investments and the working and middle classes screwed even further.

      Wonks for all their good ideas are not very good at convincing politicians and the electorate to go along.

      Notice how it is seemingly impossible to prevent sweetheart stadium deals from happening.Report

      • Avatar North in reply to Saul Degraw says:

        In terms of realpolitic you may be correct. Politicians just can’t say “tough, leave if you must” to sports teams.

        In terms of outcomes I think you’re mistaken. I dare say NY’s footprint could build more luxury condos than the market of money stashing elites could absorb. It’s not like they’re wedged against a mountain.Report

      • Avatar Saul Degraw in reply to Saul Degraw says:

        @north

        I think they could but it hasn’t happened yet. I am also cynical/doubtful that the apartments would get filled if NYC builds too much. I am cynical and suspect banks and developers will just hold on for a buyer. They might drop prices but not too much. They certainly won’t rent them out at reasonable rents.

        I present this as evidence:

        http://www.nytimes.com/2011/05/23/business/economy/23glut.html?_r=0Report

      • Avatar North in reply to Saul Degraw says:

        Saul if the banks tried to hold them that’d still depress prices and it’d suck lower tier home buyers upwards which’d depress prices on lower tier homes all the way down to the lower rungs of affordability.

        I can also tell you from first hand experience that banks have zero incentive to hold real estate in New York. Banks will lend on property in NYC even if it’s on fire- and that’s because they’re almost zero risk. You can always resell them for what the loans on them are worth or more.

        It is enormously more expensive than you probably realize to sit on an empty home. Rest assured banks do not like doing it at all. It would cost a howling fortune to do such a thing in New York City.Report

      • Avatar Troublesome Frog in reply to Saul Degraw says:

        They may hold on for the short run in hopes that demand picks up, but no business sinks a bunch of money into capital assets that don’t produce income or appreciate and then just sits on them forever. Every year that goes by, you’re losing whatever the depreciation of the asset is and whatever opportunities you could have invested in if you had the cash instead of the fallow property. “Investors hold on to empty property with no potential buyers” is just not a stable long run situation unless there’s some outside incentive (neat accounting tricks, tax breaks, etc.) for them to do it.Report

      • Avatar North in reply to Saul Degraw says:

        TF: don’t forget that banks sitting on property must pay HOA dues, upkeep, taxes, and any assessments that are levvied by HOA’s. In New York City that is an ENORMOUS potential sum of money. In cold climes you also have to pay utilities.Report

  4. Avatar j r says:

    Not sure how much #1 is an inequality story as much as it is a “real estate developers capture Albany/City Hall story.” Unless, of course, folks have just decided that every economic/political economy story from now on is to be filed under Income InequalityTM.Report

    • Avatar James K in reply to j r says:

      @j-r

      This is one of the problems with discussing inequality. There are any number of things that can cause inequality, some of which are a problem and some of which are not.Report

      • Avatar j r in reply to James K says:

        More importantly for me, I don’t care about inequality per se. I care about the objective well being of the poor. If you show me that inequality has a negative impact on the poor and middle class, I’ll care. Otherwise, it’s all signalling.Report

  5. Avatar Troublesome Frog says:

    San Francisco, New York, Los Angeles, and other major cities are more diverse in their economies but this also seems to create huge income inequality.

    Some good old fashioned rock throwing at any residents brought in by a new economic boom will fix that right up.Report

  6. Avatar Jim Heffman says:

    [2] Back when they were building BART, there was concern expressed that cheap mass transit would lead to a situation where San Francisco was a super-expensive place that was mostly businesses plus a few super-rich people, and everyone lived down the BART line on the peninsula or the East Bay.

    And, um, that’s what’s happening right now anyway.Report

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