Housing is literally exclusively a supply and demand problem. If you want rent to go down, allow more building. End of story. There's actually nothing else to it. Lower property values caused by an increase in supply will yield lower rents because rents are generally indexed to mortgage rates which are indexed to property values.

The problem is twofold.

1. Americans view property as an investment while also wanting it to be affordable. These are mutually exclusive. If you want something to be a good investment you want it to become less affordable over time.

2. Renters tend to be younger, transient, non-voters with weaker ties to the community. Landowners tend to be older, established voters with strong ties to the community. This means the city council panders to landowners, and they pass policies which prevent development.

SF is the worst for this, the city is basically unchanged since the 1970s to the absolute and sole benefit of landowners.

There are wonderful examples of cities which pretty much default-allow building housing, like Tokyo. Tokyo is incredibly affordable, downtown starter-home/condos cost $200K USD, and people in Japan do not view property as an investment but rather as somewhere to live. More like a car.

Yes, prop 13 sucks, yes a land value tax is pointing in the right direction, yes rent control isn't helping, but none of these things are a substitute for the simple unit economics of supply and demand. Anything other than permitting tons of new building is at best a band-aid over a hole in the dam.

> Housing is literally exclusively a supply and demand problem. If you want rent to go down, allow more building

Wrong. Without Land Value Tax the housing market simply doesn't clear. If there is no force to make house and land owners to sell to those who would actually utilize it better, they will sit on it forever until a huge ass corp or gov eventually buys them out for ridiculous price. As an owner you just have to wait while not paying virtually anything. Everybody else who actually needs to live, work or produce something in that location has to rely on new housing in ever increasing urban sprawling cities.

San Francisco is a prime example of this and apparently always has been as Henry George showed more than a century ago.

> If you want rent to go down, allow more building. End of story. There's actually nothing else to it.

There's actually another solution, but people don't talk about it: reduce demand. Break some windows. Have a few organized robbery parties. Hold monthly "Stabby Sundays" where you just stab people randomly. That'll drive down demand, and prices will drop like a rock.

Obviously, I'm joking. Building more houses is the only solution to the problem of "a lot of people want to live here" and "it's almost impossible to build new houses."

I would argue the solution is build a lot of affordable housing. I've noticed in Berlin, a lot of new development follows a pattern: small footprint apartments with luxury amenities. This is great if you're a landlord, and you want to maximize the revenue of your property. But it's terrible if you're just looking for a safe, clean place to live, and you end up paying double the rent because luxury units are the only thing available.

Small, luxury apartments are going to be more profitable than something more affordable. Landlords will build the most affordable thing they can, to do anything else would be irrational. If only luxury apartments are being built, that means demand for such apartments hasn't been satisfied yet. The solution is to allow MUCH more building, so that something affordable will eventually be built. Even without that, having luxury apartments prevents the renters from competing on more affordable units, so it likely does have a positive impact.

I don't know anything about Berlin, but in San Francisco, there are plenty of affordable housing requirements placed on developers of new apartment buildings. This ends up just making new construction MUCH more expensive, as a single unit has to support itself as well as some fraction of an affordable unit. The result is that it's even less profitable to build new housing.

I don't agree that the free market is the only way to allow for more affordable housing, or even a good one. To some extent, housing has inflexible demand. If you work in a city, you need to find housing at least within commuting distance of that city. Because of this, landlords can build tiny palaces, and people will pay 50% of their income or more to live there, even if they really want affordable housing. In some sense, you could argue that real-estate developers can operate like a cartel and control the supply of affordable housing.

One clear alternative to this public housing. In Vienna, for example, about a quarter of the population lives in social housing. And these are poorly maintained slums, these are nice, well-located and affordable apartments. The city/state can optimize for the actual housing needs of the city rather than for profit.

I would argue that housing, much like healthcare, can function better when managed as a public good, as there are too many perverse incentives at play when there is a profit motive involved.

Have you looked at Marzahn? Or was that too unsafe for you? :)

No I live in a beautiful Altbau in Kreuzkoln, but I wish more of the housing built would be in this style, not luxury shoe-boxes.

Encouraging businesses to move elsewhere seems like it should help reduce demand. Why not do some load balancing? There are other places that need more businesses.

Isn't that what was happening in the states the last half a year? You guys seem to have a whole respected tradition of rioting.

Climate change is going to do that to California.

I'm sad you got downvoted for that, I really enjoyed it haha.

> 1. Americans view property as an investment while also wanting it to be affordable. These are mutually exclusive. If you want something to be a good investment you want it to become less affordable over time.

This comes up a lot, but is false. It's easy to have every single home become more expensive over time while the average unit remains affordable. Let me paint a picture of how it would work in a city where you can actually build new housing at higher density.

Family buys single family home in year A for $100k. Lives there for a while, then sells in year B for $200k. The buyer is a developer, who then constructs a larger building on that same lot consisting of 4 apartments that now each sell for $100k again. Original family gains in wealth, developer makes tidy profit, new families can still buy a place to live for $100k. All numbers inflation-adjusted, you pick A and B to make whatever return you think is reasonable.

This is how density increases happened almost everywhere, until zoning laws became the new way to keep racial minorities out of white neighborhoods, roughly mid-century, after restrictive racial covenants (i.e., "when you buy this house you agree not to sell it to anyone non-white") became illegal.

Note what you don’t get out of this arrangement: a neighborhood that doesn’t change for 40 years; the ability to live in the same type of house your parents did, in the same neighborhood, for the same price. But you could have the same amount of (indoor) space they did, and outdoor space through public parks and the like.

What’s not sustainable is everyone having a suburban style detached single family home without increasing density in perpetuity. That is what leads to this contradiction.

The non-density alternative is sprawl, where prices rise in long-established neighborhoods, and outlying new developments are where you can buy new houses for less—which is what you observe all over California.

I see what you're saying, that densification and building up vertically means each unit represents a smaller proportion of the footprint of the building. This in turn means that the ground under the building becomes progressively more valuable as the average density of construction increases. This can happen either by permitting smaller units or by building taller, or both.

This feels transient to an extent no? At some point your building is tall enough and your unit as small as people are willing to accept.

But does this not apply primarily to the land underneath the building? Once you reach a certain plateau a 700sqft apartment on the 10th floor of a 50 story building isn't worth any more than an apartment on the 10th floor of a 70 story building is it?

> This feels transient to an extent no? At some point your building is tall enough and your unit as small as people are willing to accept.

Yes, there is an endgame here -- and also, truth be told, construction costs per unit start to go up once you pass 4 or 5 stories, so there's other economics at play.

But that endgame is Tokyo or midtown Manhattan, and we're not close to those levels of density basically anywhere on Earth -- and certainly not in the USA, where you can count with one finger the number of cities that might not be able to increase density because the buildings are so tall it's hard to imagine building more-attractive taller ones.

> But does this not apply primarily to the land underneath the building? Once you reach a certain plateau a 700sqft apartment on the 10th floor of a 50 story building isn't worth any more than an apartment on the 10th floor of a 70 story building is it?

This is an interesting question -- in my example, you might think it's pretty clear that a single condo in a 4-plex would be less valuable than the same land area with a single family home (even if all 4 units together are worth more). But it's not clear why a single condo in a 25-story doorman building is inherently more valuable than a similar condo in a 50-story doorman building, which is basically the only density increase that's realistic -- and in fact, maybe the larger building supports more amenities, making the individual units more expensive as density increases? Also, this level of density supports rapid transit that allows for more effective geographical distribution than the "freeways choked with traffic" sprawl we're seeing today.

That said, this is not the situation that SF (or really, any market in the USA outside of Manhattan) finds itself in. In all these cities, developers could build a larger number of less-expensive units to replace more-expensive lower-density units on a given land area (and still profit! And increase housing supply!), if they were allowed to by zoning and other (typically local) policy.

> Housing is literally exclusively a supply and demand problem. If you want rent to go down, allow more building. End of story.

Uh, no? Suburbs reaching further out, without the infrastructure to support them, are not a happy ending. High risers in the wrong places cause infrastructure overload too. Putting high risers in the right places will ruin someone's vista. Hardly unsolvable, but far from "just build more".

> Uh, no? Suburbs reaching further out, without the infrastructure to support them, are not a happy ending.

So cap how far out you can build. Generally, of course, that already exists.

> High risers in the wrong places cause infrastructure overload too.

More houses means more residents means more jobs means more tax revenue. This revenue can then be plowed into shoring up the infrastructure to fit. That's what a city is.

> Putting high risers in the right places will ruin someone's vista.

And that sucks for them, but they've no right to a view.

Yes. Because of policies that favor landowners housing in California has become primarily an investment instead of a place to live.

However it's not simple supply and demand. We have a ton of "speculative demand" which increases when prices rise and we can't reasonably stop that by building more. Yes California needs to build but even if we started Shanghai levels of growth today it's unlikely we'd get affordable cities before climate change renders the state unlivable.

We need to kill land speculation and taxes are the right way to do that.

I agree that a land tax is great policy if anyone wants to argue about fairness and outcomes. (And therefore I suspect politicians talking about land taxes will by a sign of the end times.)

But it is very easy to have cheap housing and lots of it without a land tax. If I could sign a 50 years lease with strong protections that might even be better for me than buying, and landlords would have the usual incentives to build lots of houses if there is demand.

The problem in California sounds like the landholders who are being rewarded are the ones who choose not to build more dwellings. Greedy landlords in high-demand areas would build more, because then they make more money. I'd rather rent to an apartment building of people than a wealthy middle class family. And they'd be making generational fortunes doing that.

> non-voters ... Landowners tend to be older, established voters ... city council panders to [voters]

surprise, surprise, if you don't vote and assert your civic duty and rights, you don't get included in the process to decide the direction of society.

> view property as an investment while also wanting it to be affordable. These are mutually exclusive.

they aren't - investment is supposed to increase the efficiency of production, thus increasing the availability of said product. The issue here is that land is scarce, and can be made more scarce by various laws. Building/construction costs have decreased somewhat, but the major cost is the land, and lack of density leads to lower supply.

> Anything other than permitting tons of new building is at best a band-aid over a hole in the dam.

yes, this is exactly it. However the people _want_ low density, but affordable! Both cannot be true. And thus, here there is conflict.

> they aren't - investment is supposed to increase the efficiency of production, thus increasing the availability of said product. The issue here is that land is scarce, and can be made more scarce by various laws. Building/construction costs have decreased somewhat, but the major cost is the land, and lack of density leads to lower supply.

You may have misunderstood, I'm suggesting it's not possible for something to remain perpetually affordable and be a good investment. A good investment becomes less affordable over time. A bad investment does the opposite.

For instance, nobody complains about how unaffordable AAPL shares are do they? That wouldn't make a lick of sense because that's the desired outcome. That's why you invest.

If you want housing to be affordable you don't invest, you buy. Like a car.

You can purchase a 5K sqft lot outside of Austin for $2,200 and we still have a growing homeless problem. I'd look more into providing mental health, relocation, and incentives to stay off heavy drugs.

SF has a $360 million dollar a year budget for addressing the homeless situation. I'm not sure what funding they may also get in addition from the County and State Level.

As someone who once earned money from a CA public project the wastes are gross negligence. All that money which is paid is almost certainly misappropriated.

It was upped to about $600m. Good luck getting an audit.

Okay, that is something on the order of $10,000 per person if there's a homeless population of 60,000 people. I doubt if SF has such a large homeless population.

Does this $600 million cover things like Churches sheltering the homeless, pantries, and such? Or is it in addition to the the $600 million? Something is very rotten here.

You're off by almost an order of magnitude [1]. Even if we say the official estimates are off by a huge margin and there are actually 20,000 homeless in SF, that's $30K per person, on top of however many millions are given out via begging and other programs. It's insanity.

[1] https://sfgov.org/scorecards/safety-net/homeless-population

Oh my. I feel like I will never understand California politics. Such blatant corruption and such a large vulnerable population, but also such a huge 'woke' electorate. It would take some crazy mental gymnastics to reconcile these things.

It's because CA voters are bombarded with propositions every election. At least a half dozen. People barely have time to study the issues, so they go off what makes sense from the headline or the title of the measure on the ballot. Hence being fleeced by Prop 22 and the new privacy laws, which sure looked pretty when they were sitting there in the ballot.

Prop 22 passing is what I simply can't square with the woke/liberal politics of CA. Workers' rights, whether they are cabbies, schoolteachers, government workers, construction crews, or really any other large workforce that can be unionized should be sacred to people of this persuasion. Yet, dispiritingly, it passed.

I don't blame them. I got texts from supposed "uber drivers" who really were paid actors (didn't even change their actual name for the advertisements, you can search for these actors websites yourself as I did) encouraging me to vote yes on 22. For people not keen on reading between the lines, this could have passed the sniff test.

Not only that, all these props are just propaganda to me. I see a bunch of youtube videos constantly telling me that people are gonna die if I don't vote for prop something. No information, just appeals to emotions.

Said electorate is gradually moving elsewhere due to the issues and voting for the same policies that cause the same problems.

Yes. I have lived in the Bay Area for a long time now, but never really liked the general holier-than-thou attitude (interestingly, I keep meeting older people who have never turned conservative, but have instead turned even more rabidly leftist.) It's dispiriting to realise that moving elsewhere, to Texas, say, is no guarantee of being rid of this. The same cycle will likely be repeated, perhaps in the next decade or so!

Being woke doesn’t translate to voting for good policies. You’re even more susceptible to voting for heartstrings boondoggles when you’re extra woke.

Completely agree with everything you said. But how does woke and liberal politics square with almost complete apathy to the the plight of the homeless (or of those verging on homelessness)? Almost nothing has been done to make housing affordable (even very modest, incremental bills in this regard have been shot down). If you consider the plight of agricultural workers and housing for them, you would be even more befuddled. 9.2% sales tax? Regressive tax on the poor. Gasoline tax? Again, hurts the poor the most. What am I missing here?

What you're missing is the "left" has long since transferred its affections away from poor people who are not wards of the state.

"Woke" politics magically appeared in 2008 when leftists were manning occupy wall street, which pretty much immediately degenerated into escalating virtue signalling instead of, you know, making some reforms to wall street. I'm sure that was a total coincidence.

Well, it did appear to result in the CFPB (the thing that Elizabeth Warren was heading?) and Dodd-Frank, perhaps (one can never attribute these things to some particular movement or event, I feel). I don't know if they have been defanged already.

Anyhoo, so what is the pet constituency of the left? They do appear to be falling over themselves to regularise illegal immigrants (perhaps the Latinos in Texas handing Trump a win will give them pause?), while doing nothing for legal immigrants (who power the only growth sector America has going for it, technology.) They certainly don't care much for the working poor, as you have rightly pointed out.

Related: a "stirring" defense of child labor from a Gates foundation apparatchik that got published in the left-leaning guardian:

https://www.theguardian.com/global-development/2020/nov/06/c...

Pretty sure Gates is a Democrat! Yeah, man, Child Labor laws are so 19th century.

SF does have a huge homeless population. Yes it go's to homeless shelters and other charities/programs. We sometimes forget that not all homeless are chronic homeless which is what most people associate as homeless.

Someone may be having hard times making rent and go to a church or other organization for financial help and other services. Battered women, at risk children also exist and may require a shelter with more security or women only shelters - which are funded too. There are many other services that exist that use that funding.

I didn't see waste. Actually, I would go so far as say most charities that receive federal and state funding rely on reporting to receive those grants and funding and things are very transparent. HMIS is the tech side of things that build the systems to track and report on everything.

I don't have the bandwidth right now to consider the actual numbers, but one thing worth noting - as it's often overlooked in these discussions - is that much of the money spent on homelessness is spent keeping people in housing such that they're not homeless. Dividing by the number that still remain homeless isn't the right choice of denominator for anything meaningful.

Looks like 8k or 10k as of January [1], depending on which standard you consider, though obviously that may have gone up with recent events.

[1] https://sfgov.org/scorecards/safety-net/homeless-population

SF has 10k homeless people. You can give everyone $60k a year outright right now and they would live a very comfortable life on that in the midwest.

My take is that homelessness is a nationwide issue in the US more than anywhere else in the world, and its more visible in states that have more funding to address the issue. Knowing that, 360M$ is nowhere near enough to alleviate the symptoms, and nothing compared to what needs to be invested to cure the actual root cause.

360 Million is cute, NYC spends over 3 Billion and still hasn't cracked it.

Maybe if other states could be blocked from buying one way bus tickets for their homeless citizens and instead be responsible that would help.

California buses the homeless out as much as they're bused in. It's complicated[1].

[1] https://www.theguardian.com/us-news/ng-interactive/2017/dec/...

This is an urban legend and gets claimed in every major city.

San Francisco has great weather, lots of well off people to panhandle from, and treats the homeless relatively better than its neighbors. It really is that simple.

It’s not an urban legend. Mayor Bloomberg had a well funded, well documented program in NYC. Quick duck duck go.

Many others have piled on, so the burden has shifted to you. What support do you have for this being an urban legend?

Literally one search shows sources from across the ideological spectrum covering this:

https://www.nytimes.com/2019/09/14/us/homeless-busing-seattl...

https://www.breitbart.com/politics/2019/10/27/nyc-exports-ho...

And other cities are bussing their homeless to NYC as well. How can NYC fund the entire countries homeless population?

It’s real. There are plenty of articles about it. The cities are playing hot potato with the homeless because there’s no federal program to deal with it. 80% of the homeless get back on their feet in months. It’s only 20% who are chronically homeless. It’s a mental health and drug abuse issue.

Absolutely not an urban legend.

https://www.sacbee.com/news/investigations/nevada-patient-bu...

> This is an urban legend and gets claimed in every major city.

It's not an urban legend, it's well documented and there have been lawsuits based on it.

> You can purchase a 5K sqft lot outside of Austin for $2,200 and we still have a growing homeless problem.

But not actually near Austin enough for it to be a sane place to live and commute to Austin from (especially if you depend on public transit).

If you depend on public transit in Austin, you're not going to be able to commute reliably no matter where you live.

When I lived in Austin I took the bus almost every day without issue. Austin has the best public transit in all of Texas (though that’s admittedly a low bar).

30 mins east of downtown is farmland

Not with traffic. Takes 30 mins just to get to the airport from downtown around rush hour.

Fort Worth is in the same state, almost the same population, growing just as fast, and has similar taxes. Yet Fort Worth doesn’t have the visible homeless problem that Austin and San Francisco do.

This is partly because the private security force employed by the wealthy Bass brothers forcefully (and sometimes violently) discourage the homeless from existing in downtown Fort Worth, especially the Sundance Square area.

I used to work downtown (Oil & Gas Commerce building) and became friends with the night-shift security guard, who told some really shocking stories about how the Bass goons would drag the homeless into alleys and beat them, simply for existing in downtown Ft. Worth.

If your security guard at the O&G/C Building said that, then you were being told a wild story.

There is NO WAY Sundance Security would do that. I personally know the security team members and how professionally they are trained, and I know the Basses and how they operate.

That's a horrible thing to say. And it is sad that you or anyone would actually believe it.

It's a tall tale that a late shift guard might enjoy telling, but it isn't the truth.

That might be 0.1% of the city’s land area. Not really a significant cause. If you applied that exact same factor to Austin there would still be a ton of homeless people everywhere.

The homeless tend to congregate where they're treated better.

The cities that treat the homeless better, when confronted with a new influx of homeless, work to confront the problem with more spending and social programs, and the cycle continues.

Surely that number is not right - probably lacking two digits?

Live in Austin. Yes that's BS, unless you're talking about a 5.5k sf lot out carved out of a rural farmland (which are plentiful right outside of Austin).

Odd thing to argue about that is easily provable with a Zillow search. Plenty of half acre lots that sold int he last year for ~$5K east of downtown but certainly before farm country. And capital metro goes past it all the way to the toll road.

Montopolis and McKinney are basically right before farm country (I ride my bike there all of the time). Where on earth are you seeing 5k sf lots being sold for $2k?!?!

I always hear bay area friends tell me how it's not that bad there if you have room mates. Mean while the engineers here in their 30s are collecting income from their 3rd rental property already.

I know lots of people under 30 in the Bay Area who could have much more than 3 rental properties if they wanted to. Especially outside of the bay area.

It's just that living with roommates is pretty frugal, and before the pandemic, it was a good way to save an extra $10k a year living in a more central location. Every single person I know who is a bay area SWE makes enough to afford renting a 1bed apartment in a good area, they just don't think it's worth it.

Yes if your main goal in life is to live in a large house on a large lot in a nice area without spending much, you will not find it there, but your characterization makes it seem like bay area engineers are poor which is... not true

>> makes enough to afford renting a 1bed apartment in a good area

In most cities in the US this is not the definition of wealthy or even well off. living with roommates to save 10K a year does sound like one step above poverty.

When I lived in the bay area, lots of my friends lived in shared accommodation because they actually liked living with other people. Saving money was a side effect. They usually bought a place when they got married or not long after. That's not poverty.

This is common when you're a kid out of college, but a few years go by and living with other people sucks.

Maybe I am just a frugal person, but to me, if you told me I could get a post-tax extra 10k a year switching from a 1bed apartment to a roommate situation I would always take it as long as I could find reasonable people to live with. I was pretty far from poverty when I made that decision in the SF bay area. And again, I just said they could afford a 1bed apartment, not that this was the max they could afford. You're not being charitable with interpreting my reply.

> living with roommates to save 10K a year does sound like one step above poverty.

Sounds like every college student and recent grad I've ever known.

One of the problems is that every person wants to live in some trendy neighborhood in "The City". Naturally, that means landlords can get away with charging exorbitant rents (the bulk of the inventory is under rent control, which reduces incentives for folks to move out). Because of this, you end up with ridiculous startups that rent beds out to people, folks paying $2000+ for a small room in a small house, and so on.

Meanwhile, in the majority of places that aren't the Bay Area (or urban CA), folks in professions like engineering are set up with nice suburban homes and additional properties by their mid-thirties.

I have seen many east-coast transplants move back after realizing that the madness is not going to end in the past ten years. Giving up access to the Bay Area job market, or existing social or family circles are perhaps the only thing holding folks back from getting the hell out of this area, I feel.

Not everyone wants "nice suburban homes" or being a landlord. Many people like city life. It's really that simple.

I agree. A lot of this stuff is a function of age and marital status. Older people tend to get married and have kids, and once that happens they clearly prefer the suburbs.

There are many folks who prefer city life, but I bet they would be found in much greater numbers in the 'real' cities: New York, Chicago, Los Angeles, Dallas, Houston, Washington D.C... San Francisco just feels like a slightly overgrown town with hardly any cultural amenities one would expect from a world-class city. It does have almost unparalleled access to very pretty coast, woodland, and desert all in three hours' range, though.

40% of SF residents are married. That is just slightly lower than nearby mostly suburban Sonoma County at 47%. And the median age of an SF resident is actually higher than the state median.

How many with young (K-12) children?

I don't know what exactly you consider "city life," but Los Angeles does not come anywhere close to San Francisco by my definition.

The second-class treatment of public transit over car-driving alone is awful. I don't have to worry about being stranded ANYWHERE in the bay because I didn't finish what I was doing by 5pm, unlike my last trip to Santa Monica.

How many billion dollar start ups came out of the Austin ecosystem? SF is expensive because it is productive. It’s producing wealth so prices go up. If you want to raise money, recruit talent SF adds value which is paid for with hire expenses. I would rather own equity in a high growth start up than 3 rental houses; at least from a growth perspective.

> I would rather own equity in a high growth start up than 3 rental houses; at least from a growth perspective.

But that isn't the choice, the choice is between three rental houses and a maybe 1 in 20 chance of owning equity in a high growth startup that may or may not IPO in the next 15 years.

The third option in west coast cities is probably more common than your startup option : working for an established company, possibly a FAANG, and accumulating enough wealth to retire early.

It is the choice because the ecosystem is in SF. And because of the demand of people wanting to participate in the SF ecosystem, prices are higher. It’s a gold rush dynamic. YCs are the new 49ers.

That's a false dichotomy. A startup engineer could easily afford three rental properties in most flyover states after 8 years of working from their salary alone.

It's more important and more achievable to become financially independent rather than to become outrageously wealthy. Someone with a tech job and 3 rental properties has a lot more flexibility in life than someone with a tech job and some stock/options in the same tech company they work for.

You can get out of Austin pretty quick. 30 mins in some directions can get you out of the metro area. Also, 5k sqft is 1/10 of an acre.

That said, I don’t know anything about land prices in Texas right now.

>You can get out of Austin pretty quick. 30 mins in some directions can get you out of the metro area. Also, 5k sqft is 1/10 of an acre.

During the normal busy hours in which people commute, no way. I can only hope all the construction going on along 183 will speed things up on the East side. The 290/71 junction is another nightmare during rush hour.

30 minutes won't take you from the river to North Loop. And even Redbud is slow in the opposite direction.

north-south commute? You must be new here.

Nah. I arrived when it was too easy to speed on Mopac. I left town before a north-south was totally inconceivable. Dunno if the behind-Pease-on-Parkway trick still helps. I had an east-west when I bailed.

Or that figure is the monthly mortgage payment heh

No... In most parts of the country, a tenth of an acre of dirt past the edge of town does not run $200k.

Social problems exist in degrees. San Francisco, with the most stringent land-use restrictions in the US, and largely as a consequence of that, the highest rental rates in the world, experiences the problem of homelessness to a much higher degree.

> You can purchase a 5K sqft lot outside of Austin for $2,200

How many miles away from the city though?

Quite a few, and not somewhere most would probably choose to live

Can you build on that? Is there water, electricity, gas and cable?

Yes. If you want to drive 50 miles outside the city you can get 10 acres for $50k.

50 miles is really far. You can get the exact same prices in California if you're willing to drive 50 miles outside SF / Bay Area proper.

A pet crusade of mine: California can pass a 100% (or close to that) land appreciation tax (capital gains tax on land), and that wouldn't violate Prop 13. High land appreciation taxes are essentially indistinguishable from Georgist LVT. China taxes land appreciation between 30-60%.

> High land appreciation taxes are essentially indistinguishable from Georgist LVT

A capital gains tax is not “essentially indistinguishable” from a land value tax if rents rise and the owner never sells the property. The owner gets to collect increased rents for as long as his family owns it, and even his heirs don’t have to pay the tax on transfer (since capital gains are untaxed on inheritance in America due to the step-up basis and apparently also for the Chinese Land Appreciation Tax). Kevin Erdmann has written a good series of articles on focusing on the rental value of land rather than only sales prices: “A Conceptual Starting Point for Housing Affordability and Public Policy” <https://www.mercatus.org/bridge/commentary/conceptual-starti...>

>China taxes land appreciation between 30-60%.

Doesn't the government technically own all the land in China and then just lease it to individuals? Slightly different system.

Not quite relevant, because we already tax land appreciation in the US today, it's just the capital gains tax. The capital gains tax is also low because (in theory) we want to incentivize investment in the name of growth. There's no reason why we ought to apply the same incentive in favor of investment in real asset growth. A Land Appreciation Tax is just a capital gains tax just on real estate.

In fact, LVT would be unconstitutional at the Federal level today, but a Land Appreciation Tax would not.

Why capital gains tax rate is lower

[..] The justification for a lower tax rate on capital gains relative to ordinary income is threefold: it is not indexed for inflation, it is a double tax, and it encourages present consumption over future consumption. ... Finally, a capital gains tax, like nearly all of the federal tax code, is a tax on future consumption.[..]

Yup, that too. It’s another consideration that I don’t think ought to be made for land appreciation. In fact, because it doesn’t account for inflation, for the longest holders of land, a high LAT functions like a very mild LVT in practice, while also neutralizing the attractiveness of land as an investment vehicle in general.

Most homeowners don't pay capital gains taxes when they sell their home.

https://www.investopedia.com/ask/answers/06/capitalgainhomes...

No, they are different.

Unlike LVT, an appreciation tax is a transaction tax, which can be shifted to the purchasers.

I would argue that as a transaction tax, it reduces the demand for the land. The net effect is the same: curbing land speculation.

A transaction tax does not reduce the demand. It reduces the quantity of transactions that matches the demand and supply. That means it adds friction to the reallocation of resources for more efficient use. It literally encourages hoarding. That is even worse than speculation.

Why is it that traditional capital gains tax doesn’t function as a transaction tax on equities and securities?

I am not sure what you mean by "doesn't function as a traction tax". It does create the same incentive for hoarding. I don't see any advantage of it compared with LVT.

Nobody would ever sell. They'd just use the increased value as borrowing power if they ever needed cash. Housing prices would skyrocket.

If your idea were put on the ballot it'd probably pass.

It would just become another variable in pricing land. It would actually slow down appreciation because taxes would have to be priced into every transaction. You can't borrow against collateral you don't have, so lenders would obviously calculate the appreciation taxes due if they need to foreclose.

That’s not true, because appreciation isn’t uniform in a housing market. Not everyone experienced the same value gain, so your tax bill might be hundreds of thousands of dollars while your neighbor’s tax bill might just be thousands of dollars.

This is also why capital gains taxes don’t get priced into equities and securities.

Markets don't move by magic. They move by the aggregation of thousands and millions of transactions. And yeah, sellers and lenders absolutely incorporate their taxes into prices.

I see what you are trying to say about capital gains taxes not being in the "price" of securities. But they are in aggregate because taxes inevitably have to be paid. The whole market can't go up without transactions pushing it higher. And all transactions that make profit get a portion pulled out for taxes. They quite literally act as a damper on how fast a market can move.

But would the lenders adjustments offset the huge rise in prices from people not selling?

Prop 13 already locks people in. With this law they'd have an even bigger reason to bank land forever.

I don't follow that. Suppose the tax was 100%. Real estate would effectively never appreciate, so no one would hoard it. If the tax is 0%, then it's a completely "free" market. Anything between the two just reduces the ROI.

Since a high ROI in the short term promotes speculation (and not development), it seems like this would reduce speculation and the likelihood of bubbles forming.

Of course that's a ridiculously oversimplified view. There are a zillion different ways to stack this, which is what would happen in any case. To spur development and not just buy-and-hold, the law might be written to exempt certain kinds of improvement costs.

> China taxes land appreciation between 30-60%.

If you want support for your causes in the US, you probably don’t want to compare it to a communist regime that scares the crap out of people.

Unless this was sarcastic...?

China does absolutely scare the crap out of both it’s own people and people abroad, but economically it’s clear they’ve done a lot of things right over the last 40 years. The US could learn a thing or two from the communists when it comes to Capitalism.

I don’t think they’ve done things right; they were granted access to the global trade network and had wages at pennies on the dollar from other countries. It would be almost impossible not to grow under those circumstances. Let’s see if their decisions are as effective when wages are more on parity and they are competing as peer economic levels.

> I don’t think they’ve done things right; they were granted access to the global trade network and had wages at pennies on the dollar from other countries. It would be almost impossible not to grow under those circumstances.

I’m guessing you don’t know that this was also true of America in the 18th and 19th centuries and a large part of how it became so wealthy. Especially when they kept using slaves long after it was banned elsewhere.

I think it's fair that comparing something to China doesn't win adherents, but just because China does it, doesn't mean that it's "communist". China has shopping malls — does that make shopping malls communist?

Also, a Land Appreciation Tax isn't really radically different from the status quo in the US today. Land appreciation is already taxed as capital gains, it's just that the capital gains tax is intentionally set to be low to incentivize investment. The argument here is that we should not only NOT incentivize speculation on land, we should deter it by carving out a "special" capital gains tax on land.

Depends who owns the shopping mall

Wait are you seriously suggesting we adopt a taxation policy the CCP utilizes? Did I miss something?

A policy being associated with the CCP doesn't automatically mean it's wrong or that we can't learn something from it.

This one is

Then explain why so we can actually have a productive conversation. Making bare assertions just wastes everyone’s time, including yours.

Everyone works but the empty lot.

I was not aware that Henry George was from San Francisco.

HG was born in Philadelphia (1839); arrived in San Francisco by 1860 or so, and lived in California until early 1880. He wrote "Our Land and Land Policy" and "Progress and Poverty" during that period, as well as owning and editing the SF Daily Evening Post for 4 years between those books. He then moved to NYC, where he lived until his death in 1897.

For an introduction to his ideas, see wealthandwant.com. For more contemporary references, see https://schalkenbach.org/introductionto-the-ideas-ofhenry-ge... and that entire site.

Most visible in restaurants. They came in and made a dangerous neighborhood a trendy hotspot and then got booted out because VC and law firms outbid them on rent.