I agree on the land value tax part of what you said, though.
What would incentivize the building of low or medium income housing, when higher profits can be made from high income housing.
In the US and many other countries, the reason is definitely local government restrictions. Developers would love to build more high-rise apartments - it's very profitable to them - but they're not allowed to in many areas. In the area I'm living in, it is illegal to do it.
The incentive picture is not as you're portraying, and we can look to other industries for counter examples. If there's profit to make, the market will fill those shoes, even if there's "more profit" (which I don't agree is the case always due to volume) serving wealthier customers. Consider the market for low-margin cheap restaurants in poor areas, and the market for high-end dining in rich areas. These are both very well served markets. The market will almost always find profits where they're to be had, especially in an industry like real estate development.
it's wrong to say "nobody" wants to. the problem is that the homeowner class holds all the political power, and so there is no greater political sin than decreasing the cost of housing (or "lowering property values" in homeowner terminology). if anybody cared what non-homeowners thought, there'd be plenty of will to build more housing. as long as so many people's net worth is tied to their housing, there will be no appetite for lowering the cost of housing.
For me, instituting rent controls is towards the less acceptable end of this spectrum. If the city believes it ought to be able to set prices on an apartment, it should own that apartment first. Just my unenlightened gut feeling on this issue.
What do you mean? There are innumerable such taxes, globally. You definitely need to tax various people & businesses differently, it’s the only real solution.
Could you please reread the section of my comment that you quoted and your response to it? I said, "it would clearly be wrong to pass a law that raises taxes on one person by name," and you said, "there are innumerable such taxes, globally." You very specifically did not say that classes of people or businesses are taxed differently. You said single individuals are taxed differently. (You might not have intended to, and if not, well enough, but I set up no strawman in my comment.)
I am sure especially in those "hot" areas where prices are spiralling out of control, there is no shortage of entities with the "will" to build.
That is usually the point behind markets, rising prices give an incentive to increase supply.
One thing is for sure: as long as any private housing ownership is allowed, rich people aren't going to be the ones left high and dry.
I'm fine with short term patches to help with the acute issues, but fundamentally unless a lot of housing is built, there are going to be some people suffering in the housing market. Either it will be poor people paying a lot for housing, or it will be poor people who are unable to win lotteries to get into public housing who then cannot afford housing at all. Whether the housing is publicly or privately owned is just pushing sand around the sandbox. It just changes exactly who the winners and losers are, but not the number of people losing.
> I think where we probably fundamentally don't agree is that not all things need to be provided through a market.
I don't hold this belief. There is no fundamental disagreement on this score between us.
I live in a district that was originally working class, and is being very fastly gentrified now (yuppie myself I guess), and it just sucks that people who've lived here all their lives have to move to completely new environments because this is now an area desirable desirable for rich people.
Same with small businesses, one of my favorite bars closed down recently due to some English billionaires wanting to turn the house into higher margin living. Vice did a documentary on it called "Punks vs. Billionaires". For the people living here, who live in small flats and still pay half their income to it, these "living room" bars, where you do not have to buy to be welcome were absolutely essential. But they all get destroyed now.
Almost all new private housing is for richer people, because they are the most profitable, and lots of them move over at the moment. The state needs to step in to make sure that normal people can still live a decent life around here, too, lest we become a horror show like London.
Whenever people say stuff like this, I wonder if they’ve ever taken a moment to look around themselves and see that it is already that way. The current housing problem is also orchestrated by the same political elite…
Obviously we need more housing but until then we also need to ensure that people with normal incomes can also afford to live _in_ the City.
Even if only new luxury apartments are being built, it is more housing that takes pressure off the market. The wealthy people can move into those apartments, freeing their old less luxurious apartments for "poorer" people.
And there is no "free market" for housing here - it is very difficult to build, with lots of regulations.
And who wants to invest, when the government will seize your assets as soon as you are successful? Last year they introduced a hard cap on rents, that applied no matter how much you paid for the house you wanted to rent out, and no matter where it was located.
In two weeks, there will be a public vote to seize thousands of flats at "way below market value" (quote from the voting sheet) from corporate landlords. These are not conditions where a "free market" can do its thing.
As a matter of fact, only big companies have the means to build under such conditions, it is much too risky for smaller entities.
But then, sure, blame the evil capitalists for the issues your socialist government has created.
[1] https://www.tagesspiegel.de/berlin/wohnungsnot-leerstand-in-...
Luxury housing construction can help, but can't really fix the issue on its own because it is also a relatively inefficient and expensive method of increasing the housing supply (since each added unit has high costs.)
This problem is one that a large number of municipalities have failed to solve. It seems very difficult to get the regulatory and tax incentive structure setup just right to get sufficient affordable housing built in large urban areas.
> As a matter of fact, only big companies have the means to build under such conditions, it is much too risky for smaller entities.
I would think that governments have the scale to take on those risks as well. At some point, I think it makes sense to stop struggling to get privately build affordable housing and do it publicly.
London is the poster boy for exactly why you don't do this.
The result is builders and landlords buying up land, "delaying" (often indefinitely) building the homes to artificially drive up the prices of existing housing, or building tiny, tiny, apartments in huge hive-like blocks and towers, with insane prices.
If I could sustain my work from abroad, I would be tempted to move to Wroclaw, actually. Unfortunately I need access to cheap shipping to Czechia, which means being in Czechia or at least going there pretty often.
Resetting taxes to LVT means that improvements on land won't be disincentivized. Buying them out means they get a lot of cash and won't be so opposed to you lowering the value of their owned property.
Also, the government will be able to afford to focus on cheap housing, not what makes them the most money, since their focus isn't private profit.
The sales prices in BW and many other areas of Germany are simply ridiculous.
And they are building: a few dozen lots are being offered by the city and there’s dozens of takers per lot.
private entities will only build luxury housing in these conditions
Building codes have become so strict that it's not worthwhile to build affordable housing for private investors. Especially since the government pays incentives (or rather gives out very low interest loans) to build houses of the highest energy standard.
Why build a "cheap" house when you can build a more expensive house with subsidies that has a lot higher resale value later?
What if a kid ran into a balcony glass and broke it, hurting or killing itself? Better demand that balcony glass be reinforced (and more expensive, to a great delight of the glass factories!) just in case. Even in old folks' homes.
No one wants to be known as the child killer, so here is a new demand making the construction a bit more expensive.
Why? Because the problem is lack of political will. You can't expand housing supply if nobody wants to.
It's a piecemeal solution until we figure out something better or that society is willing to support public housing initiative. Otherwise, we would be waiting forever for entrenched political opposition to die or the situation to worsen over time.