> Why should housing not be to governed by market forces?
The limit is transportation/infrastructure. not buildings. You need NYC's roads, schools, and subway etc before block after block of 40+ floor building are viable. It'a very much a tragedy of the commons situation as a single high rise is fine but 100 of them are not.
Unfortunately, most areas are regulated at the local level which while better than a free for all creates massive problems.
I would posit that the best solution is state level control + an infrastructure tax on new development. Charging ~30k per SFH might seem to make things more expensive but by allowing new entry to pay their own way let market forces work while adjusting for externalities.
> I would posit that the best solution is state level control + an infrastructure tax on new development. Charging ~30k per SFH might seem to make things more expensive but by allowing new entry to pay their own way let market forces work while adjusting for externalities.
Why should the new pay the burden of the new and the old together?
The old has already paid for a lot of infrastructure or their would be no roads etc. New people need both new and old infrastructure their property taxes offset the use of old infrastructure, but the added cost of new should be paid for by the people who need it.
The idea that the current residents have a right to extract a tax on the future ones is the basic motivation of nimbysm. Then come zoning controls, come construction controls, all those that make the new buildings more expensive to make, and the old ones more and more increasing in value, even at the decay of services or population.
This tax is not going to increase the cost of a new home 1:1 as markets still exist. It's going to reduce the profit of a new home construction and thus the value of existing land. As the tax is very much levied on the person building the house not the person buying the house the person selling land is also going to take a hair cut.
Really I am saying local governments lose the ability to limit growth.
The ideal amount of growth is where the total cost of new construction balances the demand for new construction. I am simply including externalities as part of that cost. Any other system makes some group richer at the cost of everyone else.
> This tax is not going to increase the cost of a new home 1:1 as markets still exist. It's going to reduce the profit of a new home construction and thus the value of existing land.
Reducing the profit of new construction increases the value of land, as it reduces the supply of housing. Study case, san francisco. It has a 0.1 supply elasticity: if rental prices went up 100%, construction units move by 10%.
Any tax that is put on construction reduces construction.
> The ideal amount of growth is where the total cost of new construction balances the demand for new construction. I am simply including externalities as part of that cost. Any other system makes some group richer at the cost of everyone else.
Your system makes local homeowners with very old large houses very rich: not for the house, but the land they have that appreciates because it is harder to build around it.
I think you are confused about actual housing prices and infrastructure costs in the US. In SF for example a ~30k tax per new home would be meaningless until the price of a new home crashed enough for it to become meaningful.
In small towns on the other hand the infrastructure cost would be much lower.
Its even more meaningless to increase property taxes on everyone than to focus the pain into the new construction. a 30k tax on any new unit might be like 10 dollar tax on all units.
The effect of concentrating a tax on something is to make it happen less, and less construction means higher home prices and higher rentals. San Francisco needs to build 1000 units to bring rental prices down 50 bucks. What you need is not to punish, but to make people responsible for the infrastructure they use, and everyone is responsible for the usage, and new construction even less so: until the building is used, the increased infrastructure usage is less. And once its built, all the dwellers pay sales tax and income taxes as well. They will be brining more than their fair share.
Perhaps you believe that the new construction represent a minority that can be exploited, after all, they found a way to profit from the city. But the ones that exploit it the most are the state and the current residents. SF has one of the highest budgets in the world, per city per inhabitant. It doesnt need more money, it needs more discipline.
But there you have the actual issue of SF and california, things like prop 13 that make it impossible to raise taxes on property owners but it makes it easy to apply sales taxes which are known and accepted to be regressive.
SF is not adding units because people are not allowed to add units. I am specifically saying you need to change that to build units. I am also saying that a portion of windfall from changing zoning should be used to offset the cost of new infrastructure. As long as building units stays profitable and people are allowed to build units then people are going to build units. Giving people building units even more profit is going to have minimal effect.
As it stands now anyone that can convince a zoning commission to change zoning get's a huge windfall from doing so as suddenly with zero other changes the land is more valuable. That's ripe for corruption on many levels and creates terrible incentives.
As to building infrastructure after people show up that's really does not work because building takes time. The lag between getting permission to build and someone moving in is not long enough to finish infrastructure but it is useful.
Nobody needs, or can even afford for that matter, infrastructure for people that don't exist yet. That's why that process never works. It is nothing more than a giant concern troll: you get to look like the smart one who insists on planning ahead for more development, knowing full well that nobody will seriously propose adding more infrastructure for people that don't exist yet.
Luckily, you can build infrastructure as it's needed. If traffic gets bad because 100k people moved in and it's straining the transit system, you've got an additional 100k people who will help pay for it. We've been doing it this way for thousands of years, so it's pretty hard to argue that it doesn't work.
It's a question of collecting money not building infrastructure.
When 100k people move in and you need a new water treatment plant. Those 100k people should pay for the water treatment plant not everyone that lives in the area who also paid for the last water treatment plant.
Further, you need to start building infrastructure now, not in 20 years when the new people have paid enough in taxes to pay for it. It's not like you need a new police station and a new school from a single new home but you do need them after X new homes.
Debt seems like the obvious solution to time shifting infrastructure, but that increases costs, adds risks, and still forces everyone to pay for new infrastructure. When a tiny home is worth 3x what would be somewhere else that value is from the existing infrastructure not the cost of building the house so adding a tax to capture that surplus is completely reasonable.
That's exactly the point, nobody is gonna pay to build infrastructure for people that don't exist yet. Especially if they don't want those people to exist. That's what's so ridiculously obvious about the concern troll. When a developer wants to build housing, it's always "no, we don't have the infrastructure to support it", yet a few days later when new infrastructure gets proposed, it's "we can't afford that!". Well shit, wouldn't it be nice if there were more people in the city that could help share that cost? But you blocked them out.
Requiring infrastructure to be built beforehand is nothing more than a way for incumbents to win in their quest to never let anything new get built.
Maybe theoretically that works. But it's still not fair in the way that you think it is.
100k people move in and several things happen: you need a new sewage treatment plant, new some more transit capacity, new schools, etc. You are proposing that the new people pay for this expansion. But you are neglecting the ways in which you benefit.
By building more schools, each school serves a geographically smaller area, meaning school buses drive a lot less. You can also have higher student-to-administrative ratios (even if student to teacher ratios stay the same). By having more transit riders, your transit system might need additional capacity, but it will be using that transit capacity much more efficiently, because transit system is a step-fixed cost business, and more riders means more profitability (or less subsidy). You aren't getting any benefits to scale on the sewage treatment plant, but you will get benefits on the water provision: smaller and higher density housing uses far less water per person than single family homes with yards, etc.
So yeah, if new people move in, you're gonna need a new sewage treatment plant. If you charge the new residents for the new sewage treatment plant, are you gonna credit them for the improved efficiency of the transit system, school system, and water system? Or are you gonna try to keep those benefits to yourself?
Somehow I think its all just a bit easier to treat every person as the same whether they're new to the area or not.
Complexity with undefined or difficult to determine benefits is definitely a case against itself.
If you want to charge a newcomer more because the city had to build a sewer treatment plant to accommodate him, you should at least credit him back the ways in which he also made the city more efficient, such as by taking public transit or reducing school costs. And if you are willing to take on the burden of an extensive economic analysis of the marginal cost and benefit of every new housing unit, by all means go ahead. For most of us, a single property tax rate works fine.
And if you are willing to take on the burden of an extensive economic analysis of the marginal cost and benefit of every new housing unit, by all means go ahead.
Long term benefits are meaningless as they would impact long term property taxes. It's only a question of new construction which is a fairly simplistic annalists.
PS: Really it's hard let's play checkers is not an argument.
The limit is transportation/infrastructure. not buildings. You need NYC's roads, schools, and subway etc before block after block of 40+ floor building are viable. It'a very much a tragedy of the commons situation as a single high rise is fine but 100 of them are not.
Unfortunately, most areas are regulated at the local level which while better than a free for all creates massive problems.
I would posit that the best solution is state level control + an infrastructure tax on new development. Charging ~30k per SFH might seem to make things more expensive but by allowing new entry to pay their own way let market forces work while adjusting for externalities.