HN Explorer

Why aren't you doing something about housing tyranny?

14 points by freethedream ↗ HN
An academic paper recently gave some real credibility to the urgence of the following issue.

So basically, landlords collude with local governments all over US (I don't know how it is in other countries) to prevent the real estate rents/prices going down by making politicians restrict building more housing wider, and building more housing higher.

The economic impact on the economy is staggering. GDP reduced by $1.6 trillion a year. That's $1.6 trillion in lost economic activity, money people could have used to build up their lives, happiness, hope for the future, and one of the reasons millenials struggle to launch their lives.

Americans now spend the highest percentage ever of their income on housing. This is money that could have been available in the economy for general consumption.

Links to the academic study:

http://faculty.chicagobooth.edu/chang-tai.hsieh/research/growth.pdf

https://www.nber.org/papers/w21154

Press coverage:

http://www.citylab.com/housing/2015/05/the-urban-housing-crunch-costs-the-us-economy-about-16-trillion-a-year/393515/

http://laborcenter.berkeley.edu/the-high-public-cost-of-low-wages/

http://sfist.com/2015/05/13/study_ny_and_sf_rents_are_dragging.php

Another press article highlighting the issue:

http://europe.newsweek.com/affordable-housing-rent-burden-census-income-inequality-333350?rm=eu

What you can do:

Anything. Start a website or a movement demanding high level government action on the issue. Tell your friends. Silicon Valley tech industry or a wealthy individual could bring awareness to this issue in a major way.

The desired end result is a congress or presidential level action on this issue that could boost GDP immensely, improve the quality of lives of millions and give the American dream some real wings again.

7 comments

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transfire
I recently read about the cost of building a hotel. I could barely believe what I was reading. A 2,000 sq ft house with all the amenities that go with it can be built for around $250,000. But a 500 sq ft hotel room costs over a $1,000,000. It doesn't make a lot of sense. How can there be an inverse economy of scale?
tamana
A skyscraper might cost that much. building more than a couple stories gets expensive.
pliny
Is that the actual cost per room or the cost of the hotel divided by the number / sq-footage of rooms?

Hotels have a lot of things that private homes don't, like gyms and restaurants, and the land is naturally more expensive (because hotels tend to be built inside the city and near attractions, often in ritzy areas), they also have a lot of fixtures and furniture (and you need to stock extra in case they're damaged, and you need an area to keep all your extras...) that might not be included in the cost of building a home.

Finally, building a hotel incurs costs like paying bribes or protection money, that private homeowners pay more seldom.

freethedream
I'd also like to add this message to the tech industry, startups and entrepreneurs:

If people had more of their paychecks available to spend as they wish rather than on housing, just imagine how much more they would spend on the services and products you make than they currently do.

A switch to an economy where consumers are in the driver seat rather than one that is a pyramid scheme for wealthy real estate investors would boost the country's economic strength and growth potential immensely in all aspects.

charonn0
> So basically, landlords collude with local governments all over US (I don't know how it is in other countries) to prevent the real estate rents/prices going down by making politicians restrict building more housing wider, and building more housing higher.

At least in the Bay Area, it's the NIMBY homeowners that block new construction, not a conspiracy of real estate dealers.

cardinal2007
The thing you don't mention is prop 13. Since prop 13 passed cities that have more residential and less commercial than average have had to either cut services or in some other way deal with budget issues. Cities like Palo Alto manage to have good budget on having way more jobs than housing, San Jose the city that builds the most housing in Silicon Valley has continuous budget issues. San Jose did a study and found only high end condo high rises generate more in taxes than they cost the city in services, so now even they are being strict on what new housing gets built, under this atmosphere they may soon only allow downtown high rises as the only new residential. Since San Jose can't carry as high rents developers aren't getting financing that easily, with the threat of a recession and bubble talk all the time, the rumors are that they think rents will drop like the dotcom bust, so the pipeline will likely slow down.

The rest of Silicon Valley, except for maybe Milpitas doesn't really build all that much housing. I think the situation will get worse before it gets better.

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