New at Reason

David Weigel | July 6, 2006

Joel Miller reveals how big government makes home ownership more difficult, in an adaptation from his book "Size Matters."

Comments

|7.6.06 @ 9:20AM|#

I look around NYC and so many people can't live without a job plus an income from their parents (people in their 30's, mind you). Then two blocks away there's a project with graffiti and busted up appliances. There's not a lot of middle class folks in Manhattan anymore. It's not only market forces and regulatory forces. NYC seems to be where America's trust-fund babies go to waste their parents' money. In all seriousness, I wonder why this article didn't address NYC?

Jay Muntz|7.6.06 @ 9:24AM|#

This article does not mention Bay Area rents, which are low relative to prices. One would think that if there was scarce supply, then it would show up in rents (at least in those that aren't regulated by rent control). The fact that rents remain low shows that this is a classic asset price bubble, and not the result of onerous zoning. Generally, if one municipality has stringent zoning, the next one will be more lax - so the needs of the market get met by competition between municipalities.

|7.6.06 @ 9:36AM|#

The authors neglect to mention the affect of the tax-code on housing prices. Since interest costs from mortgage payments are tax-deductible in the US, the government effectively subsidizes home buyers. This also makes interest-only mortgages more attractive as it offers a larger tax-incentive.

|7.6.06 @ 9:37AM|#

For a non-American, the jargon is a little hard to follow. Is he saying that, if people could build houses wherever and whenever they liked, then prices would be lower?

|7.6.06 @ 9:41AM|#

You guys have it easy.

Try living in London.

I work as a lawyer by day but have to sell my ass by night.

Kinda like Batman. Kinda.

|7.6.06 @ 9:42AM|#

I work in New York, and one of the scaries comments I heard recently (from a new colleague that relocated from London) is that London makes New York seem cheap!

|7.6.06 @ 9:45AM|#

lanny,
Indeed it does. London is super expensive. Think Tokyo expensive.

|7.6.06 @ 9:55AM|#

Indeed it does. London is super expensive. Think Tokyo expensive.

But there's an added twist. Whereas everything in Tokyo is new, flashy, clean, exciting and working, London is fundamentally a toilet. Miserable, crappy, broken down and yet, still ridiculously pricey.

I want out.

There was an article about city prices in the Times recently. I can't remember who placed where but I do know that Moscow came out as the most expensive city. Not surprising.

|7.6.06 @ 10:01AM|#

Mark,
Yuck. Why isn't there any expansion out of the city? For example, quite a few firms have started to move out of Manhatten in order to escape high rents and taxes. Is there a similar move in London? Why or why not?

|7.6.06 @ 10:05AM|#

Mark, sorry to see England go out early. Once the U.S. committed suicide, I figured England was my team for the rest of the Cup. I suppose I'm for Italy, now. Yeah, why not? Rome, pasta, Renaissance art. . .sure. Beats all those rich sauces.

|7.6.06 @ 10:14AM|#

Why isn't there any expansion out of the city?

Well unless we want to turn every square inch of London and Greater London into concrete then we don't really have space! There was a big hoohaa about three years ago when the Labour administration proposed turing a portion of the Green Belt (protected land) into affordable housing for first time buyers.

I know it's a cliche but as a visitor to the States the one thing I couldn't get my head around was how much land there is. Well we're the opposite - we're not as lucky as all the people living in Phoenix (isn't that that fastest growing city in the world?)

One of the things that the government is doing is making business sort it out - it is genuinely impossible for nurses and teachers to buy in London so they came up with the 'Keyworker scheme' whereby any new superstore, stadium or business planning application would have to provide a certain number of cheap apartments for key workers. I can see that solving a particular problem but I can't see it fixing anything in the long run.

|7.6.06 @ 10:16AM|#

What is up with shitholes always being the most expensive cities to live? For a long time Logos Nigeria was the most expensive city in the world and I am sure it is still in the top ten. Moscow is now the most expensive. San Franscisco and New York at least have their vitues, but Logos? Logos and Moscow's priciness certainly shows that it is not desirability that drives up prices.

I think it would help some get rid of our insane tax code. Home mortgage deduction does a lot to distort the market. It is elitist and unfair, but even the allegdly progressive Dems won't mess with a good upper middle class entitlement like that.

|7.6.06 @ 10:18AM|#

Mark, sorry to see England go out early. Once the U.S. committed suicide, I figured England was my team for the rest of the Cup.

Appreciated.

And yes, I did cry.

As much as it pains me to say it, I'm for the French. Can't stand the Italians. Dive, dive, dive.....

|7.6.06 @ 10:22AM|#

The problem with the global economy is that it produces massive distortions in certain high value areas. If I am a rich writer or a musician or a financier or deadbeat trustfund baby or all of the above, I can live and work anywhere in the world. That means that the good people of places like London and Aspen and Key West are not just competing with each other for places to live, they are competing with the elite of the world. For some people money is no object. If you are one of these people, why wouldn't you want a nice flat in Kensington so you could spend your summers in London? Or a Victorian mansion in San Fran when you get the urge or a ski lodge in Aspen or Whistler. As world population and wealth gets greater, there will be more and more of these people. The problem is that someone still has to man the cash register and make the trains run on time in these places, but the millionaires price them out of the market. I really don't see a good sollution to it.

|7.6.06 @ 10:23AM|#

Mark,
Ahh I see. I suppose I meant out of Greater London, like more growth in Manchester and such.

I'm with you, I'm painfully for the French for the same reason. At least Portugal's not in the final or else they'd have to replace refs with judges a la figure skating to give points. On the plus side, we may have seen a record number of two people falling simultaneously without touching each other.

|7.6.06 @ 10:25AM|#

You know, this chumminess between the UK and France is getting tiresome. Isn't it time for a war or something? I mean, Jesus, it's been well over a century since you've shot at each other. Well, maybe a few shots were exchanged with Vichy France, but that's a technicality.

If natural enemies like France and England can get along, what's the world coming to?

|7.6.06 @ 10:26AM|#

Mo and Mark VIII,

As a non-soccer expert, let me ask you two one question, why not just legalize the tackle? If it were legal, it wouldn't do you any good to flop and all of this nonsense would end. If not that, why not get rid of the off sides call so there is more scoring, that way one well placed flop doesn't completely determine the result because it would take more than one goal to win a match.

|7.6.06 @ 10:28AM|#

Don't worry Pro, I think the Germans are starting to feel their oats again. I am quite sure France and Italy will be surrendering to them again before the century is out.

|7.6.06 @ 10:29AM|#

why not just legalize the tackle?

Like any tackle? Because if basically any tackle was legalized scoring would be even scarcer than it is now. I feel that the best solution would be to increase the number of refs on the field to two or three. You have a head judge and two others that can call penalties (just like the NFL). Having one guy to monitor all of those players and that much field without anyone unbiased to say, "Dude, he was totally faking it," is insane.

|7.6.06 @ 10:31AM|#

I suppose I meant out of Greater London, like more growth in Manchester and such.


Oh - that's happening bigtime. Leeds, Manchester, Birmingham, Liverpool.

People complain at the moment that London is such a drain on the UK and it's young people. Hopefully, as these cities offer more and more opportunity then we might see cities evening up, but that will take a long, loooongtime.

|7.6.06 @ 10:32AM|#

And without the offsides rule, you'd have a couple of players from each team hanging around the goalposts of the other side.

|7.6.06 @ 10:33AM|#

John, without offsides, people would bunch up in the goal box and games would be driven much more by luck than by skill. The U.S. (I think it was the NASL) experimented with using the 35-yard line as a limit on the offsides rule (passes between that line and the goal were always onside; passes from outside of the line towards the goal could be offsides). Not sure how that worked, though I do think the NASL had more scoring.

As for the tackle, it isn't illegal unless you take down the guy instead of the ball. I think the solution to the Oscar auditions might be to get more officials on the field, so that they can see what really happens. I've seen penalties and even cards given for obvious fakery. Not often, but it has happened.

|7.6.06 @ 10:37AM|#

Perhaps get rid of the offsides rule and then have something like a three second call in basketball. If a player is in the box too long without the ball, he gets a foul. I understand the concern about players hanging out in the box. It seems that there are some beautiful plays where a striker catches the defense napping and gets behind them and is hit with a nice pass and scores only to see it disallowed due to offsides. The game seems poorer for such plays being disallowed.

|7.6.06 @ 10:47AM|#

As a non-soccer expert, let me ask you two one question, why not just legalize the tackle?

Ooooohhhh now were talking!

John,

You raise the clearly logical, and very sensible question that non football watching humans propose.

Now the tackle was once legal. If you watch footage of football games from the sixties and seventies, the players kicked seven shades of shit out of one another; injuries were more common, careers were shorter BUT BUT BUT money wasn't such an issue.

I think two things changed the perception of the tackle - South American footballing tactics (namely diving and rolling around on the ground like you've just been shot with an elephant gun) and the fact that individual players turned into investments for clubs.

Now, say we leaglised the tackle tomorrow. Anything goes. What happens when Lucas Neil (you may remember him as the dickhead australian who charged into Grosso, who in turn dived, to give the Italians a 94th minute penalty) breaks Wayne Rooney's leg with a now fully legal and very hard tackle. Mr Rooney cost Man Utd the best part of $50 million. Games wouldn't be refed by referees but by lawyers. The litigation would be ridiculous.

I don't think we need more refs. It's a nice idea but it would break the game up. And I don't think refs are in a position during a game to really know whether someone is diving or not. Instead, FIFA should simply say that they will examine footage after a game and that anyone who CLEARLY dives or uses gamesmanship will be issued a retrospective yellow card or fined...whatever's suitable. It's that easy.


I think Portugal may have done football a great favour this World Cup. They were so cynical and so pathetic that hopefully, their shenannigans will be the straw that breaks the camel's back.

PS - Offside has to stay. That's the whole point of football - Beating the offside trap.

|7.6.06 @ 10:50AM|#

John,
There is no offsides rule in indoor soccer. The field is signifigantly smaller though. As a result the game is much more intense. Indoor soccer is a lot of fun.
We stopped letting the girls goal-hang at around 7 years old. Once they started figuring out that they could do that, the game got a little ridiculous. The offsides rule makes for a much better game.

|7.6.06 @ 10:52AM|#

Good points Mark. Rooney was an idiot for kicking the guy in the nuts, but he wink was just too much. The rules seem to require some good faith on the players part. We will call tackling but you have to not flop all of the time. That good faith balance seems to have been broken. Figures it was the histrionic Latins who did it. As a die hard American sports fan, soccer has really grown on me. It is kind of a fun cult sport like Hockey used to be before the NHL ruined itself by expanding to places like Nashville and Raliegh. That said the acting and the flopping is just about ruining it.

|7.6.06 @ 10:55AM|#

Maybe if they got rid of the magic sponge, players would be less aggressive :)

|7.6.06 @ 11:02AM|#

but he wink was just too much.

Jesus Christ...

I have never, ever, ever wanted to hit another human being so much as when that streak of piss winked at the bench.

Still, yesterday when Portugal crashed out he was blubbing like the little bitch that he is. Should be very funny to see what happens when Ronaldo and Rooney turn up for training at Utd.

|7.6.06 @ 11:08AM|#

I dont' think Renaldo will be showing up in Manchester or the UK anytime soon. I can't beleive Utd, won't sell him to someone, anyone, pretty quickly. What a mess for them.

|7.6.06 @ 11:33AM|#

There's been talk about him heading to Madrid.

What a departure from high real estate prices.

|7.6.06 @ 12:09PM|#

There's been talk about him heading to Madrid.

Well it's loopy season in Madrid. All the presidential candidates name the four or five players that are going to the Bernabau as an incentive for voting. (Democracy is so sweet!)Apparently, Robben, Ronaldo, Kaka and Torres are all going.

It's usually nonsense.

|7.6.06 @ 12:19PM|#

The regulatory costs Miller cites don't even begin to explain the high housing costs.

"Permit lags of six months can add nearly $7 per square foot to the price of a house. That�s more than $10,000 added to the cost of a 1,500-square-foot home." So if we take the median home price of $720,000, that's 1.4% of the home's cost.

"Oates to pay more than $2,000 extra per acre of a Sutter Basin property because it was home to roughly 40 giant garter snakes. The total �mitigation� fee was $3.8 million�$93,950 per snake." This comes out to 1900 acres. Assuming half acre lots, that's $1000 per home, or 0.14% of each home's cost.

Miller includes some good language about regulations that restrict the supply of building lots and the supply of homes, but then doesn't include any analysis of actual supply-crimping regulation, such as large-lot, single-family sprawl zoning. Why not discuss whether Mr. Oates could have built three times as many homes on his land by shrinking the lot sizes and including duplexes and townhouses?

It's odd that the single greatest distorter of the housing market is, for some reason, forbidden as a topic of discussion when Reason makes a foray into the affordable housing issue. That wouldn't be because of an ideological preference for sprawl, would it?

|7.6.06 @ 12:35PM|#

I couldn't help but notice that the source of most of his facts and statistics are building companies and their trade organizations. That's not Reason, that's trying too hard to make a case. I feel slightly offended now. I knew there was a reason he didn't address NYC: it doesn't support his case. Instead of addressing the problem, he pretends the most famous city in the world doesn't exist.

|7.6.06 @ 12:46PM|#

I agree with the author's general point that zoning restrictions make housing more expensive, because they restrict supply so that it can not meet demand. That said, there are many other factors at play. And, the politicians who are putting these zoning restrictions in place are doing so at the strong urging of their constituents. Only if there are major changes in our political structure will this change. The politician who votes for high rise zoning in a suburban area will be out on his butt, maybe even before the next election.

|7.6.06 @ 2:42PM|#

Lamar,

How exactly does the high rents in the rent control capital of the world aka New York City, not support his case?