It predicts movement in policies. As neighborhoods get wealthier, they trend toward regulatory capture. Zoning laws get more onerous, building codes get more restrictive (ever wonder why you don't see 25 story condominium complexes for example?) and the cost of entering the neighborhood is artificially inflated as a result.
They correlate, but it itself is not the cause in the sense that income levels directly cause housing prices to go up. What they do enable though, is as folks become wealthier they tend to also spend more time lobbying for these types of city regulations to preserve their home values. They spend more time on this as the income bracket goes up. Couple this with the fact that wealthier home owners tend to be older, they often have more time relative to others in many respects to lobby consistently for the status quo.
The issue I have with the report is it takes none of that into account, and instead takes the correlation (that income rising === higher home prices) without looking more closely at what happens as the income trend goes up.
>It predicts movement in policies. As neighborhoods get wealthier, they trend toward regulatory capture. Zoning laws get more onerous, building codes get more restrictive (ever wonder why you don't see 25 story condominium complexes for example?)
This. Once people are rich enough to have no real problems the setback of someone else's shed on someone else's land and the spacing of outlets in the walls of other people's houses suddenly start looking like things worth caring about, all of which drives down the efficiency by which dollars can be converted into use of land.
>and the cost of entering the neighborhood is artificially inflated as a result.
Worse, it's a feedback loop. High cost of entry means only more of the same will enter
No. It’s a given that people without the incomes to afford housing won’t enter that locality, but many could remain from before it was a popular place to live.
Gentrification actually only affects a very small percentage of people who end up refusing to sell and holding out until they cannot afford anymore.
But the point remains that a 90 year old living on Social Security could potentially own a million dollar home.
In my experience, a huge number of people spend the most they can on housing. So the local price level is set by the local income distribution. Their observation lines up perfectly with my experiences.
This also suggests two solutions that are bound to be unpopular:
* To make housing prices more reasonable, give everyone a pay cut.
* Trying to set a "living wage" is futile since boosting income will feed right through to the price of housing.
Why doesn't it feed through to the price of food? Of vehicles? Of energy?
It only feeds through to the price of certain classes of goods: housing, healthcare, education.
Those are also "markets" that are artificially supply-constrained, through zoning, the AMA, and accreditation.
To be clear, I'm not saying that we should get rid of zoning, the AMA, and accreditation—but we should be much more careful to avoid use of those tools to curb supply.
The most common reason the simple income level of a region changes is that increasing housing costs push lower income people out, meaning the simple income level is only measuring those who remain.
no_wizard|11 months ago
They correlate, but it itself is not the cause in the sense that income levels directly cause housing prices to go up. What they do enable though, is as folks become wealthier they tend to also spend more time lobbying for these types of city regulations to preserve their home values. They spend more time on this as the income bracket goes up. Couple this with the fact that wealthier home owners tend to be older, they often have more time relative to others in many respects to lobby consistently for the status quo.
The issue I have with the report is it takes none of that into account, and instead takes the correlation (that income rising === higher home prices) without looking more closely at what happens as the income trend goes up.
potato3732842|11 months ago
This. Once people are rich enough to have no real problems the setback of someone else's shed on someone else's land and the spacing of outlets in the walls of other people's houses suddenly start looking like things worth caring about, all of which drives down the efficiency by which dollars can be converted into use of land.
>and the cost of entering the neighborhood is artificially inflated as a result.
Worse, it's a feedback loop. High cost of entry means only more of the same will enter
singleshot_|11 months ago
0: https://www.dccondoboutique.com/midtown-at-reston-town-cente...
1: https://www.bizjournals.com/washington/news/2013/09/24/arlin...
llamaimperative|11 months ago
It quite literally is directly the cause. The price of real estate in an area is overwhelmingly defined by the productivity of the local area.
Productivity goes up → income goes up → real estate prices go up.
rightbyte|11 months ago
I.e. it would be in their financial interest to allow it.
GoatInGrey|11 months ago
kulahan|11 months ago
Gentrification actually only affects a very small percentage of people who end up refusing to sell and holding out until they cannot afford anymore.
But the point remains that a 90 year old living on Social Security could potentially own a million dollar home.
llamaimperative|11 months ago
xhkkffbf|11 months ago
This also suggests two solutions that are bound to be unpopular:
* To make housing prices more reasonable, give everyone a pay cut. * Trying to set a "living wage" is futile since boosting income will feed right through to the price of housing.
zamfi|11 months ago
It only feeds through to the price of certain classes of goods: housing, healthcare, education.
Those are also "markets" that are artificially supply-constrained, through zoning, the AMA, and accreditation.
To be clear, I'm not saying that we should get rid of zoning, the AMA, and accreditation—but we should be much more careful to avoid use of those tools to curb supply.
appreciatorBus|11 months ago
llamaimperative|11 months ago