Record rise in U.S. rents(bloomberg.com)
bloomberg.com
Record rise in U.S. rents
https://www.bloomberg.com/news/articles/2021-08-18/housing-hunt-turns-to-desperation-with-record-rise-in-u-s-rents
117 comments
This is unsurprising. Take a step back and squint enough and you can see any wide-scale fiscal stimulus will be absorbed by land rent. This is the inverse of the Georgist observation that "all taxes come out of rent." All stimulus is absorbed by rent.
Winston Churchill on the topic: http://www.andywightman.com/docs/churchill.pdf
> Some years ago in London there was a toll bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and returning from their work. The spectacle of these poor people thus mulcted of so large a proportion of their earnings offended the public conscience, and agitation was set on foot, municipal authorities were roused, and at the cost of the taxpayers, the bridge was freed and the toll removed. All those people who used the bridge were saved sixpence a week, but within a very short time rents on the south side of the river were found to have risen about sixpence a week, or the amount of the toll which had been remitted!
> And a friend of mine was telling me the other day that, in the parish of Southwark, about 350 pounds a year was given away in doles of bread by charitable people in connection with one of the churches. As a consequence of this charity, the competition for small houses and single-room tenements is so great that rents are considerably higher in the parish!
> All goes back to the land, and the land owner is able to absorb to himself a share of almost every public and every private benefit
Winston Churchill on the topic: http://www.andywightman.com/docs/churchill.pdf
> Some years ago in London there was a toll bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and returning from their work. The spectacle of these poor people thus mulcted of so large a proportion of their earnings offended the public conscience, and agitation was set on foot, municipal authorities were roused, and at the cost of the taxpayers, the bridge was freed and the toll removed. All those people who used the bridge were saved sixpence a week, but within a very short time rents on the south side of the river were found to have risen about sixpence a week, or the amount of the toll which had been remitted!
> And a friend of mine was telling me the other day that, in the parish of Southwark, about 350 pounds a year was given away in doles of bread by charitable people in connection with one of the churches. As a consequence of this charity, the competition for small houses and single-room tenements is so great that rents are considerably higher in the parish!
> All goes back to the land, and the land owner is able to absorb to himself a share of almost every public and every private benefit
It should be especially unsurprising when you pair this with dramatically reducing inventory at the same time housing demand is at an all-time high.
Almost 1% of renters get evicted per year in normal times. Almost 0.5% of homes get foreclosed in normal times.
^ This makes up a decent percentage of overall new leases / purchases. It's not like 100% of renters move every year.
We have a lot of markets with restricted housing measures that should make it obvious that reducing supply even a little, can cause prices to go up a lot.
You give people the largest transfer of money in history - increasing personal income by the largest margin in decades, lower interest rates dramatically, AND reduce supply - at the same time everyone is going bat-shit insane trying to "WFH" with kids and there's no where else for them to spend money...
I will be surprised if there is not some really bad unintended consequences from this. But I'm far from surprised that prices are going up in the middle of a "recession". There's 30% more M2, personal income is up 10%, and payments are ~15% cheaper due to interest rates. Why should anyone be surprised that rents are up?
Las Vegas had the highest increase in rents. It had the highest unemployment rate. People on unemployment were making > median wage. Why should anyone be surprised rents went up?
Almost 1% of renters get evicted per year in normal times. Almost 0.5% of homes get foreclosed in normal times.
^ This makes up a decent percentage of overall new leases / purchases. It's not like 100% of renters move every year.
We have a lot of markets with restricted housing measures that should make it obvious that reducing supply even a little, can cause prices to go up a lot.
You give people the largest transfer of money in history - increasing personal income by the largest margin in decades, lower interest rates dramatically, AND reduce supply - at the same time everyone is going bat-shit insane trying to "WFH" with kids and there's no where else for them to spend money...
I will be surprised if there is not some really bad unintended consequences from this. But I'm far from surprised that prices are going up in the middle of a "recession". There's 30% more M2, personal income is up 10%, and payments are ~15% cheaper due to interest rates. Why should anyone be surprised that rents are up?
Las Vegas had the highest increase in rents. It had the highest unemployment rate. People on unemployment were making > median wage. Why should anyone be surprised rents went up?
The issue, though, is that if you look at most causes of significant inflation, while people like to blame "money printing", it is actually almost always a big supply shock that is the root cause.
With rental housing, there are 2 major supply shocks:
1. Much new housing was put on hold during the pandemic.
2. Critically, the eviction ban over the past 18 months has absolutely killed many small time landlords. Any prospective small-time landlord would certainly think twice about getting into the business now, and many existing small-time landlords are doing everything they can get out. It doesn't help that landlords are basically demonized by a large section of the political class. The end result is this: https://www.reuters.com/business/finance/selling-out-america...
So, at the end of it, it comes down to basic supply-and-demand, and the supply side got crushed.
With rental housing, there are 2 major supply shocks:
1. Much new housing was put on hold during the pandemic.
2. Critically, the eviction ban over the past 18 months has absolutely killed many small time landlords. Any prospective small-time landlord would certainly think twice about getting into the business now, and many existing small-time landlords are doing everything they can get out. It doesn't help that landlords are basically demonized by a large section of the political class. The end result is this: https://www.reuters.com/business/finance/selling-out-america...
So, at the end of it, it comes down to basic supply-and-demand, and the supply side got crushed.
The problem actually goes much further back than the pandemic... The housing bubble/crises lead to a massive supply of homes being foreclosed on and purchased by wealthier groups. It also lead to a large exodus of home building professionals as the demand dried up. This resulted in the US building 500,000+ fewer homes per year than the typical demand of the growing population normally demands. The US is now > 7,000,000+ homes behind were we should have been at this point, which means home prices skyrocket making them unavailable to entry level workers. On top of this, it's a common strategy among the wealthy to but a 2nd, 3rd, or more homes, which they rent to rent out at their mortgage rate or higher because the system allows it... So someone who can't get a $1200/month mortgage (for an example) now has a $1200 rent paid to someone for their second home... Though generally they pair up with others or other couples to live together and afford the rent...
This also ignores the trend of businesses engaging in the activity.. buying homes in mass for rental properties instead of the typical apartment/townhouse apartment developments.
This also ignores the trend of businesses engaging in the activity.. buying homes in mass for rental properties instead of the typical apartment/townhouse apartment developments.
> . Critically, the eviction ban over the past 18 months has absolutely killed many small time landlords. Any prospective small-time landlord would certainly think twice about getting into the business now, and many existing small-time landlords are doing everything they can get out. It doesn't help that landlords are basically demonized by a large section of the political class.
The end result does not have to be what you mention. We can enact policy to ensure that housing is available to the masses. I don't personally spill many tears over the landlords who lost money. For years, every time people have asked "why can the landlords extract rent", they respond with "the landlords take on the risk". Okay. So this is the risk coming back around. There was never a guarantee that landlords would always make money, nor should there have been.
The end result does not have to be what you mention. We can enact policy to ensure that housing is available to the masses. I don't personally spill many tears over the landlords who lost money. For years, every time people have asked "why can the landlords extract rent", they respond with "the landlords take on the risk". Okay. So this is the risk coming back around. There was never a guarantee that landlords would always make money, nor should there have been.
It's not about "spilling tears" for anyone, it's about creating the right economic incentives to ensure there is plentiful housing supply, and having an eviction ban for 18 months absolutely kills that incentive.
And when it come to "the landlords take on the risk", well, in the past, this was always true. There's the risk of bad tenants, the risk of unplanned environmental damage (just ask anyone in Texas who had to go through major floods or ice storms with no power), etc. But the extended eviction ban basically was changing the rules in the middle of the game, to what amounted to government appropriation of property without just compensation, and that is exactly the type of risk any decent functioning government is supposed to prevent.
And when it come to "the landlords take on the risk", well, in the past, this was always true. There's the risk of bad tenants, the risk of unplanned environmental damage (just ask anyone in Texas who had to go through major floods or ice storms with no power), etc. But the extended eviction ban basically was changing the rules in the middle of the game, to what amounted to government appropriation of property without just compensation, and that is exactly the type of risk any decent functioning government is supposed to prevent.
You're right, a sudden eviction ban is a gross market intervention that helped tenants and harmed landlords, and on the net caused market failure. My only point is that the status quo of privatized claims to unearned land value increments is a gross market failure in the other direction.
This is true for the majority of asset classes now. Stocks can't go down, the Fed will press buttons. Housing can't go down, the Fed will press buttons. The dollar can't go up, etc...
Yes, the government is so terrified of investors actually being affected by the risk they are supposed to be taking on that they are interfering massively in the process.
This is in no small part due to the fact that social safety nets are weak and collapsing prices mean terrible outcomes for retirees.
But it also, to me, demonstrates the unethical state of investment and wealth in this country, where the rich get richer without providing any risk-bearing service to the rest of the country.
This is in no small part due to the fact that social safety nets are weak and collapsing prices mean terrible outcomes for retirees.
But it also, to me, demonstrates the unethical state of investment and wealth in this country, where the rich get richer without providing any risk-bearing service to the rest of the country.
I don't see why small landlords are relevant to a supply shock here. If supply has been effectively destroyed by people not paying rent but also not being evicted, that should affect everyone right? In other words, it'd only matter if the bottleneck is the amount of capital buying houses to rent coming from small landlords. We all know that's not the case though, the bottleneck is the actual supply of housing.
Small landlords are relevant to the supply shock because, after seeing the effect of the eviction moratorium, many will opt to either (a) not rent out existing space they own at all, or certainly find less risky ways to rent it out, like STRs, or (b) find something else to invest their money into in the first place.
Also, there is evidence that small time landlords are much less aggressive when it comes to evictions (see https://www.atlantafed.org/-/media/documents/community-devel... from the Atlanta Fed). This means that small-time landlords provide a greater percentage of the supply for "marginal renters", i.e. renters who are more likely to miss payments. When that supply goes away it means there will be more competition among these marginal renters to find a place to live.
Also, there is evidence that small time landlords are much less aggressive when it comes to evictions (see https://www.atlantafed.org/-/media/documents/community-devel... from the Atlanta Fed). This means that small-time landlords provide a greater percentage of the supply for "marginal renters", i.e. renters who are more likely to miss payments. When that supply goes away it means there will be more competition among these marginal renters to find a place to live.
The pandemic made it relatively cheaper to use rather than rent space. So some units are off the market and are in use as guest units/ extra bedroom/whatever
This is a very reductionist look at rents. There are more factors at play, the most important of which is the vacancy rate.
https://smcorridornews.com/steady-as-she-goes-texas-apartmen...
San Francisco: https://twitter.com/AlecStapp/status/1331832907003015168
Blackstone: "We believe we will continue to experience below-average levels of new housing supply in our markets which will support future rental rate growth and home price appreciation." https://twitter.com/AlexFischCC/status/1402770234730160132
Does putting more money into people's pockets make rents increase? All else equal, this does occur in the short-term. In the long-term, housing developers want to build more housing to get a cut, which increases the supply of housing and slows rent growth. This hasn't been happening because of segregation-era zoning laws which outlaws denser housing in areas where they are needed.
https://smcorridornews.com/steady-as-she-goes-texas-apartmen...
San Francisco: https://twitter.com/AlecStapp/status/1331832907003015168
Blackstone: "We believe we will continue to experience below-average levels of new housing supply in our markets which will support future rental rate growth and home price appreciation." https://twitter.com/AlexFischCC/status/1402770234730160132
Does putting more money into people's pockets make rents increase? All else equal, this does occur in the short-term. In the long-term, housing developers want to build more housing to get a cut, which increases the supply of housing and slows rent growth. This hasn't been happening because of segregation-era zoning laws which outlaws denser housing in areas where they are needed.
> This is a very reductionist look at rents.
The fact that there is a belief "the invisible hand" will lower it back down, is separate from the increase due to the general welfare (stimulus). Availability/a market supply increase, is another factor for pricing, not part of the same change. Less so, since it simultaneously exists only in the mythical future.
> All goes back to the land, and the land owner is able to absorb to himself a share of almost every public and every private benefit
Seems like an accurate look to me.
The fact that there is a belief "the invisible hand" will lower it back down, is separate from the increase due to the general welfare (stimulus). Availability/a market supply increase, is another factor for pricing, not part of the same change. Less so, since it simultaneously exists only in the mythical future.
> All goes back to the land, and the land owner is able to absorb to himself a share of almost every public and every private benefit
Seems like an accurate look to me.
Absolutely. Outdated zoning laws are public enemy #2 for livable cities, just a hair after outdated tax laws. The root of both issues is misalignment of incentives.
> This is unsurprising. Take a step back and squint enough and you can see any wide-scale fiscal stimulus will be absorbed by land rent. This is the inverse of the Georgist observation that "all taxes come out of rent." All stimulus is absorbed by rent.
So fiscal stimulus should be paired with some kind of rent control/regulation, then?
So fiscal stimulus should be paired with some kind of rent control/regulation, then?
Regulation yes, rent control no.
Google "deadweight loss price ceiling rent control" to see the detrimental economic effects of that policy. Once you understand that, check out the deadweight loss graph of a land value tax: https://en.wikipedia.org/wiki/Land_value_tax#Efficiency
The type of regulation we need is a tax on the pure unimproved value of land sites (excluding buildings, factories, farms etc.).
George:
> When all rent is taken by taxation for the needs of the community, then will the equality ordained by Nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return.
Google "deadweight loss price ceiling rent control" to see the detrimental economic effects of that policy. Once you understand that, check out the deadweight loss graph of a land value tax: https://en.wikipedia.org/wiki/Land_value_tax#Efficiency
The type of regulation we need is a tax on the pure unimproved value of land sites (excluding buildings, factories, farms etc.).
George:
> When all rent is taken by taxation for the needs of the community, then will the equality ordained by Nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return.
What do you think about regulation that enforces a maximum limit on the number of dwellings or properties any individual can own?
> At what point is someone's wealth acquisition too much–$1b, $10b, $100b, $1t?
> Limitarianism is the view that no-one should enjoy more than an upper limit of some valuable goods or resources
> Plato's Socrates identifies the ‘endless acquisition of money’ (Plato, 1997b, 373d) as the main cause of civil unrest and war.
> In his last dialogue, the Laws, Plato gives a more or less complete limitarian account with a specification of both a lower and an upper threshold. According to this account, ‘extreme poverty and wealth must not be allowed to arise in any section of the citizen-body’ (Plato, 1997a, 744d).
> Plato provides a detailed description of the lower threshold which each citizen should meet: everyone should obtain one dwelling near the centre of the country and another one near the outskirts. The size of the pieces of land on which these dwellings are built will vary according to the fertility of the land and its distance to the city
[1] https://onlinelibrary.wiley.com/doi/pdf/10.1111/ejop.12535
> At what point is someone's wealth acquisition too much–$1b, $10b, $100b, $1t?
> Limitarianism is the view that no-one should enjoy more than an upper limit of some valuable goods or resources
> Plato's Socrates identifies the ‘endless acquisition of money’ (Plato, 1997b, 373d) as the main cause of civil unrest and war.
> In his last dialogue, the Laws, Plato gives a more or less complete limitarian account with a specification of both a lower and an upper threshold. According to this account, ‘extreme poverty and wealth must not be allowed to arise in any section of the citizen-body’ (Plato, 1997a, 744d).
> Plato provides a detailed description of the lower threshold which each citizen should meet: everyone should obtain one dwelling near the centre of the country and another one near the outskirts. The size of the pieces of land on which these dwellings are built will vary according to the fertility of the land and its distance to the city
[1] https://onlinelibrary.wiley.com/doi/pdf/10.1111/ejop.12535
When it comes to economics, I don't believe in hard limits. Policies should not be brittle numeric rules ($15 minimum wage, $800 maximum rent, 1 child policy). Think gradients that affect incentives at every point in the map, not hard step functions with wide open loopholes.
Plato's ideas seem well intentioned but somewhat ignorant of higher order economic effects of such "1 child policy" like rules. Much better to have a tax policy that's well aligned with the incentives we want to promote, and let the market figure the rest out.
Plato's ideas seem well intentioned but somewhat ignorant of higher order economic effects of such "1 child policy" like rules. Much better to have a tax policy that's well aligned with the incentives we want to promote, and let the market figure the rest out.
Plato's ideas were also rooted in the times he lived in. He lived in ancient Greece, in the city-state of Athens - the birth place of democracy. And the word "citizen" does a lot of heavy lifting...
At the time, roughly 3% of the population were citizens. You had to be landed, wealthy and/or politically influental to qualify. Incidentally, only citizens had a vote. The other 97% were riff-raff, poor, slaves or otherwise unsuitable to be allowed to have a voice in the nation's decisions. Hence their opinion didn't matter.
At the time, roughly 3% of the population were citizens. You had to be landed, wealthy and/or politically influental to qualify. Incidentally, only citizens had a vote. The other 97% were riff-raff, poor, slaves or otherwise unsuitable to be allowed to have a voice in the nation's decisions. Hence their opinion didn't matter.
I've always wondered why taxes were percentage based but many govt benefits were hard numbers.
It seems like a clever govt trick.
Allow the outgo to be reduced by inflation but allow the income to adjust to accommodate inflation.
It seems like a clever govt trick.
Allow the outgo to be reduced by inflation but allow the income to adjust to accommodate inflation.
I think it's hardly enforceable in a world where real estate can be owned by legal entities, which can be set-up on paper in seconds.
Besides, in a free market it should not matter to prices whether I own two properties, or me and my brother (acting individually) own a property each, the market will set prices and neither of us can with one or two or 200 properties.
Of course there's a limit to this logic, which is when you own so much you have a monopoly, but there's no entity that I'm aware of that has a monopoly in residential real estate or anything close to it.
Besides, in a free market it should not matter to prices whether I own two properties, or me and my brother (acting individually) own a property each, the market will set prices and neither of us can with one or two or 200 properties.
Of course there's a limit to this logic, which is when you own so much you have a monopoly, but there's no entity that I'm aware of that has a monopoly in residential real estate or anything close to it.
> but there's no entity that I'm aware of that has a monopoly in residential real estate or anything close to it.
Singapore might come close.[0]
0: https://en.wikipedia.org/wiki/Public_housing_in_Singapore -- "The majority of the residential housing developments in Singapore are publicly governed and developed, and home to approximately 78.7% of the resident population."
Singapore might come close.[0]
0: https://en.wikipedia.org/wiki/Public_housing_in_Singapore -- "The majority of the residential housing developments in Singapore are publicly governed and developed, and home to approximately 78.7% of the resident population."
But that's public housing, owned by the state, governed by a democratic vote. The theoretical chance that the state will abuse its monopoly position to squeeze renters is extremely remote, and in fact the opposite of the going practice in Singapore.
It's easily enforceable. Avoid applying the tax to primary residences. If it's not a primary residence, tax.
You've not addressed my point. The idea is not to tax, it's to have a progressive tax. i.e., the more units you own, the more limitations or taxes you pay. That doesn't work if investment firms can invest in individual entities owning individual properties.
Just to ensure I understand your and this George fellow's assertion, you're basically claiming that renting should be a revenue neutral activity, not producing profit, but being entirely counterbalanced by taxation. I.e. not an investment.
I want to make sure I'm actually getting it, because I'm not sure I disagree in a sense. Housing/land has too much importance in the scheme of being a financial asset to the point it is detrimental to actually utilizing the world around us. Finance as social control mechanism has become, in my opinion, so fundamentally tangible as to be downright laughable.
So am I getting it, or am I still missing the point?
I want to make sure I'm actually getting it, because I'm not sure I disagree in a sense. Housing/land has too much importance in the scheme of being a financial asset to the point it is detrimental to actually utilizing the world around us. Finance as social control mechanism has become, in my opinion, so fundamentally tangible as to be downright laughable.
So am I getting it, or am I still missing the point?
Renting LAND should be revenue neutral. Renting use of the building on the land should produce profit.
This creates good incentives, because the more you invest in structure on your land (ie more housing), the lower your effective tax rate is on the profits you generate from renting. $100 land rent, taxed at 95%, vs 100$ land rent + 500$ rent from housing 5 people is taxed at ~16% overall( 95 / (100 + 500)). Although ofcourse being able to house 5 people would require an investment into buildings, so it is not free money, and there is also competition from others who may be able to house 6 for the same building cost and thus maybe only charge 95$ per person.
Also here is a link of a book review that explains these ideas really well.
https://astralcodexten.substack.com/p/your-book-review-progr...
This creates good incentives, because the more you invest in structure on your land (ie more housing), the lower your effective tax rate is on the profits you generate from renting. $100 land rent, taxed at 95%, vs 100$ land rent + 500$ rent from housing 5 people is taxed at ~16% overall( 95 / (100 + 500)). Although ofcourse being able to house 5 people would require an investment into buildings, so it is not free money, and there is also competition from others who may be able to house 6 for the same building cost and thus maybe only charge 95$ per person.
Also here is a link of a book review that explains these ideas really well.
https://astralcodexten.substack.com/p/your-book-review-progr...
I guess I'm not understanding how you don't then see the building rent inflate in proportion to the disappearance of the Land rent's contribution to overall profit. It's a trivial case of financial engineering and shell games to implement.
Yes, good for you for getting to the heart of the issue immediately. Though to clarify, renting location should be a revenue neutral activity. Renting something that is the product of your labor or capital investment (house renovations, warehouse with new equipment) should of course be compensated.
In addition, such a tax on ground rent should replace our familiar taxes on labor, capital, and economic productivity.
In addition, such a tax on ground rent should replace our familiar taxes on labor, capital, and economic productivity.
> renting location should be a revenue neutral activity
> Renting something that is the product of your labor or capital investment … should of course be compensated.
Land ("location") is a scarce economic good, with different locations being valuable for different purposes. Rendering it revenue-neutral would lead to misallocation. Land is also capital—a durable good used to produce other goods—so land ownership is a form of capital investment, and a tax on "ground rent" is a tax on capital.
All economic value is the result of human action. When the scope of "improvements" is properly understood to include all human activity relating to the land—not just obvious things like builidngs but everything done to deliberately or incidentally increase the value of the land—there is no "unimproved" value left to tax.
> Renting something that is the product of your labor or capital investment … should of course be compensated.
Land ("location") is a scarce economic good, with different locations being valuable for different purposes. Rendering it revenue-neutral would lead to misallocation. Land is also capital—a durable good used to produce other goods—so land ownership is a form of capital investment, and a tax on "ground rent" is a tax on capital.
All economic value is the result of human action. When the scope of "improvements" is properly understood to include all human activity relating to the land—not just obvious things like builidngs but everything done to deliberately or incidentally increase the value of the land—there is no "unimproved" value left to tax.
I honestly can't comprehend how you are talking about a tax on land being a tax on capital. The owner of the land didn't create it, taxing the owner of the land doesn't discourage his production of additional land.
If you were to introduce a 100% land tax no land would disappear as a result, instead the value of the land would shrink until people can afford to pay 100% of the value of the land every single year.
As people who can use the land more productively can pay a higher land tax they would outbid anyone who intends a less productive use of the land.
As people who can use the land more productively can pay a higher land tax they would outbid anyone who intends a less productive use of the land.
> I honestly can't comprehend how you are talking about a tax on land being a tax on capital.
"Capital" in economics is a fairly broad category. One definition from Merriam-Webster would be "accumulated goods devoted to the production of other goods". Land is at least as qualified on that score as a manufacturing plant or a home (creating goods such as "shelter" and "storage") or machinery or hand tools or any other durable property used in the production of other goods.
> The owner of the land didn't create it, taxing the owner of the land doesn't discourage his production of additional land.
Being created by the owner (or by humans in general) is not a necessary qualification for status as "capital". Still, it is important here to distinguish between "land" in the colloquial sense and what economists would refer to as "land" (unowned resources). While land might not be created through human action, property is. You are not taxing the land, you're taxing the conversion of land into property—the act of identifying useful, unowned resources and claiming them for human use. And when you tax something you naturally get less of it; in this case there is less incentive for people to go out and discover new resources. A 100% LVT would nullify any economic motive to expend effort locating new sources of minerals or suitable farmland (etc.) since 100% of the value of whatever you discovered would be taken by the LVT.
That's assuming the LVT is limited to the hypothetical value of a bit of land in isolation. It gets worse when the scope of the LVT is increased to include the economic value of "location" with respect to other human developments—for example land inside a city being taxed more than physically equivalent land in a rural area. At that point you're not basing the amount of the tax on the land at all, but rather the capital investment and expenditure of human labor in the surrounding area. This form of "land value tax" is deceptively named; it should really be referred to as a tax on gross external benefits received. Which has some obvious flaws, for example that the property owner has little control over external benefits others may unilaterally choose to create, and also that one pays extra tax on any contribution one makes to one's own community which has the effect of raising property values. (In fact, under a LVT system unilaterally contributing to the community and making it a nicer place to live might well be considered harmful since it raises everyone's taxes…)
"Capital" in economics is a fairly broad category. One definition from Merriam-Webster would be "accumulated goods devoted to the production of other goods". Land is at least as qualified on that score as a manufacturing plant or a home (creating goods such as "shelter" and "storage") or machinery or hand tools or any other durable property used in the production of other goods.
> The owner of the land didn't create it, taxing the owner of the land doesn't discourage his production of additional land.
Being created by the owner (or by humans in general) is not a necessary qualification for status as "capital". Still, it is important here to distinguish between "land" in the colloquial sense and what economists would refer to as "land" (unowned resources). While land might not be created through human action, property is. You are not taxing the land, you're taxing the conversion of land into property—the act of identifying useful, unowned resources and claiming them for human use. And when you tax something you naturally get less of it; in this case there is less incentive for people to go out and discover new resources. A 100% LVT would nullify any economic motive to expend effort locating new sources of minerals or suitable farmland (etc.) since 100% of the value of whatever you discovered would be taken by the LVT.
That's assuming the LVT is limited to the hypothetical value of a bit of land in isolation. It gets worse when the scope of the LVT is increased to include the economic value of "location" with respect to other human developments—for example land inside a city being taxed more than physically equivalent land in a rural area. At that point you're not basing the amount of the tax on the land at all, but rather the capital investment and expenditure of human labor in the surrounding area. This form of "land value tax" is deceptively named; it should really be referred to as a tax on gross external benefits received. Which has some obvious flaws, for example that the property owner has little control over external benefits others may unilaterally choose to create, and also that one pays extra tax on any contribution one makes to one's own community which has the effect of raising property values. (In fact, under a LVT system unilaterally contributing to the community and making it a nicer place to live might well be considered harmful since it raises everyone's taxes…)
Land is not a good, because it cannot be produced by human labor. A good is something that is created by humans using natural resources, i.e. the productive output of land infused with labor.
> what economists would refer to as "land" (unowned resources)
I have never come across this definition of land anywhere in economics. A more accurate description would be "unproduced resources". It is anything that exists in nature independent of human activity, and a distinct factor of production from capital and labor.
> You are not taxing the land, you're taxing the conversion of land into property
This is a total misunderstanding of land value tax. LVT taxes the monopolistic holding of land in order to collect rent. It does not tax any property developments or improvements (mines, cafes, farms, factories) on that land.
If a landowner expends labor to extract resources or improve the value of his land, those are improvements, which logically are untaxed. A LVT in lieu of other taxes would encourage the development of land into property, not discourage it.
> the act of identifying useful, unowned resources and claiming them for human use.
Again, it only taxes holding resources without using them -- it explicitly has zero taxation on productive economic activity such as mining, farming, or operating a business on land.
Furthermore, I contend that the act of identifying useful resources and claiming them only, is not a valuable activity, and can be taxed. It is the actual utilization of the resources to produce goods or services that adds value -- merely laying claim to land without productively utilizing it is the definition of a rentier economy.
> And when you tax something you naturally get less of it; in this case there is less incentive for people to go out and discover new resources. A 100% LVT would nullify any economic motive to expend effort locating new sources of minerals or suitable farmland (etc.) since 100% of the value of whatever you discovered would be taken by the LVT.
You're right in a very narrow sense, hypothetically there is less incentive for unproductive landowners to discover resources in their own land, lest they get taxed on something they have no intention of exploiting. In return for this disincentive, LVT aligns every other incentive for the common good. A 100% LVT and 0% sales, development, income, capital gains taxes would mean you get more of the latter: productive economic activity, because you're taxing it less.
The vast majority of land value in modern economies is well known, because it is not undiscovered mineral resource value, but the value of proximity to labor, goods and services. LA, SF, NY flats don't cost what they do because there's gold under the floorboards. The value of infrastructure, proximity to various labor, goods, and services markets is what makes up the vast majority of land value today. A LVT taxes those who hold land without adding improvements (the unearned increment), and incentivize entrepreneurship and labor (the new office building or high-rise will be entirely untaxed, nor will there be any sales or income tax on the valuable economic activity of its inhabitants).
> This form of "land value tax" is deceptively named; it should really be referred to as a tax on gross external benefits received.
I agree with you here entirely. Another name for gross external benefits received is "the unearned increment".
> Which has some obvious flaws, for example that the property owner has little control over external benefits others may unilaterally choose to create, and also that one pays extra tax on any contribution one makes to one's own community which has the effect of raising property values. (In fact, under a LVT system unilaterally contributing to the community and making it a nicer place to live might well be considered harmful since it raises everyone's taxes…)
These are not flaws. The property owner pays exactly as much in tax as is required to offset the external benefit received, therefore there is no harm done to them economically. There is no free lunch for them either (infrastructure, the cafe next door's productivity, the high quality state run school a block over). Making the area more attractive is not harmful as long as the tax does not exceed the unearned increase in land value received, which it shouldn't, by definition. Furthermore, not every improvement in a community leads to an exactly equivalent improvement in the land value, this would be mathematically impossible if you grant that services, goods, building have value apart from land.
> what economists would refer to as "land" (unowned resources)
I have never come across this definition of land anywhere in economics. A more accurate description would be "unproduced resources". It is anything that exists in nature independent of human activity, and a distinct factor of production from capital and labor.
> You are not taxing the land, you're taxing the conversion of land into property
This is a total misunderstanding of land value tax. LVT taxes the monopolistic holding of land in order to collect rent. It does not tax any property developments or improvements (mines, cafes, farms, factories) on that land.
If a landowner expends labor to extract resources or improve the value of his land, those are improvements, which logically are untaxed. A LVT in lieu of other taxes would encourage the development of land into property, not discourage it.
> the act of identifying useful, unowned resources and claiming them for human use.
Again, it only taxes holding resources without using them -- it explicitly has zero taxation on productive economic activity such as mining, farming, or operating a business on land.
Furthermore, I contend that the act of identifying useful resources and claiming them only, is not a valuable activity, and can be taxed. It is the actual utilization of the resources to produce goods or services that adds value -- merely laying claim to land without productively utilizing it is the definition of a rentier economy.
> And when you tax something you naturally get less of it; in this case there is less incentive for people to go out and discover new resources. A 100% LVT would nullify any economic motive to expend effort locating new sources of minerals or suitable farmland (etc.) since 100% of the value of whatever you discovered would be taken by the LVT.
You're right in a very narrow sense, hypothetically there is less incentive for unproductive landowners to discover resources in their own land, lest they get taxed on something they have no intention of exploiting. In return for this disincentive, LVT aligns every other incentive for the common good. A 100% LVT and 0% sales, development, income, capital gains taxes would mean you get more of the latter: productive economic activity, because you're taxing it less.
The vast majority of land value in modern economies is well known, because it is not undiscovered mineral resource value, but the value of proximity to labor, goods and services. LA, SF, NY flats don't cost what they do because there's gold under the floorboards. The value of infrastructure, proximity to various labor, goods, and services markets is what makes up the vast majority of land value today. A LVT taxes those who hold land without adding improvements (the unearned increment), and incentivize entrepreneurship and labor (the new office building or high-rise will be entirely untaxed, nor will there be any sales or income tax on the valuable economic activity of its inhabitants).
> This form of "land value tax" is deceptively named; it should really be referred to as a tax on gross external benefits received.
I agree with you here entirely. Another name for gross external benefits received is "the unearned increment".
> Which has some obvious flaws, for example that the property owner has little control over external benefits others may unilaterally choose to create, and also that one pays extra tax on any contribution one makes to one's own community which has the effect of raising property values. (In fact, under a LVT system unilaterally contributing to the community and making it a nicer place to live might well be considered harmful since it raises everyone's taxes…)
These are not flaws. The property owner pays exactly as much in tax as is required to offset the external benefit received, therefore there is no harm done to them economically. There is no free lunch for them either (infrastructure, the cafe next door's productivity, the high quality state run school a block over). Making the area more attractive is not harmful as long as the tax does not exceed the unearned increase in land value received, which it shouldn't, by definition. Furthermore, not every improvement in a community leads to an exactly equivalent improvement in the land value, this would be mathematically impossible if you grant that services, goods, building have value apart from land.
> Land ("location") is a scarce economic good, with different locations being valuable for different purposes. Rendering it revenue-neutral would lead to misallocation.
This is the core of your misunderstanding. Yes, location is a scarce economic good. Rendering the ownership of it (rent collection) revenue neutral, while keeping the utilization of it (productive activity at a location) totally untaxed, is how to guarantee correct allocation. Those who can be most productive at a given location will come to utilize it.
Allowing the monopolistic ownership of location without utilization to be profitable is what leads to misallocation. Those rich enough to bid for a location will collect rent from those who productively utilize it.
https://upload.wikimedia.org/wikipedia/commons/a/aa/Everybod...
This is the core of your misunderstanding. Yes, location is a scarce economic good. Rendering the ownership of it (rent collection) revenue neutral, while keeping the utilization of it (productive activity at a location) totally untaxed, is how to guarantee correct allocation. Those who can be most productive at a given location will come to utilize it.
Allowing the monopolistic ownership of location without utilization to be profitable is what leads to misallocation. Those rich enough to bid for a location will collect rent from those who productively utilize it.
https://upload.wikimedia.org/wikipedia/commons/a/aa/Everybod...
> Rendering it revenue-neutral would lead to misallocation.
Rendering ownership of land revenue-neutral does not imply rendering all economic activity on said land revenue-neural. In fact it does the opposite, ensuring that the returns to labor and capital are allocated justly.
> When the scope of "improvements" is properly understood to include all human activity relating to the land—not just obvious things like builidngs but everything done to deliberately or incidentally increase the value of the land—there is no "unimproved" value left to tax.
Sure there is. All natural resources on that land, which existed before humans ever set foot on it, comprise the unimproved value of land. There is also the value of location arising from the community (infrastructure, proximity to labor, proximity to customers) which is not attributable to any improvements upon the land.
Rendering ownership of land revenue-neutral does not imply rendering all economic activity on said land revenue-neural. In fact it does the opposite, ensuring that the returns to labor and capital are allocated justly.
> When the scope of "improvements" is properly understood to include all human activity relating to the land—not just obvious things like builidngs but everything done to deliberately or incidentally increase the value of the land—there is no "unimproved" value left to tax.
Sure there is. All natural resources on that land, which existed before humans ever set foot on it, comprise the unimproved value of land. There is also the value of location arising from the community (infrastructure, proximity to labor, proximity to customers) which is not attributable to any improvements upon the land.
What does renting location look like in practice?
Aside, thank you for taking the time to write these comments, in this thread and others like it. This is fascinating and important stuff, and you have a way of putting it together in a way that's easy to digest.
Aside, thank you for taking the time to write these comments, in this thread and others like it. This is fascinating and important stuff, and you have a way of putting it together in a way that's easy to digest.
The easiest way to set up such a tax is figure out how much it costs to build a building. Let's say in SF currently there is a house that sells at $1M dollars. But that house didn't cost $1M to build, it might have cost $200k in materials and labor. Once you have that number, you just keep raising the tax on that building until the new market cost is equivalent, or $200k. You now have a Land Value Tax. If the owner of the building then puts in a $200k addition, you adjust that number for $400k. If next year a technology is created such that you can make that same house for $150k, the replacement costs change and that might mean a tax raise.
If a train station is built next door, the demand would go up, which would cause taxes to go up. If nearby a bunch of housing was built, this would cause supply to raise and thus move the supply and demand curve which would cause the price to drop, and therefore taxes would lower.
What's the best thing to do with this tax money? Give it back equally to all as a dividend(similar to [0])! Thus the people who use less than the average amount of housing would actually receive money when this goes into effect.
We need to systematically identify all externalities, and tax according to the externality, and just give the money back to the population. This fixes the incentives. Figuring out where that money is going to go, fighting between political parties as to which company is going to benefit, the corrupting effect of centralization of decision making. Just give it back. Tax externalities and return as a dividend.
[0]: https://en.wikipedia.org/wiki/Carbon_fee_and_dividend
If a train station is built next door, the demand would go up, which would cause taxes to go up. If nearby a bunch of housing was built, this would cause supply to raise and thus move the supply and demand curve which would cause the price to drop, and therefore taxes would lower.
What's the best thing to do with this tax money? Give it back equally to all as a dividend(similar to [0])! Thus the people who use less than the average amount of housing would actually receive money when this goes into effect.
We need to systematically identify all externalities, and tax according to the externality, and just give the money back to the population. This fixes the incentives. Figuring out where that money is going to go, fighting between political parties as to which company is going to benefit, the corrupting effect of centralization of decision making. Just give it back. Tax externalities and return as a dividend.
[0]: https://en.wikipedia.org/wiki/Carbon_fee_and_dividend
>The easiest way to set up such a tax is figure out how much it costs to build a building. Let's say in SF currently there is a house that sells at $1M dollars. But that house didn't cost $1M to build, it might have cost $200k in materials and labor.
Mmmmkay. So you've established a materials acquisition set point for the area, or is this a derived value? Do you have a process for tracking this over time as markets aren't static? We've now got in addition to a land valuation assessment, we've got workmanship/material/ labor value assessment; let's handwave this for now, because I'm pretty sure this is old hat for tax assessors/actuaries, etc...
>Once you have that number, you just keep raising the tax on that building until the new market cost is equivalent, or $200k.
I get lost here.
At T=0, Market value for land+building was $1M, right? Cool. We do our magic valuation of the material/labor cost of the building, and determine the building represents a value of 200k. Cool. Let's implement our tax. Pre-tax (T=0), Market value-wise, you're waiting around for someone with a cool million burning a hole in their pocket. Post-tax(T=1) you're still waiting on somebody with a cool million to come along. The State wants market value and tax basis to converge. So you bought at 1M, they take 800k leaving 200k on your property sale? Seems like you may have shot yourself in the foot, because now only someone better off than you were would be in a position to buy the building at whatever you're selling at for break even or profit, but also to pay the tax liability on the land you now have of 800k based on the hypothetical statute? (This is the buy scenario, not necessarily what we're talking about, because it's a one time thing, but as I understand it, property taxes have something weird going on in Cali in the sense tax rates only change when the property changes hands in a transaction.) Market value, either way, has changed: the set buyers now encompasses only those people with your cool million plus the capability to weather the tax liability? This sounds like a property transfer to the rich.
Let's talk rent. You aren't selling, but you own the land since before the tax is implemented at T=0. Your change in LVT... means nothing, til the next buyer?
Let's say we hand wave that. Let's follow the 1% rule. Market Value is $1M, x.01 = 10k a month (ouch!) Current SF average yearly property tax liability is .55% (approximately 4.5k on $785000 value), or 5500 per million. Cool. T=1. Tax implemented.
Your accountant sits down. Land +building previously was $1M. Building was assessed at 200k. By statute, the rest is LVT. 800k. Property tax has just gone from .55% on land + building (1M) to 800k based on the statutory definition of LVT being (value at time of purchase - assessed structure value = 800k... per year? Over a period time?). Screw it, we need a number that makes sense for rent. Say we stick at 10k a month. Pre LVT, that's 4500 a month you're clearing. 54000 a year. But you're taxing the building on the difference of purchase price and actual material labor cost...
Like, I'm failing to see how your tax actually changes Market value. No one is selling a million dollar property for 200k except to avoid a greater expenditure over time in which case the State becomes the questionable actor here because they are essentially levying an excise on your sale price if too high because they want it lower? What if you charge less than 200k?
Forget the fact that we've got a mismatch between how the tax is collected (LVT implies excise over time, while assessment procedure seems to imply a one time).
This feels like a word problem with half the info missing. Either that or I'm missing some painfully obvious piece of context to the initiated.
Mmmmkay. So you've established a materials acquisition set point for the area, or is this a derived value? Do you have a process for tracking this over time as markets aren't static? We've now got in addition to a land valuation assessment, we've got workmanship/material/ labor value assessment; let's handwave this for now, because I'm pretty sure this is old hat for tax assessors/actuaries, etc...
>Once you have that number, you just keep raising the tax on that building until the new market cost is equivalent, or $200k.
I get lost here.
At T=0, Market value for land+building was $1M, right? Cool. We do our magic valuation of the material/labor cost of the building, and determine the building represents a value of 200k. Cool. Let's implement our tax. Pre-tax (T=0), Market value-wise, you're waiting around for someone with a cool million burning a hole in their pocket. Post-tax(T=1) you're still waiting on somebody with a cool million to come along. The State wants market value and tax basis to converge. So you bought at 1M, they take 800k leaving 200k on your property sale? Seems like you may have shot yourself in the foot, because now only someone better off than you were would be in a position to buy the building at whatever you're selling at for break even or profit, but also to pay the tax liability on the land you now have of 800k based on the hypothetical statute? (This is the buy scenario, not necessarily what we're talking about, because it's a one time thing, but as I understand it, property taxes have something weird going on in Cali in the sense tax rates only change when the property changes hands in a transaction.) Market value, either way, has changed: the set buyers now encompasses only those people with your cool million plus the capability to weather the tax liability? This sounds like a property transfer to the rich.
Let's talk rent. You aren't selling, but you own the land since before the tax is implemented at T=0. Your change in LVT... means nothing, til the next buyer?
Let's say we hand wave that. Let's follow the 1% rule. Market Value is $1M, x.01 = 10k a month (ouch!) Current SF average yearly property tax liability is .55% (approximately 4.5k on $785000 value), or 5500 per million. Cool. T=1. Tax implemented.
Your accountant sits down. Land +building previously was $1M. Building was assessed at 200k. By statute, the rest is LVT. 800k. Property tax has just gone from .55% on land + building (1M) to 800k based on the statutory definition of LVT being (value at time of purchase - assessed structure value = 800k... per year? Over a period time?). Screw it, we need a number that makes sense for rent. Say we stick at 10k a month. Pre LVT, that's 4500 a month you're clearing. 54000 a year. But you're taxing the building on the difference of purchase price and actual material labor cost...
Like, I'm failing to see how your tax actually changes Market value. No one is selling a million dollar property for 200k except to avoid a greater expenditure over time in which case the State becomes the questionable actor here because they are essentially levying an excise on your sale price if too high because they want it lower? What if you charge less than 200k?
Forget the fact that we've got a mismatch between how the tax is collected (LVT implies excise over time, while assessment procedure seems to imply a one time).
This feels like a word problem with half the info missing. Either that or I'm missing some painfully obvious piece of context to the initiated.
Let's go to an extreme, let's say taxes are 100% of the house value per year. 1 million dollar house is 1 million dollar taxes. 10k house is 10k taxes.
It's obvious what would happen, the house price would drop. What would it stabilize at? Roughly the annual rent price for that type of house.
Moving back to my original example:
T=0, where taxes are .55% and market value is 1M, paying taxes of $5500.
T=1, we raise taxes to 1.55%, market auction comes in and offers $800k, where they would pay taxes of $12400.
T=2, we raise taxes to 5.55%, market auction comes in and offers $500k, where they would pay taxes of $27750.
T=3, we raise taxes to 15.55%, market auction comes in and offer $200k, where they would pay taxes of $31100.
STOP.
Balance as necessary.
Those numbers are not real numbers. The numbers will be different, and they will never be perfect. It's likely that you wouldn't have per-house figures, but city averages setting city-wide taxes.
Since so much of our current system's people networth are invested into something, this is not a change that can possibly happen over-night, and would likely take upwards of 50 years to phase in.
It's obvious what would happen, the house price would drop. What would it stabilize at? Roughly the annual rent price for that type of house.
Moving back to my original example:
T=0, where taxes are .55% and market value is 1M, paying taxes of $5500.
T=1, we raise taxes to 1.55%, market auction comes in and offers $800k, where they would pay taxes of $12400.
T=2, we raise taxes to 5.55%, market auction comes in and offers $500k, where they would pay taxes of $27750.
T=3, we raise taxes to 15.55%, market auction comes in and offer $200k, where they would pay taxes of $31100.
STOP.
Balance as necessary.
Those numbers are not real numbers. The numbers will be different, and they will never be perfect. It's likely that you wouldn't have per-house figures, but city averages setting city-wide taxes.
Since so much of our current system's people networth are invested into something, this is not a change that can possibly happen over-night, and would likely take upwards of 50 years to phase in.
Thank you, means a lot.
Property valuations can be roughly split into land/location value and building/improvements value. By renting location I just mean the portion of the total rent that is attributed to location value, not improvements value.
Property valuations can be roughly split into land/location value and building/improvements value. By renting location I just mean the portion of the total rent that is attributed to location value, not improvements value.
> a tax on ground rent should replace our familiar taxes on labor, capital, and economic productivity.
Even better, a tax on economic externalities, like pollution.
Even better, a tax on economic externalities, like pollution.
Yes, those would be Pigovian taxes, the very close cousin of the Georgist single tax. Not quite the same economic elegance, but less bad than taxes on wages, sales, value added, etc.
No, owning land is a revenue neutral activity. Owning housing is not. Landlords charge rent above the rental value of the unimproved land. The difference is their revenue. That revenue is greater than the cost of building and maintain the building so landlords make profit.
If you tax the land, any value not capable of being extracted from said ownership before the tax will just get shunted into the ask price buyers have to meet to rent in the abscence of explicit controls to the contrary. That's just how it works. Like, even if I eschew it personally, right, as an unusually enlightened landlord, there will be a large population of landlord's that won't. Props for me maybe that I always get renters, but I'm not at all sure that this model of taxation will deliver on what Henry George hoped.
After reading up a bit more on the topic, I'm even more convinced of this. In fact, all this would really serve to do is encourage maximum development/urbanization by guaranteeing that those that urbanize become more efficient at extracting land rent than those that actually make that possible. Take the farmer of 100 acres to the multi story tenement operator of occupancy 50 on say 10.
The farmer at about a 2.1 acre to tenant ratio is relied upon to keep everyone fed, but with his 100 acres is paying much more in rent than the tenement operator, who is paying tax on 1/10th the "land" but extracting many times the "rent" in term of having developed upwards, where the farmer can't do so for having to rely on tillage to keep everyone alive.
Let us say the farmer is the primary hirer of labor in this microcosm. He's both bearing the tax burden, plus paying his laborers, while the tenement operator contents himself hiring a paltry few, and exploiting his rent extraction.
Also, under the Georgist idea of land are all the natural resources of such as wind, sunlight etc...
What if our tenement operator blocks or shades the farmer's tillage, rendering it unfit for growing? Or blocking the dominant wind approach? What if a river passes through one, or both parcels of land? Is one to get a discount for land shaded into inexploitability by another's construction? By airflow impeded through unit volume per unit time?
What if our tenants wash themselves and dump waste upstream of the farmer, which is then used to irrigate his crops, creating a public health hazard? How is that valuated? A punitive tax extracted from the tenement owner? He may not even take part in this behavior. His tenants? Not supposed to pass it on, remember.
I'm still reading up on it, but it just feels like the entire idea started to get thought through, then all conversation and analysis stopped, and someone declared this panacea and went home. I'm left hankering for a big dose of "show your work". But again, I've just started reading.
After reading up a bit more on the topic, I'm even more convinced of this. In fact, all this would really serve to do is encourage maximum development/urbanization by guaranteeing that those that urbanize become more efficient at extracting land rent than those that actually make that possible. Take the farmer of 100 acres to the multi story tenement operator of occupancy 50 on say 10.
The farmer at about a 2.1 acre to tenant ratio is relied upon to keep everyone fed, but with his 100 acres is paying much more in rent than the tenement operator, who is paying tax on 1/10th the "land" but extracting many times the "rent" in term of having developed upwards, where the farmer can't do so for having to rely on tillage to keep everyone alive.
Let us say the farmer is the primary hirer of labor in this microcosm. He's both bearing the tax burden, plus paying his laborers, while the tenement operator contents himself hiring a paltry few, and exploiting his rent extraction.
Also, under the Georgist idea of land are all the natural resources of such as wind, sunlight etc...
What if our tenement operator blocks or shades the farmer's tillage, rendering it unfit for growing? Or blocking the dominant wind approach? What if a river passes through one, or both parcels of land? Is one to get a discount for land shaded into inexploitability by another's construction? By airflow impeded through unit volume per unit time?
What if our tenants wash themselves and dump waste upstream of the farmer, which is then used to irrigate his crops, creating a public health hazard? How is that valuated? A punitive tax extracted from the tenement owner? He may not even take part in this behavior. His tenants? Not supposed to pass it on, remember.
I'm still reading up on it, but it just feels like the entire idea started to get thought through, then all conversation and analysis stopped, and someone declared this panacea and went home. I'm left hankering for a big dose of "show your work". But again, I've just started reading.
> If you tax the land, any value not capable of being extracted from said ownership before the tax will just get shunted into the ask price buyers have to meet to rent in the abscence of explicit controls to the contrary.
This is false. The rental market has supply that is effectively fixed. Therefore, landlords are already charging the maximum that renters are willing to pay. If they raised rent the renters would move or buy. Landlords that have efficiently used their land would have taxes go down, so people would move to their properties.
> In fact, all this would really serve to do is encourage maximum development/urbanization
This is one of the many points of land value tax. Valuable land should have expensive buildings on it. Building single family homes in an area that is in high demand is incredibly wasteful. Of course you should be able to do it, but it should be expensive.
> Take the farmer of 100 acres to the multi story tenement operator of occupancy 50 on say 10.
Farm land is much, much less valuable than tenement land. There's no way to say who would pay more taxes just based off this information. Either way, it makes sense for the tenement owner to make more money since he owns the building. The farmer owns no improvements to his land.
> Also, under the Georgist idea of land are all the natural resources of such as wind, sunlight
Yes.
> What if our tenement operator blocks or shades the farmer's tillage, rendering it unfit for growing? Or blocking the dominant wind approach? What if a river passes through one, or both parcels of land? Is one to get a discount for land shaded into inexploitability by another's construction? By airflow impeded through unit volume per unit time?
The farmers tax would decrease.
> What if our tenants wash themselves and dump waste upstream of the farmer, which is then used to irrigate his crops, creating a public health hazard? How is that valuated? A punitive tax extracted from the tenement owner? He may not even take part in this behavior. His tenants? Not supposed to pass it on, remember.
Dumping waste is illegal.
Here is a breakdown of all the great things LVT provides. https://astralcodexten.substack.com/p/your-book-review-progr...
This is false. The rental market has supply that is effectively fixed. Therefore, landlords are already charging the maximum that renters are willing to pay. If they raised rent the renters would move or buy. Landlords that have efficiently used their land would have taxes go down, so people would move to their properties.
> In fact, all this would really serve to do is encourage maximum development/urbanization
This is one of the many points of land value tax. Valuable land should have expensive buildings on it. Building single family homes in an area that is in high demand is incredibly wasteful. Of course you should be able to do it, but it should be expensive.
> Take the farmer of 100 acres to the multi story tenement operator of occupancy 50 on say 10.
Farm land is much, much less valuable than tenement land. There's no way to say who would pay more taxes just based off this information. Either way, it makes sense for the tenement owner to make more money since he owns the building. The farmer owns no improvements to his land.
> Also, under the Georgist idea of land are all the natural resources of such as wind, sunlight
Yes.
> What if our tenement operator blocks or shades the farmer's tillage, rendering it unfit for growing? Or blocking the dominant wind approach? What if a river passes through one, or both parcels of land? Is one to get a discount for land shaded into inexploitability by another's construction? By airflow impeded through unit volume per unit time?
The farmers tax would decrease.
> What if our tenants wash themselves and dump waste upstream of the farmer, which is then used to irrigate his crops, creating a public health hazard? How is that valuated? A punitive tax extracted from the tenement owner? He may not even take part in this behavior. His tenants? Not supposed to pass it on, remember.
Dumping waste is illegal.
Here is a breakdown of all the great things LVT provides. https://astralcodexten.substack.com/p/your-book-review-progr...
>Google "deadweight loss price ceiling rent control" to see the detrimental economic effects of that policy.
One of the supposed detrimental effects of the policy is a lower rate of homebuilding which exacerbates the problem yet New York's fastest rate of homebuilding (the 1950s) still coincided with the highest level of rent control.
It's a topic of study (like the minimum wage, corporation tax, etc.) I'm also not really sure I trust most economists on since there's way too much $$$ (e.g. think tanks, koch money -> universities) invested in usefully wrong results.
One of the supposed detrimental effects of the policy is a lower rate of homebuilding which exacerbates the problem yet New York's fastest rate of homebuilding (the 1950s) still coincided with the highest level of rent control.
It's a topic of study (like the minimum wage, corporation tax, etc.) I'm also not really sure I trust most economists on since there's way too much $$$ (e.g. think tanks, koch money -> universities) invested in usefully wrong results.
> So fiscal stimulus should be paired with some kind of rent control/regulation, then?
I helped someone find an apartment in a rent control area - instead of higher rents you need to pay 4 months "brokerage fee" to make up for the lower rent. (If you don't want to pay, demand is so high someone else will.)
Rent control doesn't work, it makes things worse.
The correct solution is more supply. You can't fix high demand any other way.
I helped someone find an apartment in a rent control area - instead of higher rents you need to pay 4 months "brokerage fee" to make up for the lower rent. (If you don't want to pay, demand is so high someone else will.)
Rent control doesn't work, it makes things worse.
The correct solution is more supply. You can't fix high demand any other way.
Let me reframe the economy for you with an analogy.
Imagine wealth as a fluid. When it's in your account, it resides in a bulb. Connected to these bulbs are pipes connecting you to each person or business's bulb you transact with. Each transaction is facilitated by applying vacuum to transfer a small amount of fluid from bulb to bulb.
In this thing, you have entities that have many more or much larger bulbs than others, with more powerful vacuums that increase in size with the amount of capital they have at their disposal.
Every time you add a bunch of fluid to the system for everyone, you still have all the same networks for extraction in place, and no ability to prevent those connections from just extracting more.
Rent, in particular, is special. Realistically speaking, the pipe that extracts rent to your landlord is not just a transaction facilitator, but is an important mechanism for ensuring that your landlord's wealth relative to the rest of the system is maintained. So in a way, the amount getting extracted will always scale once your landlord is made aware of a global infusion of working fluid to everyone, otherwise, the "value" of their real estate is "diminished" in light of the global infusion.
Real estate as financial instrument is weird like that. Unfortunately, attempts to control that reactive rent adjustment are fraught with side-effects, because when your entire basis for free market economics is that greed and wealth accumulation (considered axiomatic human vices) can be put to productive use by leaving things alone, as evidenced by any attempt to do otherwise having undesirable outcomes, see the history of centrally managed economies.
At least that's as far as I've cared to read up on the matter. After a while trying to get to the bottom of it though, you realize once economics abstracts away any complexities around money moving => physical things happening, it might as well be pontificating on the weather for the questionability of measures involved.
This is a sign of me hitting the absolute depth of my understanding and needing to do more digging to potentially get further but not being capable of devoting the time at the moment.
Imagine wealth as a fluid. When it's in your account, it resides in a bulb. Connected to these bulbs are pipes connecting you to each person or business's bulb you transact with. Each transaction is facilitated by applying vacuum to transfer a small amount of fluid from bulb to bulb.
In this thing, you have entities that have many more or much larger bulbs than others, with more powerful vacuums that increase in size with the amount of capital they have at their disposal.
Every time you add a bunch of fluid to the system for everyone, you still have all the same networks for extraction in place, and no ability to prevent those connections from just extracting more.
Rent, in particular, is special. Realistically speaking, the pipe that extracts rent to your landlord is not just a transaction facilitator, but is an important mechanism for ensuring that your landlord's wealth relative to the rest of the system is maintained. So in a way, the amount getting extracted will always scale once your landlord is made aware of a global infusion of working fluid to everyone, otherwise, the "value" of their real estate is "diminished" in light of the global infusion.
Real estate as financial instrument is weird like that. Unfortunately, attempts to control that reactive rent adjustment are fraught with side-effects, because when your entire basis for free market economics is that greed and wealth accumulation (considered axiomatic human vices) can be put to productive use by leaving things alone, as evidenced by any attempt to do otherwise having undesirable outcomes, see the history of centrally managed economies.
At least that's as far as I've cared to read up on the matter. After a while trying to get to the bottom of it though, you realize once economics abstracts away any complexities around money moving => physical things happening, it might as well be pontificating on the weather for the questionability of measures involved.
This is a sign of me hitting the absolute depth of my understanding and needing to do more digging to potentially get further but not being capable of devoting the time at the moment.
Multiple options:
1. Stimulus given faster than it can be absorbed into rents.
2. Progressive taxes on dwellings that are not primary residence.
3. Decrease the cost of new housing.
Of those, I think the last is the most realistic. It is the only one that does not lead to a housing shortage.
1. Stimulus given faster than it can be absorbed into rents.
2. Progressive taxes on dwellings that are not primary residence.
3. Decrease the cost of new housing.
Of those, I think the last is the most realistic. It is the only one that does not lead to a housing shortage.
Option 4, which is unrealistic due to entrenched interests, but economically and socially ideal: a higher tax on the unimproved value of land, a.k.a. ground rent, in return for a lower tax on improvements, labor, capital gains, sales, and everything else.
Yes, have an inflation index linked UBI. If prices rise due to the UBI (debatable) then the payments simply get even higher. Of course, the richest will fight this since it means their taxes will be linked to inflation.
We would be better off with taxing the unimproved value of the land (possibly until the market price of the land itself is $0) and rolling back the barriers to building new housing. That would result in cheaper, more plentiful and higher quality housing.
You're supposed to tax non reproducible assets that are an essential part of daily life. Land is pretty much the number one priority to tax.
Simpler, don't do fiscal stimulus.
> Simpler, don't do fiscal stimulus.
Do you have some kind of economic intervention in mind that could produce the desired results of stimulus while dealing with some of these side effects. Besides tax cuts, that is. Those are boring and have their own well-understood issues.
If the idea is to do nothing, that something that works better in fiction than in the real world (because the real world has real problems that are harder to hand-wave away).
Do you have some kind of economic intervention in mind that could produce the desired results of stimulus while dealing with some of these side effects. Besides tax cuts, that is. Those are boring and have their own well-understood issues.
If the idea is to do nothing, that something that works better in fiction than in the real world (because the real world has real problems that are harder to hand-wave away).
> rent control/regulation
No government, ever, has managed to repeal the law of supply & demand. Not in 4000 years of trying.
Even in communist countries, where housing is "free", it applies. It's just that the cost is in terms of something other than money, often a network of favors. The same goes on how military base housing is distributed.
No government, ever, has managed to repeal the law of supply & demand. Not in 4000 years of trying.
Even in communist countries, where housing is "free", it applies. It's just that the cost is in terms of something other than money, often a network of favors. The same goes on how military base housing is distributed.
Rent control = higher rent. Every. Time.
Higher rent for the newcomers, of course. And shortages, since very few new apartments get built (mostly the luxury ones). And slow degradation of existing apartments since no sane landlord would invest in any improvements if they cannot make up for the cost in increased rent.
> So fiscal stimulus should be paired with some kind of rent control/regulation, then?
Or, turn Mao loose on 'em :)
It is possible that landlords inherently run amok until enough of them are literally killed, and then they dial it back until they forget.
It is possible that landlords inherently run amok until enough of them are literally killed, and then they dial it back until they forget.
Please don't post flamebait and definitely not ideological flamebait. It leads to ideological flamewars, which are tedious, predictable, and nasty.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
This is one of the benefits of owning (or having a mortgage) since your monthly housing costs are fixed, so your stimulus doesn’t go to rent.
In most jurisdictions, your property taxes and insurance costs always go up year-over-year.
Once in a great while, you might get a reduction, but it's really rare
Once in a great while, you might get a reduction, but it's really rare
My insurance rates have never risen (I was in my last house for 17 years). You might need to look into a different insurance company.
Property taxes do go up, but they haven’t gone up too much. Again, in my last house they went from $2500 to $3750 over 17 years.
Property taxes do go up, but they haven’t gone up too much. Again, in my last house they went from $2500 to $3750 over 17 years.
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Neal Bawa explained that rent prices follow housing prices with about an 18 month lag. There is a set of would-be homeowners, richer than renters, who have been since been priced out of the home buying market, so they outspend the previous set of renters, driving prices up.
REI074: Data-Driven Real Estate Investing W/ Neal Bawa https://www.youtube.com/watch?v=tzeTx1KE600
A major takeaway from this podcast is that 4-plexes are the best economic investment because they are liquid, ie. 5-plexes incur more scrutiny from the bank, the downside of multiplex is you may need a property manager, so after scraping zillow and doing some machine learning to deduce the most profitable market, Mr. Bawa builds seas of 4-plexes with all administered by a single property management office.
REI074: Data-Driven Real Estate Investing W/ Neal Bawa https://www.youtube.com/watch?v=tzeTx1KE600
A major takeaway from this podcast is that 4-plexes are the best economic investment because they are liquid, ie. 5-plexes incur more scrutiny from the bank, the downside of multiplex is you may need a property manager, so after scraping zillow and doing some machine learning to deduce the most profitable market, Mr. Bawa builds seas of 4-plexes with all administered by a single property management office.
That’s a theory, utilizing reversion to the mean as it’s basis but it is not a rule. With different market conditions, housing prices could also correct for rental prices.
Meaning if rents stay down after decoupling from an increase in housing stock value, the house prices could adjust down in the event there is over-supply and the market at the margins decides to rent rather than buy because it’s cheaper.
Meaning if rents stay down after decoupling from an increase in housing stock value, the house prices could adjust down in the event there is over-supply and the market at the margins decides to rent rather than buy because it’s cheaper.
> Neal Bawa explained that rent prices follow housing prices with about an 18 month lag.
I'm assuming that has a lot to do with leases and rental contracts? If you have a 2 year lease I can't raise your rent until it expires even if the property increases in value 10x during that time.
I'm assuming that has a lot to do with leases and rental contracts? If you have a 2 year lease I can't raise your rent until it expires even if the property increases in value 10x during that time.
This came up. He is no longer renewing 1-year leases, he expects to increase rent twice in 2022, so he is moving to a six-month lease. He also said 2022 will feature the largest rent increase in American history.
I worked in commercial lending for a little while and all assessments you've made on commercial properties is wrong. We (as do most) financials underwrite the business, not the property. If the business has several years of a solid, stable income as well as can afford it, we don't care. We just want a low risk borrower whom we just set and forgot until balloon renewal. Obviously we also don't just give out a loan to anyone with money either. There is no good investment in real estate unless youve got money to pump into them continually until your rents far outweigh even your personal expenses.
I just quoted the podcast which I linked. This isn't about commercial, its about residential.
>4-plexes are the best economic investment...
4 plexes are commercial properties. Just because they're for residential purposes doesn't not change that it is zoned as a commercial property.
4 plexes are commercial properties. Just because they're for residential purposes doesn't not change that it is zoned as a commercial property.
Who would have thought that banning evictions for 2 years could raise rents?
There are probably bigger factors at play, but yes, renting out to anyone even remotely evictable becomes very unattractive.
Risk increase == cost increase.
thats how it works in essentially every market. Think about 18 year old drivers compared to 45 year old drivers when shopping for insurance. Why the difference in quotes?
Would be cool if the US economy could be driven by supply and demand. Housing is needed - more houses are built. Not sure why that can't be the case. This isn't Tokyo.
>>Housing is needed - more houses are built. Not sure why that can't be the case.
Because every unit increase in a circle's radius r, causes the area to go up by r*r. These ever increasing concentric circles, cause infrastructure demands and spending to keep going up by factors of square.
Every unit increase in a Pizza's radius demands more and more cheese. To a point you will realize you get more Pizza when you order a very large Pizza than ordering 2 small Pizza's.
At some point you get two cities for Cheap than expanding an existing one.
You just can't keep building additional housing this way. In Bay Area where people stay as far as San Ramon and travel to work, you realise the taxes are just crazy high.
Because every unit increase in a circle's radius r, causes the area to go up by r*r. These ever increasing concentric circles, cause infrastructure demands and spending to keep going up by factors of square.
Every unit increase in a Pizza's radius demands more and more cheese. To a point you will realize you get more Pizza when you order a very large Pizza than ordering 2 small Pizza's.
At some point you get two cities for Cheap than expanding an existing one.
You just can't keep building additional housing this way. In Bay Area where people stay as far as San Ramon and travel to work, you realise the taxes are just crazy high.
As a fun exercise, try to get a house built in any metro area with a pop > 750k and see what you have to go through and how expensive and time consuming it is to jump through all of the hoops. You will find the answer to your question.
> Housing is needed - more houses are built. Not sure why that can't be the case.
You arrive in a room with no inspectors. To the North is, "Of course we'd still have inspectors." To the East is, "Privatize all the inspectors." To the West is, "Let's build a disruptive app to facilitate illegal barn raising."
To the South is, "Let me revise my initial statement..."
You arrive in a room with no inspectors. To the North is, "Of course we'd still have inspectors." To the East is, "Privatize all the inspectors." To the West is, "Let's build a disruptive app to facilitate illegal barn raising."
To the South is, "Let me revise my initial statement..."
In most cities and towns across the US, you have to retain half the state bar association simply to get the permits to do the environmental and traffic pattern studies that must be submitted to the approval council before you can get permission to build.
because god forbid the average person lives in a 1200sq ft home.
Valuation have risen an absurd amount in the past two years. When property tax assessments catch up, landlords might be looking at 15-20% higher operating costs, and that flows through to rents.
Not to mention property insurance rates have jacked up mysteriously in the past year.
Not to mention property insurance rates have jacked up mysteriously in the past year.
I can confirm about the rising property insurance rates. My Travelers home owners' insurance (for my two bed-room apartment) has risen up by ~11% from last year. In the past years, it was just about 3-4% YoY increase. When I asked them, they answered that part of the increase is to protect for the inflation. Inflation hurts everyone especially for people who will not see a lot of increase in their paychecks. It also seems like a self-fulfilling prophecy and I personally believe it'll be sticky (meaning, YoY inflation much higher than 2% will be with us for quite a while).
> Not to mention property insurance rates have jacked up mysteriously in the past year.
Not that mysterious. The cost of home repairs has increased substantially in the last year, due to supply chain disruptions. Lumber is a big one.
My hot water heater failed last week. It cost more than double to replace it from what I had paid to install the previous one.
Not that mysterious. The cost of home repairs has increased substantially in the last year, due to supply chain disruptions. Lumber is a big one.
My hot water heater failed last week. It cost more than double to replace it from what I had paid to install the previous one.
Not in CA with prop 13
I forget where I was reading it but people were leaning on the no evictions policy hard. Buying boats and other fun toys while skipping rent.
Of course many were. The US govt really did a dirty to many landlords. They tried controlling people in the most ineffective way possible that will have worse effects on lower income people than had they just been evicted.
The cost of the eviction moratoriums is inevitably going to be borne by the renters.
If there was scope to increase rents, then why were they not increased already?
Increasing the landlord's costs always causes rent increases. It's basic supply and demand. If demand is the same, but supply shrinks because of higher costs, then the equilibrium price rises.
That's not how it actually works in practice. Landlords are able to charge tenants as much rent as the tenant can afford, so tenant income increases are what causes rent increases.
Supply and demand don't "work" the same when there is a monopoly of a necessary good.
Consider the scenario where there is no more water in the world. All that is left is in a well in your back yard. You can charge whatever you want for the water, because people need it. The limit is what they can spend, because the demand is essentially infinite.
Now, if you had to purchase a more expensive pump to extract water from your well, would you charge more for your water? No, because you can already charge as much as you want.
I haven't seen the data for other countries, but in New Zealand, you can look at trends of rent vs house price and they are not correlated anywhere near the way rent and income is correlated.
Supply and demand do still exist and affect rent, but when supply is low for housing, landlord cost increases have no effect on rent.
Supply and demand don't "work" the same when there is a monopoly of a necessary good.
Consider the scenario where there is no more water in the world. All that is left is in a well in your back yard. You can charge whatever you want for the water, because people need it. The limit is what they can spend, because the demand is essentially infinite.
Now, if you had to purchase a more expensive pump to extract water from your well, would you charge more for your water? No, because you can already charge as much as you want.
I haven't seen the data for other countries, but in New Zealand, you can look at trends of rent vs house price and they are not correlated anywhere near the way rent and income is correlated.
Supply and demand do still exist and affect rent, but when supply is low for housing, landlord cost increases have no effect on rent.
That didn't really answer the question, however. For the rent to increase, implies that the landlord was previously leaving money on the table. Why would they do this?
I don't think rising costs to the landlord always results in rent increases. Rents are constrained to an extent by the average salary of the area.
If you incur more costs, but the average salary of your area doesn't rise, and you increase rent prices, you run the risk of void tenancies.
I don't think rising costs to the landlord always results in rent increases. Rents are constrained to an extent by the average salary of the area.
If you incur more costs, but the average salary of your area doesn't rise, and you increase rent prices, you run the risk of void tenancies.
> Why would they do this?
Because if they did, another landlord would undercut them. But with all the landlords facing rising costs, another landlord cannot afford to undercut. Hence the rents all rise.
This is how supply&demand curves work.
Over the last few years, Seattle has added many various laws that are costly to landlords to comply with. This corresponds with a decline in affordable housing. I'm pretty sure the Seattle Council is well aware of this connection. But as the number of renters far exceeds the number of landlords, they know where the votes are, and they sell the fiction to the renters that the landlords will pay.
Because if they did, another landlord would undercut them. But with all the landlords facing rising costs, another landlord cannot afford to undercut. Hence the rents all rise.
This is how supply&demand curves work.
Over the last few years, Seattle has added many various laws that are costly to landlords to comply with. This corresponds with a decline in affordable housing. I'm pretty sure the Seattle Council is well aware of this connection. But as the number of renters far exceeds the number of landlords, they know where the votes are, and they sell the fiction to the renters that the landlords will pay.
That's not really how it works though. We've been renting out in a lower-cost area in CA since 2018 and in the first two years the average Zillow and Craigslist rental listing went from $1200 to $1800. Why? There was no visible gentrification, that neighborhood really didn't change. Most of the tenants are in construction labor and management, truck driving, nursing. etc. Their salaries surely did not go up by 50%, but the going rate for the rentals somehow did.
I’m guessing that it’s because it’s harder to move, let alone find a new place to live, during a pandemic and lockdown. Landlords suddenly found themselves having a customer base which are all isolated and locked down at home.
One aspect which I have not seen mentioned is private landlords are taking advantage of the current inflated prices & general sellers market. They want to take profits and are selling units out from renters. They typically want the unit empty to sell, and so they are not renewing leases.
My landlord did this. In July, I learned that he had decided he wanted to sell my townhouse, and wanted me out. I was fortunate enough to find a place to buy that reduced my commute to my son's school, but it was pretty nerve wracking.
My landlord did this. In July, I learned that he had decided he wanted to sell my townhouse, and wanted me out. I was fortunate enough to find a place to buy that reduced my commute to my son's school, but it was pretty nerve wracking.
> My landlord did this. In July, I learned that he had decided he wanted to sell my townhouse, and wanted me out. I was fortunate enough to find a place to buy that reduced my commute to my son's school, but it was pretty nerve wracking
That's why in France it's illegal to do that. If you have a lease, and the landlord wants to sell, they have to propose to you first, and then last ( at the same price as with the potential buyer); the new landlord can't evict you ( your lease is sold alongside the "land"). And if they want to not renew your lease, you have to be notified well in advance.
That's why in France it's illegal to do that. If you have a lease, and the landlord wants to sell, they have to propose to you first, and then last ( at the same price as with the potential buyer); the new landlord can't evict you ( your lease is sold alongside the "land"). And if they want to not renew your lease, you have to be notified well in advance.
Inflation will:
- Help absorb record-high PE ratios in the market
- Allow people with heavy investments in equities to continue to prosper
Will also:
- Let the government pay off massive debts with smaller dollars (later)
- Badly hurt the poor and especially those on fixed incomes
Personally, I don't like inflationary times.
- Help absorb record-high PE ratios in the market
- Allow people with heavy investments in equities to continue to prosper
Will also:
- Let the government pay off massive debts with smaller dollars (later)
- Badly hurt the poor and especially those on fixed incomes
Personally, I don't like inflationary times.
It may not help much to pay off debt. The government borrows a lot in short term markets. If rates go up to account for inflation, that rolling debt will get rolled into higher interest rate bonds.
Poor generally have a lot debt and with inflation debt gets smaller.
This is due to the moratoria.
Not a surprise at all. Salaries for nice city jobs, such as tech, legal, banking,and finance jobs, tend to exceed inflation,so its reasonable to assume rents will too. Rents in major metro areas such as SF have been expensive forever. No reason to expect this to change. I knew that the narrative/media hype about Covid depressing rents would be short-lived and rent prices would come roaring back with a vengeance as soon as the economy and stock market rebounded.
Is this increase really caused by demand-side pressures or simply that property owners know they can charge more since tenants have more disposable coin in their pockets?
Rents in San Francisco are still way down which makes this analysis look really coarse to the point of being sloppy.
San Francisco is neither large enough nor representative enough to be that meaningful in a national context. SF is a small enclave of ludicrous pricing, because of the huge amount of investment capital flowing into a fairly small city. It still has a lot of room to move down even if everything else is going up.
The SF Bay Area is roughly 8.5 million of the most productive participants in the US economy.
Maybe not as productive as they used to be if the rents are down.
Nevertheless, 8.5 million is a small cohort relative to 300+ million, and if they're the "most productive" then they're not representative of the median-productivity experience that matters on a national scale.
For what it's worth, I think this concentration of high-profit business in the Bay Area may be (finally) coming to an end with the ascendance of remote work, which may be a factor in the locally declining rents.
Nevertheless, 8.5 million is a small cohort relative to 300+ million, and if they're the "most productive" then they're not representative of the median-productivity experience that matters on a national scale.
For what it's worth, I think this concentration of high-profit business in the Bay Area may be (finally) coming to an end with the ascendance of remote work, which may be a factor in the locally declining rents.
not sure about most but maybe somewhere between decently and generally productive participants compared to the rest of the nation
[deleted]
They don't seem to provide the data, but how much has rent risen in other recent years? Could some of this just be landlords postponing the usual 2020 rise due to the lockdown?
Similarly, I would guess 2020 saw less construction then an average year. Wouldn't that alone cause a short term spike?
Similarly, I would guess 2020 saw less construction then an average year. Wouldn't that alone cause a short term spike?
Annecdotal but my rent didnt go up in 2021... my ex's did though... both Georgia.
https://web.archive.org/web/20210820150151/https://www.bloom...