As booming demand to live and work in the most sought-after cities runs into not-in-my-back-yard (NIMBY) restrictions on new housing construction, the ideas of Henry George are getting back into the conversation. Who will invest in civic amenities, even the most basic, if their effect is to cause rents to rise even further? [Tyler Cowen, Bloomberg; related and more on New Zealand cities where strict controls on building have contributed to unaffordable prices]
Related: “Why Is Japanese Zoning More Liberal Than US Zoning?” [Nolan Gray, Market Urbanism]
2 Comments
New Zealand–
I usually am receptive to deregulation and competition. It should be noted, however, that in New Zealand the deregulatory approach for housing got a spectacular black eye, the “leaky homes crisis.”
https://en.wikipedia.org/wiki/Leaky_homes_crisis
Deregulated, incompetent builders filled the market with new homes that turned out to be leak-prone (in a cool damp climate), and went bankrupt (or otherwise disappeared) before they could be made to pay damages. The remaining damage to homebuyers is estimated between $NZ 11.3 billion (about US$ 7.8 billion) (government low-ball) and
$NZ 23 billion (about US $16 million) (outside experts). There is a theoretical belief that the government should reimburse homeowners for this failure of government policy, but uncertainty to what extent they can afford it.
For comparison, New Zealand has 4.9 million people and the USA 327 million. Multiply the NZ figures by about 70 to get a USA equivalent: $530 billion to 1,120 billion.
Apart from careful licensing and inspections, one might suggest mandatory insurance of building quality from large, solvent banks and insurance companies. But if builders had bought insurance from a NZ bank, that bank might be asking for a bail-out.
It will be a fun disaster when boomers begin liquidating their large suburban homes. The other generations either don’t want them, can’t afford them, or doesn’t meet with their tastes. I wonder if the HOA’s and cities will then finally allow developers to buy those lots and all for greater high density constructions. Who am I kidding. They’ll probably just double down and try to restrict new construction to force people to have no other option than to purchase boomer’s homes.