llamaimperative

Huh? Not sure I'm following.

The $/sqft of housing tends to go up as density increases... for the same reason as the article is suggesting: incomes are higher, so people can eat higher prices.

No, those policies only matter, definitionally, in so far as they actually affect the elasticity of supply. The elasticity of supply is what they measured and found it does not matter, ergo those policies (and all related hypothetical supply-elasticity-affecting forces) effectively do not matter relative to other factors (well, one factor in particular: income).

It's not "bad math." It is exactly what the article (and I) describe: real estate's prices are principally set by the local income levels.

If the market couldn't bear it, you'd have vacancy. But you do not.

> there is artificial scarcity up and down the chain with real estate

Which, according to this analysis, does not actually significantly affect prices relative to other factors.

I understand your theory and I intuitively don't find it "wrong" per se, but you're staring at an analysis that shows you otherwise. Your critique of it not factoring in things like policy is explicitly wrong: all of those factors are fully accounted for in the ultimate supply elasticity.

So if policy is accounted for (it is), and your theory doesn't hold, it's time to either come up with a different critique of the study or acknowledge it as clear evidence against your theory.

This is discussed elsewhere but "market prices" are a distribution of bids and asks. A buyer or seller can be on the high or low end of that distribution, which does not change the fact that the distribution itself moves up as local incomes go up.

Well, they are buying land because housing exists on land. As discussed elsewhere in the thread, if you make the housing upon that land more elastic (e.g. by loosening zoning restrictions), that elasticity pretty much immediately gets baked into the price of land itself.

This is so significant an effect that there is a highly lucrative business in simply buying low-density zoned land and going through the entitlements to turn it into a high-density zone. This does not just generate a free lunch for a developer to build more units on the same plot of land at the same price, it makes the land instantly more expensive.

Except that the order of events goes the other way

> Because for instance, you'll rent at 30%, but if there was honest market pressure (and lets face it, there isn't) why wouldn't someone else rent at 28%? Or 25%? etc.

They do! And then like all other markets, equilibrium is found, and that equilibrium point is what moves up as incomes move up.

Food, vehicles, and energy all have elastic supply. Higher prices induces more supply. This is not the case with land.

No, seriously. I am a landlord. How do I set rent? I ask myself: "How much do people around here earn?" And I set my price at ~30% of that.

I am currently selling a house. How do I set my price? I ask myself: "What salary would someone moving to this area likely be making?" And I set my price accordingly.

Literally none of the zoning laws are necessary. This method is how price is set in 100% of real estate transactions in 100% of localities, regardless of any other regulations.

FWIW I'm also an LVT zealot. Have you read Progress & Poverty yet?

> it itself is not the cause in the sense that income levels directly cause housing prices to go up.

It quite literally is directly the cause. The price of real estate in an area is overwhelmingly defined by the productivity of the local area.

Productivity goes up → income goes up → real estate prices go up.

It's not even that. Under the US Constitution everyone, citizen or not, illegal or not, desirable or not, has at least 1st Amendment and Due Process rights.

No no, you're misunderstanding. The study did factor locality-specific inputs like the ones you're describing. In fact they included all of them by measuring the actual realized supply production for each locale.

It's that those factors don't appear to matter.

1. Property tax is not land value tax, and "high property tax" does not behave at all like a quasi-land value tax even if land value is a component of the property tax.

2. No, it specifically makes sprawl very expensive relative to density, and economic decisions are largely made on a comparative basis. LVT makes it free to increase the density/productivity of your existing lot, while taking ownership of another lot (more area) introduces a huge new tax burden that you have to put to very productive use very quickly.

It's way, way cheaper to increase density than sprawl under LVT.