Morning Ed: Housing {2017.10.17.Tu}

[Ho1] A look at the state of real estate in London.

[Ho2] Downtown LA has… vacancies!

[Ho3] Kristian Niemietz is concerned that Britain’s housing crisis created a generation of socialists… but was the housing crisis caused by government planning in the first place? {More}

[Ho4] Low(er) cost housing is coming to the burbs. Devon Marisa Zuegel writes of the many ways the government created suburbia.

[Ho5] Speaking of burbs, not all of them are so conventional.

[Ho6] Tim Sullivan asks if home ownership is becoming the province of the upper classes in Massachusetts. It might not be such a bad thing if it weren’t driven so by increasing prices. Maybe if we just got rid of down payments, what could go wrong then?

[Ho7] There is just something odd about the notion of cruise ships being cheaper than retirement homes.

[Ho8] Alana Samuels argues that housing costs are decreasing mobility for lower-wage people. It’s a tempting argument, but really we want the high-wage people moving to high-cost places, and probably the lower-wage people relocating to lower-cost places.

[Ho9] Well this is a pretty neat concept. The scaling of the pictures make them look more like sheds than houses, which makes it harder to visualize.


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Will Truman is a former professional gearhead who is presently a stay-at-home father in the Mountain East. He has moved around frequently, having lived in six places since 2003, ranging from rural outposts to major metropolitan areas. He also writes fiction, when he finds the time. ...more →

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54 thoughts on “Morning Ed: Housing {2017.10.17.Tu}

  1. Ho3: Well, yes generally people who feel that they are being treated unfairly by something will rebel against it rather than accept things as the way of the world. If young English people feel shafted by the real estate market, especially since European countries have much longer and stronger history of government built and provided housing among other things, they will turn to that for relief.

    I get the argument on why government policy is increasing to the costs of housing and generally agree with it. I’m in the build, build camp when it comes to housing. What I can’t agree with is the idea that we can totally get away with land use policy, zoning, or planning. Democratic countries always hated anarchic land use and sought some measure of government control. You need a really indifferent government to allow it. People have competing values and many people do value preserving the countryside.

    Ho4: Federal government policy definitely encouraged suburbia but its debatable whether we would be living in a denser and more urban nation without these federal policies. The single family home has been America’s preferred housing type since the colonial period and when Manhattan became to dense for all middle class people to afford a townhouse, it took a big leap of psychological faith to get them into apartments. Many 19th century cities in the United States described themselves as cities of homes because single family homes out numbered apartment buildings. You also had proto-suburbs from the 19th century onward but they were based on trains and streetcars rather than the private automobile.

    This goes to Ho6, before the federal government created its mortgage policies most people rented because they couldn’t get a loan from the bank. They were considered too risky. What might happen without the federal government are suburbs but most people rent rather than buy and the houses and lots will be smaller. They would be more like the suburbs of the 1920s to 1950s rather than the big sprawling exurbs that were built from the 1970s onwards.

    Ho8: Every high-cost area is going to need the services of a lot of low-wage people though. You need high and low cost areas relatively near each other because it seems suboptimal to have low wage people do massive commutes, put in an eight our shift, and do another massive commute back home.

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    • Has this ever actually been a real, as opposed to speculative, problem? If there aren’t enough people to do low-wage jobs, the price of those services, and the wages of people performing them, will rise until supply and demand meet.

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      • I’m with BB here. I’m no economist but it seems blatantly obvious to me that if we didn’t have an intervention then the costs of the “low cost” labor would simply have to rise in expensive areas otherwise the wealthy would end up serving their own coffee and picking up their own garbage. Viewed in that way it makes low cost housing interventions an indirect subsidy for the wealthy.

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        • Viewed in that way it makes low cost housing interventions an indirect subsidy for the wealthy

          Probably not even that, at least not in general. Rent control increases rent for market-rate tenants, so they end up paying for it that way. And rent subsidies get subsidized by tax payers. I guess land owners whose properties aren’t subject to rent control might benefit, but not the wealthy as a class.

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          • If enabling low cost housing allows the wealthy to pay minimum wage for their services instead of 20 bucks an hour so a worker is willing to commute in from the far flung burbs that is a significant benefit to the wealthy who predominantly use those services while the cost is socialized to all the residents in the city. Rent control still requires state paid regulators (to say nothing of the way it fishes over the majority of the poor by disincenting the construction of additional low and medium cost housing supplies) and most of the other affordable housing interventions scale up in cost from there.

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      • This is similar to the “price of oil below what it costs to pull it out of the ground” stuff I hear from time to time. It seems to fundamentally misunderstand how prices work.

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    • I get the argument on why government policy is increasing to the costs of housing and generally agree with it. I’m in the build, build camp when it comes to housing. What I can’t agree with is the idea that we can totally get away with land use policy, zoning, or planning. Democratic countries always hated anarchic land use and sought some measure of government control. You need a really indifferent government to allow it. People have competing values and many people do value preserving the countryside.

      There are intermediate options between status quo and no regulation at all. Land use policy is, in principle, designed to address externality problems. Instead of having the specifics of land use be controlled by political forces (forces that will almost always act to benefit the majority of incumbent land-owners), a tax regime to control the negative effects of land use, would prevent a free-for-all without leaving the quantity of housing up to the whim of local government.

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  2. Ho3: I love the comments on articles like the LSE blog. Lots of alternative ideas put forth that are critical of the study by people who are acting as if the blog post is representative of the whole study.

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    • PS What I mean is, there is a lot of criticism in the form of “What about X, the authors didn’t consider that!”. Really? It’s a 50 page study report, did you read it? Are you sure they didn’t consider X?

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  3. We sure do make some funny decisions about risk. Don’t get me started on bike helmets…

    How do you use the tomatoes you can? Would it help knowing that the botulinum toxin is destroyed by cooking? (Probably not, is the point of the essay I guess).

    We made tomato sauce out of most of our crop this year. It’s little enough that we have room for it in the deep freeze. Probably won’t even be enough tomatoes left to dehydrate any, and I forgot to pickle any when they were green.

    Oh and – a friend showed me this great example of risk thinking recently http://pic.epicfail.com/wp-content/uploads/2017/09/uyrs.jpg

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  4. Housing is a sticky maddening problem a lot like Climate Change in many ways. The time horizons are long, the benefits of correct policy are diffuse and difficult to perceive and the immediate costs fall upon the actors who will end up the most passionately opposed and also have the most electoral and financial clout on the political entities making those decisions. It’s a perfect environment for shoddy irrational feel good policies and can kicking. I mean look at rent control; they pretty much had to start burning down cities in the 70’s before people figured out how bad the policy was.

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  5. H07 – I’ve been on cruise ships and the economic arguments for them are surprisingly strong:
    -Cruise ships draw on international labor resources so your labor costs are almost always going to be lower than what you’ll get for a fixed local nursing home building.
    -Cruise ships are quite compact. Until you get up to the really pricey cabins everyone is housed in basically a space for a bed and little more. Most people don’t mind since they spend their time in the public communal areas.
    -Obviously a cruise ship has no land cost though a huge steel ship has a lot more plant costs than a building.
    From an elderly perspective cruise ships also counter intuitively really work:
    -They wait on you hand and fishing foot. Every time we’d go out and about our helpful steward tidied up the cabin. For adults that’s merely pleasant but for the very elderly I’d presume it’s like manna from heaven.
    -They do everything for you, food laundry, everything. Again this is what you pay a premium for in a nursing home.
    -There’s a medical staff very close to hand. Just a phone call or a distressed cry away. Again, nursing home.

    Really when you think about it nursing cruise ships seem almost like a no brainer.
    *edit to add* My bad, I meant to compare them to assisted living facilities, not nursing homes.

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    • I recall people floating ideas for large, floating cities full of retirees that would just mostly drift on the ocean currents. The cities would have powered mobility so they could visit ports and such, but would otherwise just float around. The business model was to have retirees sign over their pensions/401Ks etc. for a room/suite, and they would get a small monthly stipend plus cafeteria privileges and health care.

      Doesn’t actually sound like a bad idea.

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        • It’s actually not a bad idea. The facility and medical staff would live in the city and thus be available consistently (no worries about being short staffed because the blizzard has made the roads impassable, etc.), other operational costs and concerns can be designed for, etc.

          My big concern would be the problem with any retirement community, that it would devolve into some kind of shithole because execs got greedy, or because costs exceeded incomes thanks to poor management or bad forecasting (old people keep living longer, doncha know).

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          • Yes, it’d work best perhaps as some kind of old persons’ cooperative where the customers were also the owners and their contributed pension streams maintained the upkeep.. but then there’s the question of getting it off the ground in the first place because even if you don’t gotta buy land a floating retirement home would be capital intensive.

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            • Most certainly the residents would have to have some voice in the governance of the community/vessel. Which itself would demand that the residents be capable of exercising that voice (no bedridden or dementia residents, etc.).

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      • And when someone dies, burial at sea?

        (Sorry, that was morbid. But honestly, right now, my idea of a living hell would be on a mostly-drifting ship with bunches of other people that *I could not get away from if I wanted to*)

        I’m guessing they’d have to do a lot with infection control; seems a lot of people get Norovirus on cruises….though maybe once the initial “shakedown” was over and it had passed through everyone on board, it would no longer be an issue because immunity.

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      • Perfect for old folks who really want to avoid family visits.

        “Hey Judy, there’s a little motorboat approaching to port.”
        “Pirates. I’ll prep the port deck gun, you fetch some ammo belts.”
        “But they’re holding up a sign. I think it says ‘we love you grandma Judy.'”
        “Pirates. Ammo. No time to lose.”

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    • I don’t buy this cruise ship thing.

      Yes the labor costs for the services you need are much lower, owing to the international staff.

      But I don’t think that makes up for the limited nature of the medical care available on-board. Yes, they have doctors and mini-hospitals–but those are set up with the purpose of keeping you alive for exactly long enough to get off the ship and to a real hospital. They’re gonna be absolutely inadequate for the sort of chronic, long-term care that elderly patients require. Whereas senior care facilities, while they don’t provide that care themselves, still work closely with doctors and hospitals to facilitate the medical care that their patients need.

      I think this is one of those “risk pool” scenarios, where there are a subset of seniors that would be better off with the cruise ship, but if enough of them take that option we’ll see the bills for cruises go up because those seniors are using cruise services more heavily than other passangers, and we’ll also see the bills for senior care homes go up because the ones that remain are those that require more senior care services than those that left for the cruise ships.

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      • Yeah it makes more sense if I had edited it to refer to assisted living rather than nursing homes. Really really old people who’re really ill would be a bad fit for a cruise ship. But the younger, sort of infirm but not yet seriously ill elderly would, and do, fit cruise ships like hands in gloves.

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      • The article does make the distinction that regular cruise packages couldn’t replace nursing homes, but rather assisted living homes (where the level of assistance is (allegedly – pace below) more in line with the kind of housekeeping and food service you get on a cruise).

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        • I still maintain that assisted living homes provide a lot more specialized care than a cruise ship is able to. For example, I have a friend who had a full time job working in the med room of an assisted living facility, where he would coordinate with each patient’s doctor to ensure that the various prescribed medicines that the residents needed were delivered by the pharmacy, then work with a four person staff to make sure that the medicines were distributed to the residents at the time of day they were supposed to take them. My roommate worked in the kitchen of a different nursing home, where the head of the care unit (a Registered Nurse) would consult regularly with the chef about the specific dietary needs of each resident.

          According to him, the Ambulance would visit the (50 patient home) about twice a month, from which it’s a 10 minute ride to the community hospital and a 20 minute ride to the regional trauma center. That’s both a level of day-to-day care and a level of easy access to chronic and emergency medical care that a cruise ship is just not going to match, period.

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          • I still maintain that assisted living homes provide a lot more specialized care than a cruise ship is able to.

            Yeah, that was my point also below. I think a lot of people aren’t really sure of what an assisted living facility provides. The word ‘assisted’ is an important part there.

            A nursing home is a place where the residents cannot take care of themselves, and an assisted living home is a place where residents can _mostly_ take care of themselves but need a small amount of help, or at least a small amount of help makes things much easier, or perhaps people are worried that they will make mistakes in their own care.

            Now, there is, indeed, a level below that. There are elderly people that live in homes that are not particularly suited to them….multiple stories that they can’t go up and down, no mass transit and they can’t drive, lawns they have to pay to maintain but don’t use, etc. They would be entirely able to take care of themselves if they lived in the correct place…but they do not.

            _Those_ people would indeed be fine on cruise ships…but, there are already plenty of communities designed for exactly that level. Where there are elevators and a little pharmacy and a grocery store in the building, etc. Or sometimes it’s a bunch of little one-story houses spread out and people drive around on golf carts, and the pharmacy/grocery delivers, and a shuttle bus will pick people up to go to the mall. There are plenty of sub-divisions and apartments aimed at the elderly, designed for people with limited mobility and non-driving.

            Now, of course, some of these places are also overpriced. I dunno. I don’t really see why they would be, the high price of assisted living is due to absurd medical pricing, so the second they don’t provide that, the prices should be basically the same as any other place. But maybe cruise ships are cheaper than they are.

            Of course, the article is still dumb. As I pointed out below, if you want a cheaper place that has all the supposed advantages of a cruise ship, just rent an extended-stay hotel room in a city. I can’t imagine why anyone decided than an _ocean-going_ hotel is a better option compared to a non-ocean-going one. Not only is it cheaper, but they also have to be ADA-compliant, whereas cruise ships do not, at least not if they are not under an American flag.

            …also, who the hell has a cruise ship in their insurance coverage? Or whatever country that happens to be closest?

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            • I can’t imagine why anyone decided than an _ocean-going_ hotel is a better option compared to a non-ocean-going one.

              Because an ocean-going hotel, being dynamic, is more interesting than a static one.

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              • Because an ocean-going hotel, being dynamic, is more interesting than a static one.

                Yes, sometimes the ocean-going hotel is in the middle of the ocean, other times it is also in the middle of the ocean, and most of the rest of the time it’s in the middle of the ocean.

                Every once in a while it visits a port that, frankly, the elderly visited once and, well, that was it, and they really don’t feel like walking up and down the gangplank to see again. And let’s not forget one of those ports is the US, where they just left from.

                All super-exciting, I’m sure.

                Look, I admit I’m biased here, because I think cruise ships are sorta stupid to start with. But I somewhat understand the lure of them…it’s an interesting vacation with a lot of stuff pre-planned, and you can visit some varied locations. I just don’t like the idea of the pre-planned stuff, and I’d rather see locations on my schedule.

                But I can see the concept, I can see why people sometimes take cruises. I will not be doing that, but whatever.

                But the thing is…the locations aren’t varied the second time. Or the third time. Or the fourth. The shows are the same, the food is the same, the sights are the same, everything is the same.

                The only possible variation is perhaps exploring the ports, but, we’re talking about elderly people with limited mobility and no driving, so…how well does that work?

                It’s not going to be varied at all. It’s going to be an identical cycle of meals followed by identical views off the ship followed by the same tiny room to sleep in.

                Now, the article did suggest that people could switch cruise ships, which I will point out is functionally the same as saying ‘The elderly could live in hotels and take a lot of cruises’, which makes perfect sense to me. If they want to go on a bunch of cruises, they should.

                I was just taking issue with the concept of ‘living on a cruise line’ presented as an cheaper alternative to ‘living in a assisted living community’, instead of ‘living in hotels’, which is the more obvious and cheaper concept.

                And also note it’s perfectly possible to explore while living in hotels. Or even in a series of hotels in different cities.

                Also, if you want ‘dynamic’, then remove my ‘does not have an attached convention center’ caveat from my post. Now every weekend up they have a bunch of dentists or web designers or sci-fi fans running around, semi-randomly.

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                • As someone who has spent a great deal of time on a very boring ship in the middle of the ocean, it is very dynamic in ways that do not exist on land, even in coastal cities.

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  6. H02: As I explained in the Rufus thread from yesterday, downtown Los Angeles is weird. You still have lots of really large buildings which were vacant for decades and still are vacant (except for squatters). But the apartment buildings being built are still luxury condos. IIRC, offering a month or two of free rent is more of a gimmick than anything else because you still have to pay 4000K for the rest of the time. So these offers are still to the Landlords trying to do anything but lower the rent.

    London housing: Is there anything that can cause the CapX folks to become skeptical of the free market or critiquing of capital?

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    • When I was in downtown Los Angeles a few years ago, there was a big mix of some very posh places and some very slummy looking places right next to each other. Downtown New York in the areas near City Hall and Wall Street are kind of like that.

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  7. H07 is rather cheating. Cruise ships don’t provide anywhere near the level of assistance provided by assisted living facilities.

    Granted not all people need that. There are plenty of old people who can operate perfectly well on their own as long as they don’t need to drive anywhere or walk long distances. Often their current living situation isn’t that great, and a cruise ship is not a bad idea.

    But if you can handle the level of ‘assisted living’ provided in a cruise ship, you can probably do just as well living in a large-ish hotel.

    By ‘large-ish’, I mean the sort of hotels that are big enough to have room service and be within walking distances of pharmacies and stuff, but not being the sort of super-hotels that come with their own convention center. Like a 20 story hotel, not a 50 story one.

    I googled ‘long-term hotel rooms’ and instantly got an ad in Google for an Atlanta hotel at $160 a week. I don’t l know the real average cost or anything, but that is about a third of the lowest cruise ship price quoted.

    Granted, that would not include food, unlike a cruise ship. Well, maybe breakfast. Find one with a continental breakfast, order room service for other meals, probably still cheaper than a cruise ship.

    You lose a few advantages, I guess, like possibly a doctor on call…but OTOH, you damn well better hope it isn’t a serious medical problem on a cruise ship. In fact, don’t the elderly often have regular medical checkups? At a hotel, it’s a cab ride. On a cruise ship…nope. Have fun trying to schedule that while you’re in port. At a hotel you’ve traded off a doctor in the building with you (Probably.) for, you know, actually being able to access real medical care if needed.

    So I’m not really sure what this article is trying to prove, except that long-term care seems needlessly expensive.

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