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One thing Austin did was cut the minimum lot size for single family home. Less lawn but you can build 3 times the number of homes. Makes sense that supply increases and prices decreases.
I agree that this would make sense, in the sense that permitting more units of housing to be built would be expected to result in a reduction in price per unit. Of course, whether this is good public policy is a separate question. And it doesn't seem like an efficient cause of the explosion in prices for single family houses.
Well yes, this is a value judgment. Young people might appreciate the ability to buy these cheaper (but smaller houses). Older homeowners might not appreciate the riff raffs. But maybe in a few years they will appreciate the economic boom from the population growth. For what it's worth, I do think Austin politicians are saying they are one of the few that has successfully tackle housing affordability in the country.
Well, I did want to point out that when Austin had the old (larger) minimum lot size, that is an example of red tape increasing cost of house. If 3x houses can be sold from the same square footage, it goes to show that before only 1 house can be sold, and the developer would have to make it a pretty expensive house (I don't know if it would have been 3x but certainly 1.5x to 2.5x).
There are other factors as well. Perhaps the increased density of housing will lead to increased congestion on city streets; overcrowded schools; etc.
Well the claim being made was that single family houses have become more expensive over the years, in part because they are being built larger, and a big factor in this is that increases in "red tape" have incentivized developers to build larger houses. So it seems like example you point to is not really relevant to this claim.
I can tell you that in my suburb, there is no more land to be subdivided; if someone wants to build a new house, they have to buy an existing house; tear it down; and construct a new one. Thus, there has been essentially no change in minimum lot size requirements. Nevertheless, developers are frantically tearing down houses from the 50s and 60s which were in the range of 1500-2000 square feet and replacing them with new houses roughly double the size. Moreover, this phenomenon is pretty common throughout the big city suburbs in the Northeast. This suggests that the "red tape" of minimum lot sizes is not what is driving this change.
Hmmmm, I will take the example of your suburb to illuminate my point.
To me, looks like there is increased housing demand in your area. Yet, the same rule for minimum lot size being unchanged means supply can't keep up. Like let's take the viewpoint of the builder. They have to buy a lot at more expensive prices. Only one house is allowed to be put on it. Thankfully there is a lot of demand so there must be at least one big catch in the sea. But those big catches won't buy older houses, so you gotta build. So the builder makes that one house more expensive (bigger house/better amenities/more expensive construction details/HOA/etc.).
The red tape hasn't changed, but the cost of the red tape certainly increased. Nothing here says that "more red tape has been added throughout the years leading to higher costs", but merely "existing red tape going unchanged and not responding to new dynamics of the given locality leading to higher costs".
I see your point, but I think that's a strained interpretation of the following statement:
Most people would understand the phrase "higher cost of red tape" to mean that regulatory requirements have gotten stricter. NOT that regulatory requires have not been sufficiently relaxed.
Indeed, it's worth pointing out that your interpretation could be applied to just about every increase in price of any good or service anywhere in the United States.
For example, suppose the war with Iran heats up and shortly thereafter the price of crude oil (predictably) goes up and shortly after that the price of gasoline (predictably) goes up by some amount. In theory, in response, the United States and various states could relax various regulations regarding the production and distribution of gasoline, which would (predictably) result in gasoline prices going down.
Therefore, under your interpretation, it would be reasonable to attribute the rise in gas prices to "the higher cost of red tape." It would be reasonable to state that the rise in price is due to the government "not responding to new dynamics leading to higher costs." When in reality, most people would state that this hypothetical rise in gas prices was due to the war heating up.
Yes. let's take the hypothetical example that somehow there is a law that the US President must wait X numbers of days before the release of the petroleum reserve. Or let's take your example and add on: the President can't "relax various regulations regarding the production and distribution of gasoline" until Congress has been notified for X number of days. I can reasonably say Trump would have truthed on day 2: "We have got it all worked out and FUEL PRICES WOULD HAVE STAYED LOW, but it's CONGRESS fault for BLOCKING the PRESIDENT with all this RED TAPE. CONGRESS FAILED TO SUPPORT THE TROOPS".
It's why decrying about "red tape" is a really good line to throw in any political election. And honestly, there is a lot of bad laws on the books. Much has already been said about Jones Act or how Jefferson foresaw this and had a letter to Madison discussing having laws that expire every 19 years.
It seems to me that's a different issue. If you want to argue that the rise of housing prices could be ameliorated by reforming some "bad law," fine, but claiming that the rise is the result of the "higher cost of red tape" is meaningless at best and misleading at worst.
Yes, it's fair that I am no longer defending @atelier viewpoint. Theirs sounds like "rules got stricter over time and costs increases" while mine is more "rules didn't change but the costs to follow the rule increases". I was thinking about your examples again and maybe the reason is essentially what moved what.
In the suburb example, the supply stayed the same but demand increased. Obviously demand increases prices, but because it's perfectly inelastic supply prices can go as high as long as demand can meet it. We could, theoretically, calculate the economic rent which is the "excess" purely because of the supply constraint of red tape.
In the oil example, the market is already in equilibrium where supply is very flexible to demand, allowing prices to stay stable as supply is turned on and off (essentially the reverse of "if [oil] prices are going lower, why drill more?"). The war reduced supply and that's the biggest or initial constraint, demand has still remained the same, red tape didn't create the situation because without the war there would be no price shock, so that's why arguments for red tape here is meaningless and/or misleading.
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