Housing Prices
September 26th, 2006 | by Gman |We often hear that the rich guy moving into town is the root-cause of the precipitous rise in the cost of housing. In a free market, though, producers will always provide choices to all consumers as long as they can make a profit. But gov’t regulations have a substantial impact on how much it costs to build housing. One of the notable comments in the article linked above, is that, for the most part, homeowners are planners, planning board members, city council members — i.e. regulators. Hence, why not create policies that restrict the supply of housing so that the value of your home increases artificially? That’s another thing we often hear — “I have a right to the highest value possible for my home!” No, arguably you have a “right” to whatever value the free market places on your home. To artificially increase values by gov’t fiat robs the public of the opportunity to achieve the American Dream of homeownership. I believe that the market will provide decent, affordable housing in any marketplace if its allowed to.
8 Responses to “Housing Prices”
By Dani on Sep 26, 2006 | Reply
Well, this is certainly a classic case of the government shooting itself in the foot. Home ownership is associated with a whole host of positive social outcomes, such as family stability, improved employment opportunities, decreased crime, etc. So much so that local large businesses actually co-sign on employees’ mortgages. Of course, this is also the impetus behind Habitat for Humanity. Remember the “broken windows,” theory of crime? Well, windows are repaired a lot quicker if they are owned by the folks who live there. When we moved to Billings, the realtor was quick to point out that there was a lot of “pride of ownership” here. I think that is as true as ever- but there has to be ownership. I don’t know what the answer is to over-regulation- after all, the disinterested ascetic ruler went out with Plato’s Republic- but maybe it would help if we made the city council members play a few rounds of Sim City.
By Matt Singer on Sep 26, 2006 | Reply
Um, some marketplaces have exceptionally high demand. Gallatin, Missoula, Ravalli, and Flathead counties have vastly different regulatory systems, yet housing prices are rising in all of them. Why? Because land is ultimately a limited good and that land is incredibly scenic.
By Dani on Sep 26, 2006 | Reply
Yes, Matt, yours is a perfect example of supply and demand, and an example that is not excluded by the article Gman quoted. In some places the housing market gets tight (like Big Sky) so people have to be paid higher wages to make up for it, and temporarily there can be problems with finding the enough workers at the low end of the wage scale- because people will not live in a dump, not even in Big Sky. Some will choose to commute- but that’s part of the same market. After all, the “free market” is nothing more than people choosing what they think is best for them. If the market doesn’t fix the problem, then people will leave and house prices will drop-exactly what’s going on in the more inflated parts of the sector right now. The worst thing that could happen is price control- if it is fixed artificially high (like in the article) it keeps buyers out of the market- if artificially low, it keeps builders out of the market. Either way, you get shortages. Great scenery shifts the whole wage/price spectrum higher, but the dynamics are the same.
By Gman on Sep 26, 2006 | Reply
Um, what Dani said…
By Dani on Sep 27, 2006 | Reply
Sorry, I’m on a tear because I went to Big Sky a coupla weeks ago and COULD NOT BELIEVE the traffic into & out of there. They should have quit building six or seven years ago- you know- just AFTER I bought my place
By keith on Sep 27, 2006 | Reply
I disagree. I think NIMBY keeps everyone honest about how they want the town to be. Open markets don’t do that.
Take the hills south of Helena. Are you comfortable having the entire treeline mowed down so that real estate developers can put in mcmansions spaced four to an acre? I’m not. I remember driving through El Cerrito and Albany, CA (or somewhere around there) where all the hilltops are paved over like a hive and it looks like crap.
I want to live in a clean aesthetic community, not an open market drivin only by $$.
By Gman on Sep 27, 2006 | Reply
Do you own the property in the hills south of Helena, Keith? Didn’t realize that your so-called right to live in an “aesthetic community” trumps the real right of private property ownership. The latter is protected by both the federal and Montana constitutions. If you need me to point out where in those documents, I’d be happy to. Moreover, Keith, last time I checked the will of the majority (assuming it could be the majority that dictates who builds what, where, and when instead of the property owner) is trumped by the rule of law. Of course, private property owners have ceded a good portion of their “bundle of rights” in the name of the “general welfare.”
Well, do you even realize the ramifications of the world that you seem to intimate by your comments?
Of course, Keith, as a fellow resident of Helena, you realize that 95% of the hills south of Helena are owned by: 1) the City of Helena; 2) the National Forest Service; and 3) the Prickly Pear Land Trust. Therefore, I highly doubt that the treeline is going to get mowed down. Your point would have been better served by what is going on the North Hills. My comments still apply, though.
By Dani on Sep 27, 2006 | Reply
Well, Keith, that’s alright as long as you’re willing to pay for it! Just remember many of those people in El Cerrito think they’ve got it pretty good, since they have their own house, and they don’t mind living in a hive. No one is making you live there. I wouldn’t want to, either.
You might like Daybreak, a clean and aesthetic community south of Salt Lake City. Funny thing, though, they left out the “affordable” part of the “decent and affordable” equation.
People with low incomes don’t get to grouse about the scenery, and they don’t get to live in Daybreak, either. They commute in from those capitalist havens of South Jordan and Sandy, I guess. A greater percentage of Americans own homes now than ever before, and there are now actually more rooms than people per house now, too, thanks to the free market. So while the market is responsible for those McMansions in Helena, it also is responsible for getting lots of folks out of apartments where their rent goes right down the wormhole every month.