Book 2: Big Boss Casamio

But what are someone else’s incentives? What if there are two big property owners in town? Then they gain something when they get more of the town’s population living in their houses: a higher portion of that housing demand becomes cash to them. That’s an incentive to build new housing.

This is correct, but not incentive to build. This is incentive to get more people living in 'your' housing. Other incentives exist to entice people into your housing and to keep them there. Lets say, if you refer others, you get a portion of the profit. On top of this, agreements which force them to stay in your housing for a period of time.

Yes, ALL housing’s earning potential drops, but you get 100% of the new property and only lose say 50% of the existing housing value to dilution.

Ok, so you have 1000 houses out there, and build new ones. These ten you gain more money on while losing half the value on you current 1000. This is not economical, you lose more than you gain without increasing demand only increasing supply. You'd have to always make more houses than you currently have (or at least enough to outweigh the decrease in value) which is very risky, and takes a very large amount of upright money and time until you have the ability to sell

Housing also takes time to make and has a massive cost associated. This is riskier than buying a new home and takes a lot more time meanwhile you aren't making money.

What if neither make new houses and increase prices anyway? Sure, neither get a larger proportion of the money made, but both make more money.

Lets skip forward to the 100 player situation,. If they make more housing that takes more time, and if it fails, the market for that home decreases before they can get it on the market, or they guessed wrong in the value of a new house in that location, they get less money than those simply increasing their prices. Those who simply increase their prices get more profit, invest back into the market more, and gain a larger share.

They are more flexible too. If the market goes down, they can sell, the builders cannot. If, lets say, the local school announces they're shutting down the builder has spent quite allot building in an area that is now less valuable. The non-builder simply sells before the school shuts down, and buys where the new ones being built. The builder still must build their house, or take a loss.

All this means, with time, those taking the safer, more flexible bet of not building and not improving get a larger share of the market as they make money more consistently and can respond to issues quicker.

One more thing, what if people build, but then still increase prices like the others do? They get more money, and more share of the market. Sure, supply increases, but so does the price. If people need housing, which they do, they will pay the increased price.

I will state I agree with a mostly free, market based economy. However market economics fail with goods that people require. Demand cannot decrease, thus those with supply can price it however they please. Normally, a person can simply say I will no longer purchase this good, and demand decreases, but people need shelter to survive so this is not an option. In-elastic goods break supply demand economics

On top of this, no market actor wants the pricing to go down. That only loses them money, or potential money, with no gain for themselves. There is no incentive.

Sorry to drone on, but to restate, those new people who enter the market with cheaper housing will be out competed by those who keep prices high. They will have more money, they will buy those cheaper houses, they will sell them at their inflated prices. The new market actors will have less resources and can never become a large force even though most would prefer to buy from them. If an average non-investor does buy from them the house exits the market, as the owner is not trying to sell but is simply living there.

End of cassimos reign

I agree, and that’s a serious problem. Even the increase in quality without increase in number would be a problem, though slightly less. Only increase in number can bring prices down.

Well, there are other ways. You could regulate the sale of housing and force it to stay at inflation, or decrease. How will things be maintained or improve? Those who own and are using the housing will pay for it, as they currently are, and no profit will be needed. You may say you'd rather this not happen but it would decrease pricing, or stabilize it.

Incidentally, this steady increase in price is because of population increase, not property improvement. The improvement of properties isn’t pushing average pricing; only individual pricing up and the whole thing balances due to demand being finite. But the demand itself increases with population (I mean, with money in the system, and each person anywhere is going to be pushing a certain amount of cash toward housing, by necessity).

correct, it's not because of improvement, because properties are not being improved. On population, though it is increasing so is available housing, and so are prices. We have many houses that remain empty and could house people that are not being used. They are up to code, they are in locations that are desirable, they are simply either priced too high or not sold/rented. This is a major issue in many cities. Sure, demand finite, but people will pay anything they can to survive and even if supply increases those with it can still charge the same price, or more, and people will still pay it. Those who decrease pricing with demand will have less money, and thus less market share.

Also, look at the places where population is decreasing. We still see housing prices increase there too

As the number of empty houses dwindles toward zero, the amount each person has to pay rises super fast. The result of supply and demand ratio shifts are nonlinear; population doesn’t have to double for the price of housing prices to double.

Correct. The number of empty, fully functional, fully legally tenable housing is increasing though, as are prices.

True. I think that happens because we subsidize that by using government force to slow the building of new housing. I think that the government is taking the profit away from those who work to make new construction happen, and is giving it to the people who simply own existing buildings.

There's quite a lot of housing that remains vacant though, sixteen million homes to be exact. On top of this, public housing could easily fix the issue here.

I also don’t think that’s entirely a bad thing. If we have to suffer the existence of homelessness as a possibility in human life, in order to avoid some kind of Chicago fire scenario where shit safety planning led to 1/3 of the population dying, maybe it’s worth it. Anyway.

What if we can avoid both? If everyone was guaranteed housing, homelessness could be close to or equal to zero. This is not the conversation we're having though, but it would fix the issue of housing being in-elastic

On rentals

Even if the bus driver makes way more than the house builder per paycheck, he’s going to be in a tough situation to have to pay the house builder’s income during the time it takes to build the house.

He has to anyway. The builders price to build the home is added to the cost of the home. The bus driver must, in the end, pay this to acquire the home. The only difference is that now he must also pay the landlord a cost on top.

The bus driver in either situation must either save up for this, or get a loan and slowly pay it off in order to acquire the home. The only difference in an increased cost.

it’s valuable to have the opportunity to just rent a place instead of investing all that energy to build a house, just to have a place to live.

I agree! however, if a person is paying for a home over the course of years this is what pays for maintenance and for improvement. The landlord must ask for more to gain profit. I'd argue, if someones paying for something they should gain something in return. If a person is paying more for a house than it costs to maintain they should acquire equity in the house. They should become partial owners of the house or apartment.

Rentals are a value to the renter, by virtue of being rentals, and it’s a value that houses don’t have when you own them. It’s simply the lower cost of entry to the living situation.

You can gain the same value through a mortgage loan, or a rent-to-buy agreement while also gaining equity on the house

Maybe the ownership in the village is the entire village. Like, nobody lays claim and everyone just pitches in to fix it when needed, because it’s valuable. The owner is the village, not the villager staying there.

This is public ownership of property, which I may agree is a partial solution, but I'd still agree with personal ownership of property. Public housing makes sense though as there is no profit incentive. They don't need to make money off of the building. I still want a housing market though

Obviously, our current situation is fucked up and way too skewed toward being trapped. I personally think that would get better if we cut back with the suppression of new construction. Some building codes are good, but ours are bloated and that’s economically inflaming the homelessness crisis AND the declining mental health of the entire lower and middle classes.

I agree, though I'd argue the solution is to add in a public housing option for basic shelter thus allowing for a housing market to function based off of supply demand economics. On top of this, renters should accrue equity as it is their funds which maintain and improve the housing, any extra profit generated should be in exchange for this.

As for incoherence I assume we both suffer with this here. Also, I restated myself way more than needed. Sorry for that. Thank you for the conversation though