Monday , September 27 2021
Home / Tim Worstall /It doesn’t matter what type of housing gets built – just build some housing already

It doesn’t matter what type of housing gets built – just build some housing already

Summary:
Near all agree that Britain needs more housing. The arguments start over what type of housing, who should build it and what price should be charged for it. The truth is none of those subsidiary questions matter. Just get on and build the housing, however:Increasing supply is frequently proposed as a solution to rising housing costs. However, there is little evidence on how new market-rate construction—which is typically expensive—affects the market for lower quality housing in the short run. I begin by using address history data to identify 52,000 residents of new multifamily buildings in large cities, their previous address, the current residents of those addresses, and so on. This sequence quickly adds lower-income neighborhoods, suggesting that strong migratory connections link the

Topics:
Tim Worstall considers the following as important:

This could be interesting, too:

Mises Institute writes The Idea of a Private Law Society: The Case of Karl Ludwig von Haller

David Henderson writes Reply to Bob Murphy’s Query

David Stockman writes Thanks For The Easy Money Fed: LBO Loans Booming Like It’s, Well, 2007!

Hans-Hermann Hoppe writes The Idea of a Private Law Society: The Case of Karl Ludwig von Haller

Near all agree that Britain needs more housing. The arguments start over what type of housing, who should build it and what price should be charged for it. The truth is none of those subsidiary questions matter. Just get on and build the housing, however:

Increasing supply is frequently proposed as a solution to rising housing costs. However, there is little evidence on how new market-rate construction—which is typically expensive—affects the market for lower quality housing in the short run. I begin by using address history data to identify 52,000 residents of new multifamily buildings in large cities, their previous address, the current residents of those addresses, and so on. This sequence quickly adds lower-income neighborhoods, suggesting that strong migratory connections link the low-income market to new construction. Next, I combine the address histories with a simulation model to estimate that building 100 new market-rate units leads 45-70 and 17-39 people to move out of below-median and bottom-quintile income tracts, respectively, with almost all of the effect occurring within five years. This suggests that new construction reduces demand and loosens the housing market in low- and middle-income areas, even in the short run.

A reasonable logical surmise is that adding even expensive housing to the market increases supply. Rich folks go and occupy that new and expensive housing. The argument in favour of insisting upon those affordable units is that this is where the process stops. Which, of course, it doesn’t.

For those rich folks moving into that new and expensive housing have just vacated a place one step down the market. Which will be moved into by someone else - who has equally just vacated a place and so on.

This cascade down the market means that one new expensive dwelling creates an empty space at the cheapest end of the market. Which is exactly what everyone desires, isn’t it? More and cheaper housing at that bottom end of the market? Something which is, as above, supplied by simply building more houses.

The logical surmise turns out to have empirical support. So we can stop all of the micromanagement of who builds what, where, for which price. Simply build more housing of whatever type and allow the market to sort through the relative valuations. Possibly a simple enough plan for even British politics to be able to grasp it. Possibly…..

Media enquiries: 07584 778207 (Call only, 24 hour)

Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

Leave a Reply

Your email address will not be published. Required fields are marked *