> High rents are created by high local productivity.

Wrong. High rents have many reasons and also good policies to get them down and have affordable housing for more people, also in otherwise expensive and popular cities.

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vlovich123 9 hours ago | parent | next [-]

OP has the demand part of the equation if supply remains fixed. The reason supply remains fixed is the US as a whole made policy changes in the 1970s that slowed down construction, specifically zoning laws and environmental laws swept the country. The 2008 recession also cancelled what little construction remained ongoing for a long time.

When you combine that with spiking wealth in Silicon Valley, you’ve got the perfect storm in Silicon Valley. With OpenAI and Anthropic both based in SF, it’s going to be worse than ever once they IPO.

	▲	estearum 9 hours ago \| parent [-]
		The equilibrium for new housing construction will always be "just enough to keep it expensive by local standards [i.e. by local wages]." That's especially true with rising labor, material, and capital costs. It was actually the post-war housing boom that was abnormal, fueled by aggressive federal funding of suburban buildout. US municipalities are now broadly doomed to bankruptcy trying to maintain sprawling infrastructure that was never cost-effective to create in the first place. Look at Austin TX. Influx of new building, prices stabilized, and now construction is dropping off a cliff. No one can afford to build into a stable or potentially falling local market. Construction will start again when local productivity grows enough for people to bid the prices back up again.

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estearum 9 hours ago | parent | prev [-]

Nope.

Rents cannot (at meaningful scale) exceed local productivity, or else there will be widespread vacancies and landlords will reduce their rents.

Rents cannot (at meaningful scale) fall below local productivity, or else landlords will simply raise their rents.

Go talk to a landlord about how they site prices.

Step 1. Look up income of your target demographic

Step 2. Eat 30% of their income

Can you show me a place with high local productivity and low rent?

Can you show me a place with high rent and low local productivity (that's not e.g. a vacation destination for people with high productivity elsewhere)?

You can certainly artificially suppress prices with rent control. But that just gets fed back into the system in the form of reduced supply, so it ends up raising rents on the non-controlled housing stock anyway.

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kbelder 4 hours ago | parent | next [-]

Assume you have an area with a certain productivity and rent. Population and housing are growing at a certain rate.

Now make a law that makes construction cheaper. Or make a law that makes construction more expensive. What happens to rent and mortgages, even though productivity hasn't changed at all?

Productivity (or, rather, wealth) of the occupants is a very strong factor, but it is still just one of multiple factors.

	▲	estearum 2 hours ago \| parent [-]
		You think you can make a law that sets the price of housing above local wages and stays there? No, you actually cannot do this in any lasting way. The price of land would fall to the level required to make it construction viable again. Or the city would be abandoned, which is not generally the outcome since cities have so much shared capital investment that cannot be moved elsewhere.

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don_esteban 8 hours ago | parent | prev [-]

> Can you show me a place with high local productivity and low rent?

Put the following prompt into your favourite AI and enjoy the reading:

"How do rents relate to productivity in the area? How does Vienna compare to San Francisco?"

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estearum 7 hours ago | parent [-]

Vienna? World famous for publicly-funded housing construction?

Try this one: "Create a simple analysis approximating how much higher rents would be in Vienna if not for the aggressive public subsidization of supply"

In any case, Vienna has a good system! But it's not that it avoids high productivity → high rent, it's that it splits rent into subsidy costs and rent.

In other words, the amount of subsidy + rent required will grow with local productivity.

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don_esteban 5 hours ago | parent [-]

My point is: Your post reeked by defeatist 'nothing can be done against market forces'.

Yes, it can be done, and if we want to have a reasonable future, it should be done.

	▲	estearum 2 hours ago \| parent [-]
		So you were responding to an assumption that's not actually in my comment? Vienna's solution is fine but has escalating costs and isn't necessary. Land Value Tax is better.