Should building codes be less restrictive to allow for more and cheaper low income housing?

[Loren Pechtel]

Everything on the list would lower costs and therefore rent.

You and Axulus make the typical mistake of assuming textbook correlations would play out in the real world. Just because a builder saves on building costs does not mean those savings are going to be passed all the way down to the tenant dollar for dollar. No matter what the conditions of the apartment, the Landlord is going to try to get the highest rent the market will bear.

Of course he will. What you are missing is the invisible hand--if the landlord is making too much rent then people will build more rental units to cash in on this. Excess profit can only exist with government protection.

I don't work "at the edges of construction" - I am in the real estate market day in and day out including new construction.

Which doesn't give too much of a picture of construction costs. My experience was directly with creating the software that did the cost calculations for parts of the house.

No, density in and of itself is not going to be the factor in crime rates that make the OP suggestions wrong. It is treating poor people like animals without dignity that attracts crime to an area. It's a downward spiral.

Then why does the crime rate always go up with density? (Hint: It's not the density per se, but rather the fact that the density provides more opportunities for crime and more ability to hide the crime.)

So yes, let's strip low income housing of all it's landscaping, amenities and aesthetics - depressing and demoralizing. Let's force families with children to share a bathroom with the strangers next door - dangerous and a great way to spread disease. Even most colleges, where this "shared-bathroom" concept is most common, are rapidly moving away from that model. The vast majority of people do not like it, even if college students tolerated it for 4 years. You and Axulus want to make it a permanent condition for poor people?

We recognize that poor people can improve their lot.

 

[Loren Pechtel]

Zoning. It is mainly a tool used to transfer property rights to government, so as to prevent individual property owners from changing the nature of an area. In attempting to 'freeze' land use/social evolution, zoning's explicit intent is to shut out economic 'best use' and to create islands of restriction to protect the better off from those 'poor'.

Sorry, but as an occupant of a quiet neighborhood I want the zoning rules so the neighborhood stays quiet.

I've been in plenty of places that didn't enforce such segregation and they are noisy. In China I'm always up soon after dawn because I can't sleep with the city noise.

Land Use and Building Regulations. Required lot sizes, house sizes, setbacks, room sizes, etc. all drive up costs. In addition, building codes and inspection departments are, more often than not, useless and expensive permitting schemes. Codes are often constructed to protect trade interests (e.g. the requirement of copper plumbing, and the non-approval of PEX...requirements for licensed electricians, etc.).

I do agree that code often falls behind technology. At the time the codes are written they are generally reasonable but times change. For example, the PEX you mention. There needs to be a much better way to get new tech into the code and to recognize that the standard ways of doing things aren't always the only way of doing things.

I don't mind the requirement for licensed electricians etc so long as the code permits DIY with an inspection by the licensed professional. Too often you hear of amateurs who didn't follow code in a non-obvious way and it only caused problems much later. (For example, sewer systems missing the required cleanouts--which sometimes leads to the pipe being dug up down the road when it shouldn't have been needed.)

 

[RavenSky]

You and Axulus make the typical mistake of assuming textbook correlations would play out in the real world. Just because a builder saves on building costs does not mean those savings are going to be passed all the way down to the tenant dollar for dollar. No matter what the conditions of the apartment, the Landlord is going to try to get the highest rent the market will bear.

Of course he will. What you are missing is the invisible hand--if the landlord is making too much rent then people will build more rental units to cash in on this. Excess profit can only exist with government protection.

If the Landlord is making "too much" rent such that it makes financial sense to spend millions to build more rental units, then we have gone far beyond affordability for the poor, which was the point of the OP

I don't work "at the edges of construction" - I am in the real estate market day in and day out including new construction.

Which doesn't give too much of a picture of construction costs. My experience was directly with creating the software that did the cost calculations for parts of the house.

And my experiences is years working with new developers and as part of the USGBC and being an accredited LEED green associate, and being part of zoning/planning meetings for the City of Miami, etc. As I said, this is my career, so please do not try to insist that your experience with a house renovation trumps my years of experience in the actual industry. Seriously Loren. I tolerate your belief that you are the smartest person in the room most of the time, but I will not let you get away with it this time. There are (at least) two actual experts on this topic in this thread, and you are not one of them.

No, density in and of itself is not going to be the factor in crime rates that make the OP suggestions wrong. It is treating poor people like animals without dignity that attracts crime to an area. It's a downward spiral.

Then why does the crime rate always go up with density? (Hint: It's not the density per se, but rather the fact that the density provides more opportunities for crime and more ability to hide the crime.)

As to the bolded, in other words "density in and of itself is not going to be the factor in crime rates"

So yes, let's strip low income housing of all it's landscaping, amenities and aesthetics - depressing and demoralizing. Let's force families with children to share a bathroom with the strangers next door - dangerous and a great way to spread disease. Even most colleges, where this "shared-bathroom" concept is most common, are rapidly moving away from that model. The vast majority of people do not like it, even if college students tolerated it for 4 years. You and Axulus want to make it a permanent condition for poor people?

We recognize that poor people can improve their lot.

No, there is nothing in your posting history to support that claim.

 

[bilby]

Presumably the current rules have not existed forever; and presumably they were put in place for reasons that seemed good at the time.

Dismantling a regulatory structure without first considering what prompted its development up to this point, and determining whether the conditions that prompted it still prevail today, is a dangerous business.

It seemed like an excellent idea in the early '00s to reduce the regulatory burden on the financial markets - particularly in real estate lending. It turned out not to be such an excellent idea after all.

The OP question is far too broad to have a meaningful answer. Maybe some parts of the building codes in some places should be made less restrictive; almost certainly some of them should not.

As I understand it, there is not a housing shortage in the USA; enough dwellings exist to give everyone a roof over their head. In theory, that should lead to rents plummeting. In practice, we have both empty dwellings, and homeless people.

Clearly the free market is not doing its job. Whether that is because of regulations, or because of irrationality on the part of landlords, or homeless people, or both, or whether it is due to some other, unknown cause(s), is hard to say.

There is no minimum rent. A landlord who has an empty property should be able to drop the rent until someone can afford it - even if that takes rents almost to zero. After all, any rent should be better than no rent at all. That this doesn't occur indicates that there is more to it than money; and more to it than the availability of cheap properties.

 

[Axulus]

Presumably the current rules have not existed forever; and presumably they were put in place for reasons that seemed good at the time.

Dismantling a regulatory structure without first considering what prompted its development up to this point, and determining whether the conditions that prompted it still prevail today, is a dangerous business.

It seemed like an excellent idea in the early '00s to reduce the regulatory burden on the financial markets - particularly in real estate lending. It turned out not to be such an excellent idea after all.

The OP question is far too broad to have a meaningful answer. Maybe some parts of the building codes in some places should be made less restrictive; almost certainly some of them should not.

As I understand it, there is not a housing shortage in the USA; enough dwellings exist to give everyone a roof over their head. In theory, that should lead to rents plummeting. In practice, we have both empty dwellings, and homeless people.

Clearly the free market is not doing its job. Whether that is because of regulations, or because of irrationality on the part of landlords, or homeless people, or both, or whether it is due to some other, unknown cause(s), is hard to say.

There is no minimum rent. A landlord who has an empty property should be able to drop the rent until someone can afford it - even if that takes rents almost to zero. After all, any rent should be better than no rent at all. That this doesn't occur indicates that there is more to it than money; and more to it than the availability of cheap properties.

You are failing to consider that search costs take time - you can drop the rent to find someone quicker but it might make sense to let the unit go vacant for up to a month and make up for it with the higher rent to allow the opportunity to find someone willing to pay the higher rent.

Homeless people is not an example of the free market not doing its "job" - homeless people have essentially zero income, so why would you ever expect the free market to provide housing and the maintenance of that housing for less than the income that a homeless person has?

 

[bilby]

Presumably the current rules have not existed forever; and presumably they were put in place for reasons that seemed good at the time.

Dismantling a regulatory structure without first considering what prompted its development up to this point, and determining whether the conditions that prompted it still prevail today, is a dangerous business.

It seemed like an excellent idea in the early '00s to reduce the regulatory burden on the financial markets - particularly in real estate lending. It turned out not to be such an excellent idea after all.

The OP question is far too broad to have a meaningful answer. Maybe some parts of the building codes in some places should be made less restrictive; almost certainly some of them should not.

As I understand it, there is not a housing shortage in the USA; enough dwellings exist to give everyone a roof over their head. In theory, that should lead to rents plummeting. In practice, we have both empty dwellings, and homeless people.

Clearly the free market is not doing its job. Whether that is because of regulations, or because of irrationality on the part of landlords, or homeless people, or both, or whether it is due to some other, unknown cause(s), is hard to say.

There is no minimum rent. A landlord who has an empty property should be able to drop the rent until someone can afford it - even if that takes rents almost to zero. After all, any rent should be better than no rent at all. That this doesn't occur indicates that there is more to it than money; and more to it than the availability of cheap properties.

You are failing to consider that search costs take time - you can drop the rent to find someone quicker but it might make sense to let the unit go vacant for up to a month and make up for it with the higher rent to allow the opportunity to find someone willing to pay the higher rent.

No, I am not failing to consider that; I am asking whether you are considering it - and indeed, whether you are considering any of the other myriad issues surrounding this topic that don't relate to building codes.

Homeless people is not an example of the free market not doing its "job" - homeless people have essentially zero income, so why would you ever expect the free market to provide housing and the maintenance of that housing for less than the income that a homeless person has?

The defining feature of homeless people is their lack of a home. While many of them also lack significant income, that is not universally true. It certainly is not true that they could not afford to pay more in rent than the landlord would get by leaving his property vacant. Almost zero is greater than zero.

You are proposing a simple solution to alleviate a complex problem. That is usually a dangerous thing to do.

 

[Canard DuJour]

You and Axulus make the typical mistake of assuming textbook correlations would play out in the real world. Just because a builder saves on building costs does not mean those savings are going to be passed all the way down to the tenant dollar for dollar. No matter what the conditions of the apartment, the Landlord is going to try to get the highest rent the market will bear.

Of course he will. What you are missing is the invisible hand--if the landlord is making too much rent then people will build more rental units to cash in on this.

Like where? You see the crazy rents in places like London where more people want to live than there's living space for. More rental units elsewhere won't reduce rents. The only alternative is to subdivide existing living space, per the OP proposal, which is unlikely to reduce rents because the resulting concentration of economic activity tends to multiply demand. Indeed what we see in places like London is living space subdivided and subdivided again into windowless shoeboxes while rents continue to rise. Steeply.

Excess profit can only exist with government protection.

 

[Togo]

You and Axulus make the typical mistake of assuming textbook correlations would play out in the real world. Just because a builder saves on building costs does not mean those savings are going to be passed all the way down to the tenant dollar for dollar. No matter what the conditions of the apartment, the Landlord is going to try to get the highest rent the market will bear.

Of course he will. What you are missing is the invisible hand--if the landlord is making too much rent then people will build more rental units to cash in on this..

This is a case of restricted supply.

Unless you're somehow able, as a developer, to make use of an unlimited amount of space, then supply of rental property will remain limited. Which is the entire reason for reducing the square footage in the first place. Rents will thus depend on the desirability of the area, and the rented properties available. Construction costs are largely irrelevant. What limits supply is your ability to impose the negative impact of your building on the rest of the neighbourhood.

And if you think about it, they have to be.

 

[Nice Squirrel]

You are failing to consider that search costs take time - you can drop the rent to find someone quicker but it might make sense to let the unit go vacant for up to a month and make up for it with the higher rent to allow the opportunity to find someone willing to pay the higher rent.

And I assume this is what is happening in our neighborhood where we have "investor" apartments that sit half empty. (aka apartment buildings sold like condos where an uninvolved group of investors are promised a sound ROI, but few renters are willing to pay the $2k to live there.) The developers don't care if the building doesn't make a profit. They've already been paid.

AKA: Apartment bubble is forming here.

 

[Axulus]

This is a case of restricted supply.

Unless you're somehow able, as a developer, to make use of an unlimited amount of space, then supply of rental property will remain limited.

Every product has a "limited supply" on that basis.

"Unless there is unlimited metal, then the supply of cars will remain limited"
"Unless there is unlimited farm land, then the supply of corn will remain limited"

It's not about an infinite supply. It's about how supply can _vary_ based on the costs involved with increasing supply. If production costs drop (such as being cheaper to make more rental units, for any reason), then more units will be built given a fixed amount of demand, and price will drop given that fixed amount of demand. And the reason why is obvious: I can maintain or even increase profit by making more units since each unit is cheaper to make, even if rents drop a little. Basic econ 101.

But my examples go even further: the units are not identical. We are talking about the units being a little bit less desirable - smaller units with shared bathrooms among perhaps 2 other units, and maybe a shared kitchen. The result will be a further drop in price since there is less quantity demanded for such units at a given price.

 

[Axulus]

You are failing to consider that search costs take time - you can drop the rent to find someone quicker but it might make sense to let the unit go vacant for up to a month and make up for it with the higher rent to allow the opportunity to find someone willing to pay the higher rent.

And I assume this is what is happening in our neighborhood where we have "investor" apartments that sit half empty. (aka apartment buildings sold like condos where an uninvolved group of investors are promised a sound ROI, but few renters are willing to pay the $2k to live there.) The developers don't care if the building doesn't make a profit. They've already been paid.

AKA: Apartment bubble is forming here.

Not everyone has the goal of maximizing their ROI with real estate. Some people think real estate is a sound investment even if they let the unit remain empty (that, at a minimum, it will keep up with inflation, for example, and maybe even a little bit better). They don't want to deal with the hassle of tenants/renters and are willing to forego that income stream because of that. Or maybe they want the "option value" of the condo - they may be considering moving there in the near future, or maybe have a kid that might want to move in there. Therefore, they let it remain empty so they can move in at any time. That's what it sounds like you are talking about.

 

[Axulus]

The defining feature of homeless people is their lack of a home. While many of them also lack significant income, that is not universally true. It certainly is not true that they could not afford to pay more in rent than the landlord would get by leaving his property vacant. Almost zero is greater than zero.

You are proposing a simple solution to alleviate a complex problem. That is usually a dangerous thing to do.

You are failing to consider all the factors involved:

-Even if a homeless person has a little bit of income, does that income exceed the additional maintenance costs incurred as a result of having a tenant?
-Can much more income be earned by waiting up to a month or two to find a tenant that can afford to sign a one year lease, with a damage deposit and first/last month's rent?
-What if the homeless person fails to pay rent? Eviction is a time consuming process that can take up to a month before you can legally kick the person out.
-What if the homeless person leaves the place damaged/dirty? It's not like it's possible to be compensated for that.
-How much time is spent dealing with a tenant, just to collect "some rent that is more than zero." Time is valuable.

Your simplistic analysis fails on so many points.

Final point: I never once claimed that my proposal is a _complete_ solution. It's one _part_ of the solution to making housing more affordable. What I propose does not exclude other ideas working together in conjunction with each other.

 

[Jimmy Higgins]

Final point: I never once claimed that my proposal is a _complete_ solution. It's one _part_ of the solution to making housing more affordable.

We understand that. What most of us are saying is that almost nothing you suggested would help to lower rents.

 

[Loren Pechtel]

The defining feature of homeless people is their lack of a home. While many of them also lack significant income, that is not universally true. It certainly is not true that they could not afford to pay more in rent than the landlord would get by leaving his property vacant. Almost zero is greater than zero.

You are proposing a simple solution to alleviate a complex problem. That is usually a dangerous thing to do.

1) You're assuming the place remains vacant forever. In practice that's usually not the case.

2) You're ignoring wear and tear. An occupied place uses up the lifespan of things like carpet and paint, you have to recover the costs.

3) Social factors. If you rent cheap to the homeless you're likely to have gripes from other renters who are paying more and feel they are being treated unfairly.

- - - Updated - - -

Of course he will. What you are missing is the invisible hand--if the landlord is making too much rent then people will build more rental units to cash in on this..

This is a case of restricted supply.

Unless you're somehow able, as a developer, to make use of an unlimited amount of space, then supply of rental property will remain limited. Which is the entire reason for reducing the square footage in the first place. Rents will thus depend on the desirability of the area, and the rented properties available. Construction costs are largely irrelevant. What limits supply is your ability to impose the negative impact of your building on the rest of the neighbourhood.

And if you think about it, they have to be.

Build taller. Build deeper.

 

[Axulus]

Final point: I never once claimed that my proposal is a _complete_ solution. It's one _part_ of the solution to making housing more affordable.

We understand that. What most of us are saying is that almost nothing you suggested would help to lower rents.

Only if the law of supply is violated and you also hold the absurd notion that smaller units with shared bathrooms and kitchens and less available parking are just as desirable for people looking for something to rent and will not decrease their willingness to pay for those units. Do you have some reason to believe that both of these highly implausible scenarios are true?

 

[bilby]

The defining feature of homeless people is their lack of a home. While many of them also lack significant income, that is not universally true. It certainly is not true that they could not afford to pay more in rent than the landlord would get by leaving his property vacant. Almost zero is greater than zero.

You are proposing a simple solution to alleviate a complex problem. That is usually a dangerous thing to do.

You are failing to consider all the factors involved:

-Even if a homeless person has a little bit of income, does that income exceed the additional maintenance costs incurred as a result of having a tenant?
-Can much more income be earned by waiting up to a month or two to find a tenant that can afford to sign a one year lease, with a damage deposit and first/last month's rent?
-What if the homeless person fails to pay rent? Eviction is a time consuming process that can take up to a month before you can legally kick the person out.
-What if the homeless person leaves the place damaged/dirty? It's not like it's possible to be compensated for that.
-How much time is spent dealing with a tenant, just to collect "some rent that is more than zero." Time is valuable.

Your simplistic analysis fails on so many points.

Final point: I never once claimed that my proposal is a _complete_ solution. It's one _part_ of the solution to making housing more affordable. What I propose does not exclude other ideas working together in conjunction with each other.

Are you even reading my posts?

I am pointing out that there are a huge number of factors involved, and that as a result, your proposed solution is too simplistic.

How can that possiy lead you to claim that I am not considering all the factors, or that my analysis is simplistic? The only thing I am analysing is your analysis.

You are proposing a simple solution to a complex problem. That is a dangerous thing to do.

 

[Nice Squirrel]

We understand that. What most of us are saying is that almost nothing you suggested would help to lower rents.

Only if the law of supply is violated and you also hold the absurd notion that smaller units with shared bathrooms and kitchens and less available parking are just as desirable for people looking for something to rent and will not decrease their willingness to pay for those units. Do you have some reason to believe that both of these highly implausible scenarios are true?

What is this law of supply? Unless there are some radical changes to consumer preference, people will want their own bathrooms and kitchens.

 

[Ford]

What is this law of supply?

It is one of the laws handed down by the Holy Hand of the Free Market and cannot be contravened by the Fallen Angels of Regulation.

 

[Axulus]

What is this law of supply?

It is one of the laws handed down by the Holy Hand of the Free Market and cannot be contravened by the Fallen Angels of Regulation.

So say the fundies about about evolution.

 

[Ford]

It is one of the laws handed down by the Holy Hand of the Free Market and cannot be contravened by the Fallen Angels of Regulation.

So say the fundies about about evolution.

So say we all. So say we all.


Wait...are we supposed to be repeating things?