Crozier for Mayor

His platform almost makes one look into becoming a London voter.

Property is too expensive. With a three-bedroom house costing six or seven times the average wage, millions are postponing and even abandoning the idea of having children. This is hardly a sustainable state of affairs. Prices are high because demand is high and supply is low. The answer is to increase the supply.

If elected I would abolish all planning laws and all building regulations. Immediately, people would start to build. Up mainly. And why not? We shouldn't be scared of living in flats. Many people around the world enjoy good quality high-rise living where raising a family is as easy and as pleasant as living in a semi-detached. All that we have to do is to allow it to happen. I believe that by scrapping the regulations we will see the development of all sorts of new ideas in architecture as well as a massive increase in capacity. ...

It's an interesting approach except for one little thing: few who currently own property would agree that "Property is too expensive." Quite the contrary. Assuming that Londoners and Seattleites have similar values, which judging by the British blogs I read, they do --- I suspect that most property-owners think values (not "prices," thank you) are "about right" if not a tad low. So "unleashing the market" to build more housing faces enormous resistance from everyone who already owns --- and every time you help someone (through one sort of subsidy or another) to own, you create a new voter who wants to keep things as they are and will turn around and call for restrictions.

And I also want to know more about those "new ideas in architecture."

But good luck, Patrick. Please send me some campaign buttons and I'll make sure that they are distributed to the right people.

Comments

[Courtney]

Basic economics will tell you that supply and demand are not related.

[David Sucher]

Huh? "...supply and demand are not related."

Tell me more, please.

Perhaps I had been under the mis-apprehension these many years that, for example, the reason shoreline property in Seattle is so expensive is because "they ain't making any more of it" and a finite supply meets a growing demand.

[Courtney]

I found it very confusing too. Apparently it goes something like this:
http://www.bized.ac.uk/stafsup/options/notes/econ207.htm

Crozier's platform doesn't make sense - prices are high because *demand* is high. Conversely, it doesn't matter how few there are, if nobody wants it, you aren't going to be able to sell it. The answer is not to increase the supply of 3 bedroom 'houses' but to change the demand for those 'three bedroom houses'. What he doesn't say is that English custom and law strongly discourages families with small children from living on the second story or above. He faces a far more difficult task than simply persuading people to build 'up'. Instead, he's going to need to persuade families with small children to live on the second story or above - flats which are not now built, because families with small children don't want to live there. If he can change people's minds about living there, if the demand is there for those 'family flats', then builders will build them.

As for the Seattle shoreline, you're correct - because people *demand* to live there. If the shoreline was considered an undesirable place to live, land there would be cheap, because demand would be low. The supply of land stays the same whether or not the demand is there.

[Patrick Crozier]

Courtney,

All property in London is in demand - 3-bed houses, 3-bed flats, 1-bed flats, studio flats, even broom cupboards from time to time.

You mention laws that discourage families living in high-rises. Which ones are these?

Are you aware that it almost impossible to build in London? There is almost no way of telling whether people might be prepared to live on the 22nd floor because no one is allowed to build these kinds of buildings.

[Murph]

Courtney, the second page you cite contradicts the point you're trying to make out of it. You say that "price is high because demand is high", while the page states that "demand decreases as price increases." You're righter than the page, for what you're thinking of; it would be best if you didn't try to back yourself up with contradictory sources.

The page is speaking of demand as "how many people want to buy houses if houses cost X amount?" That kind of demand is driven by price, and falls as price rises. What you--and Patrick--are talking about, is "how many people want to buy houses?" This kind drives prices; prices rise as this kind of demand rises. Your citation refers to it as desire.

So the system goes something like this:
- As desire rises, price rises; more people want to buy, and the people with the most money can and will outbid the rest of the people, so the price that each unit of housing can command rises.
- As price rises, demand (the number of people willing to buy housing at the current price) falls, but supply rises, as manufacturers see an opportunity for profit and produce more housing.
- As the number of units on the market rises, the people at the top and the people on the next layer down can afford to buy, so the average selling price of a house drops.

On top of that, you're missing Patrick's point. In London, as in many other cities, there are laws limiting how high you can build, and therefore artificially capping the supply, and preventing this process from working. The reason the flats aren't being built is not because the market won't support them, but because the laws won't allow them. He wants to restore this process by removing the laws.

[Murph]

Which isn't to say that I wholly support him. I, for one, happen to like some of the building codes in existance. Maybe you're desperate enough for a place to live that you're willing to buy a house with low-quality electrical wiring that has a chance of catching fire, but that fire might also burn down my house if I'm your neighbor, and I think I kind of need to have a say in whether you burn my house down, so, regulations on how a house's wiring system is done are reasonable.

And, of course, without any kind of building regulations, there's no justification for building inspectors, so, most likely, you'll happily buy your firetrap of a house without anybody ever warning you that the electrical system presents a severe fire danger.

I support getting rid of big portions of the average city's planning codes--and I say that as a planning student--but zapping everything is irresponsible.

[Courtney]

I did mention the laws restricting building upwards. As for custom, don't you find it interesting that the government department that deals with what I call child welfare lists as a statistic the number of families with small children that live above the ground floor?

Those laws are a result of societal desire. In order to change the laws, you need to change what society deems necessary. The reason the prices are high isn't the supply, per se - it's the *limitation* of supply - making an elastic good inelastic. Similar to NYC's rent-control problem, I think.

And yes, all property is in high demand in a city - that's rather beside the point I was making.

Murphy has got the essence of the point rather well, I think...I'm tired and can't be bothered to do a full analysis.

And sorry for the muddled explanation - I think you all have figured it out well enough for yourself. I'm not an economics student, per se. I just took macro economics this summer, but I did see something worth mentioning.

[Murph]

I'll admit, Courtney, that I don't know anything about Londoners' views on upper-story homes. But it seems as though, if Londoners don't want to live on upper-stories, you don't need a law saying, "Hey, you can't live in a place you wouldn't live even without this law." And, if Londoners do want to live in upper stories, my desire to raise my kids at ground level shouldn't affect your ability to raise your kids how you like.

Either way, using laws to block this is unnecessary and/or wrong. You should remove the laws, and see what happens. Either,
(a) people really don't want to live up high, and so developers won't build things high, and you have exactly the same situation with the law as without, only this way you've tested it to make sure that's the situation people want, or,
(b) people really do want to live up high, and developers will respond to that, and everybody has a place to live and is happy.

If the housing situation really is as bad as Mr. Crozier suggests, then the societal desire to "have a place to live" will probably outweigh the societal desire to "have kids raised at ground level". Maybe not, but that's a choice that people should be allowed to make.

Sorry to be so relentless, but I come from a city with nonsensical four-story height restrictions that are pretty unarguably driving up both commercial and residential prices, so this is kind of a hot-button issue for me.

[Courtney]

*chuckle* I don't disagree with you, there. My point was that laws/desire/demand are generally a reflection of societal mores. You and I might not mind, but there are no shortage of people who love telling us what to do, in our own best interests. Plus,.....there is the whole societal contract concept.....

[clew]

Ha; I just read a book on The Growth of Victorian London which recaps arguments about why the English built London with so many crowded houses and so few flats.

The arguments of the day were that flats were urban, French, and socially mixed. It would be odd but not surprising to trace all those ideas to the present day.

(I would like to know, before judging the proposal, whether the desire and demand pressures on flats in London are anything like the pressures on houses.)

Wasn't there an enormous highrise modern flats & offices development recently? How is it doing? I only remember it from a line in a movie, "Oo, from up here I can see the class war."

[Tenants Association]

For some educated commentary on the subject check out

Rent Controls in New York
and for a Canadian prespective check out Rent Controls.

[Tenants Associations]

I see that last link has moved.

It is now at Rent Controls in Ontario Canada