Interesting Links for 3-1-2011

[andrewducker]

• The joy of making model aircraft
  (tags: toys funny)
• UN defends human right to WikiLeaked info.
  (tags: wikileaks un)
• What Could Have Been Entering the Public Domain on January 1, 2011 if 1977 copyright laws were still in effect.
  (tags: copyright law culture publicdomain publishing)
• The New Year's resolutions of various tech companies. I love Apple's.
  (tags: technology funny)
• New clues uncover how 'starvation hormone' connects insulin, fat levels and cancer.
  (tags: hormones health fat insulin diabetes)
• Why Star Wars is not Entertainment (although it sure as hell entertained me).
  (tags: scifi sf starwars movies)
• Women working in technology discuss whether they would recommend the profession to other women.
  (tags: career feminism work computers technology)
• The Female Character Flowchart
  (tags: feminism)
• Bill Sienkiewicz speaks about Big Numbers #3
  (tags: BillSienkiewicz alanmoore comics)
• Good Lord, government ministers want stable house prices. Altogether too sensble.
  (tags: housing uk government)
• Microsoft not allowing NES emulator on WP7 phones - this kind of thing is why I won't be getting one.
  (tags: mobile_phones microsoft censorship)
• Calories, fat or carbohydrates? The problems with current diet studies
  (tags: science health food diet nutrition research)
• Jesus not actually related to Mithras (or Horus, or Dionysus).
  (tags: religion christianity jesus)

Comments

[makyo.livejournal.com]

He suggests the government could help limit further house price rises by encouraging the building of more homes.

This (the idea that the way to keep house prices steady is to build more houses) is a myth, albeit one that's quite widely-believed and oft-repeated, even by those (like housing ministers) who really should know better. It turns out that things just don't work like that, not least because it's unclear how you'd get the developers to join in: their entire business model relies on being able to make large profits from building new houses and then selling them for as high a price as they can get.

[gonzo21.livejournal.com]

Indeed, there are at least a dozen local property developments that have ceased around here, because developers can no longer make huge profits on them.

The worrying thing is just how many people jumped on the property development bandwagon, and as soon as interest rates start to go up again... I fear a lot of people are going to be in a world of hurt.

[andrewducker]

Can I get some references on this? Because I find it hard to believe that you can increase supply without prices dropping.

[makyo.livejournal.com]

I just asked Abi, who knows about this sort of thing (her job essentially consists of researching and thinking very hard about UK housing policy, and trying to persuade politicians to do things in a sensible way). The following is my attempt to understand and explain what she said, and may contain errors as a result of it not being my specialist subject.

Apparently an early draft of the Barker Review highlighted this issue, but the final report was persuaded to confirm the accepted supply-demand wisdom. There are, I'm told, a fair number of academic papers on housing policy which point out the flaws in this reasoning, but I don't have any specific citations to hand (although Abi says an academic journal search for "Barker Review" should turn up a few).

The problem, as I understand it, with the supply-demand argument is essentially what nmg says below: prices depend on the demand, but demand is affected only slightly by supply and much more by several other factors.

Some of these factors are geographical: We're currently in the process of buying a 4-bedroom detached house with a garage and nice garden, in a nice quiet bit of Coventry, for a price that might get you a one-bedroom flat in an ok-ish but not especially up-market bit of London. This difference in price isn't because there are more houses available in Coventry (there aren't), but because more people want to live in London than in Coventry.

Another factor is social in nature: house prices are pretty low in some of the dodgier inner-city areas of Liverpool, say, but that's not because there's an oversupply of housing, but because relatively few people want to live in those neighbourhoods.

Supply and demand works fine for things like Mars bars: if I own the necessary factories, and notice that the price of chocolate is going through the roof, then I can take on more staff, buy in lots more sugar etc, and then have a warehouse full of the things within a couple of weeks, which can then be distributed to retailers in order to meet the geographical variations in that demand. If there's a big shortage of housing in a particular area, though, then it'll take a year to build, say, ten at a time, in a fixed location. Also, you have to be very careful about what sort of houses you build: developers building one-bedroom flats for single executives might be profitable for the developers, but isn't going to do anything to bring down prices of 3- and 4-bedroom family houses, especially if you build those flats in the wrong area (eg near local schools but away from mainline railway stations or motorway junctions, etc).

Even if you could bring down the demand by carefully targeting the supply, then (if I've understood what Abi just told me correctly) in order to keep house price inflation to about 2%, you'd need to build about a quarter of a million new houses a year - which hasn't been happening for the last few decades. Also, the developers aren't going to do that, because they rely on house prices remaining high in order to make a profit.

So unfortunately it's all a bit more complicated than most people realise. It's not entirely clear whether the current housing minister does realise this and is just presenting it as a simple issue in order to look like he and the rest of the government have a workable plan when they don't, or whether he actually does think the problem is easier to solve than it is.

[nmg.livejournal.com]

You're looking at this the wrong way. The way to reduce house prices is not to increase supply, but to decrease demand. We need a good pandemic around here.

[undeadbydawn.livejournal.com]

I'd love you to explain that.

I mean, the verbal principal makes sense, but how does one decrease demand?

[nmg.livejournal.com]

Uh, reduce the number of people who need to be housed?

[undeadbydawn.livejournal.com]

how

[anton-p-nym.livejournal.com]

Kill homebuyers, drive them before you like cattle, and listen to the lamentations of their real-estate agents.

Or slap on a huge land transfer tax, or raise interest rates into the stratosphere, or sit on the sidelines as your major source of employment folds tents with no visible means of replacing the lost jobs, or switch off the water mains and sewers. You could also sharply curtail the extension police/fire/emergency services to new developments as an austerity measure.

-- Steve thinks there are tons of ways to make buying a new home unattractive enough that few people would go on the market.

[dalglir.livejournal.com]

"Kill homebuyers, drive them before you like cattle, and listen to the lamentations of their real-estate agents."

Lol.

[anton-p-nym.livejournal.com]

I mean, the verbal principal makes sense, but how does one decrease demand?

Aside from nmg's Swiftian answer, you mean? Well, you may want to ask the city fathers in Detroit for details.

-- Steve's boggled at the (in a literal sense) decivilisation happening just a couple of hours down the road from his home.

[makyo.livejournal.com]

Indeed. The problem is that house prices depend on demand, which isn't as strongly linked to supply as one might expect or want.