Zoning doesn't make empty units. If you took away all zoning strictures, you'd still be left with the fact that people who buy just as an investment aren't doing much good for a neighbourhood and a city.
Zoning is the cause of high housing prices. This is only an issue because there aren't enough houses to meet the demand. Zoning laws are artificial restriction to prevent deflation of home values. They also prevent people from building what has been dubbed as "tiny homes" that would allow poorer people to provide a substantial improvement to their living conditions. That is where this issue stems from.
The inability to a) provide for yourself reasonable living accommodations, and b) the surprisingly huge spike in prices of homes due to the lack of homes that are required.
This is what a libertarian believes (disclosure: I'm a libertarian).
I don't think that's true in most places though. In Australia we have crazy unaffordable house prices, and economists and politicians often say the problem is supply, but a group called LF economics did a study recently and found that our fastest growing markets were in oversupply for more than half the time the price has been rapidly rising.
As far as I can tell, the idea that it is a supply problem is just an assumption, assumed simply because neither neoclassical nor Austrian economics appear to have an understanding of credit and money creation by banks (through lending, which creates deposits) that lines up with how modern banks and the real-world monetary system works.
Some of the post-Keynesian models seem to match the real-world situation a lot more. The house prices seem to be so strongly distorted by speculation based on easy access to credit that the price statistics don't correlate almost at all with the supply surveys, but does strongly correlate to the amount of money created by lending. This explains pretty well what we're seeing, including how lowering interest rates will inflate asset prices instead of stimulating the real economy. But many people refuse to believe the data and the conclusions it leads to just on principal, because the idea of market prices not being set by supply and demand is blasphemy!
Australia is a different case due to the lack of many urban areas. If development where allowed to continue at a faster pace with no red tape most of Australia could no doubt be turned into an economic super power much like Japan. The country is huge, has an extremely smart population, and is already known for engineering prowess. The heel that is Australia's weakness is high import tariffs on pretty much anything, poor ISP quality due to monopolies, and a select few urban areas.
This is also coupled with how great of a place Australia is to live to create a pretty high bar in housing prices. To be honest, if some things where changed about Australia I'd move there. It's got low crime, great politics so far, and a lot of things I like. It's just too focused on a select few areas and too pricey.
Zoning is just one cause of high housing prices. If zoning allowed for greater supply, we'd have lower housing prices. No argument from me there. But if we believe that housing isn't meant to be an empty investment that pushes out local residents, we should regulate uses of housing that don't actually put roofs over heads.
Honestly, if you take your (a) point seriously seriously, I think you have a moral prerogative to regulate the market in that way. It decreases demand and absolute prices, sure, but trying to accommodate both investment and residency is exactly what Vancouver's been doing for the last 20 years, and it's why we're where we are now. Our local GDP is largely based on real estate. It's not great.
> But if we believe that housing isn't meant to be an empty investment that pushes out local residents
As a libertarian I feel that protections of any free trade are the cause of most of these problems so no, I do feel that housing is meant to be an "empty investment" as you put it. I don't believe in government protectionism.
To me it looks like you are saying "I want more people to be able to afford houses" then following up with "oh that person? No they're too poor, they don't deserve a house" as that is where this sort of "necessities-as-an-investment" thinking leads. A house should only be worth what a house is worth, nothing inflated by a restriction on the homes created.
> we should regulate uses of housing that don't actually put roofs over heads
Do you think that anyone would buy a home that doesn't have a roof? I could actually see a few situations for doing this (installing your own roof after purchasing is one). I don't think government should mandate safety scissors. This is again another protectionist mentality that ruins freedoms of decisions.
In my ideal world I'd go to a reputable inspector, have them inspect one of the thousands of new homes in a development, then based on their comments buy or not buy the home. No one should tell me I have to live in this home. What if I want to use it as an office for a doctors clinic that's built in the center of the town? No one should be able to tell me that isn't allowed other then the person selling me the home. Government involvement in this is a) just to increase price and b) just red tape that keeps "those people" out of "my" neighborhood.
> Honestly, if you take your (a) point seriously seriously, I think you have a moral prerogative to regulate the market in that way
I don't see how wanting someone to be allowed to build a home for themselves, or allow someone to build homes for the poor/homeless as a charitable prospect, on land that isn't currently developed requires government regulation.
> but trying to accommodate both investment and residency is exactly what Vancouver's been doing for the last 20 years, and it's why we're where we are now.
Again, I don't think a property is an investment. Then again I also don't believe in bailouts or other protectionist viewpoints. It would be beneficial to you to read up on libertarian viewpoints as your characterizations aren't correct in these cases. I don't believe any investment should be protected as every investment is to be a compensation for the risk that was taken in making it.
To a libertarian this looks like a ruling elite class oppressing the poor minority in an attempt to make themselves rich.
> Our local GDP is largely based on real estate. It's not great.
I don't see why property sale being a large percent of GDP is bad. If a country was made of 90% diamonds selling the land to diamond mines would be very profitable and as such a large percentage of the GDP would be from land sales. This isn't a necessarily bad thing. It just depends on who it's benefiting. Currently this benefits the ultra-rich and the government and that's just doesn't fit in my world view.
I know a lot about libertarian viewpoints. I think they largely ignore reality in favour of positing stronger property rights as an unfalsifiable solution to what have proven to be systemic and intractable problems. You don't appear to live here, so you get the benefit of being able to idly perform that sort of theorizing. There's a lot you could learn by engaging with the situation Vancouver has built itself into, but I haven't learned a lot from being told (many times before now, too) that libertarianism will solve every issue we have.
The thing, too, is that I agree that zoning is usually the problem with housing prices. San Francisco and the Bay Area have decided to opt out of building enough places for many decades, to the point where some communities there prefer to push jobs and businesses out and away in favour of getting higher housing prices.
But we aren't San Francisco, because we have no underlying economic engine that's driving in-migration and pushing up housing prices. We're just chilling here, broke as ever, wondering how on earth even a small condo could have gotten so out of reach.
I think in the absence of zoning, the affected neighborhoods would have HOAs by contract limiting building freedom. What's the difference as to whether the contract is imposed by the local government or a private council that is attached to the property?
The problem is that there's no effective way with (currently constituted) zoning law to 'trade' the externalities of density. You can't compensate your neighbours for shadows or traffic or other impacts in exchange for being able to build larger. So the choice faced by most residents is:
1) Acquiesce to high-density development, and receive zero compensation, or
2) Fight high-density development, and probably get zoning laws imposed at minimal personal cost.
You can see why this setup incentivizes people to push hard for "static neighbourhood" zoning law.
3) Agree to high-density rezoning, endure the construction noises and shadows and whatnot for a couple of years, then sell your house to a condo developer for a massive profit and never have to work again.
This isn't a hypothetical, I saw it happen on the street I lived on in college. The detached houses fell like dominos and were all replaced by high-rises until there were none left.
Sure, if you want to sell. But if only some of the people want to sell, then the problem of non-compensated externalities arises again. It's a classic collective action problem arising mostly from the fact that things like air rights, street space, and so on, are barely tradable.
If the HOA is a corporation with the residents as shareholders, then Walmart or whoever can go to the council and offer to buy out the area or make an exception. The local neighborhood can vote on whether to allow it to go through, or ask Walmart for money to compensate them for the disruption. There's very little friction if Walmart is willing to come to an agreement with the neighborhood. The worst case is that Walmart buys the HOA corporation, and there's always some amount of money that will buy people off.
If the local city manages it, then it's a long drawn-out process of lobbying for zoning controls that apply city-wide. And offering the citizens money to vote for it might be illegal in some jurisdictions. Even if Walmart and the local citizens are okay with it, a couple hold-outs or people from other neighborhoods can delay the entire process by complaining to the zoning board.
> the affected neighborhoods would have HOAs by contract limiting building freedom
Then I wouldn't sign those contracts or I would not move into their properties. I'd move to the outskirts of their neighborhood and build there.
Governments have a perceives authority to enforce their regulations on everyone. No one perceives Joe-blow as having the same power. It is because of this that society can keep people in check when these situations arise but no one can control the government as they are presumed to have abilities ordained allowing them to (unfairly) arbitrate these situations.
It appears zoning rules, which prevent Vancouver from building up to Brooklyn levels of density (approx 3x as high), is keeping 400k units off the market.
In contrast, unoccupied housing is keeping only 10k units off the market.
But I'm sure the rich Chinese people are secretly to blame for this too.
You're focusing on yet another externality of vacant units, that they increase the price of housing. I agree with you that this is minor compared to the way that restrictive zoning drives up the price of housing, but what about all the other negative externalities I mentioned in my comment?
Not at all. Adding more supply is definitely part of the solution.
The problem is that adding supply takes time, there are physical limits to the rate at which supply can be added, and the level of demand is unknown.
This means it's hard to know when a supply only solution will result in decreased prices and it can take a long time. (Vancouver is not SF, it adds plenty of supply and yet there is still housing shortages and high prices)
If you want to fix the problem quickly, policies that increase supply and limit speculative demand will achieve results faster.
No, the fact that the whole lower mainland has 30% the population of NYC is why Vancouver proper has 1/3 the density of Brooklyn.
Increasing density in response to rising populations is great. Increasing density in response to rising investor demand is what we've done already, and it's why we have incredibly lonely, dead neighbourhoods like Coal Harbour.
The logic is that zoning makes for a housing shortage, which means it's profitable simply to hold on to properties without renting them, because the rent would be such a small portion of the investment gains. If supply increased, and moderated the price increases, then people would rent out more because they wouldn't be seeing huge year-on-year home value increases.
That's definitely an alternative response. Here, we've decided that we should instead cut investors' demand of housing, rather than increasing supply proportionately in response to investor demand. Like raldi says above, it's an approach that's a little more sensitive to the fact that we have to live in the hollow feeling city that an investor class can make.
I understand the response, certainly. But I don't think it's going to make housing (rental or ownership) substantially more available or cheaper in Vancouver - it'll just shuffle a few people around. And rich people don't just evaporate because you limit housing supply; they can arbitrage their way around most of these limits pretty easily.
