Category: land and how we use it

Contrary to expectations, rates of homelessness tend to be lower where poverty rates are higher.

Contrary to whose expectations?

A quick comparison of income/GDP and homelessness suggests that higher incomes push up the rate of unhoused people…why, it’s almost as if housing (ie, land) prices chase wages, and those whose wages don’t rise so fast are forced out of whatever housing they could afford.

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Is it a perfect correlation? No, there are other factors but the assertion that homelessness is tied to poverty rates, rather than inequality or a widening gulf between rich and poor, makes me wonder how much the authors want to understand the problem. But then I am reminded of Upton Sinclair’s dictum that “[I]t is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Housing as a market good rewards speculation. Recapturing the value of land to fund and build social housing, through outright public ownership of land or a tax that recoups the dividends of public productivity, can curb it.

Homelessnessness isn’t a housing problem: it’s a land problem. There is no affordable housing without affordable land. Seems like it wouldn’t take a PhD to get that. Maybe having one makes it harder to see the obvious.

Yet another well-argued and sourced explanation of why land rents are not just the “least bad tax” but good actually. The fact this never seems to be part of the debate, as tax rates in high earners (and investors) fall and working people find themselves under more stress makes a person wonder, why not?

A real Populist would make hay with this, if such a person existed. What’s the old saying? “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” Nor can you make someone understand something if their power depends on not understanding it…not that congressional salaries are unimportant (if the national minimum wage were $15, they would make about 12 times that, not counting staff and other expenses) but power is the real draw. Corporate boards and other sinecures await the obedient.

The Seattle Process is alive and well…just as a consortium to build social housing gets some traction, another then opposes it and who knows if anything will ever get built?

The land is there, the funding could be found, but as noted in this piece, the bust part of the cycle, where the fortunate few watch the rest of us struggle or leave, has cheerleaders. Seattle doesn’t want to be a fair and equitable city, One Seattle, or anything of the kind. I think the promise of that, as unveiled at the 1962 Century 21 Exposition, scared people. (What this writer seems to forget is that all the changes he and his mossback friend decry were all wrought by local people cashing out their local businesses or failing to keep up with the times.) The local voters were offered a future with transit and managed growth but opted out, cherry-picking pools and parks for themselves (and to keep other people in their own neighborhoods) and rejecting anything that connected people.

According to the City of Seattle, currently most surplus public land is sold to the highest bidder; however, a state level bill passed in 2018 (SB 2382) “grants authority to cities to sell surplus property for below fair-market value – all the way to $0 – as long as the land is used for permanently affordable housing.”

And as we already know, that just turns what could be productive land into a speculative investment.

No matter what the bloviators on right wing media claim, Seattle is far from “woke,” whatever they think that means. It’s still a propertarian city of private parks surrounding single family homes that are no longer housing but tradable commodities…Wall Street, not your street.

This encapsulates the current mood pretty well, reminding me that Seattle is a city that is willing to share, as long as it doesn’t have to give anything up.
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Rebecca Parson, a Democratic Socialist running in Washington’s 6th Congressional District, tweeted that “$15 minimum wage is an antiquated demand. It should be $30 per hour.” According to her reading of the present economy, which is mostly correct, “1 adult supporting 1 kid needs $30 an hour across the country. Rural, urban, suburban: $30 is the floor.” But increasing wages will only return us to regular Keynesian economics when what we really need to do is move toward an economy that makes life much cheaper. Raising wages without considerable structural changes can will only add more fire to the belly of the beast we call capitalism.

The increases in the cost of living and resulting inflation are caused by the increasing cost to access land for development. Inflation is caused by too many dollars chasing a scarce good…what is more scarce/finite than land? We have all the land we will ever have, and as much as all the kingdoms and empires ever had. What we have that they didn’t is a lot more people trying to make living, build a life, on that land. Putting a rent on land the returns that rising value to the people who created it is what we need to do.

Could housing crack before inflation does?

Singling out housing makes sense. As we’ve discussed, house prices and rents are very high. Roaring demand, driven partly by demographics, is paired with meagre supply. The inventory of existing homes for sale hit an all-time low in January and has hardly recovered. Homebuilders are rushing to get fresh inventory on the market, but are constrained by shortages of labour and building materials.

Does it make sense though? Labor and building materials are just as available in suburbs as in cities but land is not.

The existence of cheaper housing in suburbs or small towns, either as new construction or existing stock, shows us that land and location drive housing costs. Scarce commodities rise in price, as any economist or business person will tell you, but for some reason, land is always left out of the conversation.

So why compare inflation and housing costs without discussing land and the scarcity of it as the factor driving both upwards? Rising prices and inflation are always linked to scarcity of something…after the Black Death, as scarce labor supply raised wages.

But all we hear about is inflation without any attention paid to what causes it. The underlying inflation we hear about constantly as well as the pressure to raise wages, higher rents or home prices, all of this ties back to scarcity and the rising cost of living. And land is the one commodity we all need, whether for farming, manufacturing or just to live on. We should perhaps act like it’s valuable, maybe even essential.

Developers say they can’t build affordable apartments the Boise area needs. This is why

Blame high land and construction costs, along with property taxes, developers say.

Don’t listen to me, listen to developers who want to build the housing we need but can’t…because speculators are holding land for gain.

And by property taxes, they mean low taxes on vacant unproductive land vs the taxes on improvements that discourage development, along with zoning and other outdated laws. Raise the tax on undeveloped land and lower it on improvements and stand back…the increased in economic activity will more than make up for any shortfall in passive property tax revenue.

i like a piece of lawn like the next person but isn’t that what public parks and other spaces are for? you know, where community can actually gather and interact?

When I read this, I see the people of Seattle giving up public land in a park to make up for the enclosure of so much land in private parks (yards).

If you magically doubled the density of Seattle and freed up that much land currently under and around single family homes Wall Street’s new favorite commodity, imagine the amount of park land and public space we would have…and still only one-third the density of Paris. The City of Light houses 2.2 million people — three times as many — in one half the area…and there are public spaces, parks, railways, trams and bus lines, as well as ample and safe space to cycle.

I wonder if people are really as opposed to publicly visible encampments as they claim to be. Maybe people get a frisson of satisfaction as they glide past a tent encampment under a freeway bridge. After all, you can’t have winners if there are no losers.

I note this story on the declaration of a “homelessness emergency” with a pledge to end it in 10 years — in 2015. 6.5 years later, I’m not sure there is an emergent solution. But then I didn’t expect one. As was pointed out in the local paper two years later, Seattle had no idea how to manage its good fortune.

When the vacant land we already have is developed into much needing housing and commercial space (there are parts of Seattle that are close to being labeled “food deserts”), rather than carving up public parks, maybe we can take some of this seriously. Any parcel of land that has been idle for years — not even turned into pay parking — should just be reclaimed under eminent domain, taxed or fined as an eyesore, whatever it takes to get it developed, rather than sacrifice public spaces. But under the current city leadership, our glad-handing mayor and complacent council president, I don’t expect much to happen.

I would argue that these churches would be better off renting/leasing access to their holdings than selling them, as with the local branch of the Missionary Sisters of the Sacred Heart of Jesus.

If a developer is willing to pay $55M…

Pastor Audrey Warren provides a window into the future of First Miami Presbyterian church. In 2018, three years into her tenure as pastor of the nearby First United Methodist, she helped arrange the sale of her church’s original 1.15-acre property, just one mile north of First Miami, for $55m.

…how much could a church get from a 99 year lease? If 3 acres in Seattle’s hottest location sold for $150M — after an offer of $1.1B over 99 years was rejected — could that location command a similar rental income of $330M/acre over that same term? Back of the envelope calculations of $330M over that term means $800,000 a year in rental paid but $3.4M annualized rental income (take the total and divide by the years of the lease term…I assumed the same 2.5% annual increase though in So Fla that might not hold water [ouch]). Lowering that to a more conservative 1% means $1,355,986 annually. So 40 years in, the fee simple sale price is met and the remaining 49 years are gravy.

And this may not be the last time we read stories like this…

Other than the federal government, religious organizations are the largest owners of real estate in the country

Now that some places are emerging from the pandemic and business wants to get back to normal — whatever that is — we are going to see more stories about how workers have changed the way they think about work. After two years of not being able to — or needing to — go into an office but still managing to get things done, why would they want to change that?

The question business owners — and city leaders — should be asking themselves is why downtown locations are more expensive than suburbs or spare rooms turned into workspaces and why they pay higher wages in large cities than smaller ones? In other words, who is making the real money here and without doing any of the work? Landlords grow rich in their sleep, as someone once said. The high rents and higher wages are the landlords game…business owners may be nettled about having to pay the same wages and rents, as their still-productive workers stay home. And that’s what they should be thinking about: why am I enriching someone who creates no value while I and my workers put in the work?

The reduction in corporate property rents last year as high as 10%, with huge changes in the use of office space and co-working space. And the city has a new competitor: the suburb. The flight to suburbia during the pandemic has accounted for a rise in the property market for residences outside city centers. For downtown districts to attract and retain people as places to live and work, city centers will need to be redesigned completely.

The fact that business owners pay high rents and higher wages for downtown office space that now might be vacant, with all of that value raked off by speculators, should be concerning. The landlord’s game is all about charging what their tenants can afford to pay, not the value they offer. Sure, they might claim to offer a great location but they didn’t build that. Seattle didn’t become a tech goldmine because of real estate investors…it became one through the investment of various business owners and the educated workforce that jumpstarted it. A lot of workers may move to Seattle but the UW and other local schools are well-represented. That investment should be reclaimed from the speculators through a tax or ground rent structure that rewards development over speculation. As noted in the excerpt above, land values — and prices — increase with economic activity.

Land prices mainly reflect location: farmers may till the soil, or drain it, but most increases in land’s value comes from the activity of other people. Nobody builds skyscrapers or shopping malls in the wilderness. Landowners, in other words, enjoy unearned income from the benefits bestowed by good transport links, and proximity to customers, suppliers and other businesses. Once they have bought their land, they keep this money.

But why not tax it? That simple but revolutionary idea has deep roots. David Ricardo termed unearned income from land as a pernicious anomaly: “that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil”.

And this would be an ideal time to re-assess the best use of land in cities to make them work as something other than a 9-5 destination and a desert the other 16 hours of the day. Monocultures don’t survive. And what else is a city of office blocks but a monoculture?

Not every city has the energy to be a 24 hour city but it’s only failure of imagination that holds them back. Cities like Seattle have lots of opportunities to reclaim and redevelop the urban environment (hint: if people are no longer commuting by car, you probably don’t need all those surface parking lots).

Every one of those markers could be a multistory development, mixed-use or residential, all adding to the local community rather than sitting idle for 2/3 of the day for 5 of the 7 days.

The value of the land downtown, whether it’s under an existing development or a disused car storage area, is all created by the investment made by others…your vacant lot becomes more valuable when I put up a shop on mine. And both become more valuable when the city runs a bus or train to connect them with other parts of the city or connects them to the utility grid. And that value should be recaptured by something more closely related to that value than simple property tax. A high tax on the productive value of land — not held as a vacant lot, but based on the uses nearby — and a reduced tax on improvements would get land back into productive use, driving more commercial activity and lowering rents as landlords are forced to compete, rather than hold land idle.