Comparing median houses
Auckland’s median house price is very high, but that’s partly the fault of Auckland’s median house. While waiting for my olive bread to cook, I looked at some of the most expensive cities in the US for housing, based on data from the Center for Housing Policy, and then used the real-estate site Zillow to browse for a price near the median.
What you get for the median price in these cities is smaller, and on much less land than most TradeMe listings near the Auckland median price.
San Francisco: US$585k median>
Example: 1 bedroom, 1 bathroom apartment, 56.7 square meters,
New York: US$450k median
Example: a 6-bedroom apartment in the Bronx, a 2-bedroom apartment in Harlem, a house on 200 square meters in Brooklyn.
San Jose: US$443k median
Example: 2-bedroom unit on 268 sq metres.
Cambridge, MA: US$370k median
Example: 1 bedroom condo apartment, 58 sq meters
Houses are expensive in Auckland, and that’s partly because land is expensive, but it’s also because you’re forced to buy so much land with your home, whether you want it or not.
Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »
The land around my house is a public good that my neighbours benefit from, just as I benefit from the land around their houses. Essentially, it allows us to live further apart. So I’m quite happy to be “required” to have that “excess” land, with the quid-pro-quo that the same is required of my neighbours.
(In fact, I would be quite uncomfortable if my neighbours were much closer, and I’m already somewhat uncomfortable with how close the neighbours on one side have gotten after substantially extending their house.)
We bought into this area precisely because it had a designated minimum section size that would prevent our neighbours from subdividing. We accepted some significant trade-offs to get that space. So we would feel ripped off if our neighbour-free space were taken away from us without due recompense, simply because some bureaucrat thought our section sizing was too big. If people think the space is too big, well don’t move here to begin with.
It could be argued that it’s also a demand-side problem, caused by the people being in the wrong places. So stopping the influx of people would see house prices settle to something more reasonable.
Option 1: require employers to pay for commute-time as if the employee were at work, along with the cost of the commute itself.
Option 2: require NZ immigrants (who qualify based on employment) to have a job offer *somewhere other than Auckland*
Option 3: levy a (substantial) tax on employee-transit-kilometres, for employees who lives more than walking distance (say 2 km) from their place of employment.
Option 4: Occupancy rights. Shoot^H^H^H^H^H Evict anyone who attempts to gain employment in the city without renting, buying or inheriting an occupancy right from someone leaving the city; any child born in the city must obtain an occupancy right before, say, their 20th birthday.
These would in principle also apply to New York and those other expensive cities, if one could find somewhere else to put several million people; oh wait, there’s Detroit with houses that can barely be given away — see http://www.businessweek.com/the_thread/hotproperty/archives/2009/03/the_median_home.html
11 years ago
It’s hard to know how to respond to this. There doesn’t seem to be anything I actually wrote that you’re commenting on, except perhaps if you disagree that it would be desirable for there to be some cheaper housing available in some parts of Auckland.
I didn’t anywhere suggest or imply that denser housing should be required or that there was anything wrong with private agreements to have larger lots in an area. I don’t know how you read that into the post.
I didn’t even suggest that neighbours should get no say in land use in the absence of existing voluntary agreements.
11 years ago
Maybe I’m missing something, but it sounds like all of your options (other than option 2 which I don’t really understand-possibly because I am American) would INCREASE the median house prices.
Option 1-Penalizing employers for employees living far away means that they would refuse to hire people who don’t live close enough: anyone wanting to work in a city would have to buy/rent a house. This would increase demand while not necessarily increasing the supply (many cities have substantial geographic or regulatory restrictions on supply of housing) which would INCREASE house prices.
Option 3-By penalizing employees for the distance they are away from their jobs (more so than they already are penalized by having long and/or expensive commutes), you increase their demand for housing which would INCREASE house prices.
Option 4-Occupancy rights are essentially a permanent decrease in supply while doing nothing to decrease demand which would INCREASE house prices.
Your options also have the affect of increasing income inequality, limiting opportunities for the poor, penalizing small businesses, limiting social connections between income groups, and punishing both immigrants and the young. But I suppose people like you (who already own houses) would make huge profits, so maybe you think that it is worth it.
11 years ago
Thomas:
Sorry, I have rather deviated off-topic, but when I read about “being forced to buy unwanted land” it seems like the main reason one has to buy too much land is because the seller is prevented from subdividing it. And changes to zoning regulations often slip through unnoticed until the bulldozers turn up next door.
Dina:
I may be wrong in my assessment of “unintended consequences”, but it is quite insulting to imply that I am knowingly proposing policies which would be counter to my stated intention (reducing demand) in order to inflate the value of my own house (which is a rather dubious benefit anyway).
Clearly I have not explained what I mean by “occupancy right” if you think it would restrict the supply of houses while allowing demand to increase. On the contrary, the “occupancy right” I speak of would be precisely a legally enforced limit on the supply of people. In terms of the market for houses, it is therefore a cap on the demand with no implication of control on the supply.
Applying penalties to employers was tongue-in-cheek; it would be far too draconian. Such a scheme would indeed push up housing demand from the employees in the vacinity of their employer, but that employer would then be competing for employees with other employers within the same area — and so they may find themselves undercut in the market by an employer in a cheaper location.
These are of course not certain outcomes, but to say that all my suggestions would necessarily be counter productive is as naïve as expecting them all to work perfectly.
11 years ago
PS: I have badly overstepped the topic in conducting this conversation here; so I suggest anyone wishing to discuss this further should contact me directly at martin AT kurahaupo.gen DOT nz.
11 years ago