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Comments on: And we’re concerned about our housing market!: Two http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/ The Visible Hand in Economics Wed, 20 Aug 2008 21:11:24 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/#comment-2125 Wed, 20 Aug 2008 21:11:24 +0000 http://tvhe.wordpress.com/?p=883#comment-2125 “which probably includes the requirement to burn the damn thing to the ground”

I wonder if the land would still be worth holding 🙂

]]> By: Miguel Sanchez http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/#comment-2124 Wed, 20 Aug 2008 04:48:39 +0000 http://tvhe.wordpress.com/?p=883#comment-2124 What’s happening in Detroit is that these are pretty much the same houses that Michael Moore toured in “Roger and Me”, with an extra 20 years of neglect and decay. Read the fine print: “Buyer is responsible for any municipal requirements”, which probably includes the requirement to burn the damn thing to the ground.

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/#comment-2123 Tue, 19 Aug 2008 21:14:44 +0000 http://tvhe.wordpress.com/?p=883#comment-2123 Well saying that things are chaotic isn’t going to help us understand them – its a bit like saying we can’t tell whats going on so lets not bother, or lets assume that what we want to happen just will.

When studying choices we need to actually think of what people will do, and why, instead of saying that their decisions will just be part of some “chaotic order”. In the case of building there is an information asymmetry between the builder and the purchaser which will cause suboptimal outcomes – thats really the crux of the issue.

]]> By: John http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/#comment-2122 Tue, 19 Aug 2008 21:09:19 +0000 http://tvhe.wordpress.com/?p=883#comment-2122 This is what Owen McShane says:
“Surely, chaos must prevail? Well, chaos does prevail, because
urban economies are what mathematicians call dynamic chaotic
systems and their behaviour, while unpredictable, is also best described as deterministic chaos.
Such systems, which we find throughout the universe, and in life
itself, generate spontaneous order.
Hence the universe has no need for a “universe-design committee” and life itself has had no need of central
planners to manage its development.
Houston is a splendid example of such spontaneous order”

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/#comment-2121 Tue, 19 Aug 2008 04:01:41 +0000 http://tvhe.wordpress.com/?p=883#comment-2121 “The comment was made that the market doesn’t deliver the desired outcomes”

Information asymmetry.

Developers know the quality of what they build, improving quality is costly, but the purchaser can’t fully view the quality. As a result, developers reduce the quality of what they build – as someone who spends more to make a good quality place can’t get a sufficiently better price.

The solution to this is education for new home purchasers and some way of making information easier to figure out (eg if rating could be given to a new house based on components).

If consumers knew what they were doing, it would be in the builders interest to make houses that consumers are demanding – leading to the level of quality that the market wants.

However, if there is an externality between properties – then we reach another issue.

“I’m rather skeptical about whether councils are best placed to decide what type of retailing and eateries should go where”

I think that skepticism is fair 🙂

]]> By: Richard http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/#comment-2120 Sun, 17 Aug 2008 05:35:11 +0000 http://tvhe.wordpress.com/?p=883#comment-2120 “best thing for the city”

Some of the worst monstrosities in Wellington are the Council’s apartment blocks. They used to be the desired outcomes that were best for the city.

I’m rather skeptical about whether councils are best placed to decide what type of retailing and eateries should go where. Invariably the bad things, such as the CCC was seeking to prevent in the Hendo incident, are things that many people will want to go to.

]]> By: John http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/#comment-2119 Sat, 16 Aug 2008 05:31:56 +0000 http://tvhe.wordpress.com/?p=883#comment-2119 Have you been following the Christchurch City Council +Dave Henderson property purchases issue Matt? The comment was made that the market doesn’t deliver the desired outcomes. How could we encourage developers to do the best thing for the city versus narrow financial goals (or is that too big a topic)?

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/#comment-2118 Sat, 16 Aug 2008 01:55:04 +0000 http://tvhe.wordpress.com/?p=883#comment-2118 “Still, we should look on the bright side. Houses in Taneatua are more valuable than houses in Detroit. Eh, boy?”

😀

]]> By: Adolf Fiinkensein http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/#comment-2117 Sat, 16 Aug 2008 00:05:53 +0000 http://tvhe.wordpress.com/?p=883#comment-2117 If I remember rightly Detroit is a hotbed of American Islam. Nobody wants to live amongst a bunch of extremists who hate the country in which they live.

Still, we should look on the bright side. Houses in Taneatua are more valuable than houses in Detroit. Eh, boy?

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/08/15/and-we%e2%80%99re-concerned-about-our-housing-market-two/#comment-2116 Fri, 15 Aug 2008 02:49:44 +0000 http://tvhe.wordpress.com/?p=883#comment-2116 “When I read stories like this, it reminds of some tales of the Great Depression”

Some areas are screwed. Detroit has been dieing for a number of years now – as their car industry has become less and less competitive.

The best thing any government organisation can do is help to buffer the transition between the old and new economy in the region – things still have to change. Ultimately, I don’t know much about Detroit, but I suspect they need to try and work out where there comparative advantage lies and get to it!

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