19 March 2017

What if condos weren't a scam?

Condos as a form of land tenure got invented in New York State to get around a new, strict, builder liability law.  If the builder of record is the condo corporation, all the liability falls on whoever bought in, rather than the actual builder, and so the actual builder -- on this scale, developer -- is safe from the legal consequences of their shoddy practices.

Note that the people "buying a condo" -- buying a share of the condo corporation that entitles them to live in a particular portion of the structure -- don't get design input.  The actual building is built to maximize the profit of the developer, and has almost nothing in it that referenced the preferences of the people who are going to live in it.  (Observe the increasingly tiny size of condos as the optimal small-investor-attracting price stays roughly constant and real estate markets get pricier and pricier as low interest rates shift the price associated with a particular monthly payment.)  There is basically no feedback from the people who are going to live there.

The other part of this is that there's not really a housing market; one of the things required for a market is buyer knowledge, and hardly anyone buys houses often enough to have the necessary knowledge.  People buying something to live in are not participating in a market.  (The building trades might be, but there you get issues of concentration and number of participants and functional monopsony.)  Houses, as a broad general class of things, are built right at the limit of the local building code in ways where the developer is seeking to maximize their profit at the expense of the building trades and the buyer gets all the liability for the result.  This sort of feedback can't give good results.

What could we do instead?

Well, let's look at where the collective structures are.  (The human trick is ganging up on problems; if you want to find the problem being solved, look for the co-operating group.)

There's a group of developers who exert political influence through the concentration of money.  There's a much more diffuse group who are complaining about the perverse incentives and unfortunate consequences of the developers seeking to "maximize their profit"[0] as a form of political opposition.  The second group is, well, losing.  Everybody[1] believes success means a house in a suburb with a lawn and a two car garage.

So part of this is PR (though keep in mind there's a chunk of the population who _likes_ knowing they're getting more out than they put in, and never mind how the system breaks in time), but part of it is finding some way for the people who live in the housing stock to provide direct feedback into what kind of housing stock it is, where it is, and what it does.

First off, it does need to be collective; hardly anyone has enough money to go buy a chunk of land and get just what they like built on it.  Secondly, it has to meet the needs of the people involved.  Thirdly, it should, from a public policy perspective, recognize that there's a housing density of less than one per ten hectares and a housing density of more than ten per hectare that make sense, but the stuff in the middle doesn't.  (It's ecologically unwise and it's expensive to service.  Remember that roads are a service.  So is sewage.)

So how many people does it take to have something that can build good housing -- the kind where the soundproofing between units is an insulated gap between concrete walls, and the plumbing has been put in with the expectation of paying for the next fifty years of maintenance, and so -- with some day care spaces and some senior assisted living spaces and just generally function, not as a condo, but as a really full service credit union; housing and child care and retirement planning/investment as well as financial and insurance services?  Most of your income would go into it; your taxes would have to fall as this means took over from current public means of meeting those needs.  And, yes, you have to deal with other people, but dealing with other people is a consequence of being a social primate.

If we want better communities, we must want better feedback, which means collective organization because individuals aren't communities and can't individually afford the services of communities.  That means we can't permit a system where the feedback is driven by developer profit.

[0] this means "shift as many costs on to the defenseless as possible" at least as much as it means "get the largest difference between our expenses and our income as we can"; many of the costs (infrastructure) of the most profitable forms of development aren't borne by the developer, but the tax base.  There's an argument that "most profitable" and "largest share of costs borne by the public purse" is an identity relationship.

[1] not literally everybody; it's generational.  Sure.  But the "don't tax me and I want more highways and less traffic and more convenience and services in my suburb" voter is a very reliable voter.


Anonymous said...

I live in an eastern European housing block built by and built for communists. It is widely accepted that the quality is superior to that of the newer "capitalist" buildings. The concrete blocks may look ugly, but they are structuraly more solid and have better insulation for heat and sound. Some of the newer buildings also suffer from deficient infrastructure ( a developer pays for a permit to build 1000m2 of appartments, and then builds five times as much, leaving the electric lines drained, the sewers clogged, and people living in semi-illegal homes ).

There is no such thing as a north-american style suburb around here. People with money gravitate towards the city centre. People with A LOT of money gravitate towards villas in the fashionable nature reserves.

I am told that there was a much bigger sense of community in the old days. Back then, living in the same building as someone usualy meant that you both went to the same workplace. The neighbourhood I grew up in, for example, was populated by families who had at least one member working for the ministry of interior afairs. Nowadays, I have little to no connection to the people around me. About the only thing that's left is the fact that our children go to the same school, but even that is being eroded by the increasing presence of private primary schools.
Then again, the increasing fragmentation of human polities is somewhat of a global trend.

Graydon said...

I think that increasing fragmentation comes from wages being too low. (effective wages. The resources you can dispose of beyond bare survival.)

Calculating how many people it takes to do the retirement savings and elder care and housing and child care and probably laundry and food purchasing in a lump along with the housing and the financial services is beyond me, but I'm pretty sure it's a practical size. And a share of something like that would be a good generational store of value.

Darn hard to start, though. Especially when all the forces keeping wages low are against any forms of collective action not focused solely on profit.