Skip to main content

Slow developers and profits

I hear stories like the below from time to time, that developers either hold on to properties, or build slow. Sometimes I think it's conspiracy theory talk, but I'm sure it's true at times too. What could we do to address it?

"There is also evidence that big builders acquire large plots of land in a local area, then put up houses deliberately slowly in order to maintain the local market price."

A common cure to this type of behavior is competition, so this tends to happen where there isn't competition. Maybe a developer owns too much of the land in an area, or maybe it relates to a local rules and preferential treatment via corruption or other effect.

I don't put much stock in the idea that developers are getting together to rig the system though. Multi-party, secret agreements like that, where one whistleblower can bring the whole thing down are uncommon. The typical corruption system of powerful "brokers" is a more common arrangement.

A solution to the lack of competition when it occurs would be public auction of developer land, as eminent domain, if targets aren't met.

As an example, the rule could work like this: Say one developer owns all land in the area. If they don't manage to complete and sell x number of homes (based on some industry average), then some portion of their undeveloped land would be put up for auction. If there are any buyers, now you have a new source of competition.

Comments

Popular posts from this blog

Commit to Long Term Testing

Expanding testing is very important now.  It's also clearly an area we were unprepared.  We should commit to having testing capacity long term, to both provide more certainty to anyone expanding testing capacity today, and to be prepared in the future.

I had some thoughts about how this testing would be best structured.  It's not possible to test for an contagious disease you're not aware of, but much of the infrastructure for doing so can already be in place, ready to be adapted.  That infrastructure would roughly boil down to

a) sample collection
b) sample handling
c) sample preparation
d) sample analysis
e) materials: reagents, etc.

Scaling these up from scratch is quite a bit more work than adapting to a new contagion.  A commitment to having that infrastructure would have helped a lot with the current crisis.

Right now, the focus is rightfully on health care workers, suspected cases and essential workers.  In terms of preparation though, in the early stages of an outb…

How to create a resilient Oil & Gas industry

Use Less As part of the current crisis, oil usage is down, and storage around the world is filling up, to the point that oil has traded at negative prices.  As a reaction, many Republican lawmakers want to bailout the oil industry, by providing free access to storage or no-collateral loans.  While it would make sense to ensure oil doesn't get dumped in the ocean, the right way to do that is by producing less oil. These proposals from the Republicans undermine the motivation for the industry to do so.  Workers are important, but they have the same access to unemployment as the other 25 million Americans who are out of work.
What this crisis should illustrate is something that has been illustrated many times before, the oil industry is a fragile thing.  In the past this fragility has been demonstrated by massive spikes in prices and fears of shortage, in this case it's the inverse.  Why the fragility?  The simplest explanation is, we use too much.  
In a world where oil consump…

The promise (and pitfalls) of index based insurance

Insurance in developing nations is far less broadly available than developed ones.  In addition, the risks that citizens of developing nations face, are often much more numerous and severe.  Crop-insurance is a common element of agricultural policy in the United States, but less common in Ethiopia.  As Ethiopia has a much higher percentage of their population engaged in agriculture, shocks, such as drought, crop disease, or severe weather have big impacts.

Insurance's basic principle is simple, spreading risk across a broader pool.  When harmed, you get assistance to lessen the impact, when you're not harmed, your payments cover the costs of others who are.  But deciding who is harmed is a very time consuming task.  Preventing fraud is important to staying competitive, when looking at private enterprise, and important to public trust when dealing with public programs.  But preventing fraud places burdens not only on the insurance provider, but the claimants.  Having to prove l…