@pluralistic I've previously mentioned Bernhard J. Stern, a largely-forgotten mid-century sociologist with a famous research assistant.†

Stern's 1937 article "Resistances to the Adoption of Technological Innovations" addresses housing specifically:

When recently the mechanized industries, particularly in metal, entered the housing field with the production of “prefabricated houses”, they were met by the resistance of property holders, especially of the banks, who hold mortgages on about 58 percent of all 1933 value of all urban real estate, and who fear that an influx of cheap modern dwellings would subtract substantially from the market value of existing structures. These banks and loan companies have been unwilling to finance prefabricated houses except in rare exceptions and then on a limited basis. ...

Planned public housing projects such as slum clearance which afford the most efficient methods of utilizing advanced technologies in the building industry, crash against the wall of vested private-property interest. They meet the combined opposition of the owners of obsolete buildings, that nonetheless are still profitable, of landowners who demand prohibitive prices, of holders of mortgages who fear a depreciation of housing values through the increase in available homes. Achievements in building technology lie sterile in the face of the opposition of these interests.

https://archive.org/details/technologicaltre1937unitrich/page/39

(I've re-typed the paper for easier reading / formatting in Markdown: https://pastebin.com/raw/Bapu75is)

Sound familiar?

Notes:

† Isaac Asimov.

#BernhardJStern
#capitalism #AssetAppreciation #EconomicRents

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@pluralistic Residential real estate alone accounted for $31.8 trillion in US assets in 2017, 1.5 times US GDP.

https://www.zillow.com/research/total-value-homes-31-8-trillion-17763/

The value of these assets to banks is in meeting reserve requirements for further lending. At a rate of 3%, in effect in January, 2020, $31 trillion in assets can back $1,033 quadrillion in loans. More assets, more loans.

(FWIW, the US Federal Reserve eliminated reserve requirements on March 26, 2020. Banks need hold nil in reserves. https://www.federalreserve.gov/monetarypolicy/reservereq.htm)

There are very powerful interests in seeing real estate prices rise.

Oh, and this counts toward GDP via several routes, despite the fact that land value appreciation, as with other asset appreciation, is not actual economic production. It's something simply sitting there with its price rising.

#EconomicRents #AssetAppreciation #capitalism

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@pluralistic An underappreciated dynamic of #capitalism is that most wealth accumulation does not occur through money transfers but by #AssetAppreciation, a form of #EconomicRents.

Jeff Bezos isn't seeing single-day net wealth gains of $13 billion because someone's shovelling dollars into a vault, but because the market price of Amazon, Inc. stock is appreciating:

The bulk of Bezos' personal wealth is tied to his more than 57 million shares of Amazon stock, so the company's stock spike also sent his net worth soaring to the point that he's on the precipice of becoming the first person in the world to officially boast a net worth of more than $200 billion

https://www.cnbc.com/2020/07/21/bezos-record-multibillion-dollar-net-worth-gain-bloomberg.html

And stocks aren't the only asset class out there.

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