Saturday, September 03, 2005

Today "gouging", tomorrow "rent control" 

The Eclectic Econoclast wonders if agitation for rent control could be coming in Katrina's wake.
I was interested in the impact that this massive flood of refugees will have on short-term housing prices throughout the southern US. The refugees will not be able to return to their homes for months, if ever. Many of them will find their homes destroyed or impossible to salvage. They will have to find alternative housing, and it cannot be at The Astrodome forever.
I mentioned yesterday that there doesn't appear to have been a housing shortage after the 1906 SF earthquake. Rick Brady, a city planner who's worked with FEMA on disaster housing criteria -- and whose scenario was a Category V hurricane in New Orleans -- works through how FEMA would look at the housing crisis John discusses. It will strike you as triage, but it has a market component.
FEMA should already have people surveying rental housing markets in surrounding unaffected areas and placing deposits vacant apartment and home units. As units are held for victims, these data should be loaded into the GIS and an inventory compiled. The database should also include information on citizens who have expressed a willingness to share their home for some period.
Rick makes a convincing point that temporary encampments -- sure to be called "refugee camps" in the media -- will be unavoidable. And then he poses the greatest challenge:
How many mobile homes and structures are currently available? How much treated lumber will be required? Aggregate for concrete? Glass for windows? Roofing materials? How much labor will be required to rebuild the devastated areas? How many engineers and inspectors will be required to review and approve all the redevelopment applications? The government cannot simply allow a �free for all� by developers.
The last sentence, frankly, must be wrong. Why can developers and evacuees/residents not simply come to a bargain? Gouging! you say. There would only be gouging if there were only a few bidders to build new homes or if there is collusion. By allowing the market to work, though, developers would compete against other developers to gain the relief dollars and insurance of the homeless. That much money in the hands of people who want new homes would, in a free market, sound the clarion for all kinds of developers to set up offices in the affected areas and begin advertising for business.

The alternative, to have the government prevent a "free for all", is an invitation for the same kind of graft and regulatory nightmare that has hampered Louisiana's development for the last 75 years. (Read the post just below for why.) If you want to rebuild it, and fast, you should let individuals negotiate with each other through a competitive process.

UPDATE: Think anyone from FEMA is monitoring Craig's List for temp housing? (Thanks, John!)