If Bill Gates Made His Seattle Area Estate Available for Low Cost Housing, It Would Make Seattle Housing More Affordable

September 21, 2016

CEPR

I am waiting for the Washington Post to make this obvious point. (The same is probably true about wherever Post owner Jeff Bezos lives.) The reason we should expect this piece is that the paper ran a piece that effectively pronounced people who refuse to sell their houses to accommodate development as anti-social characters who are driving up housing costs for everyone else.

The claim is true. If people will make land available at a lower cost to developers then it will reduce the cost of building more housing units. While some of the gains from cheaper land will go into the developers’ pockets, some of it will undoubtedly be passed on in lower rents, as more units will put downward pressure on prices.

All of this is true, exactly as the Post piece says. However, the same argument applies to the land held by Bill Gates and other rich people. If they would make it available to developers at a low cost then it would mean that there could be more housing, which would put downward pressure on prices.

There is an argument that Gates and other rich people may be willing to make their land available at the market price, but this would be extremely expensive and therefore not help efforts to provide low cost housing. However, for someone who owns a home, it can be argued that the market price is the price at which they would be willing to sell it. (Markets are supposed to be about free exchange.) If they are not willing to sell the property at a low price, then the situation is not qualitatively different from Bill Gates being unwilling to sell his estate at a low price.

The issue here seems to be that Gates and other rich people are deemed to be entitled to their large plots of land, even if it makes housing less affordable, whereas the typical person is not. We are supposed to think that the non-affluent person insisting that their property rights be respected — even at the cost of raising housing costs for others — is a bad person. But because Bill Gates is rich, we don’t talk about his impact on housing prices.