Household formation is tricky. With total fertility rate continuing to decline, it’s important to shift away from singe family starts to higher density (duplex, quads, mid rise mixed use, and condo towers, depending on what the local market calls for); as older cohorts age out and Boomers transition into senior or assisted living, that’ll free up housing stock.
TLDR take the population pyramid into account, but still build baby build.
(disclosure: part time real estate investor/developer apprentice)
>With total fertility rate continuing to decline, it’s important to shift away from singe family starts to higher density (duplex, quads, mid rise mixed use, and condo towers, depending on what the local market calls for)
Maybe I have a dirty mind, but is the higher density supposed to help people meet others and promote reproduction or something? It seems kind of cynical that people are forced to pay more for less in modern times, especially with higher taxes. I wish I had a house vs. having a 1 bedroom priced at ~3k per month. My rent is basically the equivalent of a mortgage at this point. I don't really want to have to have a car though so I guess that limits my living options.
Higher density is more capital efficient, versus what passes for single family homes in the US. It also reduces the per unit tax burden when taxes are based on land use and property value.
If you want to live on an acre of land in a 3k-5k sq ft home, you’ll have to do it in Iowa City versus say, downtown Chicago (or within ~50 miles of the/a city core). Desirable land has a cost, both from an acquisition and upkeep perspective.
"But this doesn’t mean millions of abandoned and dilapidated homes are withering away in the suburbs. Vacant homes can be unoccupied for many reasons beyond being uninhabitable. For example, a house can be vacant because it’s still on the market to be sold or rented or it’s a vacation home not currently in use."
Strong financial incentives to not possess unoccupied homes. i.e. second homes are heavily taxed, out of state second homes are even more heavily taxed.
Homes under management for long term housing or resale kept in unoccupied states longer than reasonably expected incur penalties.
Homes kept unoccupied due to being priced out of reasonable band may do so for limited duration--every loophole has to be addressed with financial incentives.
This includes reducing the business potential of domestic and foreign private equity groups picking up homes at depressed rates like what blackstone did.
Residential property rental and transactions related to residential property must be way less lucrative.
So if my wife moves to Boston to advance her career, we get taxed like crazy? By who? But if we get divorced, it's all good? Or will it be fraud for us to keep dating after the divorce?
> Residential property rental and transactions related to residential property must be way less lucrative.
The problem is growing; why take a demand-side approach? Especially one so prone to making lawyers and government officials rich? You’re just trading like-for-like as demand grows over time.
FWIW, I’m in favor of nationalizing zoning laws as Japan has done to fix supply.
So this will discourage demand for housing, which will lead to discouraging the developers to build new properties. So you will cause rise in housing prices, rent and cause housing shortage eventually.
Also, this doesn't seem to answer my question. How should expropriation be done exactly?
Do you think all of the millions of owned but unoccupied houses are just "whoops it took me a couple extra weeks to sell"? It's ludicrous to suggest it's a significant fraction of the total, or that the suggestion is to require the immediate forfeit of any house when the owner moved out.
People moving where the source house is still in the process of selling should have their house seized? I think that ends in everyone owning endless mortgages.
There are approx 5.7M vacation homes in the US. There are also approx 550,000 homeless people in the US. A system which allows such misallocation is fundamentally broken. If this is what effecient resource allocation looks like, then I want something else.
One can argue that those homes wouldn’t have existed in the first place without wealthy people to commission them for vacation homes. After all, homes aren’t just built for no reason, but because someone is willing to buy it
How does having fewer homes in total lead to more unhoused people having homes?
In these comments you seem more concerned about lowering the number of vacant homes than lowering the number of homeless people. I feel that's the wrong approach.
The argument is that vacation homes wouldn’t exist without vacationers, not that demand for vacation homes would lead to homeless people owning houses.
Broken compared to what? Homelessness is an ancient problem, noone was able to solve that yet.
We need to look and take lessons from systems that at least somewhat helped the problem. Of course, adjusting for the US situation, which might be just different.
Compared, to, say Eastern Europe, I feel like US can just afford having so many homeless (e.g. free food and medicine for homeless in California). In many other countries homeless would not be able to survive, so in some weird sense we can call it a luxury, not a problem.
Interesting, I can only think of three cases:
1. Homeless were killed (e.g. nazi germany).
2. It's a family honor matter, like in Caucasus countries. There are no retirement homes as well, as every family takes the burden of taking care of their elder, because it would be very unhonorable. Although I still doubt they have 0.0% homelessness.
3. Official numbers don't reflect reality.
Really curious to learn other ways to solve the problem. What those other countries you mean?
> Homelessness is an ancient problem, noone was able to solve that yet.
No, it's a fairly recent and entirely cultural phenomenon. For one thing, there was no homelessness at all in North America before the Seventeenth century or so.
As an owner of a vacation home and a large donor to homeless charities: this is completely divorced from the reality on the ground. It's a false dichotomy proposed as a way to block solving the problem of limited housing where it's acutely needed.
My ski house in Vermont does absolutely nothing for the homeless people in my neighborhood in New York. If you put someone in that ski house what would it do? Sure it would put a roof over their head, but there are no jobs, no soup kitchens, no homeless resources. They would need a car whereas in New York they can walk and use mass transit. The town in VT is already strapped supporting many in their community (I do charity there as well, and let me tell you it's more dire than much of the New York area).
The solution is to house them here in the New York area where they are (and in fact New York does a better than average job of this).
As for it being a misallocation, I own a $1M apartment in NYC and a $300K house in Vermont. If I just owned a $1.3M apartment in NYC my bills would be exactly the same, there would be 1 fewer "vacant house", and the homeless would still be unhoused. The real misallocation is how much I get paid as a software engineer relative to other professions of similar difficulty. I happen to spend my fun money on a ski house instead of a boat or a bunch of vacations, but there's no moral difference between a vacation home and other leisure spending. So really you are arguing that some people shouldn't have such a surplus when there are homeless people. Maybe that's true, but it's one of the most unpopular positions in American politics and if you are an ally of the homeless it's not a fruitful argument to make.
You seem to be focused on navigating the effects of the current system by relocating people. I'm not sure where you got this from.
I'm interested in modifying the system which allows for such outcomes, not managing the outcomes themselves. Please take a systems-level approach that seeks root-cause adjustment and not simply an amelioration of symptoms.
The root cause is primarily housing policy. Let developers build many apartments, and let them build small apartments. Zoning laws that make it a years-long process to just get a permit, or that force developers to build apartments with minimum square footage, or prevent large families living in a "small" apartment - these are all luxury laws forced upon poor people so that rich people can be more comfortable.
I count myself as progressive but am almost disgusted by how many progressives try to muddy the water here because they don't like to face the fact that they have to give something up to make their neighbourhood more accessible to those who are well-off people.
Anyone who doesn't take housing policy seriously on the issue of homelessness is either naive, or doesn't actually care about the issue and instead is trying to use it to push some other agenda.
You "system-level approach" is still missing OP's main point. If the system did not allow/encourage OP to buy his Vermont home, but instead 'successfully' managed to allocate it to a needing & worthy homeless person.... then what? As the old adage goes, it takes a village. This person still requires infrastructure to escape poverty/homelessness. You wont find that in a skitown in Vermont.
Where will this person find a job?
Where will this person get help organizing their lives?
How will this person transport themselves?
Where will this person get help for any significant issues in their lives (e.g. substance abuse, mental disorder, etc)?
This is where your "system-level approach" breaks down - you can't bring the support infrastructure for this to a small Vermony ski town and also to all the other small towns in America. This is, as your first post says, poor resource allocation.
I'm not sure why respondents are focusing on a specific home after it has been materialized in Vermont other than it serves as a specific example that any solution must address.
Zoom out a bit and observe the broader systems which conspired to guide the invisible hand to allocate a largely unproductive property in Vermont to exist in the first place. I'll be very clear - I'm not advocating for unhoused people from New York to inhabit this property. If that's how you've decided to read it I implore you to go back and begin steel-manning instead.
To be perfectly awful, 552K homeless out of 335M people is about 1.6% of the US population.
Even high-functioning and privileged individuals seldom have their shit together 98% of the time. I can't go 5 days without doing something chillingly stupid.
It is frankly astounding that we achieve better than 98% on any homelessness metric. A long forgotten ancestral memory says: there but for the grace of God go I.
Root cause: humans stink individually but we are robust in aggregate.
Capitalism is very inefficient overall so it's sort of obvious that there'd be waste in all segments however at the same time it leads to better human quality of life overall than other systems we've tried. Or in other words if you waste 25% of 100% more than you're still ahead by 50%.
Sorry, but I'm not interested in engaging with capital-realists. "The best of all the bad systems" platitudes doesn't really anything for people without homes.
Neither does your complaining about capitalism with no actually usable solutions to the problem of homelessness. Like I said in another post you seem to care more about hating capitalism than helping the homeless.
The works of the roots of the vines, of the trees, must be destroyed to keep up the price, and this is the saddest, bitterest thing of all. Carloads of oranges dumped on the ground. The people came for miles to take the fruit, but this could not be. How would they buy oranges at twenty cents a dozen if they could drive out and pick them up? And men with hoses squirt kerosene on the oranges, and they are angry at the crime, angry at the people who have come to take the fruit. A million people hungry, needing the fruit—and kerosene sprayed over the golden mountains.
Some scholars argue that the famines in Africa toward the end of the 20th century were more than anything else a result of the collapse of economically sustainable local agriculture resulting from rapid industrialization and cheap imported grains. Food became so cheap that farms couldn't produce enough income as going concerns; people quit farming en masse. Populations in countries with little local agriculture remaining became exceptionally vulnerable and susceptible to price and distribution shocks, such as from monetary or military conflict stressors.
Many other countries have historically avoided famine in part because their political systems depended upon and heavily favored local agricultural interests--not the laborers, but specifically the financial security and opportunities of the agricultural land-owning classes. And when and where they didn't, e.g., Ireland in the late 19th century or China in the mid-20th century, things played out in predictable fashion.
Such emphasis doesn't create an optimal state of affairs for maximizing overall wealth and economic equality, but it's one way, however primitive, to buffer volatility and minimize the chances of catastrophic food failure; and helps explain why such seemingly unfair socio-political favoritism, often with seemingly perverse side effects, persists today, let alone in the 1930s.
You have to realize that these are baby steps for our civilization.
Only since the 1920s and commercial fertilizer use has food become abundant to such a degree, and logistics so sophisticated that we could fathom supplying excess food to multiple entire countries.
It is doubtful that the people who conceived plans for providing such aid foresaw all the consequences of their actions, because there was simply no historical precedent for such a scale of intervention. Food was scarce. Countries usually didn't have enough of it. It only seemed like the best way to alleviate that was to just _give people food_.
As it turns out, maybe that wasn't the best way, but it was lieky a lesson that needed to be learned the hard way.
I'm not sure if the homeless of NYC would like to be shipped to a house in the mountains of Vermont without food, support, food or anything else. I mean NYC would be happy I guess until they found their way back.
The empty dilapidated homes are in rural Vermont and flooded Louisiana. If you want to force people to move there, fine. I'd rather they be granted an chance to live in high economic mobility areas like NYC, SF, and Seattle without having to have wealthy parents.
It's pretty helpful when the solution people want isn't the one always insisted upon. Spread the things out and create new, smaller hubs instead of always pushing people into existing hubs. You'll hit the limits at some point, unless the answer has become to slowly grow a metropolis outward to something of a bigger scale.
Of course, that's the exact thing which is hardest to do, since economy is king and economic incentives don't align with that proposal at all.
Those houses, by in large, are not in places where people want to live. Per the first Key Finding in your article, are you going to force the homeless to move to Alaska, Maine or Vermont?
16 million homes where? silicon valley? or like 20 miles outside detroit where the only jobs are at fast food places. Is it worth spending unholy sums to renovate inefficient old homes? Your comment is almost embarrassingly bad.
I think this is pretty much the most important point: we already have the houses, so we could save so much in CO2 emissions and materials if we don't build 4.3M more homes and instead just pay to put people in existing homes (via eminent domain or subsidized rents or whatever.)
edit to add: A couple of people have mentioned that the vacant homes are not in desirable locations. As an anecdote, I live in Park Merced in San Francisco and there are dozens and dozens of empty units here ready to move in. There are also dozens of families living in RVs around Lake Merced a few blocks away. I'm saying that the obvious thing to do is for SF to exercise eminent domain, pay the company that owns Park Merced for the property, then let the people in the RVs live in the homes. That might seem a bit expensive, but SF's annual budget for dealing with homelessness is one quarter of a billion dollars.
We could convert Park Merced into a place of healing and renewal where folks who need help can come and live in a home and have access to e.g. addiction treatment or whatever.
People probably want a new home in a desirable location more than a one-house reduction in global CO2 emissions, so what you’re saying requires some amount of coercion. Who’s getting their house taken by the state to give to somebody else, and who’s paying to subsidize the rent?
What happens when the next group of RV dwellers show up? You just gave away homes in one of the most expensive and desirable locations in the country. Isn’t it reasonable to expect your homeless population to backfill with other RV dwellers looking for the same?
It sounds so wasteful to buy such expensive real estate, lose property tax revenue, and assume perpetual maintenance costs just to house a fraction of the homeless you could elsewhere.
> What happens when the next group of RV dwellers show up?
Build more housing and give it to them.
> Isn’t it reasonable to expect your homeless population to backfill with other RV dwellers looking for the same?
Yes, but there's only about 500,000 homeless people in America. It would not quite double the city population. (Last I checked we were around 800,000.)
Park Merced alone could hold thousands more families if we converted the garden apartments and townhomes to towers, although that wouldn't be the only option. The entire Sunset District is almost all single-family homes. SF is a young city, there is lots of room.
> It sounds so wasteful to buy such expensive real estate, lose property tax revenue, and assume perpetual maintenance costs just to house a fraction of the homeless you could elsewhere.
Perhaps, but compare that to the opportunity cost to society of keeping all those families living in RVs. That's the real waste, eh?
Give them homes, let their kids grow up in stable homes, check back in three generations, eh?
A very large percentage of people experiencing homelessness have severe issues with mental illness or substance abuse. How do you propose to deal with the damage caused to homes that will likely be common?
I'm hugely in favor of guaranteeing housing, but putting homeless people in random houses and apartments scattered across the country is unlikely to actually work. Do any other countries actually do this to solve homelessness?
We need emergency and temporary housing with heavy support for many homeless people, and then more standard housing for people once they're more stabilized.
I mean this is essentially true by definition, but it doesn't conflict with mental illness or substance abuse problems being factors as well.
I don't disagree with your point though. We could do much better as a society. There should always be some bare minimum safe and secure housing available, even if it's basic.
Apartments are terrible for people. Why not talk about needs for homes?
Why can't America make small 2 bedroom homes anymore as seen in 1950s suburbs. It's either a mansion or an apartment now for new housing.
I am genuinely curious, why are they terrible for people? Grew up in one, and currently living in one as well (mind you, by choice), and know multiple families (with kids) living a relatively happy life in apartments.
I am not sure if they are terrible for all the people but for me the noise is a huge deal: always had been sleep-deprived when I lived in apartments. On top of that there are tons of tiny things that combine together into miserable conditions: the bare minimum appliances (many apartments don't have even a washer/dryer and ones that have usually come with an electric dryer), pest infestations, mold, tobacco/weed smoke and other smells from neighbors in shared ventilation/windows, slow maintenance, elevated crime activity (an apartment complex parking is a big juicy target for any enterprising thief, as is its mailroom), your deliveries going to your neighbors and their deliveries to you (at any time of night too) etc. etc.
Well-built apartments with good light, soundproofing etc are great, and you can get amenities in the building that would be cost-prohibitive for a single-family home.
If they sold well they would be built. People would rather rent an apt that uses all their disposable income than level with reality that a tiny 2bd home is what they can afford to buy. "but the amenities, location, and view in an apt" I can assure you an expensive home has all of these.
> Why can't America make small 2 bedroom homes anymore as seen in 1950s suburbs. It's either a mansion or an apartment now for new housing.
Because it isn't the 1950s anymore. The middle class that was able to afford those homes no longer exists, the rich have gotten exponentially richer, and everyone else has or is increasingly being priced out of housing.
Not sure I buy that. There are a a fair number of people who would be "middle class" by the definition of being able to afford a two-bedroom house (if there were two-bedroom houses to be had), but who can't afford a large three-bedroom house. (It may be fewer than in the 1950s, but it's a lot more than none.)
And to add on there's lots of people can afford a three bedroom house but it's just too much house which I think was the original sentiment. Of the people who are buyers that I'm directly associated with I'm seeing people who can practically pay cash for a house but they are just not seeing new construction that is appealing to them. It's too much house for a lot of people especially when you think about the long term expenses of owning such a large structure. If there wasn't a demand for good+ quality smaller buildings for people that have the ability to buy the concept of 'downsizing' wouldn't be as much of a thing. These people would happily buy new construction for full sticker but the long-term logistics of managing that property just is not what they want. Even when I was home buying none of these cut-and-paste mansions fit what I need it for and they were so expensive that doing modest customization to them to make them suitable for my needs priced me out. While there are many issues in the US housing market the build/reno as an investment vs. build to suit or reno to suit is certainly a slice.
Because more and more of us want walkability and all the amenities that come with it. None of my age ~25 friends have plans about moving to the suburbs, but we are disappointed at how NYC rent increases mean we will struggle to afford a nice place in Manhattan.
People in the US don’t get there’s a middle way between high-rise megacity and suburban wasteland. In the UK I live in a walkable community of detached homes. There’s villages, towns, dense suburbs of cities. The US used to be famous for small town main streets!
There’s some of this on the East coast. But settlement patterns in the US reflect the era in which it was settled. No Roman roads. No Viking villages. No medieval Monasteries or Castles. No stately homes. The U.K. boomed in the Victorian era and is dominated by that kind of housing but the US did not boom until the post-war period so is dominated by car-centric housing.
I grew up in an English village that, apart from a handful of Tudor buildings, was entirely Victorian growth. I imagine that had that growth occurred in the 1950s then it would be a very different place. Indeed by the 1990s almost all the shops had closed and we were effectively a suburb of our local town.
Here in California they used to have main streets but they ripped them all out in the boom, replacing them with thoughtless concrete modernity. Then those all failed when malls were invented and if you’re lucky your city tore it out and you’ve got some fake 90s interpretation of corporate utopia as your downtown.
How do y'all reconcile the air and noise pollution living in cities? I see studies posted on HN about how important sleep is and I've been way more sensitive to noise as I age.
I'm skeptical that white noise would be equal or better to the quiet of suburbia. Especially against high db sounds like firetrucks, helicopters, and trains. Doesn't look like there is much research in this area though.
It does nothing for vibrations/infrasound. Ear plugs or a noise machine can only help with the outside noise but, with many Americans preferring to wear hard sole shoes/boots inside, you are likely to be always aware of your upstairs neighbors movements.
I'd really like to know the reasoning for that as well.
I was in the market for a year and was interested in something outside of a city. I could afford the larger 5 bedroom homes, but had absolutely no use for that amount of space. Nice 2 bedroom homes in the suburbs just aren't a thing for some reason. Smaller homes exist, but the quality drops dramatically.
Perhaps there is an untapped market for high quality 1-2 bedroom homes outside of cities. I'd certainly buy one.
Except that’s not what consumers want by and large. Most buyers will add more space if they can. Often in anticipation of having a family and needing more space. Easier to grow into a bigger house than move.
Maybe we need more than one kind of housing because we have many kinds of people? You may not prefer apartments, but they can work well for lots of people with different needs, preference and life circumstances.
The answer is because it’s no longer cheap to build housing. Developers would loose money building small houses to be sold at market rate. Hence why everything is luxury - it’s those super-size-me margins only this time it’s not greed, it’s necessity. Materials are expensive, labor is expensive, standards for new buildings are high.
The other reason is that during the baby boom we already built on much of the conveniently situated land (flat, close to existing areas and infrastructure, vacant or agricultural). Now we have to go and build out infrastructure, perform grading, tear down the previous building, clean up its toxic waste, etc. It all costs money. Much of Silicon Valley was built on orchards. Now we’re trying to build on superfund sites.
Suburbia is TERRIBLE from long-term efficiency and sustainability point of view. They create car-centric living style which is very hard to get rid off after it settles in.
Apartments are so terrible for people, that almost every US city has to make sure to ban them from most of the residential land. Can't have people making the wrong choice of housing.
Much as I (a relatively young person) am in favor of more housing, isn't it also true that a surge in homebuilding would eviscerate the wealth of a lot of older Americans who are on the verge or in the midst of retirement? I feel dread whenever I look at the retirement savings numbers. So many elderly who'll have to live on a knife's edge financially.
Unless you're massively over-extended, the usual result of a housing price crash is to require you to hang around in whatever house you were in at the time of the crash (because the fixed loan payments don't change, and you can't afford to sell).
But even if homebuilding increased to the point of keeping prices steady, it would probably be enough.
Lots of boomers did refis and helocs and don’t have any equity anyway. Of course a large portion do have equity but they are generally not the ones on a “knife’s edge”
If we want to give money to old people, we should just give it to them. And there's no reason to prioritize the wealthiest old people. Plenty of old people don't own homes, they pay rent.
> eviscerate the wealth of a lot of older Americans who are on the verge or in the midst of retirement?
Using rising home values as a retirement account is essentially just a pyramid scheme.
Like, just think about how this has to work. It only functions if home values drastically increase between purchase and retirement, right? Let's say they have to double, for it to be significant for retirement savings: that means that each generation, houses are getting twice as expensive for the next set of buyers. Literally exponential growth in housing prices.
This can only happen a few times in a market before only people with a lot of wealth already -- intergenerational or otherwise -- can still afford the homes; just look at the bay area for an example. I grew up in the south bay, and hardly anyone from my childhood still lives there: they can't really afford it. To buy a house there, you usually need two people in tech with high salaries (and even then it can be stretching things a bit). Is that what you want?
The current situation in places that have had incredible growth in property prices is that people are funding their retirements, not from saving during their work years, but off the backs of their kids and grandkids, because they got lucky in where they chose to settle down. It's unearned wealth, plain and simple.
The ideal price of housing is zero*.
* okay yes obviously there's caveats there, but the fact that unlike other consumer goods where inflation is obviously held to be bad, people treat increasingly unaffordable housing as a good thing is insane.
> Using rising home values as a retirement account is essentially just a pyramid scheme.
Paying down a mortgage builds equity in the home. It's because homes are relatively illiquid and most people choose to own instead of rent that housing works rather well as a de facto retirement account. I see no issue with that personally.
> Like, just think about how this has to work. It only functions if home values drastically increase between purchase and retirement, right?
No it doesn't, for the same reason as stated above: accrued equity as a mortgage is paid down. Also, average home appreciation in the US roughly tracks inflation (which makes sense).
> just look at the bay area for an example
Why would you look at the most extreme real estate market in the country to draw any important conclusions?
> It's unearned wealth, plain and simple.
No it was just an investment whose return variance is principally explained by randomness. And of course not representative of the larger set. Almost everyone who has money in housing loses out after accounting for opportunity cost and things like maintenance + repair + property taxes.
> Paying down a mortgage builds equity in the home. It's because homes are relatively illiquid and most people choose to own instead of rent that housing works rather well as a de facto retirement account. I see no issue with that personally.
Irrelevant. Mere equity in a home with a flat value is essentially unaffected by lowered property values overall: you'll not be forced to 'save' as much, but the point of saving was to not have a mortgage payment anymore. If you don't need to 'save' as much to reach the same outcome, if anything that's a net good.
The only real downside here is if you were counting on moving to somewhere not affected by lower property values, AND you didn't invest the money elsewhere that would've gone into more expensive housing. But for most people, it's a good thing.
> Also, average home appreciation in the US roughly tracks inflation (which makes sense).
Your data is out of date. It used to hover around 200k current dollars on average, but now it's far higher. The increasingly terrible zoning and other building regulations finally caught up to us: https://dqydj.com/historical-home-prices/
And note that it tends to be particularly bad anywhere the economy is good. Of course, some of that is expected, but the effect is just more drastic than it should be.
> No it was just an investment whose return variance is principally explained by randomness.
No, it's just luck compounded by regulations that favor handing out wealth to the elderly over the keeping costs reasonable for younger people.
> Mere equity in a home with a flat value is essentially unaffected by lowered property values overall: you'll not be forced to 'save' as much, but the point of saving was to not have a mortgage payment anymore. If you don't need to 'save' as much to reach the same outcome, if anything that's a net good.
Some of this is hilariously false and the rest is incoherent. There is simply no way to argue that lowered property values won't result in a net destruction of wealth for people holding mortgages or paid off homes.
> Your data is out of date. It used to hover around 200k current dollars on average, but now it's far higher. The increasingly terrible zoning and other building regulations finally caught up to us: https://dqydj.com/historical-home-prices/
You can't measure from a point of extreme dislocation. We're clearly off trend at present and there's no reason to believe it won't revert, as is being widely discussed right now. Somewhat obviously, monthly mortgage payment inflation cannot greatly exceed wage inflation, on average.
> No, it's just luck compounded by regulations that favor handing out wealth to the elderly over the keeping costs reasonable for younger people.
You're still thinking about extreme markets. And in those markets regulation is only part of the answer. The truly salient determinant of prices is how quickly demand for housing in a region increases, which is fundamentally unpredictable.
> There is simply no way to argue that lowered property values won't result in a net destruction of wealth for people holding mortgages or paid off homes.
For people with existing home equity, sure. But how much does that actually benefit them? You can only actually make use of that money in a meaningful way if you either get a mortgage again, or if you leave and go somewhere cheaper (if it's more expensive than your current area, the current situation makes you even more screwed compared to the hypothetical).
Anyway, I was talking about the eventual steady state of the system: as a general principle, low home values would not destroy wealth, any more than reverting back to sane car prices will "destroy the wealth" of car ownership.
> We're clearly off trend at present and there's no reason to believe it won't revert
It might revert, yes, but unlike the insane housing bubble before, the current situation doesn't appear to be caused by financial shenanigans. There's just a lot of demand chasing not many houses. And if it does revert, it'll almost certainly be because of long-term changes in demand or supply. For demand, that would mean a long period of stagnation or recession.
> You're still thinking about extreme markets.
And what we're seeing is that increasingly, even markets that we didn't think of as "hot" are getting expensive. Random places look increasingly like the bay area I grew up in in the 90's, when it was already quite expensive, but not insanely so like now.
UN studies assume global population will peak around the 2080s [0].
Western countries rely on immigration induced population growth to keep their economies healthy. Would it not makes sense to prepare for a future where that well has run dry?
The world is getting older as well. The US will find itself increasingly competing for young, working age immigrants with other western nations. People in the developing world will also have less incentive to immigrate as their nations become more and more developed (look at India - it's still a much poorer than the US, but that gap used to be a whole lot bigger).
Articles like this miss the fact that having a shelter is one thing, but homes are also an important investment for the people that live in them. So much so that they are the default strategy of most financial planners and are only rivaled by complicated financial tools that involve insurance savings programs.
I welcome the talk about more housing, but people need to remember: most of what we need aren't rentals. We need places people can own.
Something cannot be an investment without scarcity, but housing is required to live. The problem is not "not enough houses to own" it's people hoarding houses as investment to the detriment of people's fundamental need to shelter.
There is no such thing as "to meet demand." If there were suddenly 4.3M more apartments, prices would drop, and suddenly there would be more demand as more people believe they can afford to have an apartment. Students who previously would have lived with their parents would want their own apartment. People with roommates would suddenly want their own place.
you’re talking about induced demand (i think that’s the term?), which is very real and makes the 4M figure in the article a bit misleading, but such demand isn’t likely to be infinite. consider an analogous endgame: i create a product which can dispense sushi for free. i give you a plate of 100 pounds of sushi, at no cost. you’re not going to eat it all, you’re not going to infinitely expand your demand to meet the available supply. supply really has met demand in this scenario.
i think a similar thing would apply to housing. even the very well-off don’t tend to purchase the maximal number of vacation homes they could afford. and i don’t think there’s any technology short of cloning that would cause a person to desire infinite residences: you can only be in on place at any given time…
Both these takes are wrong. We need diversified development that meets peoples needs at all levels of society. From soviet style concrete apartment blocks to 3 acre single lot McMansions and everything in between.
F unbridled YIMBYISM, but especially F “BUT it will ruin neighbor character” NIMBYISM.
Fill in the gaps, be empathetic, and welcome new people to the neighborhood.
I'm not sure we need more suburbs. At the scale they're on today, they're unsustainable without massive subsidies from city dwellers. They're bad for the environment, bad for health, probably bad for the community in general, etc. This is not a two-equal-sides situation IMO.
Yes. This is true, and personally I agree. But, for example, many groups in the US who have not had the privilege of living in the suburbs historically are now doing so given the opportunity. Single family housing is a status symbol and will continue to be. https://imgur.com/a/oOcq2K2
Urban3 has done some very interesting research into who pays for the suburbs. Guess who pays? It’s not the suburbs!!
'While the immigration rate stands at a record low, a reversal of this trend could significantly raise apartment demand, according to a press release on the report.'
This seems off - do they mean legal documented immigrants, because there are reports of 3000 undocumented people a day illegally coming into Texas via Mexico, some of whom are being bussed to other parts of America?
The concerns with 'building more apartment buildings' are resources in area - water, energy, transportation - and past disasters with places like Geneva Towers in South San Francisco which deteriorated into a crime ridden hell that had to be demolished in the '90's.
The US has a population of 329.5 million. Average household size is 2.51 people. So we need to house 131 million families - but the US already has 142 million housing units. The surplus is 3x the headline. What am I missing?
The market isn't perfect. The houses might not be where the demand is or the type/size needed and there will always be some unoccupied percentage due to moves, investments etc.
I would assume 10% unoccupied is the minimum needed.
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[ 7.5 ms ] story [ 230 ms ] threadhttps://i.imgur.com/2lZgEDz.jpg
TLDR take the population pyramid into account, but still build baby build.
(disclosure: part time real estate investor/developer apprentice)
Maybe I have a dirty mind, but is the higher density supposed to help people meet others and promote reproduction or something? It seems kind of cynical that people are forced to pay more for less in modern times, especially with higher taxes. I wish I had a house vs. having a 1 bedroom priced at ~3k per month. My rent is basically the equivalent of a mortgage at this point. I don't really want to have to have a car though so I guess that limits my living options.
If you want to live on an acre of land in a 3k-5k sq ft home, you’ll have to do it in Iowa City versus say, downtown Chicago (or within ~50 miles of the/a city core). Desirable land has a cost, both from an acquisition and upkeep perspective.
[1] https://www.calculatedriskblog.com/2022/06/may-housing-start...
https://www.lendingtree.com/home/mortgage/vacancy-rates-stud...
Easily takes care of the half a million people experiencing homelessness as well.
Right from the article you linked, 2nd parg:
"But this doesn’t mean millions of abandoned and dilapidated homes are withering away in the suburbs. Vacant homes can be unoccupied for many reasons beyond being uninhabitable. For example, a house can be vacant because it’s still on the market to be sold or rented or it’s a vacation home not currently in use."
Homes under management for long term housing or resale kept in unoccupied states longer than reasonably expected incur penalties.
Homes kept unoccupied due to being priced out of reasonable band may do so for limited duration--every loophole has to be addressed with financial incentives.
This includes reducing the business potential of domestic and foreign private equity groups picking up homes at depressed rates like what blackstone did.
Residential property rental and transactions related to residential property must be way less lucrative.
The problem is growing; why take a demand-side approach? Especially one so prone to making lawyers and government officials rich? You’re just trading like-for-like as demand grows over time.
FWIW, I’m in favor of nationalizing zoning laws as Japan has done to fix supply.
Also, this doesn't seem to answer my question. How should expropriation be done exactly?
/s
In these comments you seem more concerned about lowering the number of vacant homes than lowering the number of homeless people. I feel that's the wrong approach.
We need to look and take lessons from systems that at least somewhat helped the problem. Of course, adjusting for the US situation, which might be just different. Compared, to, say Eastern Europe, I feel like US can just afford having so many homeless (e.g. free food and medicine for homeless in California). In many other countries homeless would not be able to survive, so in some weird sense we can call it a luxury, not a problem.
Out of curiosity, you do realize there are lots of countries without homelessness, right?
Really curious to learn other ways to solve the problem. What those other countries you mean?
But Japan, for instance, has very, very nearly no homeless.
No, it's a fairly recent and entirely cultural phenomenon. For one thing, there was no homelessness at all in North America before the Seventeenth century or so.
My ski house in Vermont does absolutely nothing for the homeless people in my neighborhood in New York. If you put someone in that ski house what would it do? Sure it would put a roof over their head, but there are no jobs, no soup kitchens, no homeless resources. They would need a car whereas in New York they can walk and use mass transit. The town in VT is already strapped supporting many in their community (I do charity there as well, and let me tell you it's more dire than much of the New York area).
The solution is to house them here in the New York area where they are (and in fact New York does a better than average job of this).
As for it being a misallocation, I own a $1M apartment in NYC and a $300K house in Vermont. If I just owned a $1.3M apartment in NYC my bills would be exactly the same, there would be 1 fewer "vacant house", and the homeless would still be unhoused. The real misallocation is how much I get paid as a software engineer relative to other professions of similar difficulty. I happen to spend my fun money on a ski house instead of a boat or a bunch of vacations, but there's no moral difference between a vacation home and other leisure spending. So really you are arguing that some people shouldn't have such a surplus when there are homeless people. Maybe that's true, but it's one of the most unpopular positions in American politics and if you are an ally of the homeless it's not a fruitful argument to make.
I'm interested in modifying the system which allows for such outcomes, not managing the outcomes themselves. Please take a systems-level approach that seeks root-cause adjustment and not simply an amelioration of symptoms.
I count myself as progressive but am almost disgusted by how many progressives try to muddy the water here because they don't like to face the fact that they have to give something up to make their neighbourhood more accessible to those who are well-off people.
Anyone who doesn't take housing policy seriously on the issue of homelessness is either naive, or doesn't actually care about the issue and instead is trying to use it to push some other agenda.
Where will this person find a job? Where will this person get help organizing their lives? How will this person transport themselves? Where will this person get help for any significant issues in their lives (e.g. substance abuse, mental disorder, etc)?
This is where your "system-level approach" breaks down - you can't bring the support infrastructure for this to a small Vermony ski town and also to all the other small towns in America. This is, as your first post says, poor resource allocation.
Zoom out a bit and observe the broader systems which conspired to guide the invisible hand to allocate a largely unproductive property in Vermont to exist in the first place. I'll be very clear - I'm not advocating for unhoused people from New York to inhabit this property. If that's how you've decided to read it I implore you to go back and begin steel-manning instead.
Even high-functioning and privileged individuals seldom have their shit together 98% of the time. I can't go 5 days without doing something chillingly stupid.
It is frankly astounding that we achieve better than 98% on any homelessness metric. A long forgotten ancestral memory says: there but for the grace of God go I.
Root cause: humans stink individually but we are robust in aggregate.
- Steinbeck, The Grapes of Wrath, chapter 25
Many other countries have historically avoided famine in part because their political systems depended upon and heavily favored local agricultural interests--not the laborers, but specifically the financial security and opportunities of the agricultural land-owning classes. And when and where they didn't, e.g., Ireland in the late 19th century or China in the mid-20th century, things played out in predictable fashion.
Such emphasis doesn't create an optimal state of affairs for maximizing overall wealth and economic equality, but it's one way, however primitive, to buffer volatility and minimize the chances of catastrophic food failure; and helps explain why such seemingly unfair socio-political favoritism, often with seemingly perverse side effects, persists today, let alone in the 1930s.
Only since the 1920s and commercial fertilizer use has food become abundant to such a degree, and logistics so sophisticated that we could fathom supplying excess food to multiple entire countries.
It is doubtful that the people who conceived plans for providing such aid foresaw all the consequences of their actions, because there was simply no historical precedent for such a scale of intervention. Food was scarce. Countries usually didn't have enough of it. It only seemed like the best way to alleviate that was to just _give people food_.
As it turns out, maybe that wasn't the best way, but it was lieky a lesson that needed to be learned the hard way.
Do you mean that we don't have enough vacant homes?
Person A: My machine needs 4 GPU to train this model in <6 hours.
Person B: There are 1000000 GPUs in Japan.
Do you see how that's not helpful?
edit: then Michigan, Pennsylvania, Georgia, Ohio, Illinois, Alabama, South Carolina, Virginia, Missouri, Tennessee, Arizona, Wisconsin, then, finally, Louisiana.
Meanwhile NYC is <5% which can barely manage to support people moving around within the city, never mind other people trying to move into the city.
https://www.thecity.nyc/2022/5/17/23108792/nyc-apartment-vac...
Of course, that's the exact thing which is hardest to do, since economy is king and economic incentives don't align with that proposal at all.
edit to add: A couple of people have mentioned that the vacant homes are not in desirable locations. As an anecdote, I live in Park Merced in San Francisco and there are dozens and dozens of empty units here ready to move in. There are also dozens of families living in RVs around Lake Merced a few blocks away. I'm saying that the obvious thing to do is for SF to exercise eminent domain, pay the company that owns Park Merced for the property, then let the people in the RVs live in the homes. That might seem a bit expensive, but SF's annual budget for dealing with homelessness is one quarter of a billion dollars.
We could convert Park Merced into a place of healing and renewal where folks who need help can come and live in a home and have access to e.g. addiction treatment or whatever.
The simple answer is, volunteers first and if that's not enough we can do a lottery. That's just off the top of my head.
> and who’s paying to subsidize the rent?
US Government. We'll take it out of the defense budget. In the interests of National Security and all that.
I really don't think it's that crazy of an idea. The details would be messy but we could house everyone overnight if we really wanted to.
It sounds so wasteful to buy such expensive real estate, lose property tax revenue, and assume perpetual maintenance costs just to house a fraction of the homeless you could elsewhere.
Build more housing and give it to them.
> Isn’t it reasonable to expect your homeless population to backfill with other RV dwellers looking for the same?
Yes, but there's only about 500,000 homeless people in America. It would not quite double the city population. (Last I checked we were around 800,000.)
Park Merced alone could hold thousands more families if we converted the garden apartments and townhomes to towers, although that wouldn't be the only option. The entire Sunset District is almost all single-family homes. SF is a young city, there is lots of room.
> It sounds so wasteful to buy such expensive real estate, lose property tax revenue, and assume perpetual maintenance costs just to house a fraction of the homeless you could elsewhere.
Perhaps, but compare that to the opportunity cost to society of keeping all those families living in RVs. That's the real waste, eh?
Give them homes, let their kids grow up in stable homes, check back in three generations, eh?
I'm hugely in favor of guaranteeing housing, but putting homeless people in random houses and apartments scattered across the country is unlikely to actually work. Do any other countries actually do this to solve homelessness?
We need emergency and temporary housing with heavy support for many homeless people, and then more standard housing for people once they're more stabilized.
Some US homeless are mentally ill, but the majority are people without any safety net-- either societal (since they reside in the US), or familial.
https://nfyi.org/issues/homelessness/
I mean this is essentially true by definition, but it doesn't conflict with mental illness or substance abuse problems being factors as well.
I don't disagree with your point though. We could do much better as a society. There should always be some bare minimum safe and secure housing available, even if it's basic.
Because it isn't the 1950s anymore. The middle class that was able to afford those homes no longer exists, the rich have gotten exponentially richer, and everyone else has or is increasingly being priced out of housing.
I grew up in an English village that, apart from a handful of Tudor buildings, was entirely Victorian growth. I imagine that had that growth occurred in the 1950s then it would be a very different place. Indeed by the 1990s almost all the shops had closed and we were effectively a suburb of our local town.
Here in California they used to have main streets but they ripped them all out in the boom, replacing them with thoughtless concrete modernity. Then those all failed when malls were invented and if you’re lucky your city tore it out and you’ve got some fake 90s interpretation of corporate utopia as your downtown.
No answer for air quality. Except is indoor air quality any better in a new suburban house than a new apt in a walkable area?
That being said, SF is famous for their moldy condos. I've had apt neighbors that smoked cigars, cigs, and weed that crept into my room.
Oh to be young again.
I was in the market for a year and was interested in something outside of a city. I could afford the larger 5 bedroom homes, but had absolutely no use for that amount of space. Nice 2 bedroom homes in the suburbs just aren't a thing for some reason. Smaller homes exist, but the quality drops dramatically.
Perhaps there is an untapped market for high quality 1-2 bedroom homes outside of cities. I'd certainly buy one.
The other reason is that during the baby boom we already built on much of the conveniently situated land (flat, close to existing areas and infrastructure, vacant or agricultural). Now we have to go and build out infrastructure, perform grading, tear down the previous building, clean up its toxic waste, etc. It all costs money. Much of Silicon Valley was built on orchards. Now we’re trying to build on superfund sites.
Here is a really good video about it: https://www.youtube.com/watch?v=7IsMeKl-Sv0
But even if homebuilding increased to the point of keeping prices steady, it would probably be enough.
Using rising home values as a retirement account is essentially just a pyramid scheme.
Like, just think about how this has to work. It only functions if home values drastically increase between purchase and retirement, right? Let's say they have to double, for it to be significant for retirement savings: that means that each generation, houses are getting twice as expensive for the next set of buyers. Literally exponential growth in housing prices.
This can only happen a few times in a market before only people with a lot of wealth already -- intergenerational or otherwise -- can still afford the homes; just look at the bay area for an example. I grew up in the south bay, and hardly anyone from my childhood still lives there: they can't really afford it. To buy a house there, you usually need two people in tech with high salaries (and even then it can be stretching things a bit). Is that what you want?
The current situation in places that have had incredible growth in property prices is that people are funding their retirements, not from saving during their work years, but off the backs of their kids and grandkids, because they got lucky in where they chose to settle down. It's unearned wealth, plain and simple.
The ideal price of housing is zero*.
* okay yes obviously there's caveats there, but the fact that unlike other consumer goods where inflation is obviously held to be bad, people treat increasingly unaffordable housing as a good thing is insane.
Paying down a mortgage builds equity in the home. It's because homes are relatively illiquid and most people choose to own instead of rent that housing works rather well as a de facto retirement account. I see no issue with that personally.
> Like, just think about how this has to work. It only functions if home values drastically increase between purchase and retirement, right?
No it doesn't, for the same reason as stated above: accrued equity as a mortgage is paid down. Also, average home appreciation in the US roughly tracks inflation (which makes sense).
> just look at the bay area for an example
Why would you look at the most extreme real estate market in the country to draw any important conclusions?
> It's unearned wealth, plain and simple.
No it was just an investment whose return variance is principally explained by randomness. And of course not representative of the larger set. Almost everyone who has money in housing loses out after accounting for opportunity cost and things like maintenance + repair + property taxes.
Irrelevant. Mere equity in a home with a flat value is essentially unaffected by lowered property values overall: you'll not be forced to 'save' as much, but the point of saving was to not have a mortgage payment anymore. If you don't need to 'save' as much to reach the same outcome, if anything that's a net good.
The only real downside here is if you were counting on moving to somewhere not affected by lower property values, AND you didn't invest the money elsewhere that would've gone into more expensive housing. But for most people, it's a good thing.
> Also, average home appreciation in the US roughly tracks inflation (which makes sense).
Your data is out of date. It used to hover around 200k current dollars on average, but now it's far higher. The increasingly terrible zoning and other building regulations finally caught up to us: https://dqydj.com/historical-home-prices/
And note that it tends to be particularly bad anywhere the economy is good. Of course, some of that is expected, but the effect is just more drastic than it should be.
> No it was just an investment whose return variance is principally explained by randomness.
No, it's just luck compounded by regulations that favor handing out wealth to the elderly over the keeping costs reasonable for younger people.
Some of this is hilariously false and the rest is incoherent. There is simply no way to argue that lowered property values won't result in a net destruction of wealth for people holding mortgages or paid off homes.
> Your data is out of date. It used to hover around 200k current dollars on average, but now it's far higher. The increasingly terrible zoning and other building regulations finally caught up to us: https://dqydj.com/historical-home-prices/
You can't measure from a point of extreme dislocation. We're clearly off trend at present and there's no reason to believe it won't revert, as is being widely discussed right now. Somewhat obviously, monthly mortgage payment inflation cannot greatly exceed wage inflation, on average.
> No, it's just luck compounded by regulations that favor handing out wealth to the elderly over the keeping costs reasonable for younger people.
You're still thinking about extreme markets. And in those markets regulation is only part of the answer. The truly salient determinant of prices is how quickly demand for housing in a region increases, which is fundamentally unpredictable.
For people with existing home equity, sure. But how much does that actually benefit them? You can only actually make use of that money in a meaningful way if you either get a mortgage again, or if you leave and go somewhere cheaper (if it's more expensive than your current area, the current situation makes you even more screwed compared to the hypothetical).
Anyway, I was talking about the eventual steady state of the system: as a general principle, low home values would not destroy wealth, any more than reverting back to sane car prices will "destroy the wealth" of car ownership.
> We're clearly off trend at present and there's no reason to believe it won't revert
It might revert, yes, but unlike the insane housing bubble before, the current situation doesn't appear to be caused by financial shenanigans. There's just a lot of demand chasing not many houses. And if it does revert, it'll almost certainly be because of long-term changes in demand or supply. For demand, that would mean a long period of stagnation or recession.
> You're still thinking about extreme markets.
And what we're seeing is that increasingly, even markets that we didn't think of as "hot" are getting expensive. Random places look increasingly like the bay area I grew up in in the 90's, when it was already quite expensive, but not insanely so like now.
Western countries rely on immigration induced population growth to keep their economies healthy. Would it not makes sense to prepare for a future where that well has run dry?
[0] https://www.un.org/development/desa/pd/sites/www.un.org.deve...
The world is getting older as well. The US will find itself increasingly competing for young, working age immigrants with other western nations. People in the developing world will also have less incentive to immigrate as their nations become more and more developed (look at India - it's still a much poorer than the US, but that gap used to be a whole lot bigger).
I welcome the talk about more housing, but people need to remember: most of what we need aren't rentals. We need places people can own.
you’re talking about induced demand (i think that’s the term?), which is very real and makes the 4M figure in the article a bit misleading, but such demand isn’t likely to be infinite. consider an analogous endgame: i create a product which can dispense sushi for free. i give you a plate of 100 pounds of sushi, at no cost. you’re not going to eat it all, you’re not going to infinitely expand your demand to meet the available supply. supply really has met demand in this scenario.
i think a similar thing would apply to housing. even the very well-off don’t tend to purchase the maximal number of vacation homes they could afford. and i don’t think there’s any technology short of cloning that would cause a person to desire infinite residences: you can only be in on place at any given time…
>but, but, apartments are bad.
Or
>nuke the suburbs
Both these takes are wrong. We need diversified development that meets peoples needs at all levels of society. From soviet style concrete apartment blocks to 3 acre single lot McMansions and everything in between.
F unbridled YIMBYISM, but especially F “BUT it will ruin neighbor character” NIMBYISM.
Fill in the gaps, be empathetic, and welcome new people to the neighborhood.
https://missingmiddlehousing.com/
Urban3 has done some very interesting research into who pays for the suburbs. Guess who pays? It’s not the suburbs!!
https://www.urbanthree.com/case-study/lafayette-la/
This seems off - do they mean legal documented immigrants, because there are reports of 3000 undocumented people a day illegally coming into Texas via Mexico, some of whom are being bussed to other parts of America?
The concerns with 'building more apartment buildings' are resources in area - water, energy, transportation - and past disasters with places like Geneva Towers in South San Francisco which deteriorated into a crime ridden hell that had to be demolished in the '90's.
https://www.foundsf.org/index.php?title=Remembrance_of_Genev...
I'm all for more housing but the US is a big place yet everyone seems to want to live in very small areas of it, egged on by the YIYBY crowd.
https://www.statista.com/statistics/183648/average-size-of-h...
https://www.statista.com/statistics/240267/number-of-housing...
Which is to say, yeah, maybe we don't need to build tons more, but we do at minimum need to use what we have and we aren't.
I would assume 10% unoccupied is the minimum needed.