There is no housing shortage, there are more vacant homes than total numbers of homeless in the US. It’s just that capitalism creates a permanent underclass.
The problem of low housing supply is not a problem of capitalism. It's of nimbyism, restrictive zoning, car-dependency. Capitalism's hey-day was late 1800s and cities ballooned like crazy.
Define "vacant" home. The house next door to me was empty for two months while it was being sold and before new owners moved in. The house across the street from me has been for sale for months. It is impossible to house homeless in houses for sale; the sellers and buyers would never accept it.
The same thing happens with apartments. They are vacant for a month between tenants or when finding new tenants. Landlords would never accept temporary tenants who couldn't pay.
People holding houses for investment happens, but most rent them out. The few that don't are pretty rare and not enough to affect the housing market.
It’s not that we don’t have enough housing, the issue is that we have people that want too many houses for themselves. It’s just greed. I can’t even count on my hands How many people I know that own more than one house and I am homeless. So I’m sure wealthy people pretty much don’t know anyone that doesn’t own a single house.
I am sorry about your situation. I feel that simply building more houses is easier than trying to get the surplus houses out of the possession of the people who want several houses. As the fine article concluded, we are a rich country and we should act like it by building the appropriate number of houses.
But what's to stop wealthy people from buying the newly built houses as yet another asset to their real estate portfolio to the exclusion of first time homeowners?
> I am a YIMBY and still understand that these forms of housing are nowhere near as valuable as the SFH.
Well, ok then - we want affordable housing, let's build affordable housing. Nothing's perfect. Some people prefer denser housing in a more desirable place, and some prefer more space in Cyanide Springs, Oklahoma. Both should be a choice, but currently, we limit the denser housing options way too much.
In a perfect world, I would agree. But in reality that will never happen, and young people continue to suffer in the meantime. Housing should have never been allowed to become an investment.
There was a large drop in the price of housing just 15 years ago. Granted, other factors were involved, but that's part of what the article is about. It is possible.
This is that heart to what the problem is. Instead of letting the housing market, collapse and state collapsed the federal reserve started printing money nonstop to inflate assets, including housing. And they haven’t stopped since then. This is what causes separation of wealth in the United States, and the increase in homelessness.
And now the Fed can’t even get the guts to lower inflation by raising interest rates because of what it’s done to the housing market.
When I go to city council meetings to support housing, the problem is NIMBYs. Not macroeconomic conditions, but ordinary people who show up at an evening meeting to complain about - I kid you not - some code removing a number for garage heights. They wanted to use this to block some apartments in their neighborhood.
This kind of thing happens over and over and over again, all across the US and it adds up.
I don't live in your city but in my city we just got finished pushing a project approval through a 7-year political process. The project will build 1000 new apartments on the parking lot of an existing subway station. Most of the new apartments will be deed-restricted affordable housing. At the most recent and final hearing there were still Boomers showing up to demand the project be scrapped because they prefer free parking.
Do you not see the contradiction in your statement?
Houses are built by developers whom by definition only build a project when it's a sound investment. They immediately stop building when this isn't the case.
Different kinds of 'investment'. You're correct that if they can't turn a profit, they won't build. Same as with cars or bicycles or any other good. But that's not a long term thing - they want to sell the goods they have produced, turn their profit, and move on to the next project.
What people who buy homes are told, though, is to essentially 'buy and hold' because it's a "good investment" that will gain value over time, even if they are not building anything or adding any value to the dwelling they inhabit.
Where I live, during the recent runup in prices, the median home gained something like $100,000 of value in a year, which is significantly more than the median household income.
I'd say that most people do not buy a house for the investment. They actually live in it and any value appreciation is a side-effect. A pleasant one, but not the primary goal of the purchase.
Here's a chart of homeowner gains vs developer profits. It's a bit apples to oranges, but it gives you an idea of the scale of who benefits (at least on paper) from the housing crisis:
Ideally, I think, home prices would be fairly stable - neither appreciating a lot, nor dropping in value. Boring. That would also make them a 'bad' investment for corporations looking to make a buck by buying and holding.
> What people who buy homes are told, though, is to essentially 'buy and hold' because it's a "good investment" that will gain value over time, even if they are not building anything or adding any value to the dwelling they inhabit.
Do you expect people to buy and sell their home? It’s their home, why would selling (in the short term measured in decades) be the goal?
People primarily buy homes to live in. Any benefits of price appreciation, and/or political interests of those nearing their end of life and want to downsize/die are secondary.
If we remove the regulatory barriers to building more housing, the rich and the less rich can buy as much housing as they want.
Think about this in the context of any other good. No one worries that if we build more cars, they'll all be purchased by rich car collectors. Yes, when more cars are built, a few very rich people with many cars will buy more. But the increased supply also make it more economical for everyone to buy more cars.
Yes, this is exactly my point. The fundamental issue is greed, not housing. If we don’t get rid of the greed, these houses will be either bought up by investment corporations or the wealthy people that didn’t get second houses the first time around.
People will always be greedy. Theres nothing we can do to solve that problem. We can solve the housing shortage though. Investors wont buy homes when theyre easy to build because their value wont increase unless supply is constrained.
Oh, yes. Nothing frustrates me more than seeing all these “luxury apartments“ being built everywhere. I never gave a crap about luxury. I just would like a stable, clean place to live. I even love studios more than a one bedroom apartment. But now even the studios are all “luxury“.
As I said, at other times in this thread, the only incentive we have as an and an economy in the United States, is agreed.
As I said, at other times in this thread, the only incentive we have in this economy and in the United States, is greed.
It doesn’t matter. The goal should be to build enough housing to make it a marginal investment, at which point it won’t be attractive to real estate investors. Of course, a house is still attractive to someone who wants to live in it.
First of all I do not care if people rent or buy homes. Under my economic policies when I become god-king of America, owning a house will be the worst investment anyone has ever heard of and people will run screaming from the small-time flipper game. I will Make Landlords Poor Again. Vote Jeffbee.
Secondly if a person owns a home and rents it to a second person, I'm fine with it.
They would only buy it they felt the return was higher than other investments
If the capital appreciation is zero, then it's just the rental income, which is offset against the cost of maintaining the property and the opportunity cost from the capital outlay on the property. That's not a major problem though, as the rental price won't be able to get too high as people will simply rent or buy elsewhere (as you've reduced the other barriers to building more property)
Of course you can get rid of the appreciation by simply taxing the land (which is the thing that mainly appreciates -- the building itself typically depreciates), and get most of the way there.
Building more houses might be easier, but it's incredibly difficult nonetheless, at least if we're talking about affordable housing. There is tons of housing being built in my area, but it's all for the wealthy. Literally nothing is being built for anyone who isn't rich.
And what affordable rental housing exists is increasingly being purchased by investment groups who then squeeze them for every dime, squeezing out the very people who need that housing in the process.
The housing crisis really looks to me like an aspect of the serious wealth inequality problem we have.
You add housing at the top of the market, the highest price point, because people will pay more for a newer home. Consequently the older ones become cheaper, because people who prefer the new ones and can afford them no longer compete in the market for older ones.
This has been dramatically demonstrated in Berkeley, where I live. We have added tons of 0- and 1-bedroom apartments recently. These are very expensive, $3000/mo+. This building boom has caused the price of rent-regulated older apartments to plunge. What had been renting for $2252/mo in November 2018 is now renting for $1688/mo in November 2023. That is a significant increase in affordability of studio and 1-bedroom apartment, effected by building newer, expensive ones.
Edited to add sources:
The discussion is too long for me to recapitulate here, but all of my data in various forms and some visualizations are available here:
Can you please provide a source for the rent decreasing? Maybe a site showing the historical rental cost(s) for a given unit? I've not seen that happen in my market at all, I've only seen existing rental rates increase.
Edit:
I think I see where a lot of our disconnect is coming from. We have no rent control here, rent very rarely decreases and is mostly pegged to comparative sq.ft. rentals in the area. Age of the property does not factor as much as location.
Rent control only fights against upward pressure for existing renters... When you describe rents continually going up, it's due to more people competing for limited rental units. Cities can and do see rent declines (they first show up as "first month free" etc. before landlords bite the bullet and reduce rate). Seattle has seen temporary competition for rents in some neighborhoods as new construction started in 2019/2020 comes online. It won't last since we've seen such a decline in new construction starts, but the mechanism is sound.
I am sorry about your conclusion, but you're ignoring all the knock-on effects. These houses are utilizing prime locations and locations anywhere near the city centers where the majority of jobs are. They're sitting there empty for large portions of the year depriving the local economy of patrons. They're owned by wealthy individuals who are driving up the housing costs in the entire area, which also benefits them as the value of their 'investment' increases and the ability for the average person to own a home diminishes. "Just build more houses".... where? at what cost? Are you going to tell people to stop trying to buy houses where the jobs are, where the modern services and utilities are?
"We" are not a rich country, unless by "we" you mean the 10% of the population that is rich. I feel well compensated, I'm well within the middle class and consider myself lucky. I cannot afford a home, in the current market, in a location with the services and locality of my industry. I live in Florida. Vrbo, Airbnb, and properties purchased by institutional investors have directly increased my housing costs. That is objective, not subjective. Call it anecdotal all you want, the populated parts of the state have seen their housing options obliterated.
While we're on the topic, let's not forget foreign investors. Most of the properties in my neighborhood were purchased by foreign investors. My block in particular has at least 4 houses that are owned by asian investors. I've met the families who live-in and rent those houses. The property management company also runs the HOA and votes by proxy for those investors, investors who don't care about the daily goings-on of the community.
If we're going to use statistics for anything, let's look at it in the affirmative instead. How many homes are owned by the family living in them? The most recent data for Florida is for 2015-2019. Here are the owner-occupied housing for the most populated counties, starting with the one I live in.
Hillsborough County - 58.6%
Miami-Dade County - 51.2%
Orange County - 55.4%
Broward County - 62.1%
Palm Beach County - 68.9%
Duval County - 56.7%
Pinellas County - 67%
The National Average is 64.8%. In my county nearly half of the housing is not owner-occupied. As a nation, nearly a 3rd of available housing is not owner-occupied. I bet this is worse now, as this information is pre-pandemic and from the very beginning of the most recent housing rush.
There is nothing ethically preferable about owner occupancy. In Switzerland, which I consider to be a highly developed society, they have a special tax that applies only to owner-occupants. I think we should adopt that. More people should rent, and fewer people should consider home ownership an investment strategy.
Also, to be quite honest, your allusions about shadowy Asians has the whiff of racist tendencies.
I'm sorry if there was any implication of bias against Asians as a group. I don't think I implied that at all, when did I call them shadowy? That smells of your own biases and perceptions. I was simply referencing the region of those I'm aware of. My neighbors home is owned by an investor from the Philippines. Three other houses on my block are owned by investors from China and are rental houses. This information can be confirmed by a simple property tax search.
I don't understand this stance. I want to own so I can customize to my liking. I want to own so I can add that solar system and battery backup. I want to own so I can add 2 ft of pavers on both sides of my drive-way. I want to own so that 30 years from now when I'm preparing to retire, that my only housing costs will be utilities and taxes. What person wants to never be able to call something their own?
Anecdotally, of the many people I know who own second homes, ~80% or more are not rented out when the owner is not there. In at least half of the cases Airbnb is expressed prohibited by their community/municipality
I stand to inherit from such people. They own five homes, are building a sixth, and have plans for 1-2 more at least. 4 are rentals, 1 is a charity to my Uncle who is mentally unwell and unable to provide his own living. They don't think they have that much money.
It's all relative, but supposedly the top 1% had $11M in the US in 2022 (e.g., via https://www.forbes.com/advisor/investing/financial-advisor/a...). That means, 5 averagely priced houses do not put you in the top 1%, however, 1 big mansion in a nice area could.
$11M is net worth, not all of which needs to be held in residential real estate. I would expect a lot of people in that ballpark of net worth to probably "only" have a few million sunk into real property. The rest would likely be in securities.
Also consider that someone with 5 houses may not even have all that much of their net worth in the houses; the could largely be financed.
Exactly, and what’s the occupancy rate for those Airbnb? 80%, 50% 20%? I knew one family that could make more an Airbnb in a week than they could renting it for two months.
Perhaps, but so what? Acting morally superior doesn't fix that. You don't change people's habits or desires. You either change the incentives (good luck with that in this particular case), or you... build more housing and make it not a problem that people own multiple homes.
Good luck with counting on people to have shame and a moral compass (esp the wealthy). There's a ton of bigots on X (Twitter) who just love beating their chest showing they're a bigger biggot than the next. It's the generation of F* you, I've got mine, and not all of us are like that, but too many definitely are.
It's a reasonable thing to predict quanatatively. If second homeownership was not legally possible, how much would it affect home ownership rates? (given all other things equal)
That is exactly what’s happening in many places. A new condo development went up near me, and over 80% of units were immediately purchased by investors. Not giant corporations, but local individuals buying for mainly AirBnB use.
Untrue - it often takes the form of: somebody bought a townhome in the city 20 years ago, they use the appreciation to buy a house in the suburbs, they move and keep the city home and rent it out.
> Untrue - it often takes the form of, somebody bought a townhome in the city 20 years ago, they use the appreciation to buy a house in the suburbs, they move and keep the city home and rent it out.
Renting a home out is still productive.
Keeping it empty is not. I was pointing out that people aren't buying two homes in the same city to keep one empty.
Eh.. there are housing shortages in almost every one of the locations where people buy second homes too. All of the ski towns, all of the beach towns, tons of Southern warm-climate cities like Sedona and Las Cruces.
High net-worth individuals (as per the article) represent a small fraction of Americans (if you break a $1000000 you're in the top 5%). That they might own a second home makes no meaningful impact on the market, notwithstanding the fact that average people aren't even competing in the same range (multi-million dollar houses).
More housing starts means more affordable homes. We've seen what zoning reform has done for cities. We don't build enough.
Investors collectively do purchase a good amount of new housing starts (like 18%?) but that's also spurred by interest rates and confidence that demand will grow. It's neither here nor there, build more and houses become more affordable.
Small fraction of people but a huge fraction of wealth. Top 10% having 70% of the wealth, e.g.
If we make the (extremely crude) assumption that the capital expended on that 2nd home could be moved elsewhere, we could have built more housing in cities instead of building and maintaining that home.
If you consider what actually deters construction/building rates, there's no reason to believe that capital "moved elsewhere" (appropriated by some abstract entity / people) would translate to more housing.
Supposing everyone had more money in their hands (all else remaining equal), that would just be reflected in the market. Houses would increase in cost. Now you're where you started.
Housing supply is just too inelastic in most US cities.
If we make the assumption that each mansion housing a millionaire could be rebuild to a multi family home housing 10 people (or families), then those 5% houses become homes for 50% of Americans.
Consider what constitutes a "multi-family home" in the loosest sense and you'll find that zoning/regulation is what is prohibiting its construction. Otherwise, if there is demand, it will be built. 10 people will not buy a multi-million dollar mansion together, but they would buy a piece (or rent) of medium-density housing.
Those mansions also tend to be built far away from city cores, with large lots to maintain (with paid labor), more taxes to be spent for infrastructure cost, requiring a vehicle, etc. It would still be too expensive and unhelpful for average people.
WE don't build enough. Look at what zoning reform has done for Minneapolis.
The owner of the prior home I rented owns 50+ rental properties in the county, has a 1M+ family vacation house in the adjoining county, and lives in California. Explain to me how that made "no meaningful impact" on the market? That's ONE individual. Her brother also owns a number of properties in the area.
Nice anecdote, but now you're conflating second homes with rental units. Supposing they did not own 50+ rental properties, someone would have to own them if they're to be available for rent. They don't get built for nothing. Why is rental availability framed as a negative? You seem to be making an allusion that average people would otherwise purchase apartment complexes. Supposing they want to buy and not rent, they'd look at condos, and the construction of a condo is not contingent on not constructing apartments. This is not zero sum. If you have a growing population, you have to build.
At any rate, the point is that qua "second homes", they represent a drop in the bucket compared to the overall market. Home ownership rate is around 63%, for a population of 334 million. The inelasticity of housing construction whilst demand is steadily climbing due to immigration has far more impact on average housing prices than cases of the ultra-wealthy constructing or purchasing a mansion upstate.
If you're presented with abundance, everyone is taking a similar share and there isn't counterpressure from your peers (e.g., laws that we vote for), then there is no selfishness and thus no greed. To define greed you need a feedback loop.
We're simple dumb animals. We take what's available. If you want to talk about defining arbitrary limits on consumption that are disconnected from circumstances then you're basically out here preaching religion.
Taking more than you need when others are lacking is selfishness. Counterpressure doesn't enter into it. If the only thing that stops you from being greedy is that other people or laws pressure you to not be, then you're still a greedy person. Our values are expressed by what we do in the absence of such pressure.
Nobody was buying second apartments in NYC in the 80s. Nobody was buying apartments period. I knew people with brownstones for sale in spanish harlem that they couldn't get $10k for in the late 80s. 80% of _storefront_ space in midtown was vacant.
People buying vacation homes in Florida or Vermont aren't responsible for homelessness in major cities.
It amazes me how people pick and choose when they want us to be “dumb animals“. And it amazes me that someone on hacker news would say this. Even dumb animals are more communal and fair than modern humans are.
I personally would feel a great deal of guilt if I purchased a second home in my city, knowing that there are thousands of people who would kill for the opportunity.
To me, it is indeed greed. Some things are more sacred than money and housing is one of those things
But outside of a few outlier markets like SanFran/Vancouver/NY, which are mostly being used to expatriate stolen foreign money anyway, that's not how the majority of people acquired a second home.
I suspect a great deal of people buy a second home while maintaining the first one as a rental, if they can swing it.
with all of the "free" money out there over the past few years, it was insanely easy to pull equity of your home to buy investment properties. I don't have numbers but I can't imagine this is a small amount.
Nobody's swinging that in high demand markets. A lot of dumb people _tried_ to leverage themselves and lost their ass on airbnbs that aren't performing (airbnb has seen huge decline).
The overwhelming majority of second homes are vacation homes.
_Landlords_ aren't keeping people out of housing -- quite the opposite.
Home ownership is kind of an endless money pit anyway. Most people are better off renting in any of the markets we're talking about homeless populations anyway.
People are also extremely bad accountants, and if they sell a house for more than they bought it they accrue everything to profit, even if the rents during the time barely covered the mortgage (and/or didn’t cover repairs and maintenance at all). Large appreciation has hid the real costs associated with landlording.
landlording is really all about economies of scale to both the owner and renter's benefit.
Ideally landlords should be able to get better pricing for maintenance.
Unfortunately our dumb FREE MONEY monetary policy has absolutely wrecked the trades and saddled generations with bad debt chasing worthless credentials.
If there’s four slices of pizza in front of you and there’s a person sitting across from you, you’d be incentivized to take all four of the slices. Doing so would be greedy. Not being greedy is making sure the other person gets what they need before you take the rest.
I can surely blame people for taking what’s in front of them when people who are also in front of them have nothing.
At the time all of these people purchased their (absurdly cheap, relatively -- or tax/interest-incentivized) second houses, there was nobody sitting across from them.
I’m the OP, and I definitely understand. Maybe that would be a good idea, once someone goes to apply for a mortgage there has to be a homeless family in the office right next to them.
I understand and sympathize. And I'm sorry to guess correctly that it would be mental illness. I still think there's some misplaced blame going on here.
I do not believe people whom say property is theft as it would mean I can randomly take your personal items as they're not your property, since you don't believe in the concept.
But should you genuinely believe that and walk the talk, fair enough. I'm more of a pragmatist myself.
You would have to read Proudhoun an Anarchism to understand what is meant by the saying.
By "property", Proudhon referred to a concept regarding land property that originated in Roman law: the sovereign right of property, the right of the proprietor to do with his property as he pleases, "to use and [to] abuse," so long as in the end he submits to state-sanctioned title. Proudhon contrasts the supposed right of property with the rights (which he considered valid) of liberty, equality, and security. Proudhon was clear that his opposition to property did not extend to exclusive possession of labor-made wealth.
I frankly just cannot this seriously. And I think the vast vast majority of people in the world would find Prodhoun's view of property to be laughably unworkable, or at best just undesirable.
I think you're right on, but this position is deeply unpopular with the people that own those additional homes. It should also be said that, anecdotally, the same people that own a bunch of homes as "investment properties" are also the most likely to be NIMBYs because their wealth is tied up in real estate property values.
I meant more: how do you know we're keeping up with building vs population increase, but so narrowly that some people having second homes that they don't rent out are making all the difference?
There is truth to this. 3/3 interns of mine whose parents live in the Bay Area have # of homes in the neighborhood > # of adults occupying them.
> It’s just greed.
These people whom I know personally, they are not greedy. They're not even selfish. They're not the bad guys.
Why don't the rich rent their vacant homes to the poor? At least we can answer this question objectively: if you're poor, you have less to spend, you can't fix your stuff, you will have more occupants, you will pay late more frequently, you will not be able to pay rent increases, you will not be able to adapt to extraordinary events like fires and layoffs, you have higher legal risks like tenant lawsuits, you will...
The crazy thing is, in every sector, sellers are less interested in poor buyers.
If you have more than you need while others are suffering it’s greed. You can’t change the definition of greed just because it makes you uncomfortable.
What if we made it a law that no one could own a second home before everyone owned a first home?
Not to nitpick, but the common definition of greed is different:
> Greed is an insatiable desire for material gain (be it food, money, land, or animate/inanimate possessions) or social value, such as status, or power.
Keyword: Insatiable. Lots of the people in the Bay Area are simply looking for a secure future for their children. Why is this unreasonable?
Edit: Thanks Podgajski, I like your definition below better.
Just about every single Westerner has more than they need in some way, and there’s plenty of folks suffering in the world. Your definition uselessly labels everyone greedy and also does nothing to help those that are suffering.
It’s not the job of individuals to fix our global economic system by changing their individual (legal) behavior. This is a regulatory problem.
I’m not useless at labeling people, greedy, I’m usefully, labeling, greedy, and I agree, we are exploiting most of the world because of our greed. We should all come to face that, and not only our live will be better, but the whole world lives will be better. And it would probably stop climate change as well. This is a regular problem that we can change with first our behavior as living by an example. This is why I don’t feel so bad, being homeless and living with less.
You literally can’t change this solely by changing your own first order behavior. Only by higher order approaches can you achieve change. (Saying stuff on the internet is not one of those approaches. Being homeless isn’t either).
I try (and sometimes fail, but I try) not to judge people for what they choose to spend their money on. Wealth inequality is a thing, to be sure, and we can argue that perhaps there just should not be that many people who can afford 2 (or 3 or 4) homes. But that aside...
If people want to buy more houses, that's fine. If there are people who can't find an affordable home, that means we have a shortage, and building more will tend to alleviate that problem.
We need to build more homes. When we do that, buying and holding homes ceases to become an interesting investment, and private equity gets out of it, just like private equity does not buy and hold used Toyota Corollas.
Zoning should be used to keep factories out of neighborhoods, nothing more. Also, building code is making houses boring. Should be a third-party standard, like UL.
The limits are: Getting people willing to work in the industry (a lot of it is hard labor for okay but not great pay). Zoning which doesn't allow you to build at all in high demand places. Building codes that sometimes require things that don't make sense. Places where builders can get permits "by right" tend to have a lot more building and thus much lower housing prices.
If that created a construction boom, then it would be a boom of constructing very expensive housing, not affordable housing. At least, that's what would happen if recent history is anything to go by.
Except that houses last much longer and there won‘t be an newer more attractive version 5 years later. And in many places the value is the land not the house.
> Newer housing is quite often much nicer than older housing
I would disagree very strongly. Stronger building codes and rising material costs have made everything look very samey. I really wish people would/could build more houses that were interesting.
> Newer housing is quite often much nicer than older housing, truth be told.
I haven't seen this in the real world. Newer housing tends to be of much lower quality than older housing, even when we're talking about high-end housing.
Perhaps we agree in terms of aesthetics, but that's in the eye of the beholder. In terms of the quality of the actual build, see the article below. Newer is generally much better in terms of energy efficiency and other metrics.
I've owned two houses now that were older than 100 years, and both of them were the best houses I've had. No money pits that were any worse than the money pits new houses are.
Newer housing is indeed better in certain ways, but is worse in others. I suppose whether or not it's better overall depends on how much you value those different things.
They also play games where they refuse to lower rents even when they're going empty because it will lower the resale value of the property. There's lots of economic games you can play when you own a large percentage of the rental property in an area. The logic of "landlords provide housing" is a myth, but it's especially true here when the primary purpose of owning the property for these firms is speculation and collecting market rate rents is secondary to that.
Landlords generally own a couple properties, and have competition. If you control a significant percentage of the market, you can really really abuse that.
Is increasing the rental housing stock an intrinsically good thing if every unit of housing available for rent means one less unit of housing available for sale?
Here on HN we're all quick to lament the end of real ownership in the sense of media like books and music, at the mercy of an exploitative corporate practice that is not coincidentally called rent-seeking. So why should we all be happy to be literal rentiers to the landed gentry?
There's no intrinsic reason people should own as opposed to rent. Some people want to own, some to rent. When it comes to single-family lots, the stock is profoundly tilted towards ownership, so the more extraordinary claim would be that shifting those lots slightly towards rentals is somehow bad.
The idea that Blackrock brought all the homes has reached the level of what I'd call "TikTok truth", ie. an idea that feels so true that reality can't compete. Can I ask you why you find it convincing?
I found this Derek Thompson article informed my thinking on the subject:
> ban private equity firms owning residential properties
What happens to apartments? What is a "PE" fund defined as? REITs own a number of properties but are not PE. Are small landlords banned from renting? What is the delineation of a Family Office/Small Landlord and a PE fund?
You've basically done the policy equivalent of asking you to build me a website that can host FB level load with no other criteria except Facebook did it.
I came up with a rough idea for a policy. I'd say it's more like I'm describing Facebook as a timeline-based social media website where you can connect with your friends.
Not OP, but I did work real estate for 8 years. While Blackrock themselves aren't buying all the homes, private companies such as them buying homes for investment portfolios is a major issue.
In the area I worked in, 30% of all home sales were bought with cash with no inspections to investment companies like Blackrock and then listed for rent. In the 3 cities around me, 2 new communities that were supposed to be starter homes starting at $300k, were all bought up by those investment companies and are now rental-only communities.
The average American can't compete with that no matter how much we delude ourselves into thinking we can.
Is there any evidence that private equity owns a significant percentage of homes? Absent any strong data, I am skeptical that PE would purchase (and hold) large swaths of residential real estate. Unlike, commercial real estate, the operations component of maintaining the buildings (outside of apartment complexes) would be complex and hard to scale. I am open to be disproven but it just seems like a much more unwieldy asset class than PE normally deals with.
The real question is what is a significant percentage? My understanding was that the housing stock has always been so tight that residential vacancies (rental/sales) have always been in the single digit percentages. So if a private equity starts buying just a few percent they put an outsized pressure on a tight market.
Add in things like airbnb, foreign sales and the limited capacity in time and labour for construction you have a recipe for exhausting the already extremely limited suppy
That is why I used the qualifier "significant" as in enough to influence prices. What percentage of SFH sold are bought by PE each year? What percent of homes are held by PE? I would be surprised if either one is even in the high single digits.
I can definitely see Airbnb or foreign buyers being a factor in some local markets. In both these cases, the operational aspect of home ownership is less of an issue since the ownership is diffuse.
This is irrelevant. Homes are depreciating assets. The only reason that finance got involved is that we are building way to few relative to demand. Remove the extreme market distortion and finance has nothing to push against.
I think you're right, and I think I'm right. The correct approach would be to punish rampant speculation backed by my 401k, and reward building and private ownership.
People buying vacation homes on prime beachfront property has nothing to do with housing shortages in cities where young people are trying to live and work.
> which is a city where young people are trying to live and work.
I specifically quoted the part talking about "million dollar+ mansions" in "intercoastal areas".
The comment about condos in Miami not having lights on at 7-9PM was a separate point, but I don't think it's really true that "half" the condos in Miami are empty for no good reason. People work late, people go on vacation, people go out on the town.
In my townhouse in Sunnyvale the lights are off, despite that I'm home right now. Sitting in the dark is better than paying PG&E's ridiculous rates. I wish it were easier to install solar here.
It is ridiculous. But when I'm away from solar, I'm extremely frugal with energy because it's so expensive here. It's a matter of feeling ripped off, not whether or not one can afford it. Rates here feel like buying water at an amusement park, except that you live with it all the time.
You'd have to provide some shockingly well sourced data to explain why electricity cost in one location is 100 times that of the rest of California, or how the average resident spends over $150,000 a year on electricity (the average per capita use in Santa Clara county is 6.2MW)
The commenter said "wealth inequality problem" which is basically about distribution of economic resources. If these resources were distributed differently those mansions would not be located on prime beachfront property. They may take completely different forms!
> If these resources were distributed differently those mansions would not be located on prime beachfront property. They may take completely different forms!
As long as we're talking hypotheticals with no basis in reality, how about:
"If more houses were built then none of this would be a problem"
Discussions about hypothetical forceful redistribution of wealth to prevent people from owning mansions isn't really interesting, IMO.
"If more houses were built then none of this would be a problem" Yes but the economy is a real thing with limitations. In the short term you are limited by economic resources. Think of a worker placement board game or a city building game. You can choose to build mansions on beaches that will be 90% empty or you can choose to build housing elsewhere which might find different utility. But you cannot do both!
I mean I agree that principally what needs to happen is that houses need to be built & cities need to densify, but there's no question huge chunks of prime inner city real estate lie vacant because of wealth inequality & land speculation.
A land value tax would do a lot to put these underutilized spaces to work.
Where I live, which is along the ocean, boomers who grew up working in local industry are selling for seven figures to vacation home owners because they can’t say no to the money. So what was - one generation ago - a place where summer visitors would mingle with the locals has become a place where few working people actually live and which is increasingly empty in the cold months.
This has taken many hundreds of units of housing off the market for working families. To the point that many restaurants and such house their workers seasonally. And our electrician, plumber et al drive from over an hour inland where they can afford to live (and these people are not hurting). The house across the street from mine - a teardown - is under contract for $1.7MM.
Sure it does. It's just not a 1:1 correlation. People who could otherwise live there are priced out and in lieu of such an arrangement they occupy homes elsewhere while the mansion sits vacant.
There is of course the egregious, low-density nature of such a mansion in the first place, something it seems that is especially unfit for the current culture.
yeah, this isn't caused by qealth inequality. it is a separate issue, but not in housing g shortage. housing isn't a fixed sum game in usa, we have plenty of space and materials to build. the issue is that we do not allow for building to be built in the right locations in the right volume. zoning and local laws are the reason.
This is a common talking point but the facts don't bear it out. Empty homes in cities with demand are low a single digit proportion of homes that could be in circulation.
You could argue that these empty mansions are a sign of misallocated resources, but the reason there are no homes available in the places people want/need to live isn't that there's no money to build them, it's because it's de facto illegal to build new homes anywhere they would be useful, at any price. It's not a wealth problem, it's a NIMBY problem, a symptom of our political gerontocracy.
I'm all for land value tax, but it wouldn't fix things on its own. The main reason those vacant buildings aren't being converted to homes isn't because their owners don't want the money, it's because it would be extremely difficult to meet the code and zoning requirements (and even then, I don't think New York has by-right zoning rules, so you can meet all the requirements and still be turned down) to use them as homes.
> Look at the Miami skyline at 7-9pm, when people should be getting home. Half the condos with no lights on.
> We have a wealth inequality problem, symptoms include housing shortages.
Nope. The problem having a investment growth picture so bad that real estate starts to look good as a haven.
This is a very unpopular point here (and I suppose lots of places) but there are really just too many people. There's no more frontier, and nowhere to retreat to if you need to escape the crowds. Yes, we could build spaces even tighter than we currently are. But this is a new problem for humanity, and we're not dealing with it well.
Apartments aren't the only dense housing solution. Townhomes, repurposed warehouses, etc are excellent solutions. My favorite place I lived every was a townhome in a community of about 100 homes. It was a special 50/50 community where 50% were tax credit and the other 50% were privately-owned (I rented a privately owned townhome). They all looked the same so there was no stigma as to who had section 8 and who didn't, and the community was kept up very well.
$1,200/month for 3bd/2.5ba, 1,200sqft with hardwood flooring and free off-street assigned parking 15 minutes from the city. Lived there 3 years and moved out in 2018, loved it. Now I pay $1,200/month to live a 600sqft studio apartment behind a Costco an hour from the city.
To this day I don't understand why this style of housing isn't more popular.
Living with poverty brings a whole bunch of new problems. I live in a community like this. Its noisy, filled with people with their own issues. I have alcoholics getting drunk in the parking lots making noise along with regular drunk driving. The police make regular visits to my complex. Noise, traffic, safety these are realities of dense living that effect quality of life. More people mean more chances to have babies next door, crying through your shared walls, more anti social behavior from people.
People picture the wrong thing, usually soul crushing tower block. Picture Savannah, Charleston, small college towns, ... Dense, but spacious, accommodating, lush, verdant.
If the surroundings are low quality, then yes, density sucks. If the surrounding area is high quality, density makes things better. More things closer. It's awesome.
Money talks too. The denser, walkable areas are always the most expensive. Market is underserved in much of this country.
The simple reason is that dense areas are more expensive, so there is clearly a lot of demand for it, even if you dislike it.
As to why, it's really all about tradeoffs. If you live in a nice house with land, you'll be far from city amenities. If you want to be close to city amenities (concerts, theaters, stadiums, bars, restaurants, shops, activities, people, being able to walk to places, public transit, etc), then you need to live somewhere dense.
Dense areas are popular because there are so many cool things nearby you. That's just not possible if you live in the suburbs.
Sure, most people would probably prefer a single-family home also in a dense area. But that's just physically impossible. A subdivision of nice homes with yards doesn't even contain enough people to support its own infrastructure (roads, pipes, etc) let alone a vibrant local restaurant scene. So you must drive everywhere you go, which has some serious downsides.
So many people prefer being able to walk to a coffee shop or to the bar without needing to drive. There's a reason 15-minute cities are growing in popularity.
> The simple reason is that dense areas are more expensive, so there is clearly a lot of demand for it, even if you dislike it.
Just to start, this doesn't match reality. Dense cities get a lot of attention. Look at the SF Bay area. SF city is expensive yes, and it's dense. The median home is about 1.2 million. The rest of the bay's home prices suggest that people prefer less dense living. Atherton with a median home prices over 7million, palo alto at over 3 million, los altos is 3.5 million, menlo park over 2.8million, mill valley almost 2 million.
The most expensive places to live in the US are never its major cities.
I think this just proves that dense urban housing is both desirable and lower cost. What doesn’t change is that land is expensive. They aren’t making any more of it.
> Just because someone prefers it over being homeless or commuting 90 minutes each way doesn't mean they like it
Doesn't "like" have to be assessed in comparison to the available alternatives? I mean, I don't like having to cook (minimally), empty the dishwasher, and other daily household chores, but I prefer those things to store-bought meals, eating on paper plates with plastic utensils, and/or hiring a daily housekeeper.
There's a ton of extra space in the United States. Germany's population density is >600/sq mile. That's more than all but five states. It's not a new problem - it's one that's been solved by many other countries.
There are tons of awesome 3k sqft houses for under $300k—plus smaller, cheaper ones—all over the US.
They’re in shrinking rural towns and small cities. The schools are bad and there’s no economy to speak of.
… but they’re better than some imagined frontier. Yet nobody’s moving there. Which suggests a lack of places to escape to cheaply may not be the problem.
One reason it's unpopular is that people have been saying it for hundreds of years, with varying (and generally increasing) levels of stridency, and have been consistently depantsed by advancing quality of life. You'd need either to be extraordinarily ignorant (of history) or extraordinarily irrational to prefer life in 1950 to 2023.
This is not a new problem. At almost every point in history there have been more people than ever before. Historically we have built more homes and cities for the new people to live in.
How do you establish that there are too many? Do you have a metric for that?
Also - I think this is a popular point as most people would agree with this Malthusian outlook. (And by the way, Malthus was always wrong in his predictions, but that didn't impact his credibility or the longevity of this idea.) Everyone, it seems, promotes this outlook - Bill Gates, David Attenborough, most politicians - I never hear the opposite idea that we should increase the population (except via immigration).
It's funny, I live in NYC, where the population has declined by over 5% since 2020 (https://news.ycombinator.com/item?id=38698353) and supposedly everyone is working from home, and yet I'm still sitting in traffic every day. The buses are still crowded. The subways are still crowded.
Nope. If you pay enough, new labour supply opens up - people put off retirement, or work more hours, or.... But no matter how much you pay you can't build more houses anywhere useful.
yes actually. If you pay enough, new houses will get built! More space will become available. New units will come online. More rooms available for rent. Small old buildings torn down and new bigger ones constructed in their place.
There's no shortage of housing just a shortage of housing at a price people would prefer to pay. Just like labor.
> If you pay enough, new houses will get built! More space will become available. New units will come online. More rooms available for rent. Small old buildings torn down and new bigger ones constructed in their place.
Zoning laws and planning procedures prevent that from happening anywhere where it would be useful.
I believe in a variation of your statement: we should stop making already dense places ever more dense.
It's that dynamic that makes it an impossible problem to solve. Even if you temporarily add new supply, it will immediately be consumed, and new demand keeps coming in. Every small step of new supply will be ever harder to achieve, and the quality of life will get ever worse.
It's a total dead-end.
Instead, reorganize society. Instead of 3 mega cities, have 20. Have a 100, across different tiers. Reconsider where work is organized.
I like to think of it as the induced demand problem, but for housing instead of highways. If 1000 new NYC condos are built, it will induce demand to live in NYC rather than reduce the cost of NYC housing.
Some say more people living there is a good thing in an of itself but they are going to be disappointed if their real goal is lower housing prices. It's just like highways. Adding another lane will increase throughput which may be a good end by itself, but it will never cure traffic.
The issue is 100% that we make it very hard to build in the areas that have highest demand.
It is not short-term rentals, it is not individuals owning too many houses, it is not rich people moving in to a neighborhood, it is not Chinese money fleeing the PRC, and it is not private equity "commodifying" housing.
It is that we suppress the construction of housing through to byzantine permitting, incredibly harsh zoning, vetocracy, and overburdening regulation.
This shortage is at the core of so many of our woes, homelessness being the most visible, but it really underscores _the entire economy_.
> It is that we suppress the construction of housing through to byzantine permitting, incredibly harsh zoning, vetocracy, and overburdening regulation.
This isn't the cause everywhere. There are absolutely places that don't have such overbearing regulations but still have a serious housing shortage.
Zoning should keep 1) noises 2) smells and 3) dangerous things away from where people live and schools and such. Not keep a 6-plex out of a neighborhood with luxury single family units. Or stop people from building on 1500 square foot lots.
I couldn't even build a simple 10x10 deck 12 inches from the ground without having to perform $8,000 worth of work to pour concrete piers and do several other destructive things to existing structures that make no sense.
This was for a deck that was going to be used by 1-2 people at a time, that could be built for $1000 worth of materials.
Same thing doubly applies for housing, except the numbers are 10-50x higher, because Karen in Bumfuck Permitting Services can't fathom that it's not necessary to build a single family dwelling up to Fort Knox standards, especially when it's made out of sticks and drywall anyway. It's almost like the code is designed to be especially convoluted to be a make-work program for local contractors.
Yes, I'm aware that moving out of city limits tends to relax the building code & zoning a little bit. Planning to do that eventually.
But it was just an example of a thing that can contribute to rising construction/housing costs. I don't think it's particularly helpful to tell a young person "whoopsie, we could have built housing for you, but thanks to the last 10 recent code updates, the house is now 2x as expensive and you can't afford it".
Houston is on multiple "places with the worst housing shortages" lists, something I wouldn't expect if zoning was the only/majority cause of the problem.
How is that possible? Houston has some of the most lax zoning laws in the US. If housing shortages are caused by zoning laws, why does Houston still have a problem? Is it possible that housing shortages are caused by more than just zoning?
One city cant overcome the shortage the rest of the country creates. People are moving to houston because it is among the cheapest big cities because theyre actually building new housing. Houston is working on catching up with demand but it takes time. We have underbuilt for decades, this isnt something that can be solved instantly.
Almost agree with you - but I would put that at 90%. The short-term rentals, and rentals in general are definitely part of the problem.
I strongly believe, that we should help people buy their first home and increasingly tax the second, third etc. In several developed countries, it's very lucrative for rich / upper middle class people to use their credit capability to just buy another house and rent it out - with tax incentives and deduction, it basically pays for itself over time. While the young renter who is living in it, do not have this possibility.
But in a very real sense that's just pulling the ladder up and further securing the position of those who got there first. Something else / additionally has to happen here.
We've done it once before (World War 2 - in that case it was even retroactive, so you couldn't hike rents in anticipation), and it increased homeownership rate by the highest rate in the 20th century (something like 5% jump in a few years) by making leasing less profitable than selling.
Would also have to be combined with more building, but it does work. If you make investing in real estate less appealing (via rent control), people will sell - unless they're just hiding money (i.e. overseas investors).
You would probably have to go on a crusade in order to promote it, and it would require a massive anti-landowner propaganda push (of the sort that existed during WWII), but it's theoretically doable.
WW2 was done via the War Powers Acts, and being at war with half the world is a bit of an edge case. Also the mechanism used to do that was ruled unconstitutional after WW2 [0]
> it's theoretically doable
So is a constitutional amendment banning sloppy blowjobs but that is completely unrealistic.
I agree with you that the best thing to do is to relax the regulations for building (and permitting, etc etc). I was talking about fallbacks when building is not an option (either politically or because of a labor shortage or otherwise).
"New York University economics Professor Edward Wolff, a specialist in real estate statistics, said 4.48 percent of American households owned three or more residential properties in 1998, compared with fewer than 1 percent in the early '90s."
If short-term rentals were a problem, you cold just build more until you have abundance of shelter.
Anyway, short-term rentals are basically a symptom of making it hard to build hotels. Most of the time staying at a hotel is much more comfortable than staying at an airbnb.
> Most of the time staying at a hotel is much more comfortable than staying at an airbnb.
Sometimes! If I'm staying in a place for more than just a few days, I want a full kitchen. That's pretty rare to find in a hotel. Even small efficiency kitchens are pretty rare. And in most markets I can rent an Airbnb with a full kitchen for much cheaper than a hotel room with any kind of kitchen.
Beyond that, I generally prefer the Airbnb experience over that of a hotel. I know I don't speak for everyone there, but I think there are quite a few people with my preferences.
I find the entire experience of staying in a hotel to be weird and unpleasant. When I travel I try to rent AirBnBs because I specifically like them better than staying in hotels.
> Most of the time staying at a hotel is much more comfortable than staying at an airbnb.
It's trivially easy to see that this isn't true: you probably don't live in a hotel (or a structure resembling one), for example. Why not? The answers to that question generalize to travel.
No, that's not a problem. If there is demand -- any kind of demand -- whether it's for people's primary residence, a vacation home, or a short-term rental property, you build more.
If someone can't find a house because there are short-term rental properties, the solution isn't to force someone to give up their STR, it's to build another house.
I absolutely recognize that short-term rentals have other undesirable effects on a neighborhood or building: noise, constant random strangers in the building/area, etc. I think those are reasonable reasons for banning or restricting STRs, but "housing shortage" is not among them. If you have a housing shortage, the solution is to build more housing, full stop.
The thing is, we are talking about building homes and apartments - it's easy to say 'just build more', but harder to do.
We would need 'China style' decisions - which ended up with building so many apartments, that they end up with a significant percentage of them being empty, and the ripples of those decision will crush their economy for the years to come.
3 years ago, and it was induced by government policy. At any given point since I've become politically aware (around 08), there's been at least one narrative around China's coming collapse, and it hasn't materialised in the slightest yet.
Central planning is kind of where we are now already — housing construction is severely restricted, housing costs are subsidized in some areas for some people but not others, etc.
Competitive markets in general are pretty good at matching supply and demand, even when demand is pretty all over the place.
Cars are a great example in the US — sure, there are times when prices go haywire from supply shocks (e.g., due to chip shortages in the pandemic), but outside those no one really complains about a “car crisis”. There are new and used cars available at very many price points, old vehicles get retired and new ones are manufactured, etc.
In housing, one major reason we don’t “just build more” is precisely because of regulation that either prevents housing construction outright or makes it very expensive, nominally in the public interest. We don’t need state owned enterprises paid to construct vacant apartments — we have plenty of companies and individuals willing to build, we just need to let them.
We tore up all the train tracks and put down roads and parking lots everywhere. You can't get away from the effects of "central planning" just because you want to pretend the market is perfect.
My point is that the world is complex. You can't just ignore external causes/effects for one case but not for the other. You can easily flip everything you said and it makes just as much sense. Look:
Central planning is kind of where we are now already — transportation options are severely restricted, transit costs are subsidized in some areas for some people but not others, etc.
Competitive markets in general are pretty good at matching supply and demand, even when demand is pretty all over the place.
Housing is a great example in the US — sure, there are times when prices go haywire from supply shocks (e.g., due to mortgage bubbles or material shortages in the pandemic), but outside those no one really complains about a “housing crisis”. There are new and used houses available at very many price points, old buildings get retired and new ones are manufactured, etc.
In transportation, one major reason we don’t “just build more” is precisely because of regulation that either prevents rail construction outright or makes it very expensive, nominally in the public interest. We don’t need state owned enterprises paid to construct unused trains — we have plenty of companies and individuals willing to build, we just need to let them.
> No, that's not a problem. If there is demand -- any kind of demand -- whether it's for people's primary residence, a vacation home, or a short-term rental property, you build more.
In Spain, there was high demand for property prior to 2008. In areas in the UK, there was high demand for property across most of the country. Then credit became harder to get after the GFC, and suddenly the demand just wasn't there. In Spain, property prices in many area more than halved within a year. What happened? Suddenly everyone moved out? No, the demand was just demand from a different source.
Actual house price increases outstripped rent increases by multiples, but suddenly all of that demand to own just disappeared when the credit driven boom went bust (not everywhere).
Land. You can’t create more land. And neoliberals complain if local government has sufficient power, and the resources, to provide mass transit and build out housing schemes like they did in the past.
You can't create more land, no, but you can build higher on the land you have - unless some NIMBY-driven zoning code stops you.
We have a housing crisis because restrictive zoning codes prevent housing density from rising to meet demand. The market is not being allowed to work properly, and has not been for decades now in many places, so we have accumulated a huge backlog of unmet demand.
You can actually create more land, but we usually just do that for airports. Hong Kong is a great example of building up and up while prices are still sky high. I guess you are just referring to the states though, right?
It has only been beneficial to own and rent during times of incredible appreciation. If you do the math over long periods of time, being a landlord is a mugs game.
So why many sophisticated and rich people are doing it ?
It's a very good business. In many developed countries, there are very strong incentives for owning several properties.
Once you've reached a certain level of wealth, it's basically free for your - since you're buying it with a mortgage. And quite often you can deduce the interest paid, from your taxes. We are effectively subsidizing this behavior, instead of taxing it.
Simplifying a bit - you want to put 100k$ to work, and you are wealthy enough so that the bank will lend you whatever you want. A great business is to buy another home, for say 500k$ - the rent and tax deductions will cover your mortgage, so you effectively turn 100k$ to 500k$ over the span of the loan. It's basically using your leverage, which first time buyers simply cannot most of the time. It's an unfair game.
In short - the system should be set up in a way that owning a second home should not be a good financial decisions - it should be an expensive decision. If you're rich enough and want to own a second holiday home - no problem. But in the current state of affairs, it's not expensive - it's actually profitable to do that.
You remind me of two things I have read here at hacker News in the last few months:
1. We have made substantial gains in productivity over the last few decades in many areas, but not in construction. The leading candidate for the cause is that we have increased regulations to keep things stable.
2. A private company in San Francisco was going to buy a downtown office building and converted into housing, hoping that even though that is incredibly expensive there would be enough demand. But then they realized that San Francisco had mandated a large percentage of new multifamily housing units must support low rent tenants and it made the whole project completely infeasible.
There are regulations, and regulations. Those regarding, say, fire safety are pretty important and worth it even at the cost of productivity.
Zoning, on the other hand, that keeps corner stores, apartments and condos out of some neighborhoods... that is a huge problem and doesn't really exist for safety reasons.
Even fire safety is frequently done in an overly onerous and ineffective way, e.g. the double staircase requirement that doesn't apply in many other places because other, more space efficient solutions were found.
I have a friend who is putting in a temporary tent structure for a party on top of a swimming pool. Fire Marshal said it must have a sprinkler system...
> It is not short-term rentals, it is not individuals owning too many houses, it is not rich people moving in to a neighborhood, it is not Chinese money fleeing the PRC, and it is not private equity "commodifying" housing.
It's all those things. Stop looking for a single explanation. That's not how the world works.
> overburdening regulation.
Last two times my country tried to cut out the red tape it ended up costing trillions in fixes, and meant fewer builds in the end. Building regulations are good, there is a reason they exist.
> It's all those things. Stop looking for a single explanation.
Yes, it is all those things. They all contribute some non-zero amount.
But if you just build more housing, those other things end up not mattering.
Consider:
There are too many short-term rentals, and people can't find houses to buy -> Build more housing, problem solved.
Too many people own second homes, and people can't find houses to buy -> Build more housing, problem solved.
Rich people / foreigners / private equity are buying up housing, and people can't find houses to buy -> Build more housing, problem solved. (This one also solves the cause as well; if there's enough housing -- because you keep building -- this housing becomes less attractive to rich people / foreigners / private equity, because they don't envision a return on their investment that's worth it.)
> Last two times my country tried to cut out the red tape it ended up costing trillions in fixes, and meant fewer builds in the end. Building regulations are good, there is a reason they exist.
Those aren't the kind's of things the GP is talking about. Safety standards are of course something we should not relax. What we're talking about:
* Restrictive zoning (e.g. "only single family homes", "no street level retail", "max height two stories", "must have parking for N cars per household", etc.).
* Allowing people who live nearby to object to construction on any grounds, which kicks off months (or years) of hearings and legal fights, that often results in projects being greatly scaled down or cancelled. (Ultimately, the homeowners just don't want more housing because they fear it will affect their own property values. Pretty much everything else is just an excuse to attempt to avoid sounding greedy or classist.)
* Laws like the CEQA (California Environmental Quality Act) -- a reasonable law with good intentions -- that is abused by other homeowners to tie up development projects in court.
* Capricious city planning departments that can hold up or deny approval for arbitrary reasons having nothing to do with building codes.
* Long permitting processes that are necessary, but the bureaucracy spends more time than necessary.
All of this ends up killing projects, or making projects prohibitively expensive. If you're a developer looking to build a condominium building, even though the actual build might only take 6 months, you will have to factor in legal costs, and just the cost of sitting around doing nothing for possibly a year or more (while the loan you took out to buy the land still needs its interest payments) before you can start building. And that's if you're lucky; maybe your project gets cancelled, or maybe it gets scaled down to the point where it's not financially feasible at all. And if you do finally get approval and finish your build, you now have to sell the units at what many would consider "luxury" prices, because your costs to build ended up being far higher than they needed to be.
That’s the thing - allow builders to build insanely expensive luxury flats with no minimums of anything, and they’ll develop tons of lots. And luxury apartments don’t cause rich people to spawn out of nowhere, increasing the supply at the top allows everyone to move up, somewhat.
If you're arguing for less regulation without naming specifics, then you don't care what goes. If you don't care about specifics, then "all regulation must go" is your position.
If they actually cared, then they'd be complaining about the particular onerous regulations and why they shouldn't exist. Rather than just complaining about "regulations" in general, ignoring why such things are necessary.
High demand areas in the Bay Area would be places like Atherton, Woodside, Los Altos Hills. The existing home owners have a lot of resources to fight developments such as high rise apartments or condos. They have no incentive to allow such development.
Atherton, Woodside, and Los Altos Hills are not cities (at least not the way you're thinking). They're relatively small communities full of people who live in large single-family homes on multi-acre lots, often surrounded by a fence or some other privacy-type barrier.
The "character" they want to preserve is not that of an urban center with multi-family housing.
If you mentioned china, then we should look at China’s massive building of housing there for inspiration? They have none of the restrictions you say is keeping us back, but because housing is a speculative asset (and the only generic one of value given a untrusted stock market), prices still go up, people cant get places to rent in Beijing or Shanghai, one bedroom apartments going for $1 million, etc… of course, the issue is the speculation, not the lack of supply.
We already rely on market forces to ensure that everyone doesn’t just move to one of a few popular cities. We don’t just need more housing, we need them specifically in Seattle, SF, LA, Denver, Manhattan places where people want to live. I still don’t see how SF achieving Manhattan density would cause its prices not to be Manhattan comparable. Something else is going on with increased supply having the ability to induce even more demand.
Overbuilding is also a danger. Berlin had excess capacity of housing and work space for a couple of decades before demand could fill it. Just because there is demand today doesn’t mean there will be demand when your project is finished, eg interest rate increases can put a damper on speculative demand. A Japanese style mega property crash is something no one wants to deal with.
Speculation only works when the asset is supply constrained. China's problem is that they've moved 600 million people from rural areas to urban in the last 70 years.
The original argument mentioned China as a country that does not have a housing shortage. Somehow you just decided that the poster is suggesting we transition our system to a complete free for all, unregulated market. It's unclear why or how you arrived at that conclusion.
Also, the Chinese have been simulating the housing sector to encourage domestic growth. The Chinese housing sector did not grow out of control just due to lack of regulation. It was also financial stimulus and incentives to encourage building.
So, you just pounced on that other commenter, accused them of something they didn't say, and despite believing that you understand the Chinese housing market you actually have no clue. You are literally the Dunning Kruger effect manifest info a hacker news commenter.
I said the problem in China is speculation, they don’t have a housing shortage. You can’t just build your way out of a housing problem if the demand signals are messed up.
And that is why you are an armchair economist. While you may be able to point to a causal chain from the 2008 recession to what's going on today there are so many other things happening and contributing to the economy that saying "2008" is an insufficient answer.
There is something to be said of the shifting demographics: people moving more into a few hot-spots cities, a lot of rural areas emptying and small cities dying that put dramatic pressure on the demand side. The legislation and processes to get new housing done haven't kept up
Having house be store of value/investment rather than commodity is a big part, it's not just "getting permission is hard", because as long as it is a an investment, everyone that has housing will do everything in their power to keep the status quo, including pushing the lawmakers to make it hard to do anything that would lower housing value.
Option A: The housing shortage is 100% a product of public policy and the only solution is to support someone's favored political candidate or party.
Option B: Housing shortages are caused by a combination of factors that include public policy, and solving the problem requires understanding and considering all of them.
In my area, a condo complex of 93 units was purchased by 16 individuals (or companies). All of the things you mentioned are definitely a part of the problem.
Renter here, and we have a huge problem with housing up here as well. However, I don’t understand why would any level of the government would want to act in any way that can significantly decrease housing prices. Super-majority of people own their homes, why would they ever support a government that would be willing to hurt their own investment? Admittedly, I don’t have a solution here, and I understand how it hurts us especially long term. Convincing people to act against their self-interest is also not easy.
Even my friends who have been on “housing prices have to drop” camp jumped across the fence once they got their own place. Obviously, this wouldn’t be the case if we didn’t look at housing as an investment, but here we are.
But as the time goes, renters would just turn into home owners, who also wouldn’t vote against their self-interest, no? You would have relatively the same percentage of people who rent, unless something dramatic happens population-pyramid wise. I get that it’s important to build a lot of housing, which would help the prices to at least hold steady, but it still wouldn’t cause any reduction in prices (again, unless something like COVID but more lasting happens). The demand side of the equation is making it very hard for people to overcome the barrier of entry.
I’m actually curious what will happen in like 15 years in countries where population decrease will be visible. To my understanding, even Tokyo/Osaka are still growing due to people moving in from the countryside. At some point the demand will be collapsing, and curious how the governments in Japan/SK/China will respond.
Ok but the comment your replying to is pointing out that a super majority of this countries voters are heavily incentivized to be NIMBYs because they own their home. Even if every renter voted YIMBY the homeowners could outvote them. Why would waiting change any of this?
The housing shortage is the housing crisis. Period. It's simple supply & demand. Vanishing stock -> skyrocketing prices. Every other factor is peanuts in comparison. You can ban private equity, foreign investment, lower rates, etc. Won't fix a thing. You cannot squeeze blood from a stone.
Either make units or make peace. Everything else is lipstick on a pig.
Lots of theories here but if you point out there are more immigrants than new house starts every year, you get flagged. The real source of the problem is people with vacation homes.
The thing that always gets me about this is that the urgency of this problem is just ignored by the people in power. Here in Germany, there have been countless promises to improve the situation and build more social housing, but not much has come of it.
This is an actual crisis, a roof over one's head is a basic human need and with rent prices continually going up compared to income it's insane that it's not viewed as enough of a priority to spend real money on it, while other projects get funding easily.
I used to get really upset about this, but not as much anymore. I don't think the solution is sitting around and hoping for compromise. It's better if we stop trying to make it sustainable and let it suffocate itself so that the service workers and young money can move elsewhere
It only works if people keep stretching themselves thin in order to buy into the manipulated real estate markets, once this becomes untenable the aforementioned regions will become less relevant. Then you might see a real attempt at change, but at that point people won't care and the jobs will be elsewhere
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[ 3.9 ms ] story [ 297 ms ] threadlol.
The same thing happens with apartments. They are vacant for a month between tenants or when finding new tenants. Landlords would never accept temporary tenants who couldn't pay.
People holding houses for investment happens, but most rent them out. The few that don't are pretty rare and not enough to affect the housing market.
https://finance.yahoo.com/news/two-thirds-wealthy-americans-...
It’s not that we don’t have enough housing, the issue is that we have people that want too many houses for themselves. It’s just greed. I can’t even count on my hands How many people I know that own more than one house and I am homeless. So I’m sure wealthy people pretty much don’t know anyone that doesn’t own a single house.
The problem is that it's not legal in most parts of most cities.
Just stating that Americans love their yards/privacy and it's not so simple to fix.
Well, ok then - we want affordable housing, let's build affordable housing. Nothing's perfect. Some people prefer denser housing in a more desirable place, and some prefer more space in Cyanide Springs, Oklahoma. Both should be a choice, but currently, we limit the denser housing options way too much.
And now the Fed can’t even get the guts to lower inflation by raising interest rates because of what it’s done to the housing market.
This kind of thing happens over and over and over again, all across the US and it adds up.
Houses are built by developers whom by definition only build a project when it's a sound investment. They immediately stop building when this isn't the case.
What people who buy homes are told, though, is to essentially 'buy and hold' because it's a "good investment" that will gain value over time, even if they are not building anything or adding any value to the dwelling they inhabit.
Where I live, during the recent runup in prices, the median home gained something like $100,000 of value in a year, which is significantly more than the median household income.
https://oregoneconomicanalysis.com/2021/03/16/who-benefits-f...
Ideally, I think, home prices would be fairly stable - neither appreciating a lot, nor dropping in value. Boring. That would also make them a 'bad' investment for corporations looking to make a buck by buying and holding.
Do you expect people to buy and sell their home? It’s their home, why would selling (in the short term measured in decades) be the goal?
People primarily buy homes to live in. Any benefits of price appreciation, and/or political interests of those nearing their end of life and want to downsize/die are secondary.
Think about this in the context of any other good. No one worries that if we build more cars, they'll all be purchased by rich car collectors. Yes, when more cars are built, a few very rich people with many cars will buy more. But the increased supply also make it more economical for everyone to buy more cars.
As I said, at other times in this thread, the only incentive we have as an and an economy in the United States, is agreed.
As I said, at other times in this thread, the only incentive we have in this economy and in the United States, is greed.
Secondly if a person owns a home and rents it to a second person, I'm fine with it.
If the capital appreciation is zero, then it's just the rental income, which is offset against the cost of maintaining the property and the opportunity cost from the capital outlay on the property. That's not a major problem though, as the rental price won't be able to get too high as people will simply rent or buy elsewhere (as you've reduced the other barriers to building more property)
Of course you can get rid of the appreciation by simply taxing the land (which is the thing that mainly appreciates -- the building itself typically depreciates), and get most of the way there.
And what affordable rental housing exists is increasingly being purchased by investment groups who then squeeze them for every dime, squeezing out the very people who need that housing in the process.
The housing crisis really looks to me like an aspect of the serious wealth inequality problem we have.
This has been dramatically demonstrated in Berkeley, where I live. We have added tons of 0- and 1-bedroom apartments recently. These are very expensive, $3000/mo+. This building boom has caused the price of rent-regulated older apartments to plunge. What had been renting for $2252/mo in November 2018 is now renting for $1688/mo in November 2023. That is a significant increase in affordability of studio and 1-bedroom apartment, effected by building newer, expensive ones.
Edited to add sources:
The discussion is too long for me to recapitulate here, but all of my data in various forms and some visualizations are available here:
https://observablehq.com/@jwb/berkeley-rent-board-data
Also in random tweets such as:
https://twitter.com/Jeffinatorator/status/172890293692602402...
I believe these are visible to non-account holders.
Edit: I think I see where a lot of our disconnect is coming from. We have no rent control here, rent very rarely decreases and is mostly pegged to comparative sq.ft. rentals in the area. Age of the property does not factor as much as location.
Do enough of it and rents will begin to fall below loan maintenance, causing even more sales and more price drops.
"We" are not a rich country, unless by "we" you mean the 10% of the population that is rich. I feel well compensated, I'm well within the middle class and consider myself lucky. I cannot afford a home, in the current market, in a location with the services and locality of my industry. I live in Florida. Vrbo, Airbnb, and properties purchased by institutional investors have directly increased my housing costs. That is objective, not subjective. Call it anecdotal all you want, the populated parts of the state have seen their housing options obliterated.
If we're going to use statistics for anything, let's look at it in the affirmative instead. How many homes are owned by the family living in them? The most recent data for Florida is for 2015-2019. Here are the owner-occupied housing for the most populated counties, starting with the one I live in.
Hillsborough County - 58.6% Miami-Dade County - 51.2% Orange County - 55.4% Broward County - 62.1% Palm Beach County - 68.9% Duval County - 56.7% Pinellas County - 67%
The National Average is 64.8%. In my county nearly half of the housing is not owner-occupied. As a nation, nearly a 3rd of available housing is not owner-occupied. I bet this is worse now, as this information is pre-pandemic and from the very beginning of the most recent housing rush.
https://www.census.gov/quickfacts/fact/note/US/HSG445222#:~:.... https://www.census.gov/quickfacts/fact/table/US/HSG445222 https://www.florida-demographics.com/counties_by_population https://www.census.gov/library/visualizations/interactive/ac...
Edit to add some relevant information: https://cdn.nar.realtor//sites/default/files/documents/2023-...
Also, to be quite honest, your allusions about shadowy Asians has the whiff of racist tendencies.
People aren't buying two homes in the same city alternate between them while keeping young homeowners out.
> AirBnBs
It's unfortunate that sometimes vacation destinations also can be places where lots of people want to live but the PP was not wrong.
Also consider that someone with 5 houses may not even have all that much of their net worth in the houses; the could largely be financed.
We are incentivized by our greed nothing else.
Which generation exactly?
The aggregate will bin philosophy for direct confrontation if philosophy manufacturers too many vacuous excuses that over burden biology
Renting a home out is still productive.
Keeping it empty is not. I was pointing out that people aren't buying two homes in the same city to keep one empty.
More housing starts means more affordable homes. We've seen what zoning reform has done for cities. We don't build enough.
Investors collectively do purchase a good amount of new housing starts (like 18%?) but that's also spurred by interest rates and confidence that demand will grow. It's neither here nor there, build more and houses become more affordable.
If we make the (extremely crude) assumption that the capital expended on that 2nd home could be moved elsewhere, we could have built more housing in cities instead of building and maintaining that home.
[0]https://www.google.com/amp/s/www.statista.com/chart/amp/1963...
Supposing everyone had more money in their hands (all else remaining equal), that would just be reflected in the market. Houses would increase in cost. Now you're where you started.
Housing supply is just too inelastic in most US cities.
Those mansions also tend to be built far away from city cores, with large lots to maintain (with paid labor), more taxes to be spent for infrastructure cost, requiring a vehicle, etc. It would still be too expensive and unhelpful for average people.
WE don't build enough. Look at what zoning reform has done for Minneapolis.
At any rate, the point is that qua "second homes", they represent a drop in the bucket compared to the overall market. Home ownership rate is around 63%, for a population of 334 million. The inelasticity of housing construction whilst demand is steadily climbing due to immigration has far more impact on average housing prices than cases of the ultra-wealthy constructing or purchasing a mansion upstate.
One resource America has is a lot of space and we had many generations of easy money and government policy that encouraged such behavior.
If you're presented with abundance, everyone is taking a similar share and there isn't counterpressure from your peers (e.g., laws that we vote for), then there is no selfishness and thus no greed. To define greed you need a feedback loop.
We're simple dumb animals. We take what's available. If you want to talk about defining arbitrary limits on consumption that are disconnected from circumstances then you're basically out here preaching religion.
When boomers bought all of these second/vacation homes cheaply in the 80s it wasn't in places with huge demand from underhoused people.
These arguments need a little more consideration of facts rather than appeals to emotion.
https://www.coalitionforthehomeless.org/wp-content/uploads/2...
Nobody was buying second apartments in NYC in the 80s. Nobody was buying apartments period. I knew people with brownstones for sale in spanish harlem that they couldn't get $10k for in the late 80s. 80% of _storefront_ space in midtown was vacant.
People buying vacation homes in Florida or Vermont aren't responsible for homelessness in major cities.
To me, it is indeed greed. Some things are more sacred than money and housing is one of those things
I suspect a great deal of people buy a second home while maintaining the first one as a rental, if they can swing it.
with all of the "free" money out there over the past few years, it was insanely easy to pull equity of your home to buy investment properties. I don't have numbers but I can't imagine this is a small amount.
The overwhelming majority of second homes are vacation homes. _Landlords_ aren't keeping people out of housing -- quite the opposite.
Home ownership is kind of an endless money pit anyway. Most people are better off renting in any of the markets we're talking about homeless populations anyway.
Ideally landlords should be able to get better pricing for maintenance.
Unfortunately our dumb FREE MONEY monetary policy has absolutely wrecked the trades and saddled generations with bad debt chasing worthless credentials.
...YOU ARE PERFECT! https://www.youtube.com/watch?v=4p8vqoIVESc
I can surely blame people for taking what’s in front of them when people who are also in front of them have nothing.
That's what you fail to understand.
/someone who has been homeless and has also bought a home.
By the way, I’m homeless because I have a serious mental illness. Not all of us are equipped to jump back in the workforce.
When young people get hold of a home, then later sell it, none of them will be giving a "social" discount on the price.
Private property is private.
I believe for instance that property is theft, as Prodhoun proclaimed.
The fact that we see housing as an investment is part, no, probably most of the problem.
But should you genuinely believe that and walk the talk, fair enough. I'm more of a pragmatist myself.
By "property", Proudhon referred to a concept regarding land property that originated in Roman law: the sovereign right of property, the right of the proprietor to do with his property as he pleases, "to use and [to] abuse," so long as in the end he submits to state-sanctioned title. Proudhon contrasts the supposed right of property with the rights (which he considered valid) of liberty, equality, and security. Proudhon was clear that his opposition to property did not extend to exclusive possession of labor-made wealth.
It's a social norm we maintain, with some limitations, because it's useful. It's not sacred.
It's not the individuals owning the houses. It's corporations.
How do you know?
> It’s just greed.
These people whom I know personally, they are not greedy. They're not even selfish. They're not the bad guys.
Why don't the rich rent their vacant homes to the poor? At least we can answer this question objectively: if you're poor, you have less to spend, you can't fix your stuff, you will have more occupants, you will pay late more frequently, you will not be able to pay rent increases, you will not be able to adapt to extraordinary events like fires and layoffs, you have higher legal risks like tenant lawsuits, you will...
The crazy thing is, in every sector, sellers are less interested in poor buyers.
What if we made it a law that no one could own a second home before everyone owned a first home?
> Greed is an insatiable desire for material gain (be it food, money, land, or animate/inanimate possessions) or social value, such as status, or power.
Keyword: Insatiable. Lots of the people in the Bay Area are simply looking for a secure future for their children. Why is this unreasonable?
Edit: Thanks Podgajski, I like your definition below better.
intense and selfish desire for something, especially wealth, power, or food.
It’s not the job of individuals to fix our global economic system by changing their individual (legal) behavior. This is a regulatory problem.
I try (and sometimes fail, but I try) not to judge people for what they choose to spend their money on. Wealth inequality is a thing, to be sure, and we can argue that perhaps there just should not be that many people who can afford 2 (or 3 or 4) homes. But that aside...
If people want to buy more houses, that's fine. If there are people who can't find an affordable home, that means we have a shortage, and building more will tend to alleviate that problem.
https://www.theatlantic.com/ideas/archive/2023/01/housing-cr...
Something like -- no tax on any homes construction for the next 5 years. Wouldn't that create a construction boom?
I'm involved in housing advocacy locally, and a huge impediment to building more is zoning and NIMBYism.
People forget that most construction companies went bankrupt in the aftermath of 2008.
[0] - https://www.abc.org/News-Media/News-Releases/construction-wo...
Newer housing is quite often much nicer than older housing, truth be told. More energy efficient, for instance.
I would disagree very strongly. Stronger building codes and rising material costs have made everything look very samey. I really wish people would/could build more houses that were interesting.
https://www.theatlantic.com/ideas/archive/2022/01/stop-fetis...
I haven't seen this in the real world. Newer housing tends to be of much lower quality than older housing, even when we're talking about high-end housing.
Newer housing is indeed better in certain ways, but is worse in others. I suppose whether or not it's better overall depends on how much you value those different things.
if you want more housing, build more houses.
Changing % ownership of houses between individuals/companies via government mandates does not actually build more houses.
Here on HN we're all quick to lament the end of real ownership in the sense of media like books and music, at the mercy of an exploitative corporate practice that is not coincidentally called rent-seeking. So why should we all be happy to be literal rentiers to the landed gentry?
https://en.wikipedia.org/wiki/Land_value_tax
I found this Derek Thompson article informed my thinking on the subject:
https://www.theatlantic.com/ideas/archive/2021/06/blackrock-...
I'm simply saying that we should ban private equity firms owning residential properties, period. If it's not a problem, why should Blackrock care?
What happens to apartments? What is a "PE" fund defined as? REITs own a number of properties but are not PE. Are small landlords banned from renting? What is the delineation of a Family Office/Small Landlord and a PE fund?
You've basically done the policy equivalent of asking you to build me a website that can host FB level load with no other criteria except Facebook did it.
Low detail, high accuracy.
In the area I worked in, 30% of all home sales were bought with cash with no inspections to investment companies like Blackrock and then listed for rent. In the 3 cities around me, 2 new communities that were supposed to be starter homes starting at $300k, were all bought up by those investment companies and are now rental-only communities.
The average American can't compete with that no matter how much we delude ourselves into thinking we can.
The real question is what is a significant percentage? My understanding was that the housing stock has always been so tight that residential vacancies (rental/sales) have always been in the single digit percentages. So if a private equity starts buying just a few percent they put an outsized pressure on a tight market.
Add in things like airbnb, foreign sales and the limited capacity in time and labour for construction you have a recipe for exhausting the already extremely limited suppy
I can definitely see Airbnb or foreign buyers being a factor in some local markets. In both these cases, the operational aspect of home ownership is less of an issue since the ownership is diffuse.
90% of the million dollar+ mansions empty, waiting for their snowbird owners to return.
Look at the Miami skyline at 7-9pm, when people should be getting home. Half the condos with no lights on.
We have a wealth inequality problem, symptoms include housing shortages.
People buying vacation homes on prime beachfront property has nothing to do with housing shortages in cities where young people are trying to live and work.
I specifically quoted the part talking about "million dollar+ mansions" in "intercoastal areas".
The comment about condos in Miami not having lights on at 7-9PM was a separate point, but I don't think it's really true that "half" the condos in Miami are empty for no good reason. People work late, people go on vacation, people go out on the town.
To sit in the dark for 6 hours while paying a whopping $1/kWh would save me 15 cents.
No, it's not. That could potentially be the cost of electricity in somewhere like the South Pole.
"The average electric rates in Sunnyvale, CA cost 31 ¢/kilowatt-hour (kWh)"
https://www.energysage.com/local-data/electricity-cost/ca/sa...
You'd have to provide some shockingly well sourced data to explain why electricity cost in one location is 100 times that of the rest of California, or how the average resident spends over $150,000 a year on electricity (the average per capita use in Santa Clara county is 6.2MW)
https://findenergy.com/ca/santa-clara-county-electricity/
It's just really, really high compared to the rest of the country. Or even the next city over, which is what makes it really hurt.
As long as we're talking hypotheticals with no basis in reality, how about:
"If more houses were built then none of this would be a problem"
Discussions about hypothetical forceful redistribution of wealth to prevent people from owning mansions isn't really interesting, IMO.
If money were in the hands of people who want houses built in cities instead of on beaches, there'd be more houses in cities and fewer on beaches.
A land value tax would do a lot to put these underutilized spaces to work.
This has taken many hundreds of units of housing off the market for working families. To the point that many restaurants and such house their workers seasonally. And our electrician, plumber et al drive from over an hour inland where they can afford to live (and these people are not hurting). The house across the street from mine - a teardown - is under contract for $1.7MM.
There is of course the egregious, low-density nature of such a mansion in the first place, something it seems that is especially unfit for the current culture.
Having houses in the country 3 hours from a major city is less useful than having residences in the cities.
That half the units are dark from 7-9PM doesn't mean they're not someone's primary residence.
You could argue that these empty mansions are a sign of misallocated resources, but the reason there are no homes available in the places people want/need to live isn't that there's no money to build them, it's because it's de facto illegal to build new homes anywhere they would be useful, at any price. It's not a wealth problem, it's a NIMBY problem, a symptom of our political gerontocracy.
This is simply false when stated as an absolute. It may be true in some areas, but not in most of the ones I'm familiar with.
http://www.vacantnewyork.com/
Land value tax would fix this.
Nope. The problem having a investment growth picture so bad that real estate starts to look good as a haven.
https://blog.vanhornlawgroup.com/can-you-file-bankruptcy-and...
Density is horrible for qol in my experience.
$1,200/month for 3bd/2.5ba, 1,200sqft with hardwood flooring and free off-street assigned parking 15 minutes from the city. Lived there 3 years and moved out in 2018, loved it. Now I pay $1,200/month to live a 600sqft studio apartment behind a Costco an hour from the city.
To this day I don't understand why this style of housing isn't more popular.
You answered your own question.
> They all looked the same so there was no stigma as to who had section 8 and who didn't
Part of the point of segregating by income is precisely to distinguish the haves from the have-nots.
If the surroundings are low quality, then yes, density sucks. If the surrounding area is high quality, density makes things better. More things closer. It's awesome.
Money talks too. The denser, walkable areas are always the most expensive. Market is underserved in much of this country.
As to why, it's really all about tradeoffs. If you live in a nice house with land, you'll be far from city amenities. If you want to be close to city amenities (concerts, theaters, stadiums, bars, restaurants, shops, activities, people, being able to walk to places, public transit, etc), then you need to live somewhere dense.
Dense areas are popular because there are so many cool things nearby you. That's just not possible if you live in the suburbs.
Sure, most people would probably prefer a single-family home also in a dense area. But that's just physically impossible. A subdivision of nice homes with yards doesn't even contain enough people to support its own infrastructure (roads, pipes, etc) let alone a vibrant local restaurant scene. So you must drive everywhere you go, which has some serious downsides.
So many people prefer being able to walk to a coffee shop or to the bar without needing to drive. There's a reason 15-minute cities are growing in popularity.
Just to start, this doesn't match reality. Dense cities get a lot of attention. Look at the SF Bay area. SF city is expensive yes, and it's dense. The median home is about 1.2 million. The rest of the bay's home prices suggest that people prefer less dense living. Atherton with a median home prices over 7million, palo alto at over 3 million, los altos is 3.5 million, menlo park over 2.8million, mill valley almost 2 million.
The most expensive places to live in the US are never its major cities.
Doesn't "like" have to be assessed in comparison to the available alternatives? I mean, I don't like having to cook (minimally), empty the dishwasher, and other daily household chores, but I prefer those things to store-bought meals, eating on paper plates with plastic utensils, and/or hiring a daily housekeeper.
Given equal opportunity, I would bet most people would choose to live in a ranch style house with land around it than an apartment.
The hard part is building on it.
They’re in shrinking rural towns and small cities. The schools are bad and there’s no economy to speak of.
… but they’re better than some imagined frontier. Yet nobody’s moving there. Which suggests a lack of places to escape to cheaply may not be the problem.
Also - I think this is a popular point as most people would agree with this Malthusian outlook. (And by the way, Malthus was always wrong in his predictions, but that didn't impact his credibility or the longevity of this idea.) Everyone, it seems, promotes this outlook - Bill Gates, David Attenborough, most politicians - I never hear the opposite idea that we should increase the population (except via immigration).
It's funny, I live in NYC, where the population has declined by over 5% since 2020 (https://news.ycombinator.com/item?id=38698353) and supposedly everyone is working from home, and yet I'm still sitting in traffic every day. The buses are still crowded. The subways are still crowded.
There's no shortage of housing just a shortage of housing at a price people would prefer to pay. Just like labor.
Zoning laws and planning procedures prevent that from happening anywhere where it would be useful.
And just like with famines the best way to resolve the issue isn't price controls on food but to increase wealth.
It's that dynamic that makes it an impossible problem to solve. Even if you temporarily add new supply, it will immediately be consumed, and new demand keeps coming in. Every small step of new supply will be ever harder to achieve, and the quality of life will get ever worse.
It's a total dead-end.
Instead, reorganize society. Instead of 3 mega cities, have 20. Have a 100, across different tiers. Reconsider where work is organized.
Some say more people living there is a good thing in an of itself but they are going to be disappointed if their real goal is lower housing prices. It's just like highways. Adding another lane will increase throughput which may be a good end by itself, but it will never cure traffic.
It is not short-term rentals, it is not individuals owning too many houses, it is not rich people moving in to a neighborhood, it is not Chinese money fleeing the PRC, and it is not private equity "commodifying" housing.
It is that we suppress the construction of housing through to byzantine permitting, incredibly harsh zoning, vetocracy, and overburdening regulation.
This shortage is at the core of so many of our woes, homelessness being the most visible, but it really underscores _the entire economy_.
I created some slides over a year ago to present to friends and colleagues how I view the problem, you can peruse at your leisure: https://docs.google.com/presentation/d/1O1_oW0Ci2SJEIIhXzuzV...
This isn't the cause everywhere. There are absolutely places that don't have such overbearing regulations but still have a serious housing shortage.
This was for a deck that was going to be used by 1-2 people at a time, that could be built for $1000 worth of materials.
Same thing doubly applies for housing, except the numbers are 10-50x higher, because Karen in Bumfuck Permitting Services can't fathom that it's not necessary to build a single family dwelling up to Fort Knox standards, especially when it's made out of sticks and drywall anyway. It's almost like the code is designed to be especially convoluted to be a make-work program for local contractors.
But it was just an example of a thing that can contribute to rising construction/housing costs. I don't think it's particularly helpful to tell a young person "whoopsie, we could have built housing for you, but thanks to the last 10 recent code updates, the house is now 2x as expensive and you can't afford it".
About three or four builders, but not many more.
I strongly believe, that we should help people buy their first home and increasingly tax the second, third etc. In several developed countries, it's very lucrative for rich / upper middle class people to use their credit capability to just buy another house and rent it out - with tax incentives and deduction, it basically pays for itself over time. While the young renter who is living in it, do not have this possibility.
Hence why most Western countries have jacked up interest rates, and will have to keep them quite high for the next several years.
1. THERE IS A LABOR SHORTAGE IN CONSTRUCTION
2. ZONING WILL NEVER BE REFORMED AT THE LOCAL LEVEL
3. EVERYONE ASSUMES THE PRICE OF HOUSING WILL CONTINUE TO GROW MORE THAN INFLATION
All 3 highlight a broken market due to inflated costs. The only solution is to slow the market down and play chicken with owners.
> pulling the ladder up and further securing the position of those who got there first
Such is life. You can't drastically change a market overnight. You'll get voted out of office.
Welcome to the late 70s. This is how it was then too. Be happy we don't have a Volcker
We've done it once before (World War 2 - in that case it was even retroactive, so you couldn't hike rents in anticipation), and it increased homeownership rate by the highest rate in the 20th century (something like 5% jump in a few years) by making leasing less profitable than selling.
Would also have to be combined with more building, but it does work. If you make investing in real estate less appealing (via rent control), people will sell - unless they're just hiding money (i.e. overseas investors).
You would probably have to go on a crusade in order to promote it, and it would require a massive anti-landowner propaganda push (of the sort that existed during WWII), but it's theoretically doable.
> it's theoretically doable
So is a constitutional amendment banning sloppy blowjobs but that is completely unrealistic.
Jesus HN has gotten dumb.
[0] - https://openscholarship.wustl.edu/cgi/viewcontent.cgi?articl...
I mean that’s the theory, right? It’s never been truly tried?
I would even tie some portion of primary home property tax to the density of people living on a lot.
One avenue is stronger property rights. Don't let local governments and randos have an opportunity to make demands or issue denials.
It took me nearly four years to get approvals and permits to repair an existing home in California. Building a new one seems impossible.
"New York University economics Professor Edward Wolff, a specialist in real estate statistics, said 4.48 percent of American households owned three or more residential properties in 1998, compared with fewer than 1 percent in the early '90s."
I wonder what that number is today...
Anyway, short-term rentals are basically a symptom of making it hard to build hotels. Most of the time staying at a hotel is much more comfortable than staying at an airbnb.
Sometimes! If I'm staying in a place for more than just a few days, I want a full kitchen. That's pretty rare to find in a hotel. Even small efficiency kitchens are pretty rare. And in most markets I can rent an Airbnb with a full kitchen for much cheaper than a hotel room with any kind of kitchen.
Beyond that, I generally prefer the Airbnb experience over that of a hotel. I know I don't speak for everyone there, but I think there are quite a few people with my preferences.
Is that possibly because it is so hard to build hotels, though?
It's trivially easy to see that this isn't true: you probably don't live in a hotel (or a structure resembling one), for example. Why not? The answers to that question generalize to travel.
If someone can't find a house because there are short-term rental properties, the solution isn't to force someone to give up their STR, it's to build another house.
I absolutely recognize that short-term rentals have other undesirable effects on a neighborhood or building: noise, constant random strangers in the building/area, etc. I think those are reasonable reasons for banning or restricting STRs, but "housing shortage" is not among them. If you have a housing shortage, the solution is to build more housing, full stop.
We would need 'China style' decisions - which ended up with building so many apartments, that they end up with a significant percentage of them being empty, and the ripples of those decision will crush their economy for the years to come.
The music has stopped. It will take some time, but the outcome is almost inevitable.
Competitive markets in general are pretty good at matching supply and demand, even when demand is pretty all over the place.
Cars are a great example in the US — sure, there are times when prices go haywire from supply shocks (e.g., due to chip shortages in the pandemic), but outside those no one really complains about a “car crisis”. There are new and used cars available at very many price points, old vehicles get retired and new ones are manufactured, etc.
In housing, one major reason we don’t “just build more” is precisely because of regulation that either prevents housing construction outright or makes it very expensive, nominally in the public interest. We don’t need state owned enterprises paid to construct vacant apartments — we have plenty of companies and individuals willing to build, we just need to let them.
Your example perfectly supports that!
Central planning is kind of where we are now already — transportation options are severely restricted, transit costs are subsidized in some areas for some people but not others, etc.
Competitive markets in general are pretty good at matching supply and demand, even when demand is pretty all over the place.
Housing is a great example in the US — sure, there are times when prices go haywire from supply shocks (e.g., due to mortgage bubbles or material shortages in the pandemic), but outside those no one really complains about a “housing crisis”. There are new and used houses available at very many price points, old buildings get retired and new ones are manufactured, etc.
In transportation, one major reason we don’t “just build more” is precisely because of regulation that either prevents rail construction outright or makes it very expensive, nominally in the public interest. We don’t need state owned enterprises paid to construct unused trains — we have plenty of companies and individuals willing to build, we just need to let them.
In Spain, there was high demand for property prior to 2008. In areas in the UK, there was high demand for property across most of the country. Then credit became harder to get after the GFC, and suddenly the demand just wasn't there. In Spain, property prices in many area more than halved within a year. What happened? Suddenly everyone moved out? No, the demand was just demand from a different source.
Actual house price increases outstripped rent increases by multiples, but suddenly all of that demand to own just disappeared when the credit driven boom went bust (not everywhere).
There is often more to it that just build more.
The base demand for housing compared to supply in the UK is that much worse.
We have a housing crisis because restrictive zoning codes prevent housing density from rising to meet demand. The market is not being allowed to work properly, and has not been for decades now in many places, so we have accumulated a huge backlog of unmet demand.
It's a very good business. In many developed countries, there are very strong incentives for owning several properties. Once you've reached a certain level of wealth, it's basically free for your - since you're buying it with a mortgage. And quite often you can deduce the interest paid, from your taxes. We are effectively subsidizing this behavior, instead of taxing it.
Simplifying a bit - you want to put 100k$ to work, and you are wealthy enough so that the bank will lend you whatever you want. A great business is to buy another home, for say 500k$ - the rent and tax deductions will cover your mortgage, so you effectively turn 100k$ to 500k$ over the span of the loan. It's basically using your leverage, which first time buyers simply cannot most of the time. It's an unfair game.
In short - the system should be set up in a way that owning a second home should not be a good financial decisions - it should be an expensive decision. If you're rich enough and want to own a second holiday home - no problem. But in the current state of affairs, it's not expensive - it's actually profitable to do that.
2. A private company in San Francisco was going to buy a downtown office building and converted into housing, hoping that even though that is incredibly expensive there would be enough demand. But then they realized that San Francisco had mandated a large percentage of new multifamily housing units must support low rent tenants and it made the whole project completely infeasible.
Zoning, on the other hand, that keeps corner stores, apartments and condos out of some neighborhoods... that is a huge problem and doesn't really exist for safety reasons.
https://www.youtube.com/watch?v=iRdwXQb7CfM&t=648s
It's all those things. Stop looking for a single explanation. That's not how the world works.
> overburdening regulation.
Last two times my country tried to cut out the red tape it ended up costing trillions in fixes, and meant fewer builds in the end. Building regulations are good, there is a reason they exist.
Yes, it is all those things. They all contribute some non-zero amount.
But if you just build more housing, those other things end up not mattering.
Consider:
There are too many short-term rentals, and people can't find houses to buy -> Build more housing, problem solved.
Too many people own second homes, and people can't find houses to buy -> Build more housing, problem solved.
Rich people / foreigners / private equity are buying up housing, and people can't find houses to buy -> Build more housing, problem solved. (This one also solves the cause as well; if there's enough housing -- because you keep building -- this housing becomes less attractive to rich people / foreigners / private equity, because they don't envision a return on their investment that's worth it.)
> Last two times my country tried to cut out the red tape it ended up costing trillions in fixes, and meant fewer builds in the end. Building regulations are good, there is a reason they exist.
Those aren't the kind's of things the GP is talking about. Safety standards are of course something we should not relax. What we're talking about:
* Restrictive zoning (e.g. "only single family homes", "no street level retail", "max height two stories", "must have parking for N cars per household", etc.).
* Allowing people who live nearby to object to construction on any grounds, which kicks off months (or years) of hearings and legal fights, that often results in projects being greatly scaled down or cancelled. (Ultimately, the homeowners just don't want more housing because they fear it will affect their own property values. Pretty much everything else is just an excuse to attempt to avoid sounding greedy or classist.)
* Laws like the CEQA (California Environmental Quality Act) -- a reasonable law with good intentions -- that is abused by other homeowners to tie up development projects in court.
* Capricious city planning departments that can hold up or deny approval for arbitrary reasons having nothing to do with building codes.
* Long permitting processes that are necessary, but the bureaucracy spends more time than necessary.
All of this ends up killing projects, or making projects prohibitively expensive. If you're a developer looking to build a condominium building, even though the actual build might only take 6 months, you will have to factor in legal costs, and just the cost of sitting around doing nothing for possibly a year or more (while the loan you took out to buy the land still needs its interest payments) before you can start building. And that's if you're lucky; maybe your project gets cancelled, or maybe it gets scaled down to the point where it's not financially feasible at all. And if you do finally get approval and finish your build, you now have to sell the units at what many would consider "luxury" prices, because your costs to build ended up being far higher than they needed to be.
If they actually cared, then they'd be complaining about the particular onerous regulations and why they shouldn't exist. Rather than just complaining about "regulations" in general, ignoring why such things are necessary.
The "character" they want to preserve is not that of an urban center with multi-family housing.
We already rely on market forces to ensure that everyone doesn’t just move to one of a few popular cities. We don’t just need more housing, we need them specifically in Seattle, SF, LA, Denver, Manhattan places where people want to live. I still don’t see how SF achieving Manhattan density would cause its prices not to be Manhattan comparable. Something else is going on with increased supply having the ability to induce even more demand.
Overbuilding is also a danger. Berlin had excess capacity of housing and work space for a couple of decades before demand could fill it. Just because there is demand today doesn’t mean there will be demand when your project is finished, eg interest rate increases can put a damper on speculative demand. A Japanese style mega property crash is something no one wants to deal with.
Also, the Chinese have been simulating the housing sector to encourage domestic growth. The Chinese housing sector did not grow out of control just due to lack of regulation. It was also financial stimulus and incentives to encourage building.
So, you just pounced on that other commenter, accused them of something they didn't say, and despite believing that you understand the Chinese housing market you actually have no clue. You are literally the Dunning Kruger effect manifest info a hacker news commenter.
I said the problem in China is speculation, they don’t have a housing shortage. You can’t just build your way out of a housing problem if the demand signals are messed up.
My armchair economist opinion is that we are still dealing with the effects of the 2008 housing crash.
Why not add more meat around the bone while criticizing others for not doing so?
Option B: Housing shortages are caused by a combination of factors that include public policy, and solving the problem requires understanding and considering all of them.
Make it cheap to build housing and it will be done.
Even my friends who have been on “housing prices have to drop” camp jumped across the fence once they got their own place. Obviously, this wouldn’t be the case if we didn’t look at housing as an investment, but here we are.
I’m actually curious what will happen in like 15 years in countries where population decrease will be visible. To my understanding, even Tokyo/Osaka are still growing due to people moving in from the countryside. At some point the demand will be collapsing, and curious how the governments in Japan/SK/China will respond.
Either make units or make peace. Everything else is lipstick on a pig.
This is an actual crisis, a roof over one's head is a basic human need and with rent prices continually going up compared to income it's insane that it's not viewed as enough of a priority to spend real money on it, while other projects get funding easily.
It only works if people keep stretching themselves thin in order to buy into the manipulated real estate markets, once this becomes untenable the aforementioned regions will become less relevant. Then you might see a real attempt at change, but at that point people won't care and the jobs will be elsewhere