Duh? Cost of living here is spiraling out of control and housing is the biggest line item. But it's going to take something big and heavy (like federal intervention) to fix it.
Actually, it’s already on the way to being fixed the old fashioned way - with a market crash. Inventory is rising, volume is dropping, and while prices are going up - that is pretty common as the market starts to grind to a halt.
When the line keeps going up and to the right, everyone builds that into their spreadsheets and times are good.
When the line starts going down and to the right, they hope it’s temporary. But after awhile, they need to update their spreadsheets - and then times are bad.
As long as the fed keeps rates high, the crash is inevitable. I give it another year or two.
I hear predictions of crash every year since 2012-2013 at least. Foreclosures are still low. Inventory rising is locale dependent thing, e.g Palm Springs - basically vacation home flips/airbnbs. I dont see how it could crash when stocks are still at all times high
Theres so much pent up money that Powell just has to tweet a picture of a dove and the market will go up 15% the next day. Markets been lumbering up since mid april despite all the doom and gloom narrative with the interest rate and continually being told no cuts for now by the fed the entire time. Anytime the fed says no cuts recently, seems like its Powell creating a buying opportunity more than anything and a week later the ship is back on course. Whenever they do cut rates this year there will be fireworks.
Construction is expensive but at least not difficult. Entitlement and permitting are the real nightmare here. It's why we basically don't build anything.
what about the massive amount of housing starts that dropped off after the financial crisis and took a while to recover, and never got back to the same level? that seems like a big part of the problem too. https://fred.stlouisfed.org/series/HOUST
The article is about California and I would suspect that relatively few entitled projects are abandoned there. If you know where to get the relevant data, please share.
but they're not. They're building luxury condos because they pay out the most and they need to do that because the cost of construction is so high. if the cost of construction was lower, then it would be affordable to do non-luxury non-condo
construction.
That would be great but it's not going to be swift or sufficient. The thing that would really do the trick is overturning Euclid v. Ambler, and really only SCOTUS or Congress can do that.
That case was more about separating industrial and residential land. Zoning is a good thing but putting a cap on development within a zone is what has caused these issues with prices and a lack of housing supply. Everywhere that you'd consider first world has some zoning. Tokyo too of course; you can't just open a landfill next to your neighbors house for example, but at the same time there's a lot of by right development that adds housing capacity if the area can handle height with respect to the available infrastructure.
"The recent industrial development of the City of Cleveland, following the railroad lines, has already reached the Village and to some extent extends over into it. In its obvious course, this industrial expansion will soon absorb the area in the Village for industrial enterprises. It is in restraint of this prospect that the ordinance seeks to operate. In effect it erects a dam to hold back the flood of industrial development and thus to preserve a rural character in portions of the Village which, under the operation of natural economic laws, would be devoted most profitably to industrial undertakings. This, the evidence shows, destroys value without compensation to the owners of lands who have acquired and are holding them for industrial uses."
"...the ordinance of its own force operates greatly to reduce the value of appellee's lands and destroy their marketability for industrial, commercial and residential uses; and the attack is directed, not against any specific provision or provisions, but against the ordinance as an entirety."
> The thing that would really do the trick is overturning Euclid v. Ambler, and really only SCOTUS or Congress can do that.
Congress really can’t (the existing federal judiciary would be more likely to find any federal legislative attempt to limit local zoning a violation of the 10th Amendment than to give it effect); SCOTUS could, either directly or collaterally, but it seems unlikely (for one thing, to even make it to the merits you’d probably need someone who took ownership when the property wasn’t subject to zoning restrictions and where a claim wouldn’t be time-barred given the length of time since the zoning rule was enacted; its not 1922 anymore, and the problem isn’t new zoning.)
Congress could propose an amendment to overturn it – or to more directly limit zoning – but it would take a supermajority of states to sign on to give it effect, and if you had that, well, you’d probably have a supermajority of states limiting zoning without federal intervention, too.
we need social housing programs like vienna, austria. aided by federal money, but facilitated and owned by local communities.
we missed a decade of low interest rates to build, even in places with lax zoning regulations. obviously the zoning regulations are a problem and need to change, but that didn't keep developers from underbuilding in areas with lax zoning during the low interest rate environment. there's no fucking way the free market will solve this now that the cost to borrow + costs of materials + labor etc are so high (because that just makes the cost of housing higher). it will take both government investment and private enterprise.
Over $100k per door impact fees! Years of entitlement hearings! Years of wrangling for building permits! Any project is a decade and costs a large multiple of its materials.
i'm the op that everybody is being snarky towards. thanks to a project that i worked on, a lot more people are aware of this fact. notably i played a very insignificant part, but you are preaching to the choir!
Yep, going to any Bay Area city council meeting makes it very clear why it’s hard to develop - it’s an incredibly long process to get permission to build. You see the same developers again and again, making tweaks to their plans and seeing if that will appease the council. It seems to takes years.
I’m currently building something in a much more lax area, but even here, the few parts that require permits/inspection are by far the largest hurdles, because they impose a rigid sequential order of operations that have to happen before I can move on, and require a licensed master tradesman to pull the permit, whereas most other things can generally proceed as materials/equipment/people become available.
On your point about local government getting greedy, I went to the state of the county address in our area recently, and the county executive gave a long laundry list of how many millions he was splashing out to x and y, to fanfare for each spending figure, as if the goal was to spend more, rather than get the maximal impact for the dollars. I guess most of the audience were people from those departments receiving the additional money, but as a non-government worker, it was a bit sickening.
I hired an electric company to put in a car charger. In order to participate in the EV pricing program it needed a 2nd meter, which needed a permit. The actual installation was a few hours. The permitting process went back and forth between city inspectors starting in September and didn’t get approved late January. The company didn’t fight anything, always did what they recommended and it still kept coming back with more “issues” and adjustments. The company said they’d never take a charger install job again in the city. It was ridiculous.
Yeah, that sounds a lot like the beginning of this job, the initial plan review for the building permit took like 4 months, and I had to call at each stage in the pipeline to get it moving again. They’re always super friendly, but they don’t seem proactive at all.
I don't see how a contractor could be efficient at all with this setup - I'm assuming they're better at getting things through building and planning, but even if it only took them a couple weeks, they'd need a pretty big pipeline to keep busy, to compensate for all the stalls.
yep, regulations are only one piece of the puzzle to increase supply. my proposed solution would need that, and would also help increase supply. increasing supply is the the entire point of my idea.
Did you have anywhere in mind that had developers underbuild relative to the zoning? Seems like most urban areas in California at least are already near the limits of their zoned capacity. A lot of the times when you see a highrise standing out on a block its not because the rest of the block is zoned for that same height and is underbuilt, but often because of some special variances permitting that project to exceed what its zoned for on that lot.
good question. birmingham, alabama didn't build enough to match demand, and that area's zoning isn't very strict compared to big cities. i'm curious to know about the zoning laws in nashville and atlanta, but from my tiny bit of knowledge, those places have seen the supply/demand imbalance like everywhere else.
this data point groups together disparate zoning areas like san francisco and minneapolis so it's hard to parse out where exactly it all happened: https://fred.stlouisfed.org/series/HOUST
this is not my expertise, just something i'm interested in and learned about when i worked on a big project about california's housing. curious to learn more from folks here/find ways i'm wrong.
Birmingham is way off its peak population. It’s under 200k now (still falling) and was 340k in the 1960s. There is probably a lot of hesitancy to build in a place where the population is shrinking.
that stat you grabbed doesn't exist in a vacuum. that stat matches the same time as the white flight demographic shifts that happened in all metro areas in the south.
Even if you take the entire metro, growth since the 1960s has been anemic. 300k growth since 1960, and it actually shrunk in 2021 according to your chart. Again, there are much better places to make money building housing, supplies and know how are limited.
An unfathomably huge problem facing California that is under-discussed is the second order effects of the legalization of cannabis. Used to be you could get $4,000/lb per lb, but now theyr're going for $500. Generations of families and industry and workers happened at $4k which provided underground jobs that now don't exist. These are people that have never had W2 income and thus are not counted in any official stats due to the nature of growing illegal pot. These are swaths of people that previously funded their lives through illicit pot deals that no longer exist. The arts in California? Funded by untracable weed cash. That's gone.
There are very few jobs for a convicted felon with a mental illness, and trimming weed was the one way to pay the bills. That's now dried up. On an individual level, just don't be a convicted felon and don't catch a mental illness. Easy, right? Society includes all of us and they need jobs to be paid so they can buy food.
I don't know if UBI is the answer, but California's underground economy has this massive hole in it due to legalization that's gone unnoticed and we're in line for a big cultural shift because of that.
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[ 1056 ms ] story [ 1354 ms ] thread[https://www.redfin.com/state/California/housing-market]
When the line keeps going up and to the right, everyone builds that into their spreadsheets and times are good.
When the line starts going down and to the right, they hope it’s temporary. But after awhile, they need to update their spreadsheets - and then times are bad.
As long as the fed keeps rates high, the crash is inevitable. I give it another year or two.
Bankruptcies are likely to be incredibly painful.
The market also does seem strangely stubborn to correct.
We’ll see when things change, but for now they’re not freeing up cash. And the housing market in particular’s momentum has been steadily changing.
All that's necessary is for the government to get out of the way. i.e. dramatically reduce zoning and permitting requirements.
Remember there's a limit to how many of those can be sold. Once you've sold them all they'll build sometime else
But only if the government lets.
https://tile.loc.gov/storage-services/service/ll/usrep/usrep...
"The recent industrial development of the City of Cleveland, following the railroad lines, has already reached the Village and to some extent extends over into it. In its obvious course, this industrial expansion will soon absorb the area in the Village for industrial enterprises. It is in restraint of this prospect that the ordinance seeks to operate. In effect it erects a dam to hold back the flood of industrial development and thus to preserve a rural character in portions of the Village which, under the operation of natural economic laws, would be devoted most profitably to industrial undertakings. This, the evidence shows, destroys value without compensation to the owners of lands who have acquired and are holding them for industrial uses."
"...the ordinance of its own force operates greatly to reduce the value of appellee's lands and destroy their marketability for industrial, commercial and residential uses; and the attack is directed, not against any specific provision or provisions, but against the ordinance as an entirety."
Congress really can’t (the existing federal judiciary would be more likely to find any federal legislative attempt to limit local zoning a violation of the 10th Amendment than to give it effect); SCOTUS could, either directly or collaterally, but it seems unlikely (for one thing, to even make it to the merits you’d probably need someone who took ownership when the property wasn’t subject to zoning restrictions and where a claim wouldn’t be time-barred given the length of time since the zoning rule was enacted; its not 1922 anymore, and the problem isn’t new zoning.)
Congress could propose an amendment to overturn it – or to more directly limit zoning – but it would take a supermajority of states to sign on to give it effect, and if you had that, well, you’d probably have a supermajority of states limiting zoning without federal intervention, too.
we missed a decade of low interest rates to build, even in places with lax zoning regulations. obviously the zoning regulations are a problem and need to change, but that didn't keep developers from underbuilding in areas with lax zoning during the low interest rate environment. there's no fucking way the free market will solve this now that the cost to borrow + costs of materials + labor etc are so high (because that just makes the cost of housing higher). it will take both government investment and private enterprise.
Government permitting is now a huge percentage of the cost of building a house in many US metros. CA is maybe the worst offender.
It's not just NIMBY. State and local governments have gotten exceedingly greedy over the past several years.
I’m currently building something in a much more lax area, but even here, the few parts that require permits/inspection are by far the largest hurdles, because they impose a rigid sequential order of operations that have to happen before I can move on, and require a licensed master tradesman to pull the permit, whereas most other things can generally proceed as materials/equipment/people become available.
On your point about local government getting greedy, I went to the state of the county address in our area recently, and the county executive gave a long laundry list of how many millions he was splashing out to x and y, to fanfare for each spending figure, as if the goal was to spend more, rather than get the maximal impact for the dollars. I guess most of the audience were people from those departments receiving the additional money, but as a non-government worker, it was a bit sickening.
I don't see how a contractor could be efficient at all with this setup - I'm assuming they're better at getting things through building and planning, but even if it only took them a couple weeks, they'd need a pretty big pipeline to keep busy, to compensate for all the stalls.
zoning regulations and entitlements are only one piece of the puzzle. a significant piece, for sure.
The ADU legislation is a step in the right direction.
this data point groups together disparate zoning areas like san francisco and minneapolis so it's hard to parse out where exactly it all happened: https://fred.stlouisfed.org/series/HOUST
this is not my expertise, just something i'm interested in and learned about when i worked on a big project about california's housing. curious to learn more from folks here/find ways i'm wrong.
that stat you grabbed doesn't exist in a vacuum. that stat matches the same time as the white flight demographic shifts that happened in all metro areas in the south.
now do huntsville.
There are very few jobs for a convicted felon with a mental illness, and trimming weed was the one way to pay the bills. That's now dried up. On an individual level, just don't be a convicted felon and don't catch a mental illness. Easy, right? Society includes all of us and they need jobs to be paid so they can buy food.
I don't know if UBI is the answer, but California's underground economy has this massive hole in it due to legalization that's gone unnoticed and we're in line for a big cultural shift because of that.