Where possible, states should build more tiny house communities, or have land where putting up a tiny house is legal and pain-free. There should also be a law prohibiting a person from owning more than one of them, except for temporary periods of moving out of one and into another. (The same should hold for regular houses, too.) Effectively, land is a different sort of commodity than most others: it is truly finite, and people should not be able to make as much money off it as an investment as they currently do.
A Land Value Tax is much simpler to enforce, more generally applicable across all housing product types, and a lot less artificially constraining of local decision making.
Agreed land is totally unique and should be handled very differently from other forms of wealth.
Yes, that is true. Though I would argue that we still need some rules on land ownership to begin with that is independent of the prices set by a market.
>Where possible, states should build more tiny house communities, or have land where putting up a tiny house is legal and pain-free.
But let's just call them what they are: Trailer parks.
I just don't see how trailer parks are going to solve the problem. You may have cheap land but if you put 500 trailers on a plot you're still going to need sewage hookup, power and water for 500 homes.
They don't have to look like traditional trailer parks -- at least not the kind that I've seen. But besides that, they will be cheaper. That's the point.
How much of the cost of housing is construction vs land costs, utility hookups, developer profit and permits?
Tiny houses are relatively energy inefficient (a lot of wall surface for the living space), inefficient in land usage and very expensive per square meter. And they are not suited for families with children. I wonder if these trade offs are worth it against building a reasonably sized prefab home.
One must also ask in addition to your pertinent questions, can the market bear putting the same price on a tiny house as it can with a large house? It's about perceived value. It's the same as anything "wedding". The price will go up just because the word "wedding" is there: wedding photography, wedding invitations, wedding catering.
With tiny houses, you're going to get the opposite effect of the price being lower because if of the "tiny" aspect.
What the US needs is some expectation adjustment. If you make all your houses and lots 2x smaller suddenly you can fit four times as many people in the same space.
If you work this problem long enough you're going to converge on apartments/condos. It solves the problem you care about and all the caveats mentioned.
Urbanization facilitates specialization which is the engine that drives inequality. So, make all your houses and lots 2x smaller and suddenly you can have more density and higher levels of inequality. Yay?
Really? It bears out everywhere I've ever lived and also in the archaelogical record.
Don't make the mistake of equating inequality with poverty. Specialization is certainly a great driver of efficiency and wealth creation. This trade-off can be fine (in a rising tide floats all boats sense) but we have to keep our eye on the levers.
I mean, if your definition of equality is 'everyone is equally poor', then I suppose subsistence farming is what you want to aim for.
If you then urbanize, your inequality increases rapidly. But since we already have an urban, industrialized society, increasing density is not going to move the needle on inequality. It's arguable it'd move backwards because more people can suddenly live in a desirable area.
Wait, you’re missing the important linkage. Urbanization facilitates specialization only because it produces excess productivity. Growth it’s very self produces inequality when the benefits of increased productivity are not evenly distributed. This is not a fault of urbanization, and certainly a poor reason to oppose urbanization.
I didn't miss it. Read the entire (tiny) subthread...
Logically I agree that this is a "distribution" or "social" problem, not solely "the fault" of urbanization (that is, the "correct" social policies ought to be able to mitigate the natural downsides).
Unfortunately, however, we have thousands of years of data in which no society has managed to discover what these correct policies are (or at the very least, they've been unable to be deployed at scale). This observation gives me some pause and causes me to re-evaluate some of my prior assumptions.
A poor reason to oppose urbanization, perhaps. But not a poor reason to oppose kneejerk urbanization without critical thought (a prevailing trend as of late).
Whatever the case, this force is a powerful one and should not be casually dismissed, even by those who believe workable solutions are (finally) imminent.
Sure, it's cheaper to construct utilities on a per-unit basis in dense areas. The problem is that in medium-density areas the utilities were built out decades ago and are near capacity now. So, in order to add more housing units and residents in a neighborhood they have to rip out and replace many of the utilities. This is extremely expensive, and disruptive for existing residents.
And Australian houses are, as I understand it, bigger again. There was a thread somewhere about where to put your washing machine: bathroom or kitchen. And every Australian was in there getting completely confused because the vast majority of houses in Australia have a dedicated laundry room usually with a trough, bench top, washing machine, dryer, etc.
I have lived in an apartment my entire life. I'm in a building with 15 floors and 5 flats on each right now. My direct neighbors have a newborn baby. I don't hear a thing, literally - I wouldn't know there are other people if I wasn't 20 meters above the ground. Don't compromise on build quality like the Spanish do, build it like the Germans, Poles, Czechs and Slovaks do - and you won't have any issues.
Yup. You would think "builder grade" materials and work in a home was a sign of quality, a la "craftsman"... but no, it's "built using the cheapest shit that met code, and put together on deadlines".
People living their whole life in apartments do not create nearly as much nuisance as people who moved into apartments from detached houses, where they grew up. They don't wear hard-soled shoes inside, they don't drop stuff on the floor, they don't blast music and don't even own 1500W subwoofers, or weight racks, or treadmills.
For some reason people believe that a little baby is the most noise possible and it's often used in such discussions as an evidence of complete sound-proofing of their dwellings. While people do instinctively get agitated from a child's screams the power of these screams is very low. This is why parents get baby monitors as the screams don't propagate well even between floors in a single-family house. Even adults, unless trained, can't scream nearly as loud as a 200W Bluetooth speaker. Get your neighbor upstairs to drop an empty barbell bar and see how you won't notice it. And in the US your neighbor can be dropping a 300 pounds barbell while having a party with people dancing with accompaniment of 2.5kW sound system, at 2:30 am.
Rented six apartments in the US. Only once had a noise problem, solved by an email to the leasing office. Though admittedly they were all in the "nice" neighborhoods.
If the percentage of noisy apartments were 90%, the probability of me randomly landing in 6 quiet apartments out of 6 would be 0.1^6, or one in a million. If the percentage of noisy apartments was 10%, that probability would be 0.9^6 = 0.53. So, given my experience, the latter case is 0.53 / 0.000001 = 530,000 times more probable.
In my city they looked at that. My city is not one of the most expensive in the country (upper middle?), but it has been generally near the top of the "biggest YoY increases in home values" over the last decade of so.
All sorts of feasibility studies. Options.
And then out came the NIMBYs. "My grandkids play in the street and I'm scared they won't be able to anymore", "there's going to be cars parked everywhere on the street and we won't be able to find parking" (uh, you have driveways and garages, no?)
"What's this going to do to our property values?" This was the kicker. "Well the most conservative of our studies showed that it looks like we'd go from 11% YoY value increases to 8-9%."
Wow. You would have thought the city was pouring water in everyone's gas tanks, or assaulting their grandmothers.
"HELL NO. I have a right to double digit property value increases!" Even when the lower increases would still be in the top 20% of property markets in the country (and being clear, still an 8%+ ROI), no way in hell were any of those proposals going to pass.
We used to have housing of last resort, places like SROs that were unpleasant but cheap (and to be fair, they were often firetraps). But then we decided it was inhumane so we banned or greatly restricted them, and surprise, the people that would have been in an SRO now live in cars or tents, definitely not an improvement.
New Zealand too. I totally agree. There is something utterly rotten with the seniorage abilities of commercial banks and the multigenerational distortions it has created by virtue of leveraged (mortgage) lending.
tbh I am so angry about this I dont even know with whom to be angry with in the first place. we just "got" here and everyone is just waving hands, especially politicians, that promise to fix housing crisis since 2000 and nothing happens, it just gets worse.
I think some heads need to fly, french revolution style and that needs to be this violent in order for elites to be afraid again, idk what else can help.
The leaders of violent revolutions aren't especially likely to govern with more skill or empathy than those they overthrew. The selection criteria of charismatic and violent isn't very well aligned with benevolent rule afterwards.
Be angry at the currently retiring generation. This was consciously and deliberately engineered for their benefit. They even had the wisdom to carve out property tax exemptions for themselves. Perhaps they did not bother to consider what the long term consequences would be, but that is to be expected. The politicians merely did their bidding.
Housing is naturally a valuable thing. From birds with nests, to dogs and lions marking their territory. it’s something valuable that you self custody.
Regular people own the overwhelming majority of homes, and they love every dollar of increase.
The finger pointing at corporations or politicians is totally misguided. It's the locals who collectively are invested in their homes and collectively (through the votes they cast) create the disastrous situation we are in.
Even the most bleeding heart liberal is all about "protecting the character of our neighborhood". Just look at San Francisco.
I'd agree with this. In Australia, it is too financially attractive to own investment property and enough of the population makes it a political gamble (at the bare minimum) to change that.
> Even the most bleeding heart liberal is all about "protecting the character of our neighborhood". Just look at San Francisco.
I love those green and saffron signs about welcoming refugees that they put in the neighborhoods where you can't touch property for under $2M. I want stickers I can slap on those signs that say "...if you can afford this neighborhood, lol."
For those interested, Gary Stevenson has an interesting take on what is causing this, even though his view is focused on the UK market: https://www.youtube.com/watch?v=kNUNR2NZvFM
Something about Gary Stevenson doesn't feel right. Although what he says generally sounds good, all of his videos contain the exact same rhetoric about blaming problems on wealthy people. And yes, he says he's an inequality economist so it makes sense that he would say this, so why not show the numbers and data to back up his claims? He talks for 10-20 mins seemingly pulling his theories out of thin air. In that very video you linked he claims he saw house prices rising as a result of COVID while all the other economists were blind to it... uh no? He doesn't use the kind of vocabulary I would expect from somebody who has deep knowledge of the subject either.
What is he getting out of making these videos other than playing the populist game? Has he actually been verified to ever have been "Citi's top trader"?
I bought in 2022, and while it was new construction, it's a pretty mid-range house. No premium finishes, in a growing but small city northwest of Houston.
If you told me 10 years ago how much I paid for it, I'd ask what the name of my butler is.
Indeed. My home "value" has roughly doubled in the last five years.
Sounds nice, but land/home values in the area I'd like to move to has nearly tripled in the same timespan.
I feel bad for renters priced out of the market, but many of us who have "enjoyed" the upside are actually deeply underwater relative to our preferences, to say nothing of the doubling of insurance premiums, and ~25% property tax hikes in the last five years.
Property tax shouldn’t be going up with this tbh. If everyone’s housing and land is becoming more expensive, then you need to tax smaller %s to get the same budget.
To me this sounds like your city/state is just ballooning their budgets.
You don't need the same budget. You have to pay employees more to keep up with the rising cost of housing and land (or they all quit), so the budget has to go up too.
And... Look at California's prop 13 for what happens when property taxes can't rise with the market. People just keep their homes forever because they don't want to sell and buy a new place where the tax rate will ratchet up from the sale. We have multi-million dollar homes that are taxed as if they were $50,000 homes, starving the local area's schools and infrastructure of funding.
The local governments and school districts are hardly starving. School spending per student in California is above the national average. Property taxes aren't the only source of government revenue: we also have income tax, sales tax, and a wide range of other fees.
Proposition 13 did cause some distortions and needs reform. But it has at least been effective in stopping the former unchecked growth in local government spending and limiting the corrosive effect of public employee unions.
What he said makes zero sense. Of course a more desirable area is going to appreciate faster. He’s acting like he should be able to trade his less desirable property for a more desirable one 1:1.
They bought a starter home for say 100k which is now 200k. But the family home they now want tripled in the same time from 200k to 600k. So even though they now have 100k more, they need 400k more for their desired house, while only 200k before (Numbers obvioulsy chosen randomly)
This still doesn't make sense because why would only homes on the low-end appreciate? If anything homes on the high-end should be appreciating faster because the people who live in them can afford to do more improvements.
It makes sense because both the starter homes and the larger homes appreciated. I'm not sure why you say "why would only homes on the low-end appreciate" when the example talks about two different classes of homes.
Yes, that's what I'm saying. The idea that you can trade up your starter home without getting lucky and having your starter home appreciate much faster relative to other homes is daft -- especially when home prices appreciate by percentages the gap is always going to get wider over time. I don't think there's ever been a time where this "starter home" pipeline has ever worked in general.
I think they were lamenting the fact that the classes did not appreciate at the same rate, and that the more desirable homes appreciated faster. Didn’t claim not to understand it either.
I don't think you understood logic of original statement, although its clearly explained with matching numbers.
Btw those disproportional numbers can be easily real anywhere in the world even in much bigger ratios, I can confirm them from Europe - if you want to invest in properties, location is absolute top priority as we all know that. Those properties appreciate faster than average market, don't suffer much drops in crises, and of course are at most desirable locations for whatever reason.
Rising prices are great for people who want to downsize and terrible for people who want to upsize. Many millennials are “better off” than their peers having bought an apartment but can’t afford to move to a modest family home. The traditional housing ladder no longer applies.
I bought in 2021, a massive place but a complete refurbishment project.
I am not done. I have no more money and no more willpower to invest more into this. I totally regret the purchase.
I always assumed when the baby boomers retired there would be a flood of big family houses coming up for sale.
I see it in my parents that they're pretty comfortable staying in the family house as long as possible, I'm happy with this. It is made a lot easier by the fact that prices keep going up so staying in a house that is oversized financially is rewarding.
I'd like to think it'll all come to and end one day as the spiral reverses, but I've been wrong for so long now I'm losing faith.
Variable rate mortgages have varying lengths, and we will see the entire unfold in roughly 3 years.
Which is probably a mix of stagnant house prices and severe salary increases (for the ordinary person).
We are in a wealth dispersion period now (I think) - The ordinary people will catch up with tech workers, and high-salary epople (as in: reducing the number of multiples in the salary)
I think he is referring to the Tory pledge of reintroducing the National Service, given that probably like 85% of the concerned would be used to keep the NHS afloat and the 15% would go to the army.
They're probably referring to the Tory's proposed 'national service' thing, which showed up yesterday and is already being walked back; the Tories, facing fairly dramatic defeat in the upcoming elections, are throwing all sorts of nonsense at the wall to see what sticks right now.
> I always assumed when the baby boomers retired there would be a flood of big family houses coming up for sale.
Here in Munich, they indeed are... and wherever possible, they and their often beautiful gardens get torn down, and the entire plot gets "densified" by creating as much indoor space as possible. What was one house for one family is now at least 6-8 apartments for DINKs, often built in shoddy quality with corners cut everywhere but priced and sold at record amounts (that still get paid because all the tech and car bros massively distort the wage market).
On one side, it's positive because the lack of housing is absurd.
On the other side, none of the surrounding infrastructure was built with that density in mind. Parking overflows everywhere because you physically (slope angle vs lot size) can't create enough garage spaces, traffic itself is getting more and more dangerous as the small streets have been built as tiny veins but now have to carry 2-3x the traffic load, public transport can't handle it as well, doctors/kindergartens/schools are on the verge of collapse, the grid operator doesn't allow PV or EV installation because all the density increase would first require a complete overhaul of the last mile distribution grid. And on top of that, biodiversity has taken a visible hit as all the trees and bushes getting ripped out and replaced by steel eyesores and yards being replaced by gravel so that the hipsters don't have to bother with mowing a lawn don't support insect life, so the birds vanish as well. No free-roaming cats any more either thanks to traffic.
Seriously, screw urbanization and gentrification. We absolutely need to revitalize rural areas again.
People want to have their cake and eat it too. They want the peace and quiet of single family homes with lots of space of rural areas for their garden and kids, with the job opportunities, infrastructure and amenities of modern dense hip vibrant cities where the best schools, jobs and entertainment are within walking distance or short commutes by public transportation.
There's obviously gonna be a shortage of such housing arrangements, and therefore will come at hefty prices everywhere.
Of course they did want space. Turns out most people can't stand being locked up like chicken in too small coops too long. Domestic violence exploded for example - and that's only from those who were actually able to call police [1].
On positiver notes, you had stuff like urban gardening increase in popularity [2], or sales of (e-)bikes towards people who went and biked to the rural areas.
And finally, WFH made it possible for a lot of people to give up their expensive city housing and move out into the suburbs... but obviously nowhere near enough to make a serious dent in demand, and RTO policies are creeping up and destroying even that bit of progress.
I don't really see a decrease in population density and the corresponding increase in cars on the road as "progress", otherwise you're about to tell me that American-style giga suburbs are the answer to our problems. Densification is actually the answer as it's a far more efficient use of resources.
Densification only works when designing an area from scratch (like China), when you spend many many billions on retrofits or when it was built with sufficient sprawl to accommodate expansions in infrastructure. You can't just go and tear down other peoples' houses here, it's not the Soviet Union.
Densification works organically when you don't ban it. That's the way cities have always grown. You plan for the future, upzone areas when appropriate, let the property owners determine what's in their best interests, and collaborate with them to ensure that the necessary infrastructure gets built.
> You plan for the future, upzone areas when appropriate
That is a luxury Americans and Asians have, simply because there is/has been just so much unsettled land available.
Here in Europe, our cities are quite literally millennia old, some such as Rome dating back to the earliest days of recorded human civilization. It is incredibly difficult to retrofit anything there, and that's before you take archaeological and landmark protection demands into account.
It's not a luxury only they have, and Asia has lots of ancient cities too, sorry to disappoint you but urbanisation did not begin in Europe. Just down the road from me in the middle of the city we have a huge Kleingartenverein. That area could be flats, boom—city's denser. Your take that it's impossible to make European cities denser just doesn't make any sense at all.
Yeah, and yet another piece of valuable biodiversity, yet another green zone down the drain. "Kleingärten" serve a vital and valuable role in a city's ecology.
Why only reply to the comment about Kleingärten, is it because you realise you're wrong about what you said about only Europe having old cities? Which is actually a fairly comically cringe and ignorant comment to make? I live in Hamburg and it's relatively young at 1200 years old. There are lots of far older cities than that in Asia which apparently somehow have the luxury of space and being built from scratch (lol).
Cities are dense and cities are good for the environment. Your dream of everyone living in the middle of nowhere and driving everywhere in cars would be an ecological disaster, far worse than these shitty Kleingärten that should generally be got rid of anyway, since, there's nothing biodiverse about Kleingärten, they're just monocultures that are privately owned. If we careed about biodiversity then we would rewild them.
It's not densification if it's "from scratch", that's just building something dense. So in short it's apparently impossible to make a city denser than it already is. But this is trivially false. Each city's density varies with time.
The problem is rural flight. We have insane housing pressure in the largest cities (Munich, Berlin, Hamburg, Frankfurt), but a loooot of vacant housing in the rural areas - over 10% of units [1], in extreme cases in Eastern Germany 15-18% [2]. Turns out young people flee in droves as soon as they can, when they don't even get ADSL at their home, where they don't have any chance at employment, or where neo-Nazis have been taking over.
Same everywhere. 100 years ago my great grandparents all lived on farms, now we're all in big cities. I always assumed I'd go somewhere quiet after retirement but that isn't looking possible anymore.
Unfortunately, similar to the housing crisis , there’s a retirement home crisis and many people can’t afford long term care without selling the home they wanted to leave to their children.
And then (and I'll admit a cynicism here, from having seen the best of the best to the worst of the worst) retirement homes (ironically often owned by Boomers) chronically underpay their employees so many of the facilities I've seen in my time as a paramedic, I wouldn't send my worst enemy to. There is distinctly a segment of that populace who have on one hand, pissed off their children sufficiently that they don't want them living with the family in retirement, and on the other have studiously applied the "fuck you, got mine" mentality throughout their life such that their retirement or nursing home options are little better than "fade away just on the right side of the line of neglect".
How does this logic work when the next generation/incoming demographic is even bigger? Boomers aren't an isolated bloc of people followed by 20-year-olds. It's a continuous expanding number of X year olds every year.
For specific USA numbers:
There are 18.7 million 65-69 year olds.
There are 21.1 million 60-64 year olds.
There are 22.3 million 55-59 year olds.
Etc... You can't have one demographic retire/die off and everything is cheap again -- because there is always another demographic moving right into their place all the time.
The UK made renting property a lot less lucrative a few years ago. Something about the tax position of letting mortgaged property. That meant landlords sold their houses - which I believe was broadly the point - and thus there are fewer places to rent and the cost of renting has increased to the new point of stability.
I think this probably has decreased house prices to some extent, but people are really insanely reluctant to sell a house for less than they bought it for so lots will wait for years before accepting the change.
It's probably good times to be buying an ex-rental to live in and getting better as mortgage rates fall.
A similar thing has happened in France, where the government has restricted the rental of less energy efficient dwellings[0]. This is generally a good thing for the environment, but it has already had an effect on rental prices as those apartments are now taken off the market.
The exact impact is a little hard to work out, because, at least in Paris, it's also coincided with apartment owners wanting to hold on to empty apartments to rent them for the Olympics rather than to locals.
Why would people violently protest against taxing empty real-estate that's not occupied by locals?
I'm not French but IMHO, Airbnb style short term renting for tourst purposes should come with hefty taxes because housing should always prioritize the locals who live, work, have families and pay taxes there, not wealthy foreigners on vacation.
Because it's the locals who own it, even if they live elsewhere in the city. It's probably their pension income. Flats are usually owned personally by small scale owners in Europe, it's not like the huge funds and corporations in US. They are not poor but also not rich, it's work even if it's rented long term, and a lot of work if short term.
Sucks for them I guess. Maybe they should have diversified and invested in stocks or bonds instead of going all-in in housing-for-rent "investment" and complaining it doesn't turn up to be a huge profit making scheme like they expected, and expect the government to cover their losses.
Someone's housing shouldn't be someone else's for-profit side-hustle gamble. It's why housing is such a mess in the first place.
You can't have housing be affordable AND provide hefty profit returns in private pockets at the same time. Those will always be in contradiction at odds with each other in capitalism.
Honestly, I expected better from the socialist French, that they would have solved affordable housing for the masses.
Your mistake is assuming France is socialist just because of its relatively generous welfare. It's actually neoliberal capitalism with strong preference for large corporations. And that's why this would lead to a protest or at least voting preference shift - it'd be taking one of the last remaining assets in the hands of the middle class.
BTW one more point... Publicly traded companies in Europe are not as usual as in the US. It's mostly private equity here. You can't just buy stocks or bonds, it's either very high risk or very low yield.
It's quite likely not ex-locals who own it, and in any case if they no longer live locally, they're not paying local taxes, or supporting local business.
I agree, income from property should be heavily taxed, it's essentially private profit from the land value, and that value derives directly from it's location and the strength of the local economy, rather than any effort or contribution from the owner.
I am not French but I live a country or two over. Here it's mostly people who own 1-5 apartments in the city they live in, they definitely pay taxes there. And short term rentals are definitely not as simple as "profiting from land value".
Anyways I don't have an opinion about this, just wanted to answer why would people protest - because it's not some faceless corporation but them directly you're taxing.
>it's mostly people who own 1-5 apartments in the city they live in
Owning 1 apartment is completely different than owing 5 apartments in the same city. You can live in 1 apartment but you can't live in 5 at the same time. You're profiting off the other 4 ,so you should pay tax for it.
Yeah, sure. As I said, I don't agree nor disagree. As far as I know, rental income is taxed everywhere in EU. I just answered why the people would revolt or vote against it - because they're probably still right there in that same city or nearby, and you're touching their personal assets, not some faceless corporation/fund.
I'm not sure it's something the government wants to or can fix.
Many apartments that are being rented are those that house people otherwise, Paris being very well known for emptying out in July/August. For those that are being held back to rent, it can probably be hard to know what's the truth, "we didn't find a tenant" versus "we didn't want to find a tenant."
Also, I think there's also a benefit to the government, as they want to have this empty short-term housing stock available for tourists coming in. A lot of money is being invested in the games, it's important to get the tourism money to make it profitable.
That's also happened in the UK at the same time, but it's actually very difficult to bring many of the UK's pre-1930s households up to the minimum level without gutting the property and having it vacant for a period.
Something about the tax position of letting mortgaged property.
EDIT: I had misremembered. Landlords can still get a tax deduction for mortgage interest, but only at the 20% rate, not at their marginal tax rate. For most landlords with mortgages, this probably halves the tax credit.
In the UK, if a private landlord receives £1000 in rent, and pays £800 in mortgage interest, they pay tax on the whole £1000, not just on the money they made.
There are reasonable arguments on both sides:
A) Why should a landlord be able to deduct mortgage interest from their income, for tax purposes, when owner-occupiers cannot?
B) Why should a landlord be unable to deduct business expenses from revenue before calculating taxable profit, when all other businesses can?
Wouldn't a reasonable resolution to the conflict between A and B be to instead allow owner-occupiers to deduct mortgage interest from their income for tax purposes?
> Why should a landlord be unable to deduct business expenses from revenue before calculating taxable profit, when all other businesses can?
I think you nailed it. This is effectively the government saying "renting is not a business".
Think about it. The ability to "deduct expenses" is one of the characteristics of businesses. Individuals also can't deduct rent, food etc from their taxes.
This is effectively the government saying "renting is not a business".
Yes, but only if you're an individual landlord. If you register a company and buy the property through that, the normal rules apply and all interest expense is deductible. Of course, the mortgage might be harder to get or more expensive, as it's no longer secured on an individual's assets and future income.
In the USA, most mortgages are non-recourse loans, i.e. if the bank forecloses and sells the property for less than the outstanding loan balance, they can't go after the borrower for the difference.
In the UK, the borrower is on the hook for the full amount of the loan.
This just makes it easier for investors to outbid homebuyers. If you allow deductions on interest payments, why not for occupiers too? Of course that could open up a whole can of worms and potential loopholes for avoiding income taxes.
Rents have been climbing for the same steady rate they have for years now. Shrinking supply meets increasing demand.
Nothing about that has changed recently.
The recent reforms did swap out some landlords for homeowners. It didnt undo the war on affordable housing it just prevented landlords from profiting as much from it.
Which is a good thing, even if some media outlets owned by landlords do like to pretend that euthanizing the buy to let landlord is bad renters.
> I think this probably has decreased house prices to some extent, but people are really insanely reluctant to sell a house for less than they bought it for
If a mortgage is recourse, and your home price has fallen enough - yeah, you have a pretty big reason not to sell.
Especially if your alternative is to pay more monthly for a worse rental (often the case).
I think it is a mistake to write an entire article without talking about supply and demand. Demographics are one of the lest surprising things in statistics, they can sometimes be predicted decades out from an effect arriving. Housing construction is similarly easy to observe.
I'd personally bet that there is a gentle imbalance appearing between how much energy the average person can lay claim to vs. how much they need to build and service a house and this is a symptom of the energy squeeze. But it might not be and this article isn't doing much to prove or disprove what the actual problems are because we need more information to make useful observations.
Unfortunately, there is excess demand generated by non-human corporate entities. There is not a supply/demand problem among humans-who-need-a-place-to-live.
But there is investor demand for an investment vehicle that has the tax and asset benefits that homes offer.
The consequence is that the buying power in the market by humans-who-need-a-place-to-live is relatively weak when they compete against financial investment corporate entities.
If we have 100 houses and 99 people, it is just unlikely that anyone will have a problem finding somewhere to live. These non-human corporate entities don't have a real incentive to leave the houses empty. There is always a win-win deal to be had renting the house out.
It is certainly possible to have situations where someone chooses to leave a house empty. If it is happening at scale then that suggests either tax or rental law is doing an unacceptable level of damage. Otherwise, why leave the house empty? It is giving up free money.
> These non-human corporate entities don't have a real incentive to leave the houses empty.
They may have such an incentive. In an idealized market where everyone has perfect information, they wouldn't, but we don't live in such a market. In practice, it may be more profitable to leave a house empty to drive up rent on your other properties, and to save the maintenance costs that tenants would bring, especially if you can indirectly coordinate with other large property owners: https://www.propublica.org/article/yieldstar-rent-increase-r...
> In practice, it may be more profitable to leave a house empty to drive up rent on your other properties
I'm not seeing it, rent is usually far in excess of maintenance costs. Run me through how this works. Say I have an empty house, maintenance costs for tenanting it are $5,000 and I have Dan the Desparate who will rent it for $10k/annum, and for the sake of argument his next best alternative is homelessness.
What external circumstances exist here where I'm going to be better off not letting him use the house? Something like not being able to evict him on demand I can see being a factor, which is specific to the deal. But I don't see how what I do here could affect the rent any other properties I might have. I'm don't see how Dan being homeless can serve my interests here.
There was a factual statement buried in there: that there is an equal amount of extra supply to match the demand growth from people who need to live somewhere. This is simply not true — population growth is outstripping meager supply growth in most cities in the US in most other western countries. If you disagree with this statement of fact, please provide citations.
I'm an expat now but I'm hearing it's even worse back in Australia. [Disclaimer: Some of this may be off because I'm hearing it second-hand, not actively investigating myself, so corrections are welcome]
I hear people who are already in the top 1-2% in income are told their borrowing power is only A$1M (~U$660K) while houses at all worth raising a family in cost A$3-6M. Banks don't seem to want to lend to them because they could instead lend to yet another property investor that already has a portfolio full of equity and collateral. The houses will sell and the mortgages will close, the banks can afford to be picky.
If you work in tech non-remotely, you're looking at the high end of that because you're competing with everyone else working tech, heavily weighted towards Sydney, and the rest of the country's housing supply is largely irrelevant. The cities certainly aren't designed for car commuting, so the supply of locations is further narrowed to places that are either so close they're walkable or have good public transport.
To my US readers I cannot emphasize enough how much this limits people's options both ways. When you have a non-remote job it limits your housing options, and if you're lucky enough to lock in a house, now it's limited your employment options in return. This isn't great for housing or employment markets. I'd like to think remote work has helped some people, but the most career-focused people I know are sticking to in-person connections, competing with everyone else doing the same.
Meanwhile cashed-up investors can buy up several houses and neither live in them nor rent them out. They're taking supply away from both the buying and renting markets, which is their legal right and a smart move on their part, but totally dysfunctional for the market as a whole. Anyone who does buy a house to rent it out is doing their small part to make buying less affordable but make renting more affordable, making it just that little bit less likely that the next person out there is a buyer of any kind.
Of course there's been doomsaying about a housing bubble pop for decades, especially during the world-famous pandemic lockdowns. Nothing popped and the exponential runaway pricing continues. Surely it's getting untenable enough to pop somehow, if my successful friends can't buy houses then I don't know who's left in the market except the real estate investors themselves.
I honestly don't see how I can un-expat now, and I'm just counting myself lucky to own property in the USA. If I want to keep this sweet deal, my options for moving are more limited than they've ever been, but it looks like a lot of people would gladly sacrifice flexibility to have anywhere near a tenable deal on housing.
Australia is always going to be worse as long as we have this weird government/cultural pumping of housing as an investment. Every single bogan here talks like the absolute epitome of life accomplishment is to have a property portfolio to laud over the plebcunt renters. The idea of investing in production or business is laughable, you don't hear it mentioned at all.
Our biggest software employers are banks and real estate companies. Everyone I've worked with in my career has worked for REA or a bank at some point. There's no innovation, just property investing.
As long as every newspaper in the country keeps running stories about some dipshit 20 year old magically buying 6 houses with a paper route, it's impossible for it to ever change.
I’m an Aussie who’s lived in the US for 10+ years - you are spot on. Every time I go back all everyone can talk about is property investment and house prices and buying rentals. It was starting when I left 15 years ago but has reached fever pitch now. Play a little game with yourself - see if you can get through any group social event without the subject of property coming up.
It’s very sad. Australia used to have a somewhat egalitarian mindset, but this is creating such a massive generational wealth and class divide that gets wider and wider every year. No one seems to understand the damage their quest for parasitic income is doing to society.
Aussie with expat career, back temporarily but heading to the US shortly here. Beware - Aussie banks don't lend money to people without local income due to federal "loan serviceability criteria". Like zero dollars available.
Pff, in Switzerland, the mean age of the first-time home buyer is 48, and the mean age of a homeowner is 58. And those are the luckiest and the richest who could actually afford buying a house; many rent for life.
This is not a useful model; in fact, things are quite bad here. I just wanted to say that US homeownership is absolutely exceptional, has no analogues anywhere else, and exists only by means of extensive government support. In most other countries, buying a house in your thirties is absolutely unimaginable.
What age is reasonable? Okay, maybe not 30s. How about 40s? The way we are headed most GenZs are not going to have enough to be able to afford a house in their 40s or even 50s.
2008 was low of the low for home values. In my view a few things have happened since:
1.hyperconsolidation in lenders
2. Real estate orgs have worked together to eliminate downward price pressures.
3. NIMBYs and generally “home ownership associations “ have created so many barriers to building & reaped the profits in their own home values.
Some good news is that most populations are slowing or declining on the globe, and that ought to be a substantial risk to mass ownership, but that will take 20years to manifest.
Every time I hear someone predict the next housing crash I always ask them if they have looked at Canada and Australia. Seems to get more and more absurd but it keeps on trucking along.
I keep wondering who the hell buys the housing on my city.
The time for selling is on the 2 digit months, but the price of any small apartment is out of the reach of 95% of the people that live here if they save for their entire life. Anything that isn't small is out of reach of more than 99%.
To efficiently live in cities, many large public works have historically been completed, for example:
- Cities across the world built thorough sewage systems, preventing the need for private citizens to empty their litter buckets out the window – a large river in Chicago was even reversed!
- Cities across the world built mass transit networks, enabling citizens to move around efficiently without relying solely on private vehicles.
- Cities across the world should build affordable housing networks, as Vienna did. This way, citizens don't have to fall victim to the exploitation of speculators and distortions of the supposedly fair market.
Public affordable housing is a necessary infrastructure, just like sewers and transit, to create livable cities for all residents.
If you’re renting, you would stop spending such a large part of your income in rent.
If you’re a resident that already owns their home, and has absolutely no unfulfilled housing needs, you will benefit from a more prosperous society with less people struggling and more equality - and that’s a positive on its own right.
(along with its positive knock-on effects)
In fact, it’s the very goal this measure aims to achieve.
None of the measures mentioned in the article — lower interest rates, lower transaction fees, down payment subsidies — will lower costs. Every one of them will raise prices. You can only fix this with supply: build homes.
The good ol' "subsidize demand" approach to reducing prices. And if prices continue to climb? Well, just subsidize demand harder and in more diverse ways. I assure you, eventually price will fall. You just haven't subsidized the demand side enough yet.
No, it's the value of the dollar in free fall and our purchased economists not talking about it. It's the value of the dollar as reflected by the rest of the planet's confidence in the US, which is dropping faster than Trump can fall asleep and fart.
Make home ownership and renting them back to single families by corporations illegal. Seriously. It's the corporations doing ALL this. The people don't have the money.
> It's the corporations doing ALL this. The people don't have the money.
Maybe it's like that in America. In EU, where the investment 'culture' is different, there are hordes of people not knowing what to do with their money and buying homes only to sell them at a higher price (flippers). Case in point: Poland, where the housing market is quite bonkers - especially in big cities.
If you buy a second home as an investment property and plan to rent it out to a single family, your accountant and lawyer will probably recommend you form a corporation to operate under.
Just having a flat rule against corporations owning property will likely reduce the number of rentals available and a reduced supply will lead to higher prices.
One of the key factors is the increased migration for China and India. While people did emmigrate before, it was much lower. So effectively they were walled off into their own pocket. Now, most of my co-workers are immigrants from India. It's like the rest of world's population is jumping by 2 billion. That is going to change the value of everything related to populations and living.
It sounds like you have shifting baseline syndrome. Omaha last year built fewer houses than had built 25 years ago, but the city is a third larger than it was 25 years ago. So in fact it is building slower than it did in the past.
I don't doubt you have the numbers. I've only been here three years. I live on the west end of town where (seemingly) all the new construction is going on.
The other reason this is absurd is because after the American press lost interest in making fun of Chinese "ghost cities" Chinese people moved into those cities. It's a case of Americans making fun of another country for planning ahead.
There’s another way to fix it. You can regulate financial speculators. In the US 1/4 of all US homes are owned by financial institutions. I doubt it’s very different in Europe unless they are regulated. This situation ensures only the rich can own a home as buyers are competing against hedge funds.
Yes, the “just build houses” contingent seems unaware that people (and as Mitt Romney famously said, “corporations are people too”) can own more than one house. Supply is certainly an issue, but inequality is as well.
I don’t remember the context that well, so you may be correct about that, but I think I disagree with him then - I think corporations are made of humans, but they are machines (perhaps primitive AIs) and are as uncaring as a lawnmower.
Every time a mob of people get together responsibility becomes diffuse. You may see a corporation do something negative that was the cumulative result of 100 human beings who thought they were doing what they were supposed to. People who saw themselves as not able to directly control the outcome. Same for any large group of people up to and including nations.
Yep. Homes can either be for shelter or for investment, but not both. We are experiencing this as a global culture.
I dream of a 100% tax rate on second homes, foreign ownership, and corporations owning single family homes and condos. Or even better, make it illegal. But any politician who pushes such a bill would immediately get removed from office and the law repealed.
None that is going to make a lick of difference. Because of longevity, birth rates, and preferences for smaller households, America is short 30 million homes. You can't tweak your way out of this.
Pretty sure that stat is incorrect. There were years in which 1/4 of available supply was bought by investors but that doesn't mean they ever owned 1/4 of homes. And they don't buy and sit on them. They renovated and rented or sold them. That's perfectly fine.
Financial speculation happens because people believe (reasonably) that the price of a home will increase. Why do they hold this belief? Because the demand has increased while the supply is kept artificially constant.
That's what's so frustrating about all of this -- it's a complete own goal. If we all collectively do nothing at all, developers will move in to capture the consumer surplus. It will be profitable to build, not buy and hold.
Same here in the Netherlands.
I currently rent a 130m3 house for 2500 euros. 500 energy. 2500 euros daycare (4 kids). I think I spend around 6000, 7000 euros after taxes on fixed costs. I wont complain. My life is good, but for most peope here impossible to pay those amounts. Result is that lots of my friends with "normal" jobs end up living in small apartments far outside the cities or even move to a completely different part of the country. Its very hard now to start a life now. Unless you make a shitton of money. Everything became so expensive these days. Its unsustainable imho.
I recall a thread from someone from South America in the Slovenia subreddit, where they said they wanted to move to Europe because it's impossible to afford a home where they currently live. The response was basically "yeah, welcome to the club pal".
It's definitely a global issue, rising population mixed with late stage capitalism.
In brief, too many USD printed since 2008 (especially the Covid money printer), that percolated into certain jobs/professions – and lead to highly inflated asset prices.
These things are worth what they always were, FIAT currencies have lost value.
Situation in Europe is often reported in misleading ways. Everybody calls it "housing crisis" - but we do not have millions of homeless roaming the street. It is actually a "moving crisis" - people want to move to nicer places but can't afford it. I.e. here in Germany, we have close to 1M perfectly habitable empty flats/houses - but they are in rural areas or the countryside. Indeed there is high demand for urban areas and cities, at the same time rural villages struggle to find and retain their population because everybody (especially younger people) move to the city. You might have heard of those italian villages offering houses for 1€, just to attract families and keep those villages alive.
"Need to live near jobs" is a good point. People forget how mobile our society has become compared to our grand-parents generation. Nowadays you have the possibility to get your "dream job" and move for it wherever you want. Your grand-parents most likely took the first best job and career available in the area, not thinking about "self fulfilment" in their careers. In a lot of cases you do not need to move to have a job, but we rather want to be a software engineer in a Hotshot Company in a "culture rich city" rather than a farmer in your rural home town.
That's because a house 100km away from the nearest job is not cheap. Even rural area houses are very expensive compared to what jobs in those rural areas pay.
This makes them even more of a trap. The rents will go up. And yet, even more jobs will leave those places. And then you haven't saved up, because the amounts were tiny
If you can't get a job in arschfick nowhere then it doesn't matter there are a million houses there, because you can't afford them because you need a job for that. Never mind people have family, friends, children (with friends, school, etc.) and things like that.
The strange thing is that while I definitely see it happening in many places around the world, not all the causes are the same. I think @moralestapia has it right: massive inflation is likely a root cause.
I was just explaining this to my mom today. Our generation has a lot of luxuries cheaper but also a lot higher fixed costs (housing, education, childcare, healthcare, etc). Even adjusting for inflation my college and rent were a few times what she paid when she was in her 20s so my experience is that people now who are doing well are doing really well but people who are struggling are really struggling.
The problem is pretty easy to fix. 50-70% of homes (Depends on Area) are owned by people over 58-70 (Baby Boomers). They don't have good senior apartment/living options. Make more senior housing and provide incentives for them to sell their homes. There are so few available affordable senior apartment options. It's really saddening. Most places have 5-10 year waiting lists, if the waiting list is open at all.
Fixing senior living options will create inventory in the market and give seniors better choices with an active community.
Senior living centers are often atrocious and still can set people back over $10,000 a month. I think a program could be designed without being a handout.
One option could be if you’re going into a government run senior living center you need to pass that money down to whoever was going to inherit it/receive it through donation. And that has to be a taxable event to cover the cost of the subsidy on senior living.
People would hate that option because no one likes taxes but the private market is not getting us where we need to be. If people don’t like the option, no subsidy for them and they are free to figure out their own senior care. That money goes surprisingly fast.
> Senior living centers are often atrocious and still can set people back over $10,000 a month.
For "fun", most states publish nursing home reports. In the county I work in EMS, there are probably only two that have only either minor or no infractions. Every single other one has major / patient/resident risk infractions. Often around minimum staffing levels. Perhaps pay your CNAs above minimum wage, your LPNs above $20/hr, and so...
I'm not talking about just senior living or senior care places. I'm talking about total independent just 55+ or 62+ senior apartments that have affordable rents available. There are very few of these and waiting lists are usually completely closed off and take 10+ years if your name is called at all.
unfortunately, since they own the homes, unless you want to take them from them by force, you'll have to give them some sort of incentive to give up their homes so no matter how much you structure it, it will amount to the same thing in order to get them to move.
I bet this isn’t the entire solution but it seems like a really good part of it. I know seniors are snapping up Ranchers in the US, which takes away a starter home option for people just getting into homeownership.
> Make more senior housing and provide incentives for them to sell their homes.
Oftentimes those same Boomers in business own retirement/senior living/nursing homes. And while generalizing, the fuck you, got mine attitude means that nursing staff get paid a pittance, and oftentimes they're abusing the 911 system (multiple homes around here have a "policy" to call 911 for anything worse than requiring a bandaid - they won't let their nursing staff evaluate or treat patients for ... reasons ... - so we (paramedics) get called multiple times a day for little more than first aid, if that. Meanwhile, out front of the nursing home is a big billboard, "Round the clock nursing care!" and they're sending bills to the residents/families that reflect that, while you have CNAs and an LPN or two barely meeting staffing mandates, if they even are, who are unable to do anything).
This wasn't bait. Really depends on the country where you are living. In Germany it is totally fair to rent. Has is ups and downs.. To bad it's flagged now. :-(
I dunno, spending years giving someone the same price as a mortgage (for me at least, back when i rented and decided to buy) and seeing almost nothing in return but convenience seems a pretty strong argument no?
Yea, renting has some advantages. However in my view many people are simply too poor to spend that kind of money on the convenience of not managing a house. Is it more work and liability to own a home? Yes, definitely. However i was looking at throwing away $168,000 when i was renting over the next ten years (assuming no price fluctuations, which also doesn't happen lol). I couldn't afford to spend that kind of money on convenience.
Plus there's America's (imo bad) idea that home ownership is an investment. Unfortunately, my home has doubled in price. So not only could i not afford to waste the money renting before, but now i've made significant money by simply not renting before. Where as i'd get the privilege to lose even more money by renting if i had stayed where i was before, since the rent has gone up - many times.
Is there another angle i'm missing? I rented for years, and now have owned for ~8 years or something. Renting has upsides, yes - if you've got the money. I don't think most people do, especially these days. Is there an argument i missed?
If your mortgage is the same as your rent, seems reasonable. In some housing markets, just servicing the interest on the mortgage is close to the cost of rent. Buying then becomes the "luxury option".
If you don't mind me asking, how much will borrowing cost you over the same 10 years?
Younger people need to join the YIMBY movement in droves. Your economic future depends on removing the crushing restrictions on building new homes, especially homes in high wage cities. The older Boomer generation will never change its NIMBY views. Never.
1.8M/year (55+ cohort) is potentially not fast enough to bring about housing policy change in a timely manner from this alone. Non market housing is also a necessary component besides YIMBY. Housing locked up from market forces is housing that can remain affordable.
Only if those multi family units are sold at a reasonable price, or rented at a sustainable rent. There is no guarantee this happens if I sell to a developer. It is guaranteed if I develop the property.
It doesn’t matter a whit what price the developer tries to sell them at or what a landlord tries to charge for rent. There is something called ‘supply and demand’ and it applies to housing as it does to everything else. More units expand the supply and put downward price pressure on existing units.
The reason housing costs are so high is that there are too few homes and thus landlords and homeowners charge outlandish prices because people have little recourse but to pay since they are so few options.
yeah but you have to move to realize the value. put the money into the stock market instead and you can sell off the stock to realize the gains without having to move. except for the hottest areas (eg you bought in san Francisco in 2009), the sp500 beats real estate.
housing _is_, unfortunately, considered an investment for many people that cannot make relatively-significant money otherwise. (note: i am also against the housing-as-an-investment school of thought.)
If you allow private ownership, it's gonna be a significant financial asset that people work to optimize (which is not very distinguishable from an investment).
Personally, I like the problems you end up with in market system that has sufficient supply (which we don't particularly have).
The federal government through various tax mechanisms encourages home to be viewed as investments: 1. Mortgage tax deduction. 2. Sales tax exclusion on the first $500,000 3. Capital gains tax rate on the remainder.
Local government through zoning codes act as cartel limit the supply of homes which work to increase prices.
The financialization of homes is a direct result of government programs.
Expansion of housing vouchers at the US federal level would significantly address the needs of those who can’t afford market rate housing. Vouchers are more flexible, time-limited, and face less political opposition than local subsidized housing options.
In addition to others point out the timing issue, in many cases you'd end up buying a home that has been lived in for 40 years and is likely well due for expensive updates. Sure its a house and that's not nothing, but it may not really help with the "affordable" part that's missing today.
New market rate housing gives wealthier people something to buy so they stop bidding up the price of older homes. This immediately relieves price pressure on the older housing stock.
Leftist dreams of a government funded social housing utopia in the United States and the UK are just that: dreams. Reforming zoning on the other hand will strongly encourage developers to quickly add higher density housing in job rich urban areas.
House prices are supply and demand. More units, lower price. Imagine 1000 homebuyers for 950 houses. Capitalism says the houses go to the top bidders. Communists might use social credit or something. Technocrats might score on IQ. But there is no system that could possibly result in fewer than 50 people being homeless.
In a lot of ways this is a problem creating itself.
The reason Home Ownership is desirable is that the pricing of houses go up faster then both inflation and depreciation caused by wear decreases the utility value of a dwelling, and the reason that houses are expensive is that the state actors are invested enough in this cycle to make sure it never really breaks.
In a real functional market there would be no real benefit to house ownership over long term leases. but were dealing with a market thats been deliberately broken by policies promoting home ownership for reasons that's fundamentally religious/dogmatic in nature.
You talk about demand for home ownership as if it is entirely induced via economics rather than inherently valuable. I don’t understand why? There are reasons why home ownership is desirable neglecting economics entirely. Owning a home gives you more control over the space you live in, in terms of the ability to customize the space.
That's again a false argument, made a complete lie by the existence of Home Ownership associations and other contract covenants.
Rights come from your contract with whoever hold power not "property ownership"
There is yes some cases where owning is giving you a better deal then leasing in terms of rights and obligations but this is not an universal truth and not the reason house prices consistently rises faster then inflation and average disposable incomes that have nothing to do with the utility value of property as an dwelling.
Ie if we were to go back to an scenario where home properties lost value as the loans were paid off and things got old and worn there would be no crisis, the issue is that the way that currency and banking intersect makes prices keep rising.
And your property rights come from the contract you have with the state. It's all in the formal and informal contract that govern society, and you can(as most suburbanites have) sign away all of the "control" that you seem to argue property gives you to some collective body.
In the same vain the government(and some wery much do) can set pretty strict rules on what restrictions a private landlord can put in rental agreements and that's before you remember that the government itself have historically been the largest owner of rental properties.
In the old days before the idea that owning a house was a ticket into a higher strata in the class system a lot of the problems now caused by unreasonable housing prices was solved by the government acting as the reasonable landlord, essentially curtailing the amount of shenanigans some wannabe aristocrat could get away with before going bankrupt from people not putting up with the abuse.
In a pure "realty don't matter" libertarian mindset your of cause right that property rights are always supreme but in the real world it's always a balance of power and negotiations especially once we deal with urban communities(which is the only ones where property prices are a problem).
> In a real functional market there would be no real benefit to house ownership over long term leases.
More precisely, there would be no net financial benefit to home ownership over long term leases, so people would use the free market as a tool to naturally sort themselves according to their non-financial preferences: people who valued the non-financial benefits of home ownership over the non-financial benefits of renting would own homes, those whose preferences were the reverse would rent. That would not mean nobody would own the homes they live in.
> The reason Home Ownership is desirable is that the pricing of houses go up faster...
No.
No.
The reason it's desirable it that I've lived in three flats in three years because subsequent landlords wanted to sell their property. I don't want to buy because it's a good investment, I want to buy so I can actually settle down in an area, and not be constantly moving.
I live in Portugal and here the situation is outright ridiculous.
1. There are a ridiculous amount of abandoned properties, when I walk the streets of major cities, sometimes more than half of the buildings even in expensive areas are boarded-up.
2. Meanwhile I am afraid of being homeless soon, I lost my job recently, and the unemployment benefit I can receive is literally half of my rent. Thing is, there is no "worse but cheaper" place to move to. I already live in a "0" apartment, with the "0" referring to the number of rooms. The apartment is literally just an empty square with kitchen sink and bathroom stuff. I don't even have my workstation anymore because literally there is no physical place for it inside the apartment.
People are like: "Build more homes". Yet the amount of abandoned properties (by the way, this also include abandoned farmland! Government is upset that there are tons of that, and the result is land with zero management, with wildfires, poachers, drug traffickers...) is greater than the number of families needing.
Instead of squatting people been sharing rent. In one infamous case a house that was shared between 20+ people burned down and killed 2 and sent 14 to hospital.
I'm sorry to recommend you that, but i have experience with homelessness. You have two temporary solutions:
- join a group of squatters (hopefully you already know someone) until you get your bearings. The less ideological ones often squat old industrial properties, or long-abandoned houses (its rough in winter, but in Portugal you should be fine). You might meet some Urbex guys, they're nice and always fine with finding squatters.
- Live in a "big enough" car. You absolutely need to rest on a completely flat surface. I knew someone who got the back seats down and put a wooden plank on it. If you're less than 1.80 and don't move on your sleep, you have a lot of choice (the diagonal is nice), else it might be a bit more expensive.
A very short-term solution is squatting with a close friend, but you shouldn't abuse it too much, it strains relationships.
I recently kayaked a stretch of the Tennessee River, between state parks, and within an hour of paddling I passed both a homeless riverside "tent city" [technically "public camping" on TWRA/state land] and then the most-expensive house for sale in our entire metro area (just around the same peninsula).
These inholdings, both impoverished and not, were each having their respective parties (cheap beer in common) along the lakeside. Titties abounded - "howdy neighbor" - the no-betterness of being "commoners, enjoying this day upon the lake."
Interestingly, the poverty beach camp seemed to be having more fun; but obviously the multi-million $$$ homeowners are in much easier/better situations (likely).
I've lived on and off a semi-rural "squatter" community by ideological choice for around a year [0] (that experience helped _a lot_ later when i was homeless by lack of resources, while i finished my engineering degree), i've probably never had as much fun as i did at the time. Learned juggling, guitar and basic human interactions i had trouble with at the time. We shared alcohol, games and stories with everyone who went to say hello, even cops at the time (it was after César but before 2016)
Did you grow up in Loire-Atlantique..? or how did you discover this community?
I probably couldn't "hack it" out in the wilderness of NAD, but always regret having not joined a hippie co-op (living situation) while in college [I once dated a gal living in one... it was so neat and inexpensive, but she was a sloot].
Close by. I was in Nantes university (UFR) in 2009, failed to get my math bachelor degree in 2012 and took a gap year (i absolutely couldn't stand uni life anymore) where i lived between NDDL and youth camps as a counselor (also was part of "Les petits débrouillards" to teach kids science through experiments, but my expenses were barely covered to be totally honest, so i don't know if i could count this as a job).
In between San Francisco and San Jose, almost every underpass that has any underbrush potentially has a homeless settlement. There was an effort to clear some of these out but I saw several on my last bicycle ride in the area. Pre pandemic there were some on ramps that had tents just off the sidewalk for several hundred yards - it's our modern dystopia. There's a railway right of way near Facebook HQ in Menlo Park that had at least four cars parked way off the road in the brush with tents, and a few miles from Apple HQ there are lots of homeless people living on water/railway right of ways and in underpasses.
You know most of the time, squatters don't hurt anyone, don't make noise as its often an industrial building that's squatted, and are pretty nice communities to live in (there is an alcohol and unprotected sex issue though). Medium to large communities (often once you have children) can be problematic but it isn't the majority in western countries.
I live on a sleepy street that's half dense housing and half single family homes. Density will likely take over more than half of the street some day because the city has been relegating more dense housing to the working class areas of the city, which is where I happen to live. [1]
Of those single family homes there is one that was owner-occupied for a year when we moved in. Since, it's been locked up and has had no renters. The couple that own it own several properties across my city, which I came to know as I got to know one of the owners while they lived here. It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter. My owner-occupied mortgage costs me somewhere around $2600/m, I can't fathom paying two with one at a higher interest rate. Apparently this situation is common around my city.
On the other hand, and a bit non-sequitur, is two homes will likely become dense housing. They're foreclosures of properties that were inhabited by meth addicts. The whole property from the building to the soil will need to be removed for various reasons. At auction the properties were purchased for the average sale price of a home of that size that had no pre-existing issues. It won't be the kind of housing people need though, if I'm a betting man; my city has plenty of SROs (single room occupancy) but they're at the wrong price point. They're now called "lofts" and "studios" with a price tag to match. What will be lost is two 50+ year old homes, and likely the ability of our street to tolerate the traffic it was designed for as another issue is the city not investing in road-building and maintenance on our street.
> It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter.
In the USA it is happening all the time because, surprisingly, landlords have little skin in the the game. LLC is the name of the game. Each investment property is "owned" by its own LLC that bares 100% of risks and liabilities associated with the property and shields the landlord from the creditors. The property is financed entirely through commercial loans from the banks or other lenders. If the property does not generate enough profits for the landlord they quietly take all the liquid assets out of the LLC and stop paying their loan and property taxes. It takes long time (often years) for banks and local governments to start legal proceedings against the said LLC. During this period of time the property is sitting there boarded up. Finally the LLC files chapter 7 -- liquidation and all its assets, close to zero at that time, are given to the creditors.
You may ask why the banks give loans to such high risk entities? First of all, if the property is bringing profits the loans are being paid of and it is the majority of the cases. Secondly, if the loan fails the banks do not have much skin in the game either. They slice and dice the loans and package them into "real estate investment vehicles". Then they sell the packages similarly to how they did it before the financial crisis of 2008. The terms and abbreviations are different now but the gist of it is still the same.
Landlords have 100% risk. Look what happened to California, when the state said tenants did not have to pay rent. Same for Washington, NY, IL, etc... The vast majority of people with rental properties are just regular people trying to make a living.
Where can we find stats on this? Lots of claims in this thread feel good but don't point to number-sources.
I do know a few retirees who rent-out the home they raised their family in and live in a new primary. But my town also has some developers who build and rent.
My landlords have basically frozen rent since 2010. I pay half of what the people in the houses around me do. I'm very thankful to have landlords that aren't greedy.
If their fixed costs are low, the tenant could be making more through investments after staying in the same house for 15 years.
Buying makes a ton of sense if you're going to live somewhere for a long time of course, but if you start out not sure and you have a nice landlord that doesn't take advantage of you with perpetual rent increases every year, then it can make sense to ride it out and invest your "inflated" income every year instead. By the time the tenant moves out, they have a nice portfolio to leverage for a new property and the landlord has gotten a decent return on their investment with a stable tenant.
In this scenario, it seems to me that main driver of disparity in our society is landlords' push to always increase rent even when the mortgage is being paid 2x or 3x over each month, just because it's allowed.
I'm not saying we need rent controls necessarily as a way to fix the problem, but that is one problem that rent control solves. Perhaps paired with some other scheme (3% max increase per year for first 5 years of renting, then capped at 1%?) we could find a more equitable way to account for inflation of repair costs while not screwing tenants with "forced" moves every few years when the rent becomes unaffordable.
You because you didn’t have to come out of pocket the high cost of a down payment, handle maintenance costs, deal with the risk of mortgage default if you lost your income, deal with the possibility (and thus hold insurance for) of liability if someone is injured and sues, or lose out on the opportunity cost of money spent on the house versus what else that money could have purchased. To say nothing of you don’t know what their interest rates are, how property taxes or cost of home owners insurance may have changed (in the U.S. your escrow payments change often if taxes and insurance change) or how liquid the house is (ie could they sell if they needed to and at what discount to the market value).
Oh, and don’t forget that they’re paying interest on the mortgage and that - when adjusted for inflation - the actual increase in value versus what they’ve paid in in mortgage interest over the years is probably far less than the non adjusted gains it looks like.
It’s pretty easy to demonize owner landlords when you’ve always been a renter because you think only about a monthly payment. I’m not going to tell you that’s it’s a relative luxury to be fixated on one simple payment each month, but it’s also not the case that owning a home as an individual is some kind of pot of gold.
An owner that values their tenant and keeps their rent flat isn’t a saint. But they’re also doing a good thing in a time when they could be - by account of this thread - exploiting people for as much as possible. We don’t need to order them a parade, but it might be worth broadening your understanding of what the cost of a home is before you blanket assume they’re worthy of scorn.
Seems like I struck a nerve in some way? It's 2024 and you can call a man a dog to his face or even stomp on his blue suede shoes, but as soon as an argument has a walletary impact, the response is swift and lethal.
Maintenance is just not an argument. Unless you choose – yes choose – to rent to destructive tenants, or in other ways are irresponsible with your property, maintenance cost is a tiny fraction of what you get from rent. The same for insurance, taxes, etc that you list. Nobody is unaware of these costs.
With that said, I'm not demonizing over these landlords. I'm sure they're fine people and could be worse like you say.
A renter should not be any more grateful to the landlord than a worker should be grateful to the shareholder for paying their salary. It is an exchange. I do think it is better when homeowners at least rent out their property instead of just letting it rot abandoned like many choose. The most decent thing of course would be for them to sell property they don't need and we wouldn't be living in this dystopia from the beginning.
The youth of the industrialized nations are vanishing on a grander scale than ever seen - for petty gains to a few. And those gains will be short lived when the economy folds in on itself due to the impossibility for productive people to have a home. In the end you cannot have an extremely highly skilled workforce that is needed to sustain a modern economy, while at the same time keeping them dumbed down enough to accept total life long exploitation and their own genetical extermination.
> A renter should not be any more grateful to the landlord than a worker should be grateful to the shareholder for paying their salary. It is an exchange.
All true, but there can be a lot of "quality of life" variance in how that exchange is implemented in practice. I've been a tenant a couple of times and now had a couple of tenants myself. Landlords can make things more or less difficult while offering the same agreement, and tenants can make things more or less difficult while complying fully with the same agreement.
I'm grateful whenever someone chooses to do better than the bare minimum required by the agreement. If anyone reading this takes good faith for granted, I urge you to at least read horror stories on reddit.
Non-sequitur to this but VA loans do. That said, VA loans are watched like a hawk for this. It's considered fraud if the loan is not on your primary residence and you cannot rent any portion of it.
> It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter.
This may easier to explain than you might expect. Anecdotally, the people I know in a similar position own all those properties free and clear, there is no mortgage. Consequently, the carrying costs of that empty house are quite low and easily afforded. Also if the mortgage is very old. I know someone with a single-family home in Silicon Valley they don't live in with a mortgage of ~$1000 per month; you can imagine how low the property tax bill must be.
While I am sure there are people with several rental properties mortgaged to the hilt, I don't think it is that common.
I think the answer to your perplexity lies somewhere buried here:
> The couple that own it own several properties across my city
Without knowing which city you’re talking about I can assure you this is rather common.
The moment a property becomes just one out of many (assets) in your portfolio your necessity to let becomes a mere annoyance.
Many of the housing market imperfections could be at play here, but it certainly doesn’t help that renters are increasingly unable to afford to become first time buyers.
>> The couple that own it own several properties across my city
There always seems to be this common thread running through these discussions, but few want to address it. It's just build build build, moar moar moar. The problem isn't that there aren't enough homes. The problem is that so many homes are owned by so few people/entities and are often vacant. We shouldn't allow people (often foreign investors or private equity firms) to buy a home, leave it vacant, and sit on it as an investment as if it were a bar of gold or something.
> how someone can float a mortgage, much less an investment mortgage, without a renter.
They probably have an owner-occupied residential mortgage that the bank (/note purchaser) hasn't called them on. Declaring that you're residing in one unit (either falsely or temporarily) seems to be a pretty popular technique for buying rental real estate. If the mortgage was taken out during the past two decades of ZIRP, then the rate is still fixed at something very low and most of that monthly payment they're "floating" is effectively just going towards the principle as a mandatory savings account.
>and likely the ability of our street to tolerate the traffic it was designed for as another issue is the city not investing in road-building and maintenance on our street.
To be fair, the vast majority of cities need to be investing in non-car transit more than auto infrastructure. Yes, probably even Portland.
I'm not sure if it's the case in your location, but sometimes foreign buyers come in and buy properties they don't expect to inhabit (unless something goes really bad in their country). Europe and the US have strong rule of law systems that prevent the state from just taking property. (The government charging you with a bogus criminal charge to justify taking their property in in their home country). It's also an asset that they can hold, even if it's not income generating, and even if it loses some value. (Because it's still better than most of the assets they have access to in their country). This is not always the case in every situation, but it's common. (Ed. as one person pointed out below, there is also a lot of money laundering that takes place. In that case, the property does not need to make any income).
Portugal had a golden visa program that granted citzenship if you bought real state of at least 500k EUR. That drove home prices up signficantly in Lisbon, specailly units in that price range.
Under new law, the Portuguese Golden Visa no longer provides Residency status through Real Estate investments.
The golden visas were issued in relatively small numbers, I doubt they affect price much vs all the short term rentals like Airbnb combined with explosive popularity of Portugal.
The number of golden visas may be relatively small to affect prices on themselves (around 20.000 for Portugal in the last ~10y [1]). But I would bet that there is a connection between golden visas and the rise in the numbers of AirBnB properties.
The golden visa is just a fast and convenient way to get a foothold in the country and do further investments. And what would these investments be? Probably AirBnBs...
This is supported by data presented in [1]: >90% of golden visa holders acquired it via real estate investments. Now, would anyone pour their life's savings in a single property investment in a far away land? I would say no. So these golden visa holders are probably very well-off and they will continue "investing" in real estate, and expecting returns on their investment. Which translates to more AirBnBs.
They also have to remove that "golden visa" in Spain due to the same problem. I wonder if Italy, Greece, and Malta will also remove/reform their law due to the same problem...
Blaming foreigners is the trick local politicians love to use, but - at least in Portugal - very few properties are foreign-owned. Instead, people are reluctant to rent properties out in general. Real estate agents struggle to convince owners to put their properties on the market in a first place. Usually a family member dies or moves abroad and their relatives simply keep the place unoccupied. Often to convince them to rent out you have to play a match-making game: you have to know both lenders and prospective tenants for years and be a guarantor of their good character. The more contacts the two parties have in common the better. Portuguese society is very socially conservative, often connections matter a lot more than money, and rent market is one area of the economy where it is very noticeable.
To sidestep the whole "can we trust each other?" issue the owners may want to sell the property instead of dealing with tenants. Properties go to the market at inflated prices, because every house owner in the country hopes to sell to mythical "rich foreigners"* they hear so much on TV and online. Local buyers are essentially priced out of the market because the price-wage gap is simply too wide, one of the widest in the world. An average Portuguese family with two incomes can't afford a two-bedroom apartment even at a 30-year mortgage, even if we're talking about cities other than Lisbon or Porto.
So, properties stay listed for sale for years and years, owners do not maintain them in hopes of making a sale "soon", and buildings slowly degrade. Eventually owners realize they need to invest a lot of money to keep the house presentable, the money they usually don't have, and they start to lower the price way down. As a result, the market is split in two big distinct categories: something livable at exorbitant prices and places that need a lot of investment to even start living there. Like a GP comment said you can walk on a street and more than half of places are clearly unoccupied, with many of them slowly turning into ruins. If you want to describe a Portuguese urban landscape in one word the word would be "decay".
Meanwhile rent marked is under-served. All this is further worsened by the internal migration pressure. Lisbon, Porto and all towns on a narrow shore strip between the two are growing rapidly in past 30 years while the interior areas are getting deserted. Portuguese move to places where jobs are and developers can't meet the evergrowing demand.
*I recall I saw a stat that foreigner buyers account for only about 0.2% of sales each year.
As I said, it's not always the case. But in some cities there are shuttered properties, in sometimes prime locations, that are held by non-residents. In some places, like London, it's literally a money laundering who's who. Carrying costs discourage just holding on to property. (I don't know if Portugal has taxes on real property). Increase the carrying costs and the incentive is to rent or sell. That being said, you can't do much about the location of the mountains or the sea.
Portugal has started offering financial incentives for restoring properties, but I'm surprised this is a factor in Major cities, which ones do you see this? Is it also an issue in Lisbon?
Lisbon is where the issue is the worst of all. When I had a job, I had to choose the office where I would work. I deliberately avoided the Lisbon office because I knew there was no realistic chance I would find a place to live there with my family with Portuguese wages.
Not OP, and not living in Lisbon, but yes, it did strike me as odd to see so many buildings boarded-up when I was visiting there 2 years ago. Even in what looked like "prime" locations.
That's crazy then. There are incentives to investors who renovate vacant properties, but high demand areas, such as Lisbon, are excluded. Crazy that there would be so many unused buildings - I wonder if anyone is sitting on them waiting for the land-value to go up, or just setting a high sale-price and waiting for it to sell. I would think getting them vacated should be the most profitable, but alas.
6-7 years ago there was A LOT of vacant or derelict properties (like, close to 50% maybe). Ever since real estate price started going up in Portugal, Lisbon has been full steam into renovating. At one point I could count 47 cranes just from my balcony in Lisbon center. It just takes at least 10 years to refurbish 50% of buildings in a city.
The reason there were so many derelict properties was a law in Portugal that prevented landlords to increase rent unless tenants were moving. Some tenant who had been renting for decades paid less than $100/mo. No wonder why landlords had no incentive to fix this. This has now changed, I think?
> Crazy that there would be so many unused buildings - I wonder if anyone is sitting on them waiting for the land-value to go up, or just setting a high sale-price and waiting for it to sell.
It's certainly a combination of various factors.
The low borrowing costs of the 2010s combined with high inflation make it a no-brainer to hang onto these properties. Figure, someone bought one of these properties for US$500k at 4% interest in 2015, after 10 years, that property is probably worth US$1.3-1.4MM and is growing at well over US$100k each year, while the 15 year mortgage payments amount to amount to only US$45k a year, plus property taxes.
So yeah, these buildings make serious money even left empty.
It's unlikely that taxing these properties is going to force people to sell. Housing inflation is so high that taxes would have to be oppressive (six figures a year) and that's a hard to get legislators behind (most of whom are participants in this problem).
For foreign investors, these properties are basically insurance policies. If they are forced to flee their home country, they'll land in a somewhat stable western democracy with enough capital to land comfortably on their feet. So there is a proportion of people who would make this investment even if it lost them money.
There's also the problem of shell games obscuring ownership to the point that nobody really knows who owns the property. So long as the taxes are paid out of an anonymous escrow account, the government isn't going to care about them.
I don't understand. Does Portugal not allow squatting? How can there be vacant land that no one wants? Surely someone would just go squat and make money living off of it.
The empty properties are they owned or rented? If they are rented, are the tenants paying rent but just not using them? If they are owned, are the owners people who just used them for passive investment and don't rent them out?
Otherwise I don't understand how rents can be so high?
If there are places owned that aren't in use then the political solution seems pretty easy: tax property ownership massively when unused. Make unannounced visits to properties to see if the owners claim of having a property that's lived in is true.
The primary input isn’t land, it’s tolerable neighbors. That is of course what “good school district,” “location, location, location,” and similar euphemisms actually mean.
If you have a high tolerance for crime and other antisocial behavior there is plenty of extremely affordable housing in major US cities with plenty of amenities like walkability and public transportation.
Or if you venture outside of major cities there is also plenty of affordable housing in unfashionable suburban. Many of those areas also have low crime and decent public schools. Not much public transportation, but plenty of free parking.
Absolute prices are irrelevant. Affordability is reflected in home ownership rates. In some states such as Alabama, Maine, Minnesota, Vermont, South Carolina, etc. the rates are above 70%. Regular people seem to be finding it affordable.
Surely one of us is confused, but I am not lying. Here it is on the Census website. No where does the Homeownership rate depend on people. It depends on housing units.
> Housing Unit. A housing unit is a house, an apartment, a group of rooms, or a single room occupied or intended for occupancy as separate living quarters.
> Homeownership Rates. The proportion of households that are owners is termed the
homeownership rate. It is computed by dividing the number of households that are owners by the total number of occupied households.
When we get to the bottom of this we should edit the Wikipedia article if I am wrong.
> The name "homeownership rate" can be misleading. As defined by the US Census Bureau, it is the percentage of homes that are occupied by the owner. It is not the percentage of adults that own their own home. This latter percentage will be significantly lower than the homeownership rate. Many households that are owner-occupied contain adult relatives (often young adults, descendants of the owner) who do not own their own home. Single building multi-bedroom rental units can contain more than one adult, all of whom do not own a home.
You are confused. The denominator includes the total estimated population. You could at least read the official definition before wasting everyone's time.
Here is the definition, from the first paragraph of the source that you yourself posted[1]:
The United States homeownership rate represents the percentage of occupied housing units where the resident is also the owner. A constantly evolving figure, the United States homeownership rate currently rests at 65.2%, while renter-occupied housing units make up 34.8% of the national stock.
From this definition it trivially follows that a rented property becoming vacant increases the homeownership rate, because the vacant property (and the person who was renting) will both no longer be counted, at all and thus the total percentage of owner occupied units will increase.
At this point I'm not sure if you failed to read your own link, don't understand what "percentage of" means, or are just obstinately wrong, but regardless it doesn't much seem worth continuing does it?
The Census breaks the homeless population into two groups - those whom live in shelters and those who do not. They completely ignore the later. For the former, shelters are not considered housing units.
> "Census Bureau surveys do not collect data on the
population experiencing homelessness and living on the streets"
Delinquent debt is at the same levels will into the GFC starting in 2008. More like they are maxing out their debt and then ignoring the calls to repay them and the financial institutions are just delaying collection hoping this all blows over.
Delinquency Rate on Consumer Loans, All Commercial Banks (DRCLACBS)
https://fred.stlouisfed.org/series/DRCLACBS
Taking off like a rocket, people are strapped for cash and have been burning all their credit to survive. Mortgages are low for now, but once people run out of easy credit, which they have, mortgage delinquencies will rise. People are poor.
Hm, I think we may find chickens coming home to roost in the next recession perhaps. Obviously not because of variable rate mortgages, but we’ll find out if people stretched themselves too thin. I’m sure there are metrics about that as well but I think that’d be the best test.
That's not really how it works as far as I understand. Their are economic epicentres, and building near them means greater productivity and economic growth. The further out you get, the lower the ROI. The problem is, many cities in the west, controlled by an aging population of "haves" who bought when houses were the price of a sack of beans, feel that they are entitled to live in the same neighbourhood they purchased in. Incumbent homeowners are blocking new development, which stifles economic growth and creates a supply shortage, driving prices up.
You got one part of it right: building more solves the housing crisis. But if you built outside cities, you're asking new homeowners (read: young people who contribute the most to economic growth) to live increasingly far away from where the economic growth happens.
We are also legally entitled to that as well, this is how voting works. Community boards and local governments are intended to give people democratic control over the areas in which they live.
The problem is that people overwhelming vote for neighborhood stasis, which makes it completely unable to handle long-term changes in growth patterns. People always want to preserve their nice neighborhood, but they never see that a neighborhood that can't change is a neighborhood in permanent decline.
They are entitled to do so, but a neighborhood in perpetual decline is a neighborhood that will eventually die. It's kind of the opposite of people planting trees who's shade they'll never sit in. It's people preserving trees who's shade ONLY THEY will get to sit in. I don't think people are so heartless as to want their community to die after they're gone, they just don't see the long-term impacts of their desire for stability in the moment.
Why do you think the neighborhoods will die without more housing? I've watched wealthy neighborhoods in my city continue relatively unchanged for multiple generations. Once you have a thriving neighborhood, you don't need to continue changing things just to squeeze more people into it. What ends up happening (and I see this in some other neighborhoods, like my own) is that the things that made the neighborhood desirable (restaurants, retail, parks, affordable single family homes) get squeezed out in order to make room for more housing. The rents for the commercial spaces increase beyond what they could possibly earn. Once this is completed, now you have a bunch of housing in an area nobody wants to live in. People leave, then the area becomes blighted and the density gets torn down to build single family homes with yards...
This happened in my neighborhood in the mid-20th century - a huge, thriving, dense neighborhood was abandoned and destroyed as the industry in the area slowly failed. Buildings were turned into suburban-style lots, and over the past 50 years gradually gentrified and those empty spaces turned into more, denser housing. We're currently somewhere between the "local amenities can't keep up with the population" stage and the "housing is replacing commerce" stage.
If you've ever observed the sea of grey hair in a community input meeting you'd know it is not a representative democracy. People across many cities have voted in favour of change to the status quo, only to be met with non-democratic resistance from back channels and other apparatuses established by incumbent homeowners who have infinite time and seemingly infinite resources to fight the will of the people to preserve their fiefdom.
I've gone to those meetings. It was a mix of younger and older people, a diverse crowd. Felt representative of the neighborhood. Maybe it's just my neighborhood.
First, not all land is the same. The US coasts, for example, have much better income and job availability than sparsely populated cities in the middle of the country. In Europe, the size of the city is somewhat "fixed," depending on geography, transportation, etc. The same is true of some US cities, meaning that land is just more valuable that other land. That's why you see houses that are almost free in some cities, but those towns and cities are not the place where most people want to live.
Second is construction cost. A round number for the US is about 150 USD per square foot. So a 2,000 sq. foot house should be in the neighborhood of $300,000. (That does not include land, just the structure). However, in desirable cities this number is higher because labor costs are higher. In sparsely populated cities, that number is (of course) lower. This varies country to country, and in some space constrained cities, vertical is the only direction that you can build. (As one poster noted below, the $150/sq foot is only for single family. Multi-story buildings are significantly more expensive.)
But probably the biggest problem are artificial barriers to construction. The zoning system in the US, for example, prevents the construction of higher density in some areas. For example, a neighborhood can be zoned at 1 per acre. It's illegal to build a duplex, apartment, or to divide the acre into four and build four houses, etc. The zoning is set by a local board elected by homeowners in that locality. Being near high-density housing often lowers the value of existing homes, including making traffic worse and stressing the school system. (Also, to be fair, a sudden, large influx of new people, before the tax base and services catch up, can stress EMS, hospitals, fire, police, public transportation, sewage, water, electrical grid, etc. as well as just schools and roads).
Finally, there are builders, who would rather sell one large unit instead of lots of cheaper units. Building and selling a 1,000,000 USD home is cheaper and easier to manage than 5 200,000 USD homes. If you can only build one house per acre, or the space is constrained by geography, it doesn't make economic sense to build a 200,000 USD house. Even if space isn't constrained, the incentive is to build luxury, high end units as long as you can sell all your inventory.
Yes. Someone or something that man wants, made or desires is destroying the idea of housing for us. Not sure what it is, but there's a reason the largest, most empty countries are suffering the worst real estate problems.
It's absolutely weird to see land go for $1m for a small lot, then 10 minutes drive there are cows grazing on huge acreage. Then if you do a 10 minute flight in any direction you can see thousands of hectares of empty, good, liveable land.
In my mind I redefine the housing crisis in Canada as a business clustering problem. I think the percentage of attractive businesses that are concentrated in a few areas is too high. This comes in conflict with the human desire to not live in a sardine can. I would leave my city, but where would I work? My options to have a dignified life feel limited to me, especially in tech. Tech bros like me are pretty constrained to cities, which I really don't like.
That doesn't make any sense to me. Tech bros don't make physical goods. You and I can do everything remotely. There's no reason to live in a big city other than you chose to.
We can do things remotely, but trying to do complex things with lots of expert input and less-than-perfect management is _way_ harder to do remotely than in-person. We evolved to work things out with other people, not via a low-res video and slightly out-of-sync audio.
We all want more housing but zoning laws and NIMBYs prevent us from building proper urban housing. Yet there’s nothing stopping someone from building a 6bd/4ba house in my neighborhood and renting the whole thing out for $1600/rm.
Why doesn't the government build and sell housing at a small profit? Here in Dubai, the largest housing construction companies are or were government owned. It's one of the ways the government can have zero income tax despite oil being less than 1% of its economy.
My only thought is that it's political, and some voters don't want their houses to lose value.
Because of neoliberal policies. Some governments around the world did incentivise and even footed the bill for building public housing before neoliberalism took hold; for example the Swedish Million Programme [0] built 1 million dwellings between 1965-1974 where the government took the risk on 66% of the building costs to be repaid by tenants over 30 years.
This system of building houses was completely scrapped by neoliberals, letting the "market" take control of supply with the government taking a background stance of mostly zoning out where they'd incentivise building new dwellings.
I can see in a not-so-distant future talks about this kind of program being reignited in politics, the neoliberal approach has absolutely failed us.
> Some governments around the world did incentivise and even footed the bill for building public housing
I am not referring to building public housing. I am saying the government should build housing as if it were a for-profit company. Take those profits, and re-invest into building even _more_ housing. Don't try to sell to those in need, sell to those who are speculating on real estate and increase supply at the same time.
In the US no one trusts the government anymore and instead they want the private sector to do everything. But the private sector only cares about profit.
It’s also a good way to ensure companies can milk the government of money and then the head of those companies can lobby the government to keep things how they are so they continue to get that government money.
I believe the main issue with many US government projects is that they _don't_ care about profit. If they did, maybe we could have public transportation as good as that of Hong Kong[0]. This idea that pursuing profits as a public entity is not productive when it could benefit society as a whole does more harm than good.
Profit is inherently waste. It is value that is taken out of an enterprise and doesn't contribute to improving the product of the enterprise.
If there is surplus value it should stay in the enterprise and be used to improve the enterprise by improving processes or improving the lives of workers. Failing that it should be returned to the customers through lower prices.
One good thing about government services is they're more efficient because they don't have this value being extracted by uninvolved parties. That means they're able to provide better service or lower prices with the value that would've been sucked out by profit takers.
You seem to be a little confused about the nature of profit. If investors didn't expect to take out future profits then they obviously wouldn't put in the capital necessary to start the enterprise in the first place.
A lot of the value in government services tends to be extracted by public employee unions. Politicians make excessive commitments around wages, pensions, and job security in order to buy union votes and maintain labor peace. Then the politicians move on and future taxpayers are left holding the bag.
I'm afraid you're the one that's confused. Profit is defined economically as revenue minus expenses, and so the grandfather post's first sentence is correct.
What grandfather is suggesting is something like an ESOP, co-op, or etc. There are a long history of these kinds of organizations, and they thrive in free-market economies--unfortunately, nobody really lives in one of those anymore.
It is telling that you say public employee unions "extract value" by demanding the pensions/job protections that should by rights belong to everyone (and often did, in the past). Conversely, private corporations "extract value" from the labor marker by struggling to provide any job security, any retirement, or even anything resembling a living wage.
Just which sector is failing to be profitable, here?
You're welcome to start an employee owned co-op and build homes or whatever. It's completely legal and no one will stop you. There's nothing in our economic system that prevents them from working, but in practice they usually fail due to poor internal decision making. So I don't understand what you're complaining about or what point you're trying to make.
> If there is surplus value it should stay in the enterprise and be used to improve the enterprise
Profit is surplus value. The opposite of waste. Forcing it back into the place it originated versus letting it transport to the most-useful thing it can do is how you get sclerotic feudalism. Had we adhered to this philosophy during the Industrial Revolution, we would have just kept farming.
Telling voters that their tax money will be used to build housing to be sold to speculators will absolutely not work. Even if in the long-term that somehow could end up helping people, no one will vote for this absurdity.
You're asking for people to fund the infrastructure speculators thrive on with their money, on top of that you want to depress housing prices which another large cohort of society will vote against, politically your proposal doesn't make sense.
If you cared to read the Wikipedia entry I shared the approach the Swedish government took was to pay 2/3 of the new constructions and sell those houses to people who would pay them back in 30 years, it's not "public housing" as you assumed...
Aside from scale, it's pretty much the same thing but with the assumption that whoever is going to be buying is a friendly neighbor and not an evil speculator.
The land under UAE doesn’t have dozens or even hundreds of years of plot splitting and ownership claims too, there is just an enormous advantage to how new much of the county is and a government incentivized to grow. It does help that citizens form a smaller part of the population and that it seems like they get advantageous jobs and housing to keep them happy. Hard to compare to western counties.
Blame the nearby countries providing no jobs, no education, and no future for these laborers instead. Also don’t forget the hundreds of thousands of people from the exact same countries who gain respectable middle class, stable jobs in UAE that their home countries don’t provide. I’m not here to defend every decision that UAE has made but they’ve done a lot of good for people who come from countries with unspeakably shitty governments that deserve a lot more condemnation.
In the Roman Empire if you found a child that would otherwise die you could adopt it into your household as a slave since that was certainly better. Your logic is absolutely sound if you dispute the concept of human rights entirely.
The problem is you create a permanent underclass in the country since you take literally almost all rights from them. Including by the way the right to return where they came from.
Right wing activists and government have pushed the idea that government is hopeless, can't do anything and shouldn't try, and aggressively tried to make government as limited and as small as possible. This is often labelled "starve the beast" strategy.
They may well have a point, that government should only do things that only government can do, and that by declining to be involved they're leaving space for private businesses to operate.
But yea that's how we got here.
At this point any attempt for a government to be more intentional and interventionist would result in severe push back from the right.
Some governments are trying. In British Columbia, the government has changed laws to allow the arms length public transit agency to be able to buy and develop land around its transit stations.
That's because the state employs most people, they have an interest in keeping people's costs down. The people depend on the state for their livelihoods.
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[ 3.2 ms ] story [ 446 ms ] threadAgreed land is totally unique and should be handled very differently from other forms of wealth.
But let's just call them what they are: Trailer parks. I just don't see how trailer parks are going to solve the problem. You may have cheap land but if you put 500 trailers on a plot you're still going to need sewage hookup, power and water for 500 homes.
With tiny houses, you're going to get the opposite effect of the price being lower because if of the "tiny" aspect.
Don't make the mistake of equating inequality with poverty. Specialization is certainly a great driver of efficiency and wealth creation. This trade-off can be fine (in a rising tide floats all boats sense) but we have to keep our eye on the levers.
If you then urbanize, your inequality increases rapidly. But since we already have an urban, industrialized society, increasing density is not going to move the needle on inequality. It's arguable it'd move backwards because more people can suddenly live in a desirable area.
Logically I agree that this is a "distribution" or "social" problem, not solely "the fault" of urbanization (that is, the "correct" social policies ought to be able to mitigate the natural downsides).
Unfortunately, however, we have thousands of years of data in which no society has managed to discover what these correct policies are (or at the very least, they've been unable to be deployed at scale). This observation gives me some pause and causes me to re-evaluate some of my prior assumptions.
A poor reason to oppose urbanization, perhaps. But not a poor reason to oppose kneejerk urbanization without critical thought (a prevailing trend as of late).
Whatever the case, this force is a powerful one and should not be casually dismissed, even by those who believe workable solutions are (finally) imminent.
https://en.wikipedia.org/wiki/Missing_middle_housing
Efficient and healthy land use for housing was solved in the 1900s - we don't need tiny homes.
In England, row housing is quite common and that seems a good compromise between density and comfort.
I live in an apartment block in Spain and it's quite a lot worse than even row housing due to noise from neighbours, lack of parking etc.
It's okay for young people, but it'll be hard to raise a family in, which is probably partly why we have such low birth rates here.
In England, the new-build homes are often of a far inferior build quality to the older ones built after the war.
For some reason people believe that a little baby is the most noise possible and it's often used in such discussions as an evidence of complete sound-proofing of their dwellings. While people do instinctively get agitated from a child's screams the power of these screams is very low. This is why parents get baby monitors as the screams don't propagate well even between floors in a single-family house. Even adults, unless trained, can't scream nearly as loud as a 200W Bluetooth speaker. Get your neighbor upstairs to drop an empty barbell bar and see how you won't notice it. And in the US your neighbor can be dropping a 300 pounds barbell while having a party with people dancing with accompaniment of 2.5kW sound system, at 2:30 am.
All sorts of feasibility studies. Options.
And then out came the NIMBYs. "My grandkids play in the street and I'm scared they won't be able to anymore", "there's going to be cars parked everywhere on the street and we won't be able to find parking" (uh, you have driveways and garages, no?)
"What's this going to do to our property values?" This was the kicker. "Well the most conservative of our studies showed that it looks like we'd go from 11% YoY value increases to 8-9%."
Wow. You would have thought the city was pouring water in everyone's gas tanks, or assaulting their grandmothers.
"HELL NO. I have a right to double digit property value increases!" Even when the lower increases would still be in the top 20% of property markets in the country (and being clear, still an 8%+ ROI), no way in hell were any of those proposals going to pass.
And politicians love every dollar of price increase.
There’s the homeowners and the renters/serfs and nothing in between.
Dead society, nothing to aim for or live for.
Regular people own the overwhelming majority of homes, and they love every dollar of increase.
The finger pointing at corporations or politicians is totally misguided. It's the locals who collectively are invested in their homes and collectively (through the votes they cast) create the disastrous situation we are in.
Even the most bleeding heart liberal is all about "protecting the character of our neighborhood". Just look at San Francisco.
I love those green and saffron signs about welcoming refugees that they put in the neighborhoods where you can't touch property for under $2M. I want stickers I can slap on those signs that say "...if you can afford this neighborhood, lol."
What is he getting out of making these videos other than playing the populist game? Has he actually been verified to ever have been "Citi's top trader"?
If you told me 10 years ago how much I paid for it, I'd ask what the name of my butler is.
Sounds nice, but land/home values in the area I'd like to move to has nearly tripled in the same timespan.
I feel bad for renters priced out of the market, but many of us who have "enjoyed" the upside are actually deeply underwater relative to our preferences, to say nothing of the doubling of insurance premiums, and ~25% property tax hikes in the last five years.
To me this sounds like your city/state is just ballooning their budgets.
Proposition 13 did cause some distortions and needs reform. But it has at least been effective in stopping the former unchecked growth in local government spending and limiting the corrosive effect of public employee unions.
what do you mean by this?
Btw those disproportional numbers can be easily real anywhere in the world even in much bigger ratios, I can confirm them from Europe - if you want to invest in properties, location is absolute top priority as we all know that. Those properties appreciate faster than average market, don't suffer much drops in crises, and of course are at most desirable locations for whatever reason.
Page 7 for AVG sale price: 2019: $485,128 2022: $644,750 AVG build cost: 2019: $296,792 2022: $392,241
I see it in my parents that they're pretty comfortable staying in the family house as long as possible, I'm happy with this. It is made a lot easier by the fact that prices keep going up so staying in a house that is oversized financially is rewarding.
I'd like to think it'll all come to and end one day as the spiral reverses, but I've been wrong for so long now I'm losing faith.
There is a saying: „The market can stay irrational longer than you can stay solvent.“
Variable rate mortgages have varying lengths, and we will see the entire unfold in roughly 3 years.
Which is probably a mix of stagnant house prices and severe salary increases (for the ordinary person).
We are in a wealth dispersion period now (I think) - The ordinary people will catch up with tech workers, and high-salary epople (as in: reducing the number of multiples in the salary)
Here in Munich, they indeed are... and wherever possible, they and their often beautiful gardens get torn down, and the entire plot gets "densified" by creating as much indoor space as possible. What was one house for one family is now at least 6-8 apartments for DINKs, often built in shoddy quality with corners cut everywhere but priced and sold at record amounts (that still get paid because all the tech and car bros massively distort the wage market).
On one side, it's positive because the lack of housing is absurd.
On the other side, none of the surrounding infrastructure was built with that density in mind. Parking overflows everywhere because you physically (slope angle vs lot size) can't create enough garage spaces, traffic itself is getting more and more dangerous as the small streets have been built as tiny veins but now have to carry 2-3x the traffic load, public transport can't handle it as well, doctors/kindergartens/schools are on the verge of collapse, the grid operator doesn't allow PV or EV installation because all the density increase would first require a complete overhaul of the last mile distribution grid. And on top of that, biodiversity has taken a visible hit as all the trees and bushes getting ripped out and replaced by steel eyesores and yards being replaced by gravel so that the hipsters don't have to bother with mowing a lawn don't support insect life, so the birds vanish as well. No free-roaming cats any more either thanks to traffic.
Seriously, screw urbanization and gentrification. We absolutely need to revitalize rural areas again.
Covid-19 was effectively a massive experiment to test whether people want that, and turns out they didn’t.
There's obviously gonna be a shortage of such housing arrangements, and therefore will come at hefty prices everywhere.
On positiver notes, you had stuff like urban gardening increase in popularity [2], or sales of (e-)bikes towards people who went and biked to the rural areas.
And finally, WFH made it possible for a lot of people to give up their expensive city housing and move out into the suburbs... but obviously nowhere near enough to make a serious dent in demand, and RTO policies are creeping up and destroying even that bit of progress.
[1] https://www.news.harvard.edu/gazette/story/2022/06/shadow-pa...
[2] https://caes.ucdavis.edu/news/people-turned-gardening-stress...
That is a luxury Americans and Asians have, simply because there is/has been just so much unsettled land available.
Here in Europe, our cities are quite literally millennia old, some such as Rome dating back to the earliest days of recorded human civilization. It is incredibly difficult to retrofit anything there, and that's before you take archaeological and landmark protection demands into account.
Cities are dense and cities are good for the environment. Your dream of everyone living in the middle of nowhere and driving everywhere in cars would be an ecological disaster, far worse than these shitty Kleingärten that should generally be got rid of anyway, since, there's nothing biodiverse about Kleingärten, they're just monocultures that are privately owned. If we careed about biodiversity then we would rewild them.
I live in Hamburg, it could certainly be denser.
[1] https://www.zeit.de/news/2021-03/25/leerstand-auf-dem-land-f...
[2] https://www.demografie-portal.de/DE/Service/Blog/191028-Wohn...
Either intentional or unintentional, this has the effect of increasing demand and with interest rates high supply is constrained.
For specific USA numbers:
There are 18.7 million 65-69 year olds.
There are 21.1 million 60-64 year olds.
There are 22.3 million 55-59 year olds.
Etc... You can't have one demographic retire/die off and everything is cheap again -- because there is always another demographic moving right into their place all the time.
You are right, but I think in the 10 years lots of the 55-59 people die off so wont be larger. Then the pyramid shrinks.
I think this probably has decreased house prices to some extent, but people are really insanely reluctant to sell a house for less than they bought it for so lots will wait for years before accepting the change.
It's probably good times to be buying an ex-rental to live in and getting better as mortgage rates fall.
The exact impact is a little hard to work out, because, at least in Paris, it's also coincided with apartment owners wanting to hold on to empty apartments to rent them for the Olympics rather than to locals.
0: https://www.connexionfrance.com/practical/timetable-for-new-....
Sounds like something that can be fixed with laws.
Edit: would you mind explaining your downvotes with arguments please? thanks.
I'm not French but IMHO, Airbnb style short term renting for tourst purposes should come with hefty taxes because housing should always prioritize the locals who live, work, have families and pay taxes there, not wealthy foreigners on vacation.
Sucks for them I guess. Maybe they should have diversified and invested in stocks or bonds instead of going all-in in housing-for-rent "investment" and complaining it doesn't turn up to be a huge profit making scheme like they expected, and expect the government to cover their losses.
Someone's housing shouldn't be someone else's for-profit side-hustle gamble. It's why housing is such a mess in the first place.
You can't have housing be affordable AND provide hefty profit returns in private pockets at the same time. Those will always be in contradiction at odds with each other in capitalism.
Honestly, I expected better from the socialist French, that they would have solved affordable housing for the masses.
I agree, income from property should be heavily taxed, it's essentially private profit from the land value, and that value derives directly from it's location and the strength of the local economy, rather than any effort or contribution from the owner.
Anyways I don't have an opinion about this, just wanted to answer why would people protest - because it's not some faceless corporation but them directly you're taxing.
Owning 1 apartment is completely different than owing 5 apartments in the same city. You can live in 1 apartment but you can't live in 5 at the same time. You're profiting off the other 4 ,so you should pay tax for it.
Many apartments that are being rented are those that house people otherwise, Paris being very well known for emptying out in July/August. For those that are being held back to rent, it can probably be hard to know what's the truth, "we didn't find a tenant" versus "we didn't want to find a tenant."
Also, I think there's also a benefit to the government, as they want to have this empty short-term housing stock available for tourists coming in. A lot of money is being invested in the games, it's important to get the tourism money to make it profitable.
In the UK, if a private landlord receives £1000 in rent, and pays £800 in mortgage interest, they pay tax on the whole £1000, not just on the money they made.
There are reasonable arguments on both sides:
A) Why should a landlord be able to deduct mortgage interest from their income, for tax purposes, when owner-occupiers cannot?
B) Why should a landlord be unable to deduct business expenses from revenue before calculating taxable profit, when all other businesses can?
C) Why can homeowners deduct mortgage interest costs, whilst renters cannot deduct rent costs?
I think you nailed it. This is effectively the government saying "renting is not a business".
Think about it. The ability to "deduct expenses" is one of the characteristics of businesses. Individuals also can't deduct rent, food etc from their taxes.
In the UK, the borrower is on the hook for the full amount of the loan.
Nothing about that has changed recently.
The recent reforms did swap out some landlords for homeowners. It didnt undo the war on affordable housing it just prevented landlords from profiting as much from it.
Which is a good thing, even if some media outlets owned by landlords do like to pretend that euthanizing the buy to let landlord is bad renters.
If a mortgage is recourse, and your home price has fallen enough - yeah, you have a pretty big reason not to sell.
Especially if your alternative is to pay more monthly for a worse rental (often the case).
I'd personally bet that there is a gentle imbalance appearing between how much energy the average person can lay claim to vs. how much they need to build and service a house and this is a symptom of the energy squeeze. But it might not be and this article isn't doing much to prove or disprove what the actual problems are because we need more information to make useful observations.
But there is investor demand for an investment vehicle that has the tax and asset benefits that homes offer.
The consequence is that the buying power in the market by humans-who-need-a-place-to-live is relatively weak when they compete against financial investment corporate entities.
It is certainly possible to have situations where someone chooses to leave a house empty. If it is happening at scale then that suggests either tax or rental law is doing an unacceptable level of damage. Otherwise, why leave the house empty? It is giving up free money.
They may have such an incentive. In an idealized market where everyone has perfect information, they wouldn't, but we don't live in such a market. In practice, it may be more profitable to leave a house empty to drive up rent on your other properties, and to save the maintenance costs that tenants would bring, especially if you can indirectly coordinate with other large property owners: https://www.propublica.org/article/yieldstar-rent-increase-r...
I'm not seeing it, rent is usually far in excess of maintenance costs. Run me through how this works. Say I have an empty house, maintenance costs for tenanting it are $5,000 and I have Dan the Desparate who will rent it for $10k/annum, and for the sake of argument his next best alternative is homelessness.
What external circumstances exist here where I'm going to be better off not letting him use the house? Something like not being able to evict him on demand I can see being a factor, which is specific to the deal. But I don't see how what I do here could affect the rent any other properties I might have. I'm don't see how Dan being homeless can serve my interests here.
I hear people who are already in the top 1-2% in income are told their borrowing power is only A$1M (~U$660K) while houses at all worth raising a family in cost A$3-6M. Banks don't seem to want to lend to them because they could instead lend to yet another property investor that already has a portfolio full of equity and collateral. The houses will sell and the mortgages will close, the banks can afford to be picky.
If you work in tech non-remotely, you're looking at the high end of that because you're competing with everyone else working tech, heavily weighted towards Sydney, and the rest of the country's housing supply is largely irrelevant. The cities certainly aren't designed for car commuting, so the supply of locations is further narrowed to places that are either so close they're walkable or have good public transport.
To my US readers I cannot emphasize enough how much this limits people's options both ways. When you have a non-remote job it limits your housing options, and if you're lucky enough to lock in a house, now it's limited your employment options in return. This isn't great for housing or employment markets. I'd like to think remote work has helped some people, but the most career-focused people I know are sticking to in-person connections, competing with everyone else doing the same.
Meanwhile cashed-up investors can buy up several houses and neither live in them nor rent them out. They're taking supply away from both the buying and renting markets, which is their legal right and a smart move on their part, but totally dysfunctional for the market as a whole. Anyone who does buy a house to rent it out is doing their small part to make buying less affordable but make renting more affordable, making it just that little bit less likely that the next person out there is a buyer of any kind.
Of course there's been doomsaying about a housing bubble pop for decades, especially during the world-famous pandemic lockdowns. Nothing popped and the exponential runaway pricing continues. Surely it's getting untenable enough to pop somehow, if my successful friends can't buy houses then I don't know who's left in the market except the real estate investors themselves.
I honestly don't see how I can un-expat now, and I'm just counting myself lucky to own property in the USA. If I want to keep this sweet deal, my options for moving are more limited than they've ever been, but it looks like a lot of people would gladly sacrifice flexibility to have anywhere near a tenable deal on housing.
Our biggest software employers are banks and real estate companies. Everyone I've worked with in my career has worked for REA or a bank at some point. There's no innovation, just property investing.
As long as every newspaper in the country keeps running stories about some dipshit 20 year old magically buying 6 houses with a paper route, it's impossible for it to ever change.
It’s very sad. Australia used to have a somewhat egalitarian mindset, but this is creating such a massive generational wealth and class divide that gets wider and wider every year. No one seems to understand the damage their quest for parasitic income is doing to society.
1.hyperconsolidation in lenders
2. Real estate orgs have worked together to eliminate downward price pressures.
3. NIMBYs and generally “home ownership associations “ have created so many barriers to building & reaped the profits in their own home values.
Some good news is that most populations are slowing or declining on the globe, and that ought to be a substantial risk to mass ownership, but that will take 20years to manifest.
The time for selling is on the 2 digit months, but the price of any small apartment is out of the reach of 95% of the people that live here if they save for their entire life. Anything that isn't small is out of reach of more than 99%.
- Cities across the world built thorough sewage systems, preventing the need for private citizens to empty their litter buckets out the window – a large river in Chicago was even reversed!
- Cities across the world built mass transit networks, enabling citizens to move around efficiently without relying solely on private vehicles.
- Cities across the world should build affordable housing networks, as Vienna did. This way, citizens don't have to fall victim to the exploitation of speculators and distortions of the supposedly fair market.
Public affordable housing is a necessary infrastructure, just like sewers and transit, to create livable cities for all residents.
How do residents, by definition people who already reside there, benefit from public affordable housing?
If you’re a resident that already owns their home, and has absolutely no unfulfilled housing needs, you will benefit from a more prosperous society with less people struggling and more equality - and that’s a positive on its own right.
(along with its positive knock-on effects)
In fact, it’s the very goal this measure aims to achieve.
https://news.ycombinator.com/item?id=40489250
check the timestamps :p
> the measures mentioned in the article — lower interest rates, lower transaction fees, down payment subsidies
Maybe it's like that in America. In EU, where the investment 'culture' is different, there are hordes of people not knowing what to do with their money and buying homes only to sell them at a higher price (flippers). Case in point: Poland, where the housing market is quite bonkers - especially in big cities.
Just having a flat rule against corporations owning property will likely reduce the number of rentals available and a reduced supply will lead to higher prices.
Affordable though? Apparently not. I mean if you have a lot for development are you going to build a $200K home or a $600K one on that lot?
New housing units permitted: https://fred.stlouisfed.org/series/OMAH531BPPRIV
Population Omaha (note: change in statistical area): https://fred.stlouisfed.org/series/OMAPOP
Housing starts per 1000 residents: https://fred.stlouisfed.org/series/OMAPOP
We need laws against corporate ownership of residential housing, simple as.
for one the "ghost towns" of China are in places no one wants to live, the complete opposite of what the US (or anyone) needs to do
I dream of a 100% tax rate on second homes, foreign ownership, and corporations owning single family homes and condos. Or even better, make it illegal. But any politician who pushes such a bill would immediately get removed from office and the law repealed.
That is not true unless you consider having a mortgage equivalent to renting from a bank.
What is true is that in some metro-areas like Atlanta, 1/4 of sales (in certain price categories) are to investors.
Financial speculation happens because people believe (reasonably) that the price of a home will increase. Why do they hold this belief? Because the demand has increased while the supply is kept artificially constant.
That's what's so frustrating about all of this -- it's a complete own goal. If we all collectively do nothing at all, developers will move in to capture the consumer surplus. It will be profitable to build, not buy and hold.
The value of currency went down significantly, i.e. actual inflation is massive. Salaries didn't go up as much, not even close, and here we are.
>inb4 ...
It's definitely a global issue, rising population mixed with late stage capitalism.
These things are worth what they always were, FIAT currencies have lost value.
This makes them even more of a trap. The rents will go up. And yet, even more jobs will leave those places. And then you haven't saved up, because the amounts were tiny
So no, it's not a matter of "nicer places".
Fixing senior living options will create inventory in the market and give seniors better choices with an active community.
One option could be if you’re going into a government run senior living center you need to pass that money down to whoever was going to inherit it/receive it through donation. And that has to be a taxable event to cover the cost of the subsidy on senior living.
People would hate that option because no one likes taxes but the private market is not getting us where we need to be. If people don’t like the option, no subsidy for them and they are free to figure out their own senior care. That money goes surprisingly fast.
For "fun", most states publish nursing home reports. In the county I work in EMS, there are probably only two that have only either minor or no infractions. Every single other one has major / patient/resident risk infractions. Often around minimum staffing levels. Perhaps pay your CNAs above minimum wage, your LPNs above $20/hr, and so...
Seniors can pay for that, especially after selling a house.
Oftentimes those same Boomers in business own retirement/senior living/nursing homes. And while generalizing, the fuck you, got mine attitude means that nursing staff get paid a pittance, and oftentimes they're abusing the 911 system (multiple homes around here have a "policy" to call 911 for anything worse than requiring a bandaid - they won't let their nursing staff evaluate or treat patients for ... reasons ... - so we (paramedics) get called multiple times a day for little more than first aid, if that. Meanwhile, out front of the nursing home is a big billboard, "Round the clock nursing care!" and they're sending bills to the residents/families that reflect that, while you have CNAs and an LPN or two barely meeting staffing mandates, if they even are, who are unable to do anything).
Yea, renting has some advantages. However in my view many people are simply too poor to spend that kind of money on the convenience of not managing a house. Is it more work and liability to own a home? Yes, definitely. However i was looking at throwing away $168,000 when i was renting over the next ten years (assuming no price fluctuations, which also doesn't happen lol). I couldn't afford to spend that kind of money on convenience.
Plus there's America's (imo bad) idea that home ownership is an investment. Unfortunately, my home has doubled in price. So not only could i not afford to waste the money renting before, but now i've made significant money by simply not renting before. Where as i'd get the privilege to lose even more money by renting if i had stayed where i was before, since the rent has gone up - many times.
Is there another angle i'm missing? I rented for years, and now have owned for ~8 years or something. Renting has upsides, yes - if you've got the money. I don't think most people do, especially these days. Is there an argument i missed?
If you don't mind me asking, how much will borrowing cost you over the same 10 years?
Do you want to wait 20 years?
Vienna is an example: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
The reason housing costs are so high is that there are too few homes and thus landlords and homeowners charge outlandish prices because people have little recourse but to pay since they are so few options.
Personally, I like the problems you end up with in market system that has sufficient supply (which we don't particularly have).
Local government through zoning codes act as cartel limit the supply of homes which work to increase prices.
The financialization of homes is a direct result of government programs.
Leftist dreams of a government funded social housing utopia in the United States and the UK are just that: dreams. Reforming zoning on the other hand will strongly encourage developers to quickly add higher density housing in job rich urban areas.
https://www.semafor.com/article/05/23/2024/is-congress-havin...
There is no solution that doesn't involve building lots more houses.
The reason Home Ownership is desirable is that the pricing of houses go up faster then both inflation and depreciation caused by wear decreases the utility value of a dwelling, and the reason that houses are expensive is that the state actors are invested enough in this cycle to make sure it never really breaks.
In a real functional market there would be no real benefit to house ownership over long term leases. but were dealing with a market thats been deliberately broken by policies promoting home ownership for reasons that's fundamentally religious/dogmatic in nature.
Rights come from your contract with whoever hold power not "property ownership"
There is yes some cases where owning is giving you a better deal then leasing in terms of rights and obligations but this is not an universal truth and not the reason house prices consistently rises faster then inflation and average disposable incomes that have nothing to do with the utility value of property as an dwelling.
Ie if we were to go back to an scenario where home properties lost value as the loans were paid off and things got old and worn there would be no crisis, the issue is that the way that currency and banking intersect makes prices keep rising.
Rights of property ownership is always a superset of the rights of renting property. It is not a false argument.
In the same vain the government(and some wery much do) can set pretty strict rules on what restrictions a private landlord can put in rental agreements and that's before you remember that the government itself have historically been the largest owner of rental properties.
In the old days before the idea that owning a house was a ticket into a higher strata in the class system a lot of the problems now caused by unreasonable housing prices was solved by the government acting as the reasonable landlord, essentially curtailing the amount of shenanigans some wannabe aristocrat could get away with before going bankrupt from people not putting up with the abuse.
In a pure "realty don't matter" libertarian mindset your of cause right that property rights are always supreme but in the real world it's always a balance of power and negotiations especially once we deal with urban communities(which is the only ones where property prices are a problem).
More precisely, there would be no net financial benefit to home ownership over long term leases, so people would use the free market as a tool to naturally sort themselves according to their non-financial preferences: people who valued the non-financial benefits of home ownership over the non-financial benefits of renting would own homes, those whose preferences were the reverse would rent. That would not mean nobody would own the homes they live in.
No.
No.
The reason it's desirable it that I've lived in three flats in three years because subsequent landlords wanted to sell their property. I don't want to buy because it's a good investment, I want to buy so I can actually settle down in an area, and not be constantly moving.
1. There are a ridiculous amount of abandoned properties, when I walk the streets of major cities, sometimes more than half of the buildings even in expensive areas are boarded-up.
2. Meanwhile I am afraid of being homeless soon, I lost my job recently, and the unemployment benefit I can receive is literally half of my rent. Thing is, there is no "worse but cheaper" place to move to. I already live in a "0" apartment, with the "0" referring to the number of rooms. The apartment is literally just an empty square with kitchen sink and bathroom stuff. I don't even have my workstation anymore because literally there is no physical place for it inside the apartment.
People are like: "Build more homes". Yet the amount of abandoned properties (by the way, this also include abandoned farmland! Government is upset that there are tons of that, and the result is land with zero management, with wildfires, poachers, drug traffickers...) is greater than the number of families needing.
- join a group of squatters (hopefully you already know someone) until you get your bearings. The less ideological ones often squat old industrial properties, or long-abandoned houses (its rough in winter, but in Portugal you should be fine). You might meet some Urbex guys, they're nice and always fine with finding squatters.
- Live in a "big enough" car. You absolutely need to rest on a completely flat surface. I knew someone who got the back seats down and put a wooden plank on it. If you're less than 1.80 and don't move on your sleep, you have a lot of choice (the diagonal is nice), else it might be a bit more expensive.
A very short-term solution is squatting with a close friend, but you shouldn't abuse it too much, it strains relationships.
These inholdings, both impoverished and not, were each having their respective parties (cheap beer in common) along the lakeside. Titties abounded - "howdy neighbor" - the no-betterness of being "commoners, enjoying this day upon the lake."
Interestingly, the poverty beach camp seemed to be having more fun; but obviously the multi-million $$$ homeowners are in much easier/better situations (likely).
"What am I gonna do about it!??" is a common way I've heard this sentiment expressed.
[0]https://en.wikipedia.org/wiki/ZAD_de_Notre-Dame-des-Landes
I probably couldn't "hack it" out in the wilderness of NAD, but always regret having not joined a hippie co-op (living situation) while in college [I once dated a gal living in one... it was so neat and inexpensive, but she was a sloot].
I somehow completed my BS(chem) without ever taking a college math class, under a teaching scholarship.
Then I dropped out of grad school, unprepared for reality.
--
To where has your last decade enriched you?
Lol, it really is true that "civilization" is three meals away from being kaput.
Where do the more ideological ones go? and what ideologies are we talking about here
Of those single family homes there is one that was owner-occupied for a year when we moved in. Since, it's been locked up and has had no renters. The couple that own it own several properties across my city, which I came to know as I got to know one of the owners while they lived here. It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter. My owner-occupied mortgage costs me somewhere around $2600/m, I can't fathom paying two with one at a higher interest rate. Apparently this situation is common around my city.
On the other hand, and a bit non-sequitur, is two homes will likely become dense housing. They're foreclosures of properties that were inhabited by meth addicts. The whole property from the building to the soil will need to be removed for various reasons. At auction the properties were purchased for the average sale price of a home of that size that had no pre-existing issues. It won't be the kind of housing people need though, if I'm a betting man; my city has plenty of SROs (single room occupancy) but they're at the wrong price point. They're now called "lofts" and "studios" with a price tag to match. What will be lost is two 50+ year old homes, and likely the ability of our street to tolerate the traffic it was designed for as another issue is the city not investing in road-building and maintenance on our street.
1: https://prp.fm/biz503-portland-building-density/
In the USA it is happening all the time because, surprisingly, landlords have little skin in the the game. LLC is the name of the game. Each investment property is "owned" by its own LLC that bares 100% of risks and liabilities associated with the property and shields the landlord from the creditors. The property is financed entirely through commercial loans from the banks or other lenders. If the property does not generate enough profits for the landlord they quietly take all the liquid assets out of the LLC and stop paying their loan and property taxes. It takes long time (often years) for banks and local governments to start legal proceedings against the said LLC. During this period of time the property is sitting there boarded up. Finally the LLC files chapter 7 -- liquidation and all its assets, close to zero at that time, are given to the creditors.
You may ask why the banks give loans to such high risk entities? First of all, if the property is bringing profits the loans are being paid of and it is the majority of the cases. Secondly, if the loan fails the banks do not have much skin in the game either. They slice and dice the loans and package them into "real estate investment vehicles". Then they sell the packages similarly to how they did it before the financial crisis of 2008. The terms and abbreviations are different now but the gist of it is still the same.
EDIT: typos
I do know a few retirees who rent-out the home they raised their family in and live in a new primary. But my town also has some developers who build and rent.
Buying makes a ton of sense if you're going to live somewhere for a long time of course, but if you start out not sure and you have a nice landlord that doesn't take advantage of you with perpetual rent increases every year, then it can make sense to ride it out and invest your "inflated" income every year instead. By the time the tenant moves out, they have a nice portfolio to leverage for a new property and the landlord has gotten a decent return on their investment with a stable tenant.
In this scenario, it seems to me that main driver of disparity in our society is landlords' push to always increase rent even when the mortgage is being paid 2x or 3x over each month, just because it's allowed.
I'm not saying we need rent controls necessarily as a way to fix the problem, but that is one problem that rent control solves. Perhaps paired with some other scheme (3% max increase per year for first 5 years of renting, then capped at 1%?) we could find a more equitable way to account for inflation of repair costs while not screwing tenants with "forced" moves every few years when the rent becomes unaffordable.
Oh, and don’t forget that they’re paying interest on the mortgage and that - when adjusted for inflation - the actual increase in value versus what they’ve paid in in mortgage interest over the years is probably far less than the non adjusted gains it looks like.
It’s pretty easy to demonize owner landlords when you’ve always been a renter because you think only about a monthly payment. I’m not going to tell you that’s it’s a relative luxury to be fixated on one simple payment each month, but it’s also not the case that owning a home as an individual is some kind of pot of gold.
An owner that values their tenant and keeps their rent flat isn’t a saint. But they’re also doing a good thing in a time when they could be - by account of this thread - exploiting people for as much as possible. We don’t need to order them a parade, but it might be worth broadening your understanding of what the cost of a home is before you blanket assume they’re worthy of scorn.
Maintenance is just not an argument. Unless you choose – yes choose – to rent to destructive tenants, or in other ways are irresponsible with your property, maintenance cost is a tiny fraction of what you get from rent. The same for insurance, taxes, etc that you list. Nobody is unaware of these costs.
With that said, I'm not demonizing over these landlords. I'm sure they're fine people and could be worse like you say.
A renter should not be any more grateful to the landlord than a worker should be grateful to the shareholder for paying their salary. It is an exchange. I do think it is better when homeowners at least rent out their property instead of just letting it rot abandoned like many choose. The most decent thing of course would be for them to sell property they don't need and we wouldn't be living in this dystopia from the beginning.
The youth of the industrialized nations are vanishing on a grander scale than ever seen - for petty gains to a few. And those gains will be short lived when the economy folds in on itself due to the impossibility for productive people to have a home. In the end you cannot have an extremely highly skilled workforce that is needed to sustain a modern economy, while at the same time keeping them dumbed down enough to accept total life long exploitation and their own genetical extermination.
All true, but there can be a lot of "quality of life" variance in how that exchange is implemented in practice. I've been a tenant a couple of times and now had a couple of tenants myself. Landlords can make things more or less difficult while offering the same agreement, and tenants can make things more or less difficult while complying fully with the same agreement.
I'm grateful whenever someone chooses to do better than the bare minimum required by the agreement. If anyone reading this takes good faith for granted, I urge you to at least read horror stories on reddit.
This may easier to explain than you might expect. Anecdotally, the people I know in a similar position own all those properties free and clear, there is no mortgage. Consequently, the carrying costs of that empty house are quite low and easily afforded. Also if the mortgage is very old. I know someone with a single-family home in Silicon Valley they don't live in with a mortgage of ~$1000 per month; you can imagine how low the property tax bill must be.
While I am sure there are people with several rental properties mortgaged to the hilt, I don't think it is that common.
> The couple that own it own several properties across my city
Without knowing which city you’re talking about I can assure you this is rather common.
The moment a property becomes just one out of many (assets) in your portfolio your necessity to let becomes a mere annoyance.
Many of the housing market imperfections could be at play here, but it certainly doesn’t help that renters are increasingly unable to afford to become first time buyers.
There always seems to be this common thread running through these discussions, but few want to address it. It's just build build build, moar moar moar. The problem isn't that there aren't enough homes. The problem is that so many homes are owned by so few people/entities and are often vacant. We shouldn't allow people (often foreign investors or private equity firms) to buy a home, leave it vacant, and sit on it as an investment as if it were a bar of gold or something.
They probably have an owner-occupied residential mortgage that the bank (/note purchaser) hasn't called them on. Declaring that you're residing in one unit (either falsely or temporarily) seems to be a pretty popular technique for buying rental real estate. If the mortgage was taken out during the past two decades of ZIRP, then the rate is still fixed at something very low and most of that monthly payment they're "floating" is effectively just going towards the principle as a mandatory savings account.
To be fair, the vast majority of cities need to be investing in non-car transit more than auto infrastructure. Yes, probably even Portland.
Under new law, the Portuguese Golden Visa no longer provides Residency status through Real Estate investments.
[1] https://www.portugalhomes.com/golden-visa-portugal
The golden visa is just a fast and convenient way to get a foothold in the country and do further investments. And what would these investments be? Probably AirBnBs...
This is supported by data presented in [1]: >90% of golden visa holders acquired it via real estate investments. Now, would anyone pour their life's savings in a single property investment in a far away land? I would say no. So these golden visa holders are probably very well-off and they will continue "investing" in real estate, and expecting returns on their investment. Which translates to more AirBnBs.
[1] https://getgoldenvisa.com/portugal-golden-visa-statistics#ft...
Found this article that indicates Golden Visas account for 14,500 of approximately 600,000 home sales per year in Spain. [0]
[0] https://www.idealista.com/en/news/luxury-real-estate-in-spai...
To sidestep the whole "can we trust each other?" issue the owners may want to sell the property instead of dealing with tenants. Properties go to the market at inflated prices, because every house owner in the country hopes to sell to mythical "rich foreigners"* they hear so much on TV and online. Local buyers are essentially priced out of the market because the price-wage gap is simply too wide, one of the widest in the world. An average Portuguese family with two incomes can't afford a two-bedroom apartment even at a 30-year mortgage, even if we're talking about cities other than Lisbon or Porto.
So, properties stay listed for sale for years and years, owners do not maintain them in hopes of making a sale "soon", and buildings slowly degrade. Eventually owners realize they need to invest a lot of money to keep the house presentable, the money they usually don't have, and they start to lower the price way down. As a result, the market is split in two big distinct categories: something livable at exorbitant prices and places that need a lot of investment to even start living there. Like a GP comment said you can walk on a street and more than half of places are clearly unoccupied, with many of them slowly turning into ruins. If you want to describe a Portuguese urban landscape in one word the word would be "decay".
Meanwhile rent marked is under-served. All this is further worsened by the internal migration pressure. Lisbon, Porto and all towns on a narrow shore strip between the two are growing rapidly in past 30 years while the interior areas are getting deserted. Portuguese move to places where jobs are and developers can't meet the evergrowing demand.
*I recall I saw a stat that foreigner buyers account for only about 0.2% of sales each year.
* $53.3B purchase volume
* 84600 foreign buyers (1.8% of total)
* Buyers are recent immigrants (<2 years) or non-immigrants
* Top buyers are from China (13%), Mexico (11%), Canada (10%), India (7%) and Colombia (3%).
https://cdn.nar.realtor//sites/default/files/documents/2023-...
Portugal has started offering financial incentives for restoring properties, but I'm surprised this is a factor in Major cities, which ones do you see this? Is it also an issue in Lisbon?
The reason there were so many derelict properties was a law in Portugal that prevented landlords to increase rent unless tenants were moving. Some tenant who had been renting for decades paid less than $100/mo. No wonder why landlords had no incentive to fix this. This has now changed, I think?
It's certainly a combination of various factors.
The low borrowing costs of the 2010s combined with high inflation make it a no-brainer to hang onto these properties. Figure, someone bought one of these properties for US$500k at 4% interest in 2015, after 10 years, that property is probably worth US$1.3-1.4MM and is growing at well over US$100k each year, while the 15 year mortgage payments amount to amount to only US$45k a year, plus property taxes.
So yeah, these buildings make serious money even left empty.
It's unlikely that taxing these properties is going to force people to sell. Housing inflation is so high that taxes would have to be oppressive (six figures a year) and that's a hard to get legislators behind (most of whom are participants in this problem).
For foreign investors, these properties are basically insurance policies. If they are forced to flee their home country, they'll land in a somewhat stable western democracy with enough capital to land comfortably on their feet. So there is a proportion of people who would make this investment even if it lost them money.
There's also the problem of shell games obscuring ownership to the point that nobody really knows who owns the property. So long as the taxes are paid out of an anonymous escrow account, the government isn't going to care about them.
I also see a lot of empty properties for years on end in the middle of town.
If there are places owned that aren't in use then the political solution seems pretty easy: tax property ownership massively when unused. Make unannounced visits to properties to see if the owners claim of having a property that's lived in is true.
Otherwise it doesn't make sense that prices are high for a good (housing) whose primary input (land) is in great supply.
If you have a high tolerance for crime and other antisocial behavior there is plenty of extremely affordable housing in major US cities with plenty of amenities like walkability and public transportation.
https://www.propertyshark.com/info/us-homeownership-rates-by...
How does someone owning (and living in) multiple properties effect the homeownership rate? They count multiple times!
How does someone renting out a bedroom effect the homeownership rate? Their tenant doesn't count! This includes adult children.
You can not use this metric in the way that you just assumed you could.
https://fred.stlouisfed.org/series/HOWNRATEACS006085
> Housing Unit. A housing unit is a house, an apartment, a group of rooms, or a single room occupied or intended for occupancy as separate living quarters.
> Homeownership Rates. The proportion of households that are owners is termed the homeownership rate. It is computed by dividing the number of households that are owners by the total number of occupied households.
> https://www.census.gov/housing/hvs/definitions.pdf
When we get to the bottom of this we should edit the Wikipedia article if I am wrong.
> The name "homeownership rate" can be misleading. As defined by the US Census Bureau, it is the percentage of homes that are occupied by the owner. It is not the percentage of adults that own their own home. This latter percentage will be significantly lower than the homeownership rate. Many households that are owner-occupied contain adult relatives (often young adults, descendants of the owner) who do not own their own home. Single building multi-bedroom rental units can contain more than one adult, all of whom do not own a home.
> https://en.wikipedia.org/wiki/Homeownership_in_the_United_St...
You could at least read the comment you’re replying to before calling its poster a liar.
At this point I'm not sure if you failed to read your own link, don't understand what "percentage of" means, or are just obstinately wrong, but regardless it doesn't much seem worth continuing does it?
[1] https://www.propertyshark.com/info/us-homeownership-rates-by...
> "Census Bureau surveys do not collect data on the population experiencing homelessness and living on the streets"
> https://www2.census.gov/library/working-papers/2024/demo/seh...
https://fred.stlouisfed.org/series/DRSFRMACBS
You got one part of it right: building more solves the housing crisis. But if you built outside cities, you're asking new homeowners (read: young people who contribute the most to economic growth) to live increasingly far away from where the economic growth happens.
It's not a feeling, it's how purchasing things works.
> It's not a feeling, it's how purchasing things works.
He means that people feel they get to control the neighbourhood. Exercising control over property they don't actually own.
This happened in my neighborhood in the mid-20th century - a huge, thriving, dense neighborhood was abandoned and destroyed as the industry in the area slowly failed. Buildings were turned into suburban-style lots, and over the past 50 years gradually gentrified and those empty spaces turned into more, denser housing. We're currently somewhere between the "local amenities can't keep up with the population" stage and the "housing is replacing commerce" stage.
Second is construction cost. A round number for the US is about 150 USD per square foot. So a 2,000 sq. foot house should be in the neighborhood of $300,000. (That does not include land, just the structure). However, in desirable cities this number is higher because labor costs are higher. In sparsely populated cities, that number is (of course) lower. This varies country to country, and in some space constrained cities, vertical is the only direction that you can build. (As one poster noted below, the $150/sq foot is only for single family. Multi-story buildings are significantly more expensive.)
But probably the biggest problem are artificial barriers to construction. The zoning system in the US, for example, prevents the construction of higher density in some areas. For example, a neighborhood can be zoned at 1 per acre. It's illegal to build a duplex, apartment, or to divide the acre into four and build four houses, etc. The zoning is set by a local board elected by homeowners in that locality. Being near high-density housing often lowers the value of existing homes, including making traffic worse and stressing the school system. (Also, to be fair, a sudden, large influx of new people, before the tax base and services catch up, can stress EMS, hospitals, fire, police, public transportation, sewage, water, electrical grid, etc. as well as just schools and roads).
Finally, there are builders, who would rather sell one large unit instead of lots of cheaper units. Building and selling a 1,000,000 USD home is cheaper and easier to manage than 5 200,000 USD homes. If you can only build one house per acre, or the space is constrained by geography, it doesn't make economic sense to build a 200,000 USD house. Even if space isn't constrained, the incentive is to build luxury, high end units as long as you can sell all your inventory.
It's absolutely weird to see land go for $1m for a small lot, then 10 minutes drive there are cows grazing on huge acreage. Then if you do a 10 minute flight in any direction you can see thousands of hectares of empty, good, liveable land.
(This is in Australia)
My only thought is that it's political, and some voters don't want their houses to lose value.
This system of building houses was completely scrapped by neoliberals, letting the "market" take control of supply with the government taking a background stance of mostly zoning out where they'd incentivise building new dwellings.
I can see in a not-so-distant future talks about this kind of program being reignited in politics, the neoliberal approach has absolutely failed us.
[0] https://en.wikipedia.org/wiki/Million_Programme
I am not referring to building public housing. I am saying the government should build housing as if it were a for-profit company. Take those profits, and re-invest into building even _more_ housing. Don't try to sell to those in need, sell to those who are speculating on real estate and increase supply at the same time.
It’s also a good way to ensure companies can milk the government of money and then the head of those companies can lobby the government to keep things how they are so they continue to get that government money.
[0]: https://www.youtube.com/watch?v=ELy9fOX8vtc
If there is surplus value it should stay in the enterprise and be used to improve the enterprise by improving processes or improving the lives of workers. Failing that it should be returned to the customers through lower prices.
One good thing about government services is they're more efficient because they don't have this value being extracted by uninvolved parties. That means they're able to provide better service or lower prices with the value that would've been sucked out by profit takers.
A lot of the value in government services tends to be extracted by public employee unions. Politicians make excessive commitments around wages, pensions, and job security in order to buy union votes and maintain labor peace. Then the politicians move on and future taxpayers are left holding the bag.
What grandfather is suggesting is something like an ESOP, co-op, or etc. There are a long history of these kinds of organizations, and they thrive in free-market economies--unfortunately, nobody really lives in one of those anymore.
It is telling that you say public employee unions "extract value" by demanding the pensions/job protections that should by rights belong to everyone (and often did, in the past). Conversely, private corporations "extract value" from the labor marker by struggling to provide any job security, any retirement, or even anything resembling a living wage.
Just which sector is failing to be profitable, here?
Profit is surplus value. The opposite of waste. Forcing it back into the place it originated versus letting it transport to the most-useful thing it can do is how you get sclerotic feudalism. Had we adhered to this philosophy during the Industrial Revolution, we would have just kept farming.
You're asking for people to fund the infrastructure speculators thrive on with their money, on top of that you want to depress housing prices which another large cohort of society will vote against, politically your proposal doesn't make sense.
If you cared to read the Wikipedia entry I shared the approach the Swedish government took was to pay 2/3 of the new constructions and sell those houses to people who would pay them back in 30 years, it's not "public housing" as you assumed...
The problem is you create a permanent underclass in the country since you take literally almost all rights from them. Including by the way the right to return where they came from.
[1] https://en.wikipedia.org/wiki/Treatment_of_South_Asian_labou...
[2] https://www.bbc.com/news/technology-50228549
[3] https://www.youtube.com/watch?v=gMh-vlQwrmU
They may well have a point, that government should only do things that only government can do, and that by declining to be involved they're leaving space for private businesses to operate.
But yea that's how we got here.
At this point any attempt for a government to be more intentional and interventionist would result in severe push back from the right.
Some governments are trying. In British Columbia, the government has changed laws to allow the arms length public transit agency to be able to buy and develop land around its transit stations.
Discussion: https://news.ycombinator.com/item?id=40489250
https://news.ycombinator.com/item?id=40490860
;)