The bigger problem, at least in my neck of the woods, is they're not building affordable housing. By-and-large they are building luxury apartments and luxury homes. We've torn down half the city to build luxury apartments that sit at 20-30% occupancy.
Building luxury housing won't help the housing crisis until the sellers are on the brink of bankruptcy and forced to sell their properties at a reasonable price.
So much of the journalism we read is heavily processed and barely-reported and it's startling to see how much of a superpower simple shoe-leather reporting actually is. Derek Thompson's an incredibly sharp writer, but not really a subject matter expert on housing economics; all he did here was read papers and call up the authorities they cited, and the narrative behind those papers collapsed.
We're often so down on journalism on HN, and I believe a big part of that is we tend to read so much opinion and analysis and so little basic reporting.
I've been loving Thompson's substack (which is mostly not about housing policy so far).
> The sharpest criticisms of the book Abundance have sometimes come from the antitrust movement. This group, mostly on the left, insists that the biggest problems in America typically come from monopolies and the corruption of big business.
ctrl-F "RealPage" - nothing. hmm.
ctrl-F "rent" - also nothing. really?
from about a year ago: Justice Department Sues RealPage for Algorithmic Pricing Scheme that Harms Millions of American Renters [0]
> The Justice Department, together with the Attorneys General of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, filed a civil antitrust lawsuit today against RealPage Inc. for its unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments.
> ...
> Another landlord commented about RealPage’s product, “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing…”
if I hear about antitrust in the context of housing policy, RealPage making it easier for apartment buildings to collude on rent prices is the very first thing that leaps to mind.
it seems like Thompson is being awfully selective about which antitrust-related criticisms he's responding to here. he seems to be focusing exclusively on building single-family homes, and completely ignoring the concrete example of monopoly power being used for apartment rentals, and antitrust laws being used to address that.
There is an incredibly large lobby group who is fully invested in
house prices rising or at least not falling, namely homeowners.
and since most politicians at a high level usually own one or more
houses, they are fully invested in it as well.
If we can keep the price of homes flat for 10 years then homeowners won't get hosed (still increasing equity by paying off principle) and homes get more affordable (assuming steady inflation and wage growth)
What about wealth inequality as the root cause of housing shortage? Even if supply is eased, the wealthy (those who have enough capital to earn passive income) will buy the extra supply and rent to the poor. The Piketty effect takes over, they invest their profit in more housing, wealth inequality continues to get worse, and while more housing exists, it owned by an increasingly small cohort.
Personally I'd like to see legal constraints on investment in primary, single-family homes, and fewer legal constraints on building them.
i hope the next part of his article covers the zoning issues. because I'm certainly not seeing the zoning issues making the homes be on bigger lots or requiring things like 3 car garages? If anything the lots in new tract developments in dallas fort worth are smaller and have less land using features like they don't have alleys. and then in Dallas city limits any small slice of land that can possibly be used for new houses have way smaller lots than any neighboring decades old homes.
the only instance I can think of that I know of is there as a historical black neighborhood near love field airport where Dallas changed the zoning to make redevelopment less profitable by requiring the houses take up less of the lot. This way developers can't build huge houses to offset the fact that the land is expensive or they can't build duplexes big enough to make them worth selling either. In fact there were a few duplexes going in to replace detached SFH and the developers were left in the lurch. I think even had to tear them down? I never followed up on the story. This was basically a policy to prevent gentrification by making the land less valuable by policy. Unfortunately gentrification and yimbyism seem like they go hand in hand because if you can develop bigger or more dense the property value goes up and people scream.
Where I can see regulation getting in the way is in the new codes. You can't build a house like you could in the 50s-70s anymore The code today is insanely expensive. Now those 70s houses weren't great. But they aren't didn't cost $200-300+/sqft at the low end.
in my view new single family housing can never be affordable because the cost is just so high. in fact. generic home ownership is as unaffordable as ever due to inflation. call a plumber to fix a leaky faucet? That will be $300. A new fence? $10k. A new HVAC system? $20k. A roof? $12k. These are all real costs for "small" homes. At least in the rental scenario the costs are controlled because not every single thing is a one-off. There are efficiencies at scale. If it's a housing rental company your maintenance guy is on a route, if it's an apartment you have building maintenance, etc.. The roof repair is a contract worth a million bucks where every roof is only $8000 instead of $12000.
Incredibly dishonest article. It's shocking to see people support this. And I love the way it's framed in a conspiratorial tone, and uses coded language to make you doubt this is a quantifiable problem.
All while he ignored many parts of the text he allegedly was critiquing. I'm still shocked that this is getting upvoted.
The very first sentence in the article is this:
>This group, mostly on the left, insists that the biggest problems in America typically come from monopolies and the corruption of big business.
"Insists" is doing a lot of work here to support the rest of the article. But it's lies through omission.
>At a high level, I have never found these arguments persuasive
Irrelevant if it persuades you. This isn't a high school debate class, facts and metrics are what matters.
>One hallmark of a monopolistic market is rising profits.
Not even close to true in theory or practice. In theory, monopolies have ever way in order to set prices for whatever goal their after. They may also lower supply thereby lowering aggregate profits. Long term profits can justify anything now.
Anti competitive practices are mainstays of monopolies. Not whatever the author just made up.
>The Musharbash essay on Dallas—like too much of the antitrust left’s work on housing
Oh boy here we go! The boogeyman has been setup, the ominous "they" is out.. checks notes... make housing available for average people.
>is filled with out-of-context quotes, overconfident assertions lacking evidence, and generally misguided claims.
Pot. Kettle. Black.
The next 5 paragraphs are about him talking to Quintero. He starts by framing the issue saying Dallas is not a good fit for Quintero’s theoretical model or previous research, which Quintero agrees with. He then uses this agreement to act like he's right about everything else and even misquotes his "100%".
It was shocking to see how we just kind took one affirmative agreement for one thing and turned it into an agreement about another. Talk about hearing what you want!
But that's not the rub.
The rub is that the Musharbash's essay isn't referencing the John Hopkin's research paper (Quintero) to say DFW fits it's described model, it's that the use of a market intelligence broker has effectively made the firms act as single (or a few) unit(s), enough to make the DFW's conclusions relevant.
Here's the snippet from Musharbash:
>Over the past two decades, most — if not all — significant builders in DFW have converged on the same source of market intelligence to drive their decision-making: a consulting firm named Residential Strategies, Inc. (“RSI” for short). [0]
> [...] While RSI is reportedly careful not to share sensitive information or facilitate explicit collusion among builders, it does not have to do so to play a role in limiting competition. [1]
Moving back (unfortunately) to the Thompson article, here's his next little "misquote":
>Claim #2: Dallas housing experts say local homebuilders are monopolies who are “devouring” the market.
The article didn't even claim this. The quote the source articles quote DIRECTLY below the claim from Musharbash's article really highlights how far out of the way Thompson went to misquote it:
From Musharbash's article, whihch again Thompson also hilariously quotes:
>Indeed, “[t]he scale and sway of market leaders” — particularly D.R. Horton and Lennar — means they “often monopolize access to trades and vendor resources” in local markets, constraining the ability of smaller builders to build at all, according
Unless D.R. Horton is a "local", "Dallas" builder I'm not even sure Thompson misread this piece so badly. If he wasn't an established journalist I'd call into question his reading comprehension skills.
So I have to assume it's not stupidity, it's malice.
I find the term “anti-abundance left” odd. He wrote a book called “Abundance” laying out the case for deregulating zoning laws. Claiming global monopolies in aggregate seems more like a conspiracy theory. I thought the mainstream (left) opposition to deregulation was to subsidize affordable housing regardless of the cause.
> … profit margins as a share of overall home-sale prices actually declined slightly
So the profit in real terms more than doubled? At a constant percentage home building and gas pumping both become more profitable when unit prices increase faster than inflation.
All I know is I moved to the Dallas area 4 years ago, and I'm still shocked at the housing affordability compared to where I moved from. Both in terms of absolute price and general overall cost of living.
Housing crisis is just a result of increasing income inequality and the resulting real estate investment craze. The population of America (real demand) did not suddenly double at any state/city.
Rich have become so much richer that can afford bidding wars at unattainable prices. They can buy investment homes and be cashflow negative for decades in anticipation of the increased market bidding prices. Of course they oppose any sort of legislation that would increase competition.
This "Abundance" nonsense is simply liberal repackaging of Reagan's trickle down economics and deregulation. That's all it is. Reagan's policies were designed to transfer wealth from the young and the poor to the old and the wealthy. Abundance will do (more of) exactly the same.
The very best case fo housing deregulation as per this Abundance nonsense is Houston. And that's only if you have essentially unlimited land.
Private industry simply will not lower house prices long term. We need to stop with this nonsense of looking for market-based solutions and public-private partnerships.
The only solution to housing is for the government to maintain a sufficient stock of quality housing such that the private sector simply cannot corner the market to drive up prices.
The example I always come back to is Vienna where ~60% of the housing stock is owned by the government. Residents essentially have permanent leases. It's affordable and accessible. Vienna has some of the lowest rents in a European city.
The purpose of the modern Democratic Party in the US is support American imperialism and to not upset their corporate donors. "Abundance" only exists so Ezra Klein can get invited to all the cool parties, get speaking engagements and generally curry the favor of the billionaire class and the Democratic establishment. It's just a liberal face on Reaganism.
> So, Dallas doesn’t meet Quintero’s oligopoly threshold. Now let’s consider the rest of the country. I tracked down a complete listing of the country’s 50 largest homebuilding markets, from #1 Dallas to #50 Cincinnati. How many meet Quintero’s first oligopoly threshold (two companies = 90 percent of the market)? Zero out of 50. And how many meet his second threshold (six companies = 90 percent of the market)? One: Cincinnati. It turns out that the largest homebuilding markets just aren’t that concentrated
> I wanted to know how a careful monopoly-hunter like Roberts would answer the question: If six firms account for 90 percent of a local industry, is that automatic proof of a monopoly? “No, it’s not,” Roberts said. “The statistic isn’t totally vacuous, but there’s basically no useful information about market power in that statistic alone.”
---
> the number of new single-family houses permitted per capita in the Dallas metro area rose steadily between 2010 and 2022. (This is illustrated in the graph below[1].) I mentioned to Quintero that steadily rising construction per capita in a fast-growing city seemed like a weird example of monopolistic abuse.
> First, he uses 2006 as his baseline. This was a highly atypical year in housing. Just before the housing crash that triggered the Great Recession, May 2006 was the peak of 21st century construction employment. That very month was construction's single highest share of total employment since the postwar era. Using a bubble year as a baseline could easily throw off the overall findings of any economic analysis.
[1] graph clearly shows long term downward trend, with growth from 2010 to 2022 being entirely recovery post 2008 crash and still being below late 90s levels.
---
> The whole thing looks like a lawyer who arrived in Dallas with a conviction in hand and shaped the evidence to fit the indictment.
*spends entire article cherry picking evidence in an attempt to discredit one article specifically to advance a competing narrative.
While we’re debunking that can we debunk the weird leftist conspiracy theories around index fund companies like Blackrock “buying up all the residential homes.”
Yes, the largest index fund company that sells investment products that allow people to invest in indexes (entire markets) is going to defacto be a custodian on holdings across the entire economy, including homes. Operating the funds offered in your 401k doesn’t mean they own the companies that invest in residential real estate. It means you actually do.
If you have a 401k it’s actually you who is in this “secret evil cabal.”
Not surprising at all to hear that Matt Stoller got the economics of an antitrust issue wrong. I appreciate the attention he brings to the topic and his diligence in digging up stories but his own analysis is often just totally wrong. I don’t think he’s worth taking seriously as an analyst. Maybe as a reporter at best.
Sigh. The whole housing narrative has been hopelessly taken off the rails by well-meaning but clueless urbanists.
And quite predictably, once the poisoned fruits of their labors start to bloom, it's always the fault of capitalism. Or maybe foreign investors and private equity.
Pretty much any criticism of a current housing market can't happen without mentioning the quality of said housing. I have just come back from one of the apartments I was looking at to see an abysmally small shoebox with some sort of doors and windows installed in there. I live in a house with 9-foot ceilings and I feel like a king. But this is insane.
Recently I've visited a rental property to find shallow, not sound-proofed walls, askew doors made of something that looks like paper and not a single straight corner. And this is a 2023 build! It's brand new. And still looks awful.
This makes sense, but as far as I can tell it doesn't really answer the question of whether the housing crisis is driven by "monopolies and the corruption of big business". It just rebuts a particular article's claims about whether the housing market is driven by monopolies in the homebuilding industry. But I would say the issue is larger than that. Monopolies and corruption in general have led to great wealth inequality and that is at least exacerbating (if not driving) a housing crisis in many places.
Too often people hear that some lions escaped from the zoo, and then hear that shoplifting went up, and decide that the lions must be robbing convenience stores.
Sometimes a problem and a cause don't snap together so obviously. I'm no fan of private equity but I've tried to inject some perspective into discussions on HN where people automatically assume that "private equity has operated in a space" and "there are problems in the space" form a complete mathematical equation and we don't need to look beyond them for any other factors.
I just couldn't keep reading with the constant "antitrust left" being refered to on every sentence.
The issue, is that for me, the reader, it framed the piece as the author seemingly positioning themselves as the "the other side", the one that knows best and isn't those "antitrust left". It felt like it was creating a strawman and was engaging in tribal signaling.
And when you consider the rest of the piece was them claiming they called the sources, and that the sources said that the "antitrust left" had misquoted them and misrepresented their findings, but the author somehow is this unbiased truth, and definitely really for real called the the sources and didn't at all misconstrue or anything, no they wouldn't do that, unlike the "antitrust left".
58 comments
[ 3.4 ms ] story [ 89.3 ms ] threadBuilding luxury housing won't help the housing crisis until the sellers are on the brink of bankruptcy and forced to sell their properties at a reasonable price.
We're often so down on journalism on HN, and I believe a big part of that is we tend to read so much opinion and analysis and so little basic reporting.
I've been loving Thompson's substack (which is mostly not about housing policy so far).
ctrl-F "RealPage" - nothing. hmm.
ctrl-F "rent" - also nothing. really?
from about a year ago: Justice Department Sues RealPage for Algorithmic Pricing Scheme that Harms Millions of American Renters [0]
> The Justice Department, together with the Attorneys General of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, filed a civil antitrust lawsuit today against RealPage Inc. for its unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments.
> ...
> Another landlord commented about RealPage’s product, “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing…”
if I hear about antitrust in the context of housing policy, RealPage making it easier for apartment buildings to collude on rent prices is the very first thing that leaps to mind.
it seems like Thompson is being awfully selective about which antitrust-related criticisms he's responding to here. he seems to be focusing exclusively on building single-family homes, and completely ignoring the concrete example of monopoly power being used for apartment rentals, and antitrust laws being used to address that.
0: https://www.justice.gov/archives/opa/pr/justice-department-s...
Personally I'd like to see legal constraints on investment in primary, single-family homes, and fewer legal constraints on building them.
the only instance I can think of that I know of is there as a historical black neighborhood near love field airport where Dallas changed the zoning to make redevelopment less profitable by requiring the houses take up less of the lot. This way developers can't build huge houses to offset the fact that the land is expensive or they can't build duplexes big enough to make them worth selling either. In fact there were a few duplexes going in to replace detached SFH and the developers were left in the lurch. I think even had to tear them down? I never followed up on the story. This was basically a policy to prevent gentrification by making the land less valuable by policy. Unfortunately gentrification and yimbyism seem like they go hand in hand because if you can develop bigger or more dense the property value goes up and people scream.
Where I can see regulation getting in the way is in the new codes. You can't build a house like you could in the 50s-70s anymore The code today is insanely expensive. Now those 70s houses weren't great. But they aren't didn't cost $200-300+/sqft at the low end.
in my view new single family housing can never be affordable because the cost is just so high. in fact. generic home ownership is as unaffordable as ever due to inflation. call a plumber to fix a leaky faucet? That will be $300. A new fence? $10k. A new HVAC system? $20k. A roof? $12k. These are all real costs for "small" homes. At least in the rental scenario the costs are controlled because not every single thing is a one-off. There are efficiencies at scale. If it's a housing rental company your maintenance guy is on a route, if it's an apartment you have building maintenance, etc.. The roof repair is a contract worth a million bucks where every roof is only $8000 instead of $12000.
All while he ignored many parts of the text he allegedly was critiquing. I'm still shocked that this is getting upvoted.
The very first sentence in the article is this:
>This group, mostly on the left, insists that the biggest problems in America typically come from monopolies and the corruption of big business.
"Insists" is doing a lot of work here to support the rest of the article. But it's lies through omission.
>At a high level, I have never found these arguments persuasive
Irrelevant if it persuades you. This isn't a high school debate class, facts and metrics are what matters.
>One hallmark of a monopolistic market is rising profits.
Not even close to true in theory or practice. In theory, monopolies have ever way in order to set prices for whatever goal their after. They may also lower supply thereby lowering aggregate profits. Long term profits can justify anything now.
Anti competitive practices are mainstays of monopolies. Not whatever the author just made up.
>The Musharbash essay on Dallas—like too much of the antitrust left’s work on housing
Oh boy here we go! The boogeyman has been setup, the ominous "they" is out.. checks notes... make housing available for average people.
>is filled with out-of-context quotes, overconfident assertions lacking evidence, and generally misguided claims.
Pot. Kettle. Black.
The next 5 paragraphs are about him talking to Quintero. He starts by framing the issue saying Dallas is not a good fit for Quintero’s theoretical model or previous research, which Quintero agrees with. He then uses this agreement to act like he's right about everything else and even misquotes his "100%".
It was shocking to see how we just kind took one affirmative agreement for one thing and turned it into an agreement about another. Talk about hearing what you want!
But that's not the rub.
The rub is that the Musharbash's essay isn't referencing the John Hopkin's research paper (Quintero) to say DFW fits it's described model, it's that the use of a market intelligence broker has effectively made the firms act as single (or a few) unit(s), enough to make the DFW's conclusions relevant.
Here's the snippet from Musharbash:
>Over the past two decades, most — if not all — significant builders in DFW have converged on the same source of market intelligence to drive their decision-making: a consulting firm named Residential Strategies, Inc. (“RSI” for short). [0]
> [...] While RSI is reportedly careful not to share sensitive information or facilitate explicit collusion among builders, it does not have to do so to play a role in limiting competition. [1]
Moving back (unfortunately) to the Thompson article, here's his next little "misquote":
>Claim #2: Dallas housing experts say local homebuilders are monopolies who are “devouring” the market.
The article didn't even claim this. The quote the source articles quote DIRECTLY below the claim from Musharbash's article really highlights how far out of the way Thompson went to misquote it:
From Musharbash's article, whihch again Thompson also hilariously quotes:
>Indeed, “[t]he scale and sway of market leaders” — particularly D.R. Horton and Lennar — means they “often monopolize access to trades and vendor resources” in local markets, constraining the ability of smaller builders to build at all, according
Unless D.R. Horton is a "local", "Dallas" builder I'm not even sure Thompson misread this piece so badly. If he wasn't an established journalist I'd call into question his reading comprehension skills.
So I have to assume it's not stupidity, it's malice.
There's also a s...
-Confirm housing is too expensive (for whom, where)
-Ask people why they think housing is too expensive and read some books on the topic
-Come up with a list of a few reasonable reasons from said reading
-try addressing those reasons with experiments in different locations to see what works (or check if someone has already done this)
-apply learnings broadly.
Instead our system is more like: -try to get elected and win points by criticizing others' ideas
-do nothing or spend a trillion dollars trying to solve it based on an idea a lobbying group told me is the reason housing is expensive
-be replaced by someone who disagree with me completely in 2 or 4 years
Sadly, many of the issues he called out remain in the final, approved version.
So the profit in real terms more than doubled? At a constant percentage home building and gas pumping both become more profitable when unit prices increase faster than inflation.
The vapid arguments around this topic are tiring.
Rich have become so much richer that can afford bidding wars at unattainable prices. They can buy investment homes and be cashflow negative for decades in anticipation of the increased market bidding prices. Of course they oppose any sort of legislation that would increase competition.
The very best case fo housing deregulation as per this Abundance nonsense is Houston. And that's only if you have essentially unlimited land.
Private industry simply will not lower house prices long term. We need to stop with this nonsense of looking for market-based solutions and public-private partnerships.
The only solution to housing is for the government to maintain a sufficient stock of quality housing such that the private sector simply cannot corner the market to drive up prices.
The example I always come back to is Vienna where ~60% of the housing stock is owned by the government. Residents essentially have permanent leases. It's affordable and accessible. Vienna has some of the lowest rents in a European city.
The purpose of the modern Democratic Party in the US is support American imperialism and to not upset their corporate donors. "Abundance" only exists so Ezra Klein can get invited to all the cool parties, get speaking engagements and generally curry the favor of the billionaire class and the Democratic establishment. It's just a liberal face on Reaganism.
> I wanted to know how a careful monopoly-hunter like Roberts would answer the question: If six firms account for 90 percent of a local industry, is that automatic proof of a monopoly? “No, it’s not,” Roberts said. “The statistic isn’t totally vacuous, but there’s basically no useful information about market power in that statistic alone.”
---
> the number of new single-family houses permitted per capita in the Dallas metro area rose steadily between 2010 and 2022. (This is illustrated in the graph below[1].) I mentioned to Quintero that steadily rising construction per capita in a fast-growing city seemed like a weird example of monopolistic abuse.
> First, he uses 2006 as his baseline. This was a highly atypical year in housing. Just before the housing crash that triggered the Great Recession, May 2006 was the peak of 21st century construction employment. That very month was construction's single highest share of total employment since the postwar era. Using a bubble year as a baseline could easily throw off the overall findings of any economic analysis.
[1] graph clearly shows long term downward trend, with growth from 2010 to 2022 being entirely recovery post 2008 crash and still being below late 90s levels.
---
> The whole thing looks like a lawyer who arrived in Dallas with a conviction in hand and shaped the evidence to fit the indictment.
*spends entire article cherry picking evidence in an attempt to discredit one article specifically to advance a competing narrative.
Yes, the largest index fund company that sells investment products that allow people to invest in indexes (entire markets) is going to defacto be a custodian on holdings across the entire economy, including homes. Operating the funds offered in your 401k doesn’t mean they own the companies that invest in residential real estate. It means you actually do.
If you have a 401k it’s actually you who is in this “secret evil cabal.”
And quite predictably, once the poisoned fruits of their labors start to bloom, it's always the fault of capitalism. Or maybe foreign investors and private equity.
Recently I've visited a rental property to find shallow, not sound-proofed walls, askew doors made of something that looks like paper and not a single straight corner. And this is a 2023 build! It's brand new. And still looks awful.
I have an article about that. https://medium.com/@ifcllc/qualification-f33ec8fcb736 but man, it's getting worse and worse.
Just to have a 2-room apartment that I used to live in 30 years ago would cost over 1.5 mil today. Adjusted for that inflation of quality.
Sometimes a problem and a cause don't snap together so obviously. I'm no fan of private equity but I've tried to inject some perspective into discussions on HN where people automatically assume that "private equity has operated in a space" and "there are problems in the space" form a complete mathematical equation and we don't need to look beyond them for any other factors.
The issue, is that for me, the reader, it framed the piece as the author seemingly positioning themselves as the "the other side", the one that knows best and isn't those "antitrust left". It felt like it was creating a strawman and was engaging in tribal signaling.
And when you consider the rest of the piece was them claiming they called the sources, and that the sources said that the "antitrust left" had misquoted them and misrepresented their findings, but the author somehow is this unbiased truth, and definitely really for real called the the sources and didn't at all misconstrue or anything, no they wouldn't do that, unlike the "antitrust left".