Sadly structurally the system favors housing incumbents. And it doesn’t take a lot to derail efforts to create more supply.
In my town we spent 8 years of public involvement in rezoning to increase supply and density. Including several city council elections of pro-housing council members elected over more NIMBY ones.
Only to have it all screwed up by 2-3 households that sued, pausing the zoning and throwing a wrench into a lot of new housing construction.
I feel like there has to be an effort at all layers of government to solve this structural problem where a few homes can derail a democratic process.
And in my neighborhood they wanted to rezone to allow an asphalt plant for highway construction, something that made all of our homes unfit for purpose but that the government really really wanted.
The ability for 2-3 households to sue to stop something like that where the government just steamrolls over zoning/etc because it benefits the government is hugely important.
A home is the biggest investment a person will make. It is also not easy to unwind from. Zoning is a promise by the government 'invest in this, we promise it will stay what you are purchasing'. A few home owners should definitely be able to force the government to keep that promise, and to keep their homes fit for purpose.
It’s very interesting. Based on this theory, stock prices should decrease as interest rates lower.
A massive number of people who are waiting for interest rates to drop will sell their equities to buy a house when it happens. IE, many couples are waiting for lower interest rates before buying a house.
This runs counter to current equities markets where hints of rate drops from the Fed will increase stock price.
> My wife and I have been holding Treasury bills for the past few years waiting for mortgage rates or home prices to come down, but neither have.
I wonder how long people remain in such states. I feel like for something as big as house ownership you need to decide if you really want it and if you do just go for it. How much of your life are you prepared to spend on "getting ahead"? They say "life is what happens to you while you're making other plans".
Their strategy was just bad. Housing prices do drop, occasionally, but waiting for that can take decades. And waiting for mortgage rates to drop is completely unnecessary. Just refinance when they finally do!
rent is expensive too, but cheaper than buying rn. high rent and high purchase price has a second order effect that is relevant to this forum: makes it harder to bootstrap a business.
> My wife and I have been holding Treasury bills for the past few years waiting for mortgage rates or home prices to come down, but neither have. So, we keep rolling Treasuries until the right moment arrives.
Ouch. Holding T-bills instead of equities for the last few years has been incredibly costly for this couple.
It didn't sound like OP was holding Treasuries exclusively, but perhaps just as part of their overall portfolio. It's useful to keep a bunch of "dry powder" in cash or cash equivalents in case opportunities arise.
This is what poor people do in latin america, sans the RV. They just buy blocks as they can and add on to it.
This is also exactly what our family did, minus the 'expand' part. We could never afford to buy a house nor get access to credit but we could afford to build a tiny one on shithole land one brick at a time. The great thing is it also more or less works no matter how poor you are, if you die before it is complete your children can continue. Eventually after enough generations enough money is saved to have a house.
Property is only an investment vehicle _because of_ the lack of housing. If we actually built enough housing, it would no longer be a viable investment vehicle.
I think if we could make housing affordable again the entire mood of the culture would change. A ton of nihilistic rage driven resentment politics on both sides of the political spectrum would ease up. Young people would no longer be doom spiraling. It would be like the fog lifted and the sun came out.
I pretty firmly believe that high housing prices are destroying civilization. I don’t think that’s hyperbole. I’ve been fond of saying it’s the economic problem in much of the developed world. The, singular. Make housing inexpensive and most of the other stats look at least okay.
We need to choose between real estate equity and literally all other things.
This is downvoted despite being literally true. It's very easy to find a very large cardboard box, lay it somewhere and sleep in it. However, if you do that, government officers come and take away your box and beat you up and take you away too.
There's a common view that home-ownership is important because a home is the most expensive asset most people will ever own and its increasing value is key to their comfortable retirement. But this view of a home as an appreciating asset is incompatible with increasing housing affordability.
There are definitely downsides to renting such as landlord issues or missing out on mortgage subsidies, but maybe a higher proportion of renters could lead to improvements in affordability. And if the well-off are renting as well, there's also more hope for better legal protections for renters.
My wife and I were remarking on this just yesterday. We were driving through a neighborhood of small starter homes, and noting that nobody builds anything like that anymore. A two bedroom one bathroom house is all anybody needs to start out and get into the homeownership game, but the only way to get one is from the constrained supply of old ones.
Ideally NIMBYs wouldn’t have an incentive to block housing construction because while the total number of houses goes up making the average house cheaper, the land itself gets more valuable due to the increased density/development/amenities; so those same homeowners can sell their lots for bug bucks. I guess this misalignment of incentives is a problem of zoning, permitting, and taxation distorting things?
Not all NIMBYs are the same. The ones I'm more familiar with are less concerned about land value and have little incentive to sell their homes. They are older, often retired, and prefer that nothing ever change around them due to simple conservatism.
An area doesn't need increased density or amenities for land values to go up. Here in the SF Bay Area, land values have exploded yet many neighborhoods have not changed in decades.
A side effect that is vastly underestimated in its impact is: the housing racket makes virtually all Western economies vastly more uncompetitive with Asian countries.
With urban areas routinely approaching or, even worse, outright exceeding 50% of net income going away for housing, that's setting a pretty high floor on wages and salaries, and that in turn drives up the price for domestic Things and Services.
And no, building housing will not solve the problem. At all. People keep whacking their cucumber over urbanisation because they deem it to be "cheaper" to provide essential utilities due to effects of scale/density - the problem is, space is still finite and denser housing costs more money to construct, especially once you build higher than the maximum usable height of a fire truck's ladder because now you need to invest into independent rescue/evacuation paths, and once you build above 10-ish (or less, depending on soil type and geological risks like earthquakes) stories you need to dig deep into the ground to build a foundation strong enough to keep the building from damaging during settling. Can't compromise on the fire safety regulations (otherwise all you get is a new Grenfell Tower style disaster), and you can't compromise with physics eithr.
Western countries need to build out essential infrastructure like broadband Internet, mobile phone service and public transit in rural and suburban areas. That's the only path that doesn't rely on utterly insane investments.
If we all could agree that water, food and shelter are the essentials for human survival (which I know that most people here wouldn't agree on), then it's easy to see the absurdity of the so called "society" or "economy" or "system" that the younger generations have been born into. Because it would be the same thing as a person being forced to enter into life long debt in order to obtain drinking water.
How can it be that people can enslave the young generation by the motivation that they were born first and therefore own all the land, but they can't do that with water? Ie: "We were born first and own all the water rights and you have to go into debt slavery the rest of your life if you want to drink water!" Makes just as much sense as the current situation.
Why, after decades of failing against NYMBYs, are people so confident they can have any more success against NYMBYism as a whole? Homes are assets, and as such people and corporations who own homes really don't want them to depreciate, or even stop appreciating. Homeowners own the majority of this country's wealth, and since modern politics are entirely subservient to capital, the current situation makes perfect sense. Thinking it will only take a bit of deregulation to fix this mess seems foolish to me. Whatever the solution is, it will necessarily involve something more radical than tweaking a few numbers on a spreadsheet, and will require front-facing capital interests (something no political party is currently willing to engage in, not the democrats and certainly not the republicans).
We need to be critically honest about how our system operates.
Land is finite. As population grows, supply and demand dictate it will rise in value if you hold.
If you rent property that someone else would prefer to buy for habitation if made available at market rate, you’re benefiting at overall society’s expense. Similarly if you take units off the market as investment vehicles.
Productivity matters most in economics. Without it you’re just shifting money around. Owning as a middle man is essentially the opposite of productivity.
As rentals become the only option and a small percentage of land owners become the only housing option, we’re going to see a rise in wealthy untethered types who rent and move at will. Similarly, we’ll start seeing ghettos form in the scant land remaining after this fully plays out.
The problem is that you can’t tell an individual who had to go through hell to own a place, on the verge of a second home, not to rent instead of sell. This society is a hammer taking a chip out of every successful shoulder. “Why should I do society a favor when society did me none?” Is a common mindset that just exacerbates the issue.
We’re creating a resentful generation who feel disenfranchised and taken advantage of, and it’s only going to get worse. I fear for uprisings and surveillance states incoming.
For real solutions, bring back work from home. No need for dense housing when you’re not forced to live in a particular area.
> Land is finite. As population grows, supply and demand dictate it will rise in value if you hold.
Nitpick: There is a lot of land. We're not going to run out of it anytime soon. What we are consuming is 'good' land. That definition will depend on a lot of things, of course.
For instance, in Denver, there is a lot of land. It's just that all the land to the west is rugged mountains. Great, so all the land to the east then, plains, right? You can build houses all the way to Kansas! Yes, but all that land is filled with bentonite clay which expands 4x with water (yes really!). You can't build cheap and safe houses on it. So, land values increase as more people move to Denver, simple supply and demand.
This kind of thing is all over the world. You can build more houses just about anywhere, but making these houses safe, cheap, and where you actually want to live, that is the problem.
Curious to see that no one mentions the drastically rising inequality in western society as the root cause of the housing crises.
What we are seeing to date is a transfer of wealth from the working class, the middle class, and the government to rich people at a rate that is unprecedented in human history. The rich are getting richer at an extremely high rate, and barely any country taxes wealth.
So what you get is multimillionaires and billionaires who get passive income of several million dollars per month. What are they going to do with that money? There is a rule that you should let your money work for you, and so rich people buy: assets, stock, shares.
That’s why the prices of all of these things go up despite living standards falling and falling for ordinary people. We have an asset price inflation, due to the enormous amount of money given to the ultra rich.
Housing prices will never go down unless you tax the rich. Regardless of zoning laws or what not.
28 comments
[ 5.2 ms ] story [ 56.3 ms ] threadIn my town we spent 8 years of public involvement in rezoning to increase supply and density. Including several city council elections of pro-housing council members elected over more NIMBY ones.
Only to have it all screwed up by 2-3 households that sued, pausing the zoning and throwing a wrench into a lot of new housing construction.
I feel like there has to be an effort at all layers of government to solve this structural problem where a few homes can derail a democratic process.
The ability for 2-3 households to sue to stop something like that where the government just steamrolls over zoning/etc because it benefits the government is hugely important.
A home is the biggest investment a person will make. It is also not easy to unwind from. Zoning is a promise by the government 'invest in this, we promise it will stay what you are purchasing'. A few home owners should definitely be able to force the government to keep that promise, and to keep their homes fit for purpose.
A massive number of people who are waiting for interest rates to drop will sell their equities to buy a house when it happens. IE, many couples are waiting for lower interest rates before buying a house.
This runs counter to current equities markets where hints of rate drops from the Fed will increase stock price.
It’s definitely an interesting theory.
I wonder how long people remain in such states. I feel like for something as big as house ownership you need to decide if you really want it and if you do just go for it. How much of your life are you prepared to spend on "getting ahead"? They say "life is what happens to you while you're making other plans".
Ouch. Holding T-bills instead of equities for the last few years has been incredibly costly for this couple.
Put RV on it. Save.
Build utilities. Save.
Build tiny house. Save.
Expand house.
This is what poor people do in latin america, sans the RV. They just buy blocks as they can and add on to it.
This is also exactly what our family did, minus the 'expand' part. We could never afford to buy a house nor get access to credit but we could afford to build a tiny one on shithole land one brick at a time. The great thing is it also more or less works no matter how poor you are, if you die before it is complete your children can continue. Eventually after enough generations enough money is saved to have a house.
I pretty firmly believe that high housing prices are destroying civilization. I don’t think that’s hyperbole. I’ve been fond of saying it’s the economic problem in much of the developed world. The, singular. Make housing inexpensive and most of the other stats look at least okay.
We need to choose between real estate equity and literally all other things.
There are definitely downsides to renting such as landlord issues or missing out on mortgage subsidies, but maybe a higher proportion of renters could lead to improvements in affordability. And if the well-off are renting as well, there's also more hope for better legal protections for renters.
But then again. Now where home ownership is so financialized, people don't dare to do zit out of the ordinary, which again leads to boring cities.
An area doesn't need increased density or amenities for land values to go up. Here in the SF Bay Area, land values have exploded yet many neighborhoods have not changed in decades.
With urban areas routinely approaching or, even worse, outright exceeding 50% of net income going away for housing, that's setting a pretty high floor on wages and salaries, and that in turn drives up the price for domestic Things and Services.
And no, building housing will not solve the problem. At all. People keep whacking their cucumber over urbanisation because they deem it to be "cheaper" to provide essential utilities due to effects of scale/density - the problem is, space is still finite and denser housing costs more money to construct, especially once you build higher than the maximum usable height of a fire truck's ladder because now you need to invest into independent rescue/evacuation paths, and once you build above 10-ish (or less, depending on soil type and geological risks like earthquakes) stories you need to dig deep into the ground to build a foundation strong enough to keep the building from damaging during settling. Can't compromise on the fire safety regulations (otherwise all you get is a new Grenfell Tower style disaster), and you can't compromise with physics eithr.
Western countries need to build out essential infrastructure like broadband Internet, mobile phone service and public transit in rural and suburban areas. That's the only path that doesn't rely on utterly insane investments.
How can it be that people can enslave the young generation by the motivation that they were born first and therefore own all the land, but they can't do that with water? Ie: "We were born first and own all the water rights and you have to go into debt slavery the rest of your life if you want to drink water!" Makes just as much sense as the current situation.
Land is finite. As population grows, supply and demand dictate it will rise in value if you hold.
If you rent property that someone else would prefer to buy for habitation if made available at market rate, you’re benefiting at overall society’s expense. Similarly if you take units off the market as investment vehicles.
Productivity matters most in economics. Without it you’re just shifting money around. Owning as a middle man is essentially the opposite of productivity.
As rentals become the only option and a small percentage of land owners become the only housing option, we’re going to see a rise in wealthy untethered types who rent and move at will. Similarly, we’ll start seeing ghettos form in the scant land remaining after this fully plays out.
The problem is that you can’t tell an individual who had to go through hell to own a place, on the verge of a second home, not to rent instead of sell. This society is a hammer taking a chip out of every successful shoulder. “Why should I do society a favor when society did me none?” Is a common mindset that just exacerbates the issue.
We’re creating a resentful generation who feel disenfranchised and taken advantage of, and it’s only going to get worse. I fear for uprisings and surveillance states incoming.
For real solutions, bring back work from home. No need for dense housing when you’re not forced to live in a particular area.
Nitpick: There is a lot of land. We're not going to run out of it anytime soon. What we are consuming is 'good' land. That definition will depend on a lot of things, of course.
For instance, in Denver, there is a lot of land. It's just that all the land to the west is rugged mountains. Great, so all the land to the east then, plains, right? You can build houses all the way to Kansas! Yes, but all that land is filled with bentonite clay which expands 4x with water (yes really!). You can't build cheap and safe houses on it. So, land values increase as more people move to Denver, simple supply and demand.
This kind of thing is all over the world. You can build more houses just about anywhere, but making these houses safe, cheap, and where you actually want to live, that is the problem.
What we are seeing to date is a transfer of wealth from the working class, the middle class, and the government to rich people at a rate that is unprecedented in human history. The rich are getting richer at an extremely high rate, and barely any country taxes wealth.
So what you get is multimillionaires and billionaires who get passive income of several million dollars per month. What are they going to do with that money? There is a rule that you should let your money work for you, and so rich people buy: assets, stock, shares.
That’s why the prices of all of these things go up despite living standards falling and falling for ordinary people. We have an asset price inflation, due to the enormous amount of money given to the ultra rich.
Housing prices will never go down unless you tax the rich. Regardless of zoning laws or what not.