> What happens when prices actually start to fall? Because that’s not just a hypothetical. It’s already happening in places like Phoenix, Atlanta, Miami, Dallas...
Then two paragraphs later
> In The Atlantic, Rogé Karma recently pointed out that housing prices are rising fastest in the very cities once seen as escapes from high-cost coasts, places like Phoenix and Dallas...
So which is it?
There is truth to the fact that the way the housing market is intertwined with the financial markets creates some risk, but those risks are manageable - a nationwide downturn in housing prices is exactly the kind of scenario addressed by the Fed's stress tests for banks.
The article is full of bizarre logic. An increase in housing supply leads to a fall in prices, which leads to a fall in supply? No, in fact the conclusion contradicts the premise. The author is making the classic econ 101 mistake of confusing the supply curve (which is supply as a function of price) and quantity supplied.
And finally the author explains his own solution which is... an increase in supply! But only the kind of supply he approves of ("small scale, incremental development"). Left unexplained is why this type of supply, if carried out on sufficient scale, wouldn't have the negative financial effects he worries about.
tacticalturtle · 24m ago
As soon as I saw it was the founder of Strong Towns it all made sense.
Strong Towns, Not Just Bikes, and all those content creators are fulfilling the “hobby” of city planning (ie, watching hours of city planning YouTube videos, but never actually organizing at a local level)
This is a really great video about one man’s experience with trying to improve his community, getting involved in local government, and his criticism that the city planning YouTubers always gloss over what this actually looks like - they just point out what we’re doing wrong.
So I think that’s why the logic doesn’t make sense. It’s not meant to be actionable. It’s meant to be easily digestible so that people participating in the hobby can feel enlightened.
alexb_ · 45s ago
What? Strong Towns is not just their "content creation", they ARE local organizations. You might have a chapter in your city. This criticism tells me that you don't know what Strong Towns is, what they do, the actual specific policy guidelines they come up with and push that have real influence on local city planning.
Strong Towns gives actionable proposals all the time, and their main purpose is local organizations to actually do local change. To accuse them of being a content creation scheme that does no organizing tells me that you have not looked into this at all and are making immediate assumptions based on the aesthetics of their content.
OldfieldFund · 12m ago
HackerNews folks are getting hooked on ragebait recently
andrewmutz · 1h ago
It is indeed a mess. It's full of strawmen, like:
> Price Drops Don’t Lead to Supply. They Kill It.
No one believes price drops cause an increase in supply. They believe an increase in supply causes price drops.
> If “build more” was going to bring prices down and stabilize the system, we wouldn’t be seeing these mixed signals.
People believe that increasing supply will lower prices, not "stabilize the system". The current system is plenty stable, and thats the problem.
ch4s3 · 49m ago
Right clearly, as supply meets demand and prices stabilize or start to drop, new supply will slow down. You can easily have scenarios where lots of supply is being built at once and outruns demand by a lot and causes a short term drop in prices, but that still won't cause supply to drop.
I think arguments like the one in the article have over-learned the lesson of 2008. Yes the financial crash in 2008 wiped out so many home builders that capacity to create supply was lowered. But that's not the sort of event that is caused by high supply.
bluGill · 1h ago
Also no discussion of interest rates - I bought my house just a few years ago at just under 3%, today I would be paying more than 6% - I couldn't afford the payments if I refinanced. I believe that interest rates are the primary driver of less construction: people who want to buy can't afford to unless they downsize.
andsoitis · 1h ago
> I bought my house just a few years ago at just under 3%, today I would be paying more than 6%
Yes, the cost of money (interest) was cheaper a few years ago. But the cost of money has gone up, primarily because central banks are also managing inflation by making borrowing more expensive.
Der_Einzige · 1h ago
The whole point of high interest rates is to get your economy unaddicted to cheap money and force economic efficiency.
This is why Trump is so angry about high interest rates and has threatened to fire powell again and again over it.
bluGill · 58m ago
I would not call 6% high - I'd call it normal, maybe even low-normal. 3% was low, and done at a time when stimulating the economy was thought important enough to accept the consequences. However we are not facing the fallout of rates going back up.
B56b · 1h ago
The increase in supply he advocates for is a viable solution because it is sensitive to different things.
Small, local development gets built and becomes profitable based on demand of the local housing market, but almost all housing today is built by large developers. These large developers are responding to the demand not for housing, but for the mortgage itself. Thanks to nationalized mortgage securitization the buyers the market cares about are those buying these securities: banks, pension funds, insurance companies, etc. When prices fall these securities become less attractive financial products, which decreases the demand for large development.
Chuck advocates for local building, which can ignore this macro-level demand and instead respond to the actual local demand for shelter.
gota · 2h ago
Regarding the bit about Dallas being an example of rise & fall of prices it seems to be an issue of poorly worded (or explained) difference in time frame. I replied under another post with the details from the sources (https://news.ycombinator.com/item?id=44635228)
falcor84 · 2h ago
> The author is making the classic econ 101 mistake of confusing the supply curve (which is supply as a function of price) and quantity supplied.
This seems to be just another good demonstration of Michał Kalecki's famous aphorism about how "Economics is the science of confusing Stocks with Flows".
bilbo0s · 1h ago
I like the part where the author advocates that cities step in and juice the construction of housing when the author says:
3. Financ[ing] entry-level housing locally by using the city’s position to unlock favorable financing without incurring unprotected financial risk.
while performing the patented Obi Wan Jedi Hand Wave I would think.
have-a-break · 48m ago
A huge portion of why home prices dont fall is because most people dont pay for their homes up front, the actual cost of the home after the interest is 2x the total loan amount. So people dont want to sell for what they feel like is a loss.
I'd argue building more supply just makes the problem worse, since the builders almost always try to extract as much money from the potential buyers. With the internet and everyone reporting salaries most sellers price houses to extract as much money as possible included possibly expected "crypto" or other hidden sources of income.
The reality being we likely won't see a dip in home prices until the population holding homes ages out, saying there's a "housing crisis" is just spreading fear uncertainty and doubt to trick buys into unsatisfactory houses.
eviks · 2h ago
The whole article is a mess of basic misunderstanding and conflation of cause and effect and reasoning from a price change instead of understanding what caused it.
> When prices actually go down, builders get nervous, lenders get cautious, financing dries up, and projects disappear.
No, it depends on the causes that drove the prices down. Some of those will get builders nervous, while others will make them giddy.
> New construction has collapsed not because of a lack of land, permits, or even demand but because the financial risk has become unmanageable. High interest rates, shrinking margins, labor shortages, volatile materials costs… none of these are softened by falling home prices.
They are: if you can build a house in 1 day instead of 1 year waiting for some permit, your costs of capital goes down, so it can offset some of the other costs going up.
If your permit doesn't force you to limit the size/number of units, you can spread your fixed costs over more units, raising your margins, which directly softens ... shrinking margins
hattmall · 1h ago
Permits and licensing is a huge factor, most of the southeast didn't even have licensing boards until the late 90s. If you wanted to build a house you could just do it. Now it's functionally impossible unless you are capitalized enough to spend a considerable amount of time and money on the permitting and approvals process.
One of the reasons there's so much gentrification is that it's much easier for builders to take a falling down house and replace 99.99% of it than to get approvals for completely new construction.
tsunamifury · 1h ago
I find it funny how confidently hners criticize perceived incoherence with their textbook prognostications of how simple the models are when even the Fed and world renowned economics can’t give such confident solutions.
ecshafer · 1h ago
What do "Gamers" have to do with anything?
stego-tech · 2h ago
Ultimately, there is no solution in which the core groups will all be appeased:
* If prices keep going up, then home ownership remains a luxury of the wealthy and an exploitation of the poor. Asset holders will be thrilled with returns, but the majority struggling to get or stay on the proverbial property ladder will grow increasingly angry at sky-high rents and prices with stagnant wages
* On the other hand, if prices come down then the broader economic engine will grow ornery and stagnate. Large home builders will cut back on builds, purchases, and labor, in an effort to push margins back up. Existing asset owners will be angry at losing (illusory/on-paper-only) money, and cut back on spending, purchases, or renovations until they see their valuations rise again. Only a small subset of prepared buyers will be able to take advantage of these lower prices before investors snatch most of them up and raise prices again anyway.
Housing is not a standalone crisis, but a symptom of a larger dysfunctional economic engine that simply does not work for the majority. Higher prices on core necessities should be met with a mixture of rising wages and price controls to reflect broader economic growth or support, but neither happens because of monied interests: if wages rise, companies will outsource and the problem perpetuates, while price controls prevent asset holders from maximizing their return on investment, a sin equivalent to murder in the eyes of the propertied class.
And so we have a group who benefits from nothing changing (asset holders, mega-builders, financiers), and a group that benefits from an all new engine design built for modern problems (the working classes, smaller employers, and - increasingly - insurance companies), fighting for the next century of housing policy.
I’m hoping the latter wins, despite the pain it would cause the former. Housing is a necessity first, and an asset class last.
ch4s3 · 41m ago
> On the other hand, if prices come down then the broader economic engine will grow ornery and stagnate
A rather small part of the economy relies on high long term returns on housing. You can build homes and sell them for rather small margins and that's good business. Many types of businesses happily run on profit margins that are single digit percentages.
> Only a small subset of prepared buyers will be able to take advantage of these lower prices before investors snatch most of them up and raise prices again anyway.
In 2024 87% of homes in the US were bought by people who intended to live in them or use them as a second home. If you only want to count primary homes the number is still close to 80%.
> but a symptom of a larger dysfunctional economic engine that simply does not work for the majority.
Factually the majority of US families live in homes they own, about [65% of US families own their homes])https://fred.stlouisfed.org/series/RSAHORUSQ156S) that is not only a majority but nearly 2/3.
thinkingtoilet · 1h ago
>Existing asset owners will be angry at losing (illusory/on-paper-only) money
I wouldn't be. I bought my house to live in it, not as a financial vehicle. I would be thrilled if prices came down and others in my generation could afford a house because I had the dumb luck of purchasing one in 2018 before the shit hit the fan. I couldn't even afford my own house now.
stego-tech · 1h ago
You and I are in a growing minority on this, I find. When I started my homebuying journey four years ago, I did so expecting to eat an on-paper devaluation of up to 50% during my lifetime - and was fine with that, because I wanted stability, not profit.
s1artibartfast · 24m ago
That makes sense if people have more and more of their assets tied up in home value. It's a positive feedback loop.
I assume that 50% markdown wouldn't be a 50% loss on your assets or retirement.
lordnacho · 24m ago
I think the same. I have a house, but the mortgage is not massive. If I can just live in it with no appreciation, that's fine with me. I even want to encourage building in the area, since we have a train station that seems underutilized.
There's a more selfish reason for wanting prices to not rise. I have kids. In a few years, they will be adults. If prices keep rising, how will they launch their own lives? I'll get asked to buy another house again.
epistasis · 46m ago
Same for me, but that's not how most people view the housing market, especially those who take the time to influence local politicians.
almosthere · 1h ago
Simple to make people sell, make property tax near Infinity if you rent it out in the first 5 years of property purchase.
Old rentals stay rentals, new construction is for people.
stego-tech · 1h ago
It’s not that simple, although taxation is a lever I see more governments willing to tug cautiously on in this crisis. I do think multipliers on low-density housing that’s not owner-occupied year-round is an excellent starting point, though, one that would really only harm a smaller subset of landlords while loosening supply in the short-term (1-5yrs).
Still, tax policy alone won’t solve such a complex issue. We need deregulation in matters of zoning, and increased regulation in terms of rent-setting (both amounts and lengths). We also need higher-density housing near transit stops, regulations on sales of existing homes with fossil fuel heat (gas and oil) that promote their proactive replacement prior to sale, stripping HOAs of authority to police familial genetics or relationships in household makeup (to promote more shared housing in existing developments), and so much more.
It’s a complex crisis that requires a complex solution.
epistasis · 45m ago
Still doesn't solve the problem of having enough houses.
Rented houses are still housing people. The problem isn't renting, the problem isn't loans, the problem is there's not enough houses where people want them.
postalrat · 1h ago
New construction is still very expensive.
Workaccount2 · 2h ago
Transpose the problem into a Taylor Swift concert and the problem becomes clearer:
Everyone* wants to go see Taylor Swift. She comes to a stadium and the sell out is instant, the aftermarket is bloody and ruthless. The stadium has 90,000 seats, 2,000 floor spots, and they are gone before you can reload the ticket page.
Taylor Swift is the embodiment of "good jobs". The stadium is the local housing market. Those VIP booths side stage with room to move around? The mega mansions. The lower tier seats? Upper-middle class. Nose bleeds? Upper lower class/bottom middle class.
Now solve the problem of the true value of these seats being so expensive. You can add more seats (this stadium happens to be extremely modular) but the experience for everyone becomes worse in a multitude of ways. You can add seats above the nosebleed, but it doesn't really do much to affect the closer seats.
So how do you solve this? How do you handle people who want to sell their ticket? Is it even possible to give people who can hardly afford nosebleed a shot at mid tier seats?
*Yes, I know you have no interest in seeing Taylor Swift.
foobarian · 2h ago
Nice analogy. So it seems the solution would be to create more Taylor Swifts then, by investing in music schools and programs, talent shows, scouting, etc., where the analogous thing would be to create more "nice places to live" with all the desirable attributes like walkability, jobs, public transport, etc. It's a tall order since land and climate are the ultimate scarce resources, but there are probably some underutilized spots that could support it. The rest would also be difficult due to property rights.
epistasis · 35m ago
> where the analogous thing would be to create more "nice places to live" with all the desirable attributes like walkability, jobs, public transport, etc. It's a tall order since land and climate are the ultimate scarce resources
We actually ban nice places to live with walkability in the vast majority of the country. Our urban planning in the US been entirely focused on keeping out mixed uses, keeping out dense housing, the things that enable public transport to function at all.
Land and climate are much easier to manage if we were to simple legalize density and mixed uses. We are reaping decades of bad planning for car-centric lives, without planning ahead for future generations and their ability to find a home.
bluGill · 49m ago
You cannot do that. Taylor Swift is what she is not because she it better at music, dancing, or looking sexy, or sleeping with the record label executives (I don't know anything about her: the above list are the common things done to get positions like her, but not necessarily what she has done). What Taylor Swift is that is special is that nearly everybody knows about her (I'm a rare exception) - you can talk about her to strangers and have something in common because you know her music.
If you want great live music you can find that in a 1 in 10 bars around the country. (less if you want original music instead of covers). Likewise if you want to watch a dancer, though perhaps a different venue. If you want anyone sexy you can see sex better at a local strip joint. If you want to sleep with someone you can pick someone up in any bar (you probably couldn't sleep with Tayler Swift even if she was the type looking for a one night stand). However the shared experience of being a Tayler Swift fan is not something you can find if you stick to the local scenes. That national/international shared experience can only belong to a few people at any one time and no amount of schools, talent shows, scouting... can change that.
foobarian · 28m ago
It may not be a perfect analogy but I disagree that it's completely invalid. Use some imagination to make it work, e.g. with institutional support instead of having just local acts now there is Taylor, and Beyonce, and a few dozen other famous musicians.
Not everyone can live in San Francisco, but there exist other equivalent "nice places" of which there are too few.
lesuorac · 29m ago
But there's tons of places where the cost of housing is going up. If everybody was uprooting from Philadelphia to go to NYC then only NYC's prices would go up.
It seems to me that we already have multiple Taylor Swifts so having even more shouldn't be a problem. For many people, the school system is the reason why they own the house they do.
In my experience, many of the schools self-report having pretty bad math/reading comprehension amongst their students. I'm not picking a house based on it being "the best" or the one "I hear about the most". I picked it based on it actually having good outcomes. If other districts had that too I would've considered theirs.
nobody9999 · 9m ago
>...where the analogous thing would be to create more "nice places to live" with all the desirable attributes like walkability, jobs, public transport, etc. It's a tall order since land and climate are the ultimate scarce resources, but there are probably some underutilized spots that could support it.
Absolutely. And in fact there are lots of places that could support such things. In the US we call them "small towns" and "rural areas" and "the rust belt."
Areas where a lack of good jobs (as manufacturing left and farming became much less human intensive) drove folks to where decent jobs are (were?) more available.
Which drove up the costs of housing and, well, pretty much everything else, in those places.
However, with the technological changes we've seen over the past eighty years or so (Interstate highways, compute/semiconductor industries, ubiquitous networking, etc., etc., etc.), revitalizing those areas that have been left behind could boost both local economies as well as broader ones.
However, ALEC[0] and its corporate backers have sabotaged efforts to do so in pursuit of destroying competition and maximizing rent seeking. a lack of infrastructure maintenance is part and parcel of that -- as a lack of economic activity reduces the amount of tax revenue available for necessary infrastructure repairs and investments.
If companies could get symmetric, multi-gb internet, decent office space with decent road and rail connectivity to/from regional hubs in small towns and rural areas, more people would move in, prompting more housing development, more local businesses, more tax revenue, better infrastructure, etc., etc., etc.
This type of investment could have instant positive economic effects in poorer areas, and longer term (coupled with more housing), reduce the insane housing prices you see in NYC (median apartment rent in Manhattan is ~$4500[1]), SF, Boston, etc.
Unfortunately, statehouses appear to be fully captured by big corporations wanting to maintain their rents by stamping out any competition, the economies of those states be damned.
Sadly, the above can't happen unless the folks in those areas stop voting (in municipal/state elections) for the folks who are supporting policies designed to maintain the penury endured in those places.
There are so many good reasons to reinvigorate these areas, but we keep electing folks that won't bite the hand that holds their leash.
> the experience for everyone becomes worse in a multitude of ways.
your analogy requires the assumption that the stadium is already "at capacity" for the maximum comfortable number of seats
99% of American municipalities are nowhere even close to this capacity.
Workaccount2 · 1h ago
Taylor Swift (and other super stars) don't play shows in 99% of American municipalities.
Companies want top talent for their workforce. They naturally will set up shop where they have easiest access to this talent (hence why you get industry hubs in different locales). The companies move to the spots for workers, and the works move to those spots for the jobs.
s1artibartfast · 1h ago
Yep, and these changes take place for reasons. For example, California and the Bay area have had 40 years of opportunity to make it easier to build, and ample people willing to pay.
There's an alternative world where SF and San Jose look like Singapore or Hong Kong, and policy is one of the big differences
have-a-break · 32m ago
Even worse, a lot of municipalities are losing population. But no-one wants to drop everything in their lives and move to a dying city, specially not high intelligence individuals who tend to gather causing home prices to skyrocket. Worse, those individuals tend not to buy into the types of housing typically seen by large developers building "relief" housing.
bethekidyouwant · 1h ago
Analogies are always bad, but in this case, I would say that if I wanted to walk to see Taylor Swift within 15 minutes, then most municipalities are at this capacity.
pythonaut_16 · 51m ago
In many places though it's more like most of the stadium is made up of various levels VIP booths. So one of the options is to replace those VIP booths with more dense traditional stadium seating. Only it's not enough to convince the ticket holders of one VIP booth to sell their tickets so more dense options can be sold, for some reason all of the VIP booths around that one also have to agree, and they're not so excited that plebeians might get to sit in dense seats right next to their pristine VIP booth to watch the show.
api · 1h ago
I concluded long ago that the only solution to unaffordable housing is geographic diversification. You can only cram so many people into one city before costs spiral for a myriad of reasons. The root of today's housing unaffordability is geographic consolidation of opportunity into a handful of places.
There's a ton of affordable housing outside the top ten cities.
For the most expensive places I'd advise young people to consider going there temporarily to get your career started, but don't stay unless you are making serious money -- enough to offset real estate costs. E.g. for the Bay Area I'd say if you're not making over $350k/year by age 30 you should leave.
bluGill · 46m ago
Nearly every city in the world has plenty of room for more. Most cities in the US dedicate more than half of their space to just cars, a great transit system could nearly double the density of the city while increasing the quality of life. Even in cities with good transit, they all have a lot of space dedicated to cars for people who don't find transit good enough (most of that isn't about snobs not wanting to mix with poor people, it is quality of service)
paulddraper · 1h ago
What adding a new showing?
Or taking a smaller venue and expanding that?
gausswho · 1h ago
Please continue the analogy while including Ticketmaster.
yoden · 2h ago
> Price Drops Don’t Lead to Supply. They Kill It.
It really depends on how much you reduce costs. If you reduce costs enough, you can have increasing supply even in the face of falling prices. This argument sounds like one made by a hedge fund protecting its real estate investments.
The reality is that the housing market in the US (and most countries) is heavily distorted by government NIMBY regulations. Because of this, it's reasonable to expect that there is actually a lot of room to reduce the $/sqft if the market can build housing in general. Current costs are inflated by being forced into specifically prescribed solutions designed to grow the wealth of developers and landowners.
cameron_b · 1h ago
Price reduction against builder margins would be a more reasonable way to look at it than raw price change, and additionally factoring in the degree of financing vs cash and the cost of financing would possibly shed more light.
Stable firms, not out over their skis, can afford to entice buyers while still making a profit. Just like in a startup, the cost of money and the degree of leverage sets the [minimum] speed limit on the runway.
rossdavidh · 2h ago
Different states are very different in this regard; Austin Texas is considered the NIMBY-est city in Texas, and it's still building lots of houses even as prices drop, and have been for a couple years now. Other states do (mal)function as you describe, but not all of them.
spicybbq · 2h ago
> Price Drops Don’t Lead to Supply. They Kill It.
Is anyone arguing that price drops "lead to" (i.e. happen before) increases in supply? It seems to me that it's the other way around: supply increases "lead to" price drops. This is what supply advocates hope to see in HCOL cities with expensive housing.
The author is concerned that builders will stop building when prices fall, but that's rational. Suppliers should respond to changes in prices.
Other policy goals are possible. For example, instead of "affordable housing", your goal might be to help the home building and financing industries never experience a down year.
crazygringo · 1h ago
> The author is concerned that builders will stop building when prices fall, but that's rational. Suppliers should respond to changes in prices.
Exactly this. Once you've built enough new housing and so the price has dropped to the point where it's not economical to build anymore, you're done. It's mission accomplished. The goal was achieved.
But the whole point is that you have to actually build all that housing to get there. Which is what we want. The author seems to be deeply confused about basic economic principles.
bandofthehawk · 48m ago
That doesn't solve the issue of housing being unaffordable to new buyers. How do you address affordability if the prices stop dropping before they reach a price at which an average young worker can afford to buy a starter home?
bluGill · 42m ago
We need to allow smaller houses such that people can afford to buy them then. Or we need to build apartments of all sizes so people can afford to rent them. The above is not an exclusive or - buying a house is a great choice for some and a terrible choice for others.
Affordable housing used to include a room where you share a bathroom and kitchen with the entire hallway. Affordable housing used to include tiny shacks. Air conditioning used to be something not even the rich had.
maplant · 2h ago
Right, these effects seem to lag each other. If prices are affordable, there's no reason to build more housing. We've achieved the goal of making affordable housing. Then, more people move in, prices go up, and the cycle repeats.
aprilthird2021 · 2h ago
100%, supply leads to price drops. If it's not profitable to build anymore because housing costs have sunk, then there's much less demand for housing that needs to be met.
The biggest political issue is that Americans have been led to believe their homes are assets which appreciate in value. The abundance mindset threatens the net worth of many such people, but they are not the landed gentry of a democratic society. And the people who have nothing and can barely afford rent outnumber them and should vote for their interests.
andsoitis · 1h ago
> And the people who have nothing and can barely afford rent outnumber them and should vote for their interests.
my sense is they, too, want to buy free-standing homes with nice amenities that are not really necessary (not rent an apartment or buy a condo) and that appreciates in value.
queenkjuul · 1h ago
Where i live, NIMBYs just killed an ADU ordinance and were screaming just as loudly and about all the same things they would have if you were replacing their grandma's cottage with a high rise.
They can't be rationed with.
Social housing is the only thing that will really work.
anthonypasq · 1h ago
no, you just strip NIMBY's of their power. I frankly don't give a shit about grandma's opinion if the owner of the land wants to put a highrise there.
queenkjuul · 1h ago
Why do you care whether it's a developer or the city building it, then
georgeecollins · 1h ago
Because a developer is never too big to fail, it can't issue bonds and it will be outcompeted if it can't manage costs.
I am not against cities building, but where I live in California the excessive zoning, permitting and delays are at the core of the problem.
anthonypasq · 55m ago
i dont have super strong opinions about that, im just refuting your point that social housing is the only option.
ecshafer · 1h ago
I absolutely care if its a developer or the city building it. If its the developer who puts a high rise on my block, they want to make money and they sell it for a profit. The people that move in are the people that can afford a condo in a high rise. If its the city building it, they don't want to make a profit, they want to get votes. So after they fill the high rise with their quota of homeless people and a drug dealers. Its going to have a very different population and affect my neighborhood in a much more negative way.
queenkjuul · 1h ago
Ridiculous. Such disdain for poor people! Not even poor people either. Plenty of working and middle class people can't afford decent homes right now.
ecshafer · 21m ago
I grew up in poverty. I worked hard to NOT have to deal with that shit as an adult and to not have my kids deal with that either. People screaming in the street at night on schizo rants, meth heads, getting your bikes stolen, people vandalizing your house, drug dealers, fights, schools being less safe and effective because of gangs/ problem children. This stuff actually sucks to live through constantly in a day by day situation. And the only way to get away from it is to not live where that shit happens, and you don't invite it into your back yard.
queenkjuul · 13m ago
You're making a ridiculous assumption that everyone that would move into social housing is a criminal and that everyone who moves into social housing is in poverty. This isn't necessarily the case and there's plenty of examples to prove it.
Good hard working people are being priced out of my neighborhood. Social housing could be a huge step in stopping that process.
FireBeyond · 18m ago
Yeah, sounds like here. Homeowners on cul-de-sacs complaining about the rise in traffic and how it will keep them up at night. Complaining that improving the missing middle will lower projected year-over-year property value increases from 11% to 8%. Hyperbole and hysteria about having to widen streets to accommodate parking and traffic.
tsunamifury · 1h ago
This was tried the 60s in the us and uk, which gave rise to the ghettos torn down in the 2000s. There is little appetite on any side to re do that
It’s amazing how little history people seem to remember or know. I think people might be open to trying again if you could address what went wrong last time (extreme crime and poverty traps)
arethuza · 1h ago
A lot of "social housing" in the UK was perfectly decent and still exists - I grew up in a council house as did a lot of my friends. The main thing that has changed is that most of those houses have now been bought and are privately owned.
Yes, of course there were a lot of grim council housing estates (particularly tower blocks) that had to be knocked down but the causes were often a lot more complex than the concept of social housing being fundamentally flawed.
queenkjuul · 1h ago
Post war UK social housing was a huge success, and US social housing was deliberately turned into ghettos through deliberate lack of maintenance.
It's amazing how little history people who think they know history actually know
arethuza · 1h ago
Social housing, at least here in Scotland, is actually built to a higher standard than that produced for sale.
nisegami · 1h ago
Why can't we have luxury social housing?
No comments yet
rossdavidh · 2h ago
While there is a problem in how we treat shelter as a financial product, the basic thesis (lower prices aren't allowed to happen) is incorrect, at least in some states. Florida and Texas (including Austin, my hometown) already have prices going down, substantially. Colorado and California seem to have started to follow suit. This did actually happen post-2008, nationally. There are places where we don't let housing prices drop, but there are plenty of others where we do.
btbuildem · 2h ago
This is because the overtly stated goals and the actual incentives are not aligned at all, they're closer to diametrically opposed.
The stated goal is "build more housing so everyone can have a place to live", but the current incentives are "bundle these materials and labour under guise of another product so you can sell it for a profit".
Of course developers walk away when prices drop -- their objective is to make money, not housing. The fact that they build homes people live in is purely incidental.
roenxi · 2h ago
> The theory says we should be celebrating and accelerating home production even more to get prices to levels that would actually be affordable. The reality demonstrates otherwise.
Reality demonstrates the well known - the people who celebrate house prices going down don't have a loud voice in political circles and are ignored. Almost by definition they're going to be representatives of the world which doesn't have vast amounts of money and influence.
> Price Drops Don’t Lead to Supply. They Kill It.
And I love this one, it is the inverse of "nobody goes there any more, it is too crowded". If the price is low that means there is more supply than the market thinks it needs and more people who want a house are finding a house to live in. That may well cause less new builds, but more builds probably aren't necessary if the price is dropping. More people are being homed. At some point prices drop low enough that new builds should cease altogether.
aprilthird2021 · 2h ago
> the people who celebrate house prices going down don't have a loud voice in political circles and are ignored
It's changing though. I'm seeing more people, even homeowners joining this chorus. Insane housing prices make everything expensive, and people are sick of everything being expensive. Even homeowners.
I agree that builders leaving is good. It means the prices have come down and demand / supply is getting better
disgruntledphd2 · 1h ago
> I agree that builders leaving is good. It means the prices have come down and demand / supply is getting better
Not really, it just means that the builders can make more profit elsewhere.
zesterer · 2h ago
Right, and if the original statement is true - that price drops are killing supply (without providing houses at a sufficient level) - then that implies that housing does not work like a traditional commodity. Which it doesn't.
epistasis · 8m ago
That's faulty reasoning. If the price drops stop new production, but there's still "demand", it means that the cost of providing new production is higher than what this demand can afford to pay.
But a big problem is that people try to view housing as not a commodity. They think that people don't move, don't change housing, don't need different things at different stages of their life.
If instead we actually view housing as the commodity it actually is, we would realize that the reason old cars are cheap is because we build new cars that are more expensive. That day old bread is only cheap because new bread was made today. Houses fall apart, the housing itself is actually going down in value every day. The land is the only part that rises in value, because we restrict its use so much.
New housing is nicer and more expensive than old housing, yet for some reason we are saying those with the least ability to pay should only be allowed to buy new housing. There are a ton of aging people in gigantic old houses that would like to downsize into something newer and smaller so that they don't have to walk as they age, yet that sort of non-car-dependent community is largely banned.
AnimalMuppet · 2h ago
Could you expand a bit on "which it doesn't"? How does it not, and why does it not?
I strongly suspect that 1) higher housing prices make builders more likely to build (or at least to max out their ability to build), and low prices (at least below some threshold) cause them to be more hesitant to do so, 2) high prices make people less willing to buy, and low prices make them more willing (or at least able).
So far, so much "working like a traditional commodity". Where do you see it working differently?
TrackerFF · 1h ago
Monotonically increasing housing prices is a privilege not everyone has. TONS of people, even in the rich western world, own houses that essentially lose their value due to inflation. Me and my siblings inherited a house in a rural town, which sold for less than what it was purchased for 30 years ago. Most houses in that town have seen stagnating prices, even brand new ones.
People still pour money into them every 10-15 years. But have to invest their money in other assets.
psunavy03 · 38m ago
It's amazing the difference between different areas. I grew up in a single-family home in Ohio. Parents moved to New York when I went to college. I ended up in Puget Sound.
They bought their NY house by selling the Ohio one. Price was roughly equal, maybe a little higher. Now the NY one is double what the OH one is worth, and I couldn't afford to buy my own house today. Conversely, I could pay cash to buy the house I grew up in, despite the lot being 4 times the size of mine.
There's definitely haves and have nots real-estate wise in different parts of the country.
bandofthehawk · 42m ago
That doesn't sound like a problem of inflation. I think it's related to people migrating out of rural areas and into big cities. When you have a decreasing local population, home prices tend to fall.
Akranazon · 1h ago
> When prices actually go down, builders get nervous, lenders get cautious, financing dries up, and projects disappear.
I think this is putting the cart before the horse. The entire reason that building/lending/etc should exist, it's raison d'être, is to make housing more affordable. If that is achieved - mission accomplished? I don't care about these parties otherwise.
JJMcJ · 1h ago
The usual solution to the paradox of lower home prices and the political need to not have home prices decline seriously is to tell people "a 70 mile commute is good for you". In the Bay Area that means Stockton, Gilroy, and the like.
At least we aren't in a situation like 2009 where people walk away from mortgages without making a single payment because they expected to be able to flip within weeks and had no cash at all.
projektfu · 2h ago
I usually like Chuck Marohn, but it is a glaring problem when you claim that housing prices are falling in Dallas, and then talk about housing prices skyrocketing in Dallas, within a couple of paragraphs.
gota · 2h ago
Yes, that read weird to me, too, but it's because the 'lowering prices' are a snapshot, or recent trend (evidenced by the source being an index for April 2025 [1])
The 'sharpest rises' are from a long-term trend of a decade [2]:
> Over the past decade, the median home price has increased by 134 percent in Phoenix, 133 percent in Miami, 129 percent in Atlanta, and 99 percent in Dallas. (Over that same stretch, prices in New York, San Francisco, and Los Angeles have increased by about 75 percent, 76 percent, and 97 percent, respectively).
Here's my pictorial illustration of the curve because I like drawing silly plots in txt
Both concepts can be true, just at slightly different times. As someone in Dallas, let me share what I've seen in housing prices.
DFW was seen as a pretty affordable place a while ago. In 2015 could get a 2,200sqft 4-bedroom house with a larger lot and a pool for $250k pretty easily. By 2020 that price was $320k, still decently affordable, still seen as a pretty cheap place to buy a home. By 2022 the valuations had exploded. Houses down the street of similar quality were selling days after listing at $550-600k. This then leveled off, settling around $550k. Houses around that price were still seeming to move pretty quickly.
Now I have neighbors cutting prices. A neighbor trying to sell has had their house on the market for months. They've already cut about $70k from their original listing price. Three more houses nearby have also entered the market and have been around for a few weeks. Compared to just a couple of years ago where the average house was on the market for maybe a couple of weeks.
dismalaf · 42m ago
Prices going down doesn't automatically mean building stops, and prices going up doesn't mean building automatically happens...
Whether or not a homebuilder builds homes depends on whether or not there's enough demand at a price point that's profitable. And markets aren't entirely localized, people will move for affordable housing if there's also enough jobs.
So lots of things affect whether or not homes get built: cost of building supplies, cost of land, cost of labour, growth rate of the municipality, demand for the specific unit type, zoning laws (which affect a bunch of the above), etc...
Remember, a house can cost as little as $100k to build, but nowadays costs $500k-$1M+. Price of land is a huge determining factor, cost to hook up utilities (if a new neighborhood, the builder often pays for it), interest rates (the homebuilder incurs a bunch of expenses before homes are sold and whole projects are financed, then it also affects the price buyers will pay), insurance, regulatory costs (the whole permitting process is $$$) etc...
Bluescreenbuddy · 1h ago
Here in Chicago some Aldermen are trying to get more builds in their neighborhoods but some the boomer homeowners that go to the meetings always cry about it. oh and bike lanes. People hate bike lines. They're insane
ajsnigrutin · 2h ago
As long as people are willing to pay above land cost + government cost (taxes,...) + material cost + labour cost, houses will be built.
Land and government costs are well.. decided by the government, some by regulation (where can you build, what can you build there) some by direct taxation.
Material + labor costs depend on the labour and material markets directly.
Everything else is just excuses not to build more housing, that would bring prices down.
Yes, the financial markets and investors may suffer, but that their problem. Sadly, (at least over here in a small EU country) the government is focused on them.... the solution both banks and parts of our government see is based on getting easier credit and not bringing the prices down... but the problem is not in "It's hard for young people to get loans", but that the apartment that was 120k eur 20 years ago is now 450k eur, and that young people don't need a 70k loan anymore but a 350k loan (with a higher deposit).
aurizon · 37m ago
Any buffer vanishes as prices fall = buyers pull back and wait for the dust to settle = a downwards cascade that can consume all equity= underwater, and buyer does not want to bail out a sunken ship. Lenders have recourse to whatever other assets the buyer has(depends on fine print, LLC etc) and some lenders sell at auction right away, some set a reserve below which they rent the home and the banks usually have management departments to manage that, but each case differs.
Eisenstein · 2h ago
You know what always happens when the status quo everyone is depending on to get money changes? People freak out and they overreact. Everyone loves it when they can keep doing the same thing and make money and they hate it when it looks like that is going to change. You what what always happens a bit later? They adjust to the new normal and make money slightly differently and then get used to that and don't want that to change.
The sky is not falling. Let's keep moving towards what will benefit everyone and not get distracted by the totally predictable reactionary market signals.
andsoitis · 2h ago
> Let's keep moving towards what will benefit everyone
And what is that?
Eisenstein · 1h ago
You can't think of anything?
andsoitis · 1h ago
People are debating different solutions, with different problems being advanced that need solving. You make it sound like you have a solution and that it is straight forward.
So, what is it? OR perhaps you are actually saying that things are (largely) working well, so there's no major course adjustment necessary.
Eisenstein · 1h ago
Oh, I'm not saying anything except that we should a disregard a temporarily panicking market if there is a course of action that is going to be largely beneficial. The article is implying that a plan for affordable housing was working and then the market reacted negatively. The impression given was that this would be a devastating blow to this plan, and my comment was just 'let them freak out, they will get over it'.
zeroCalories · 2h ago
If cities won't make themselves more affordable, then people will simply stop coming. Maybe that's the goal. Who wants immigrants, right? Not gonna be so great when large companies decide that SV and NYC are no longer worthwhile to expand in, compared to Bangalore or Poland(sound familiar?). Prices must come down, and we've seen places that have successfully done it. Just because red cities are now falling into the same trap as blue cities doesn't mean that supply / demand doesn't apply. Yes people tied into the financial system will be hurt, but that's a price we need to be willing to pay to keep our economy healthy.
andrewstuart · 2h ago
We all know it’s just a big game of lies and charades in which the winners keep winning and control the message and the policies.
Without renters there would be no housing Ponzi scheme, so gotta keep the renters renting.
sillystu04 · 2h ago
> Without renters there would be no housing Ponzi scheme
If by "housing Ponzi scheme" you mean house prices increasing then this isn't necessarily true.
Even in a world where private renting was illegal and people were forced to choose between home ownership and homelessness, house prices could increase over time because of restricted supply, increased populated and wage growth.
carlosjobim · 2h ago
Even without renters, most owners would prefer being house-poor rather than selling any extra houses they own.
dcow · 2h ago
House poor means you can’t afford to furnish the house you live in, not that real estate is your primary asset class.
carlosjobim · 2h ago
What I mean is that most owners would prefer to let their extra real estate rot away and become worthless rather than sell it and using that money for more profitable investments or a more comfortable life. I see it everywhere.
VWWHFSfQ · 2h ago
> You’re not the homebuyer; you’re the mortgage payer. The product that matters isn’t the home; it’s the decades of payments you have promised to make.
A very succinct way of describing the actual relationship. New homeowners are not "buying a house". This is a misconception. They are agreeing to pay _double_ the home's present value for the next 30 years and then get it.
andsoitis · 1h ago
> New homeowners are not "buying a house". This is a misconception. They are agreeing to pay _double_ the home's present value for the next 30 years and then get it.
New homeowners, who take out a mortgage, are:
a) buying a home (they get it immediately, not 30 years later; their name is on the title, they can make changes to it, they can sell it, etc.)
b) borrowing money because they don't have the cash to buy outright (or prefer to borrow because it is cheaper than liquidating another asset that is increasing in value)
c) the loan is secured by the property (the lender saw a large sum of cash flowing out and there's a risk the borrower will default)
billy99k · 3h ago
"If “build more” was going to bring prices down and stabilize the system, we wouldn’t be seeing these mixed signals."
Where have we seen anything close to 'build more'? Regulations in many major cities have prevented building more for decades and I haven't seen any loosening of these regulations (they were only increased during the Biden administration).
"Prices are softening. Delinquencies are rising. Builders are walking. And instead of asking what this reveals about the fragility of our system, we’re preparing to paper over it—again—with liquidity, leverage, and euphemisms. "
This is the plan from the potential future mayor of New York: Builders and investors will flee as a result of price controls and home value will plummet.
Detroit is a good example of what happens in the long term when investors and businesses flee the city. I lived there for 20+ years and it still has never really recovered.
soylentbeige · 2h ago
Mass upzoning in Auckland, New Zealand resulted in a rent reduction of 22-35% for three-bedroom apartments and 14-22% for two-bedroom apartments
> Detroit is a good example of what happens in the long term when investors and businesses flee the city
Let's be honest: it's a good example of what happens when some guys with a lot of money find a cheaper place to make something.
Same with St. Louis, Baltimore, Chicago, Cleveland, Buffalo, Camden, Gary, and so on.
hollywood_court · 2h ago
Yep. They moved their operations to the south where they don’t have to worry about unions or those pesky worker’s right.
I experienced this first hand when I worked for a Korean company that supplied parts to Hyundai and Kia.
They sent line workers from Detroit to train people in Alabama.
My coworkers in Alabama just could not believe the Detroit folks when they talked about how much money they earned.
We were being paid half as much in Alabama. And our area of Alabama had a much higher cost of living compared to Detroit and its suburbs.
lenerdenator · 2h ago
Or out of the country completely.
hollywood_court · 2h ago
That's definitely what many of the 'American' automobile brands have been doing.
octopoc · 2h ago
Sounds like an improvement TBH. The quality of life improves for people in Alabama, and the company can pay people less. Sort of like the economic argument for offshoring people. The only people losing are the people in Detroit.
hollywood_court · 2h ago
Not exactly. Everyone on the line in Alabama had to have second jobs because the pay was not sustainable for our area. Not to mention the vacations, extra benefits, and other protections the Alabama workers didn't receive compared to their peers in Detroit.
So the company makes more money by moving their operations to the south where they exploit their workers without interference from the government.
octopoc · 13m ago
Has the situation in Alabama gotten better over time? Have the Alabama workers been able to negotiate for more protections/better pay?
Because that’s the explanation for why offshoring to countries with fewer regulations is a good thing. Yeah it’s tough at the beginning, but it theoretically gives the workers leverage over the company because there aren’t any cheaper sources of labor. It’s supposed to give the cheapest labor the option to grow a pro-labor movement.
lenerdenator · 1h ago
> The only people losing are the people in Detroit.
I mean, that's a lot of people.
Also, the company doesn't pay people less all around. They pay workers less. The c-suite still makes more, and shareholders, who never did any work for the company whatsoever, get paid more. Car manufacturers haven't substantially lowered prices in years; so there are people paying more to get a car made by people making less.
atherton33 · 2h ago
Cambridge MA just had a major shift on zoning towards "build more" in Q1. It will be an interesting natural experiment to watch.
> "If “build more” was going to bring prices down and stabilize the system, we wouldn’t be seeing these mixed signals."
Bringing prices down is usually a losing idea with existing asset holders. Even a financially strapped homeowner does not want the price of her/his home to go down. Politically, this is a complete non-starter. Also, appreciating home values serve as a very strong way to attract talent to a city.
> "Prices are softening. Delinquencies are rising. Builders are walking.
What do you expect. Why would a homeowner send 1-2 paychecks a month to pay interest into an investment that is losing value? Why would a builder start making an asset that will be worth less than when they started building?
avmich · 2h ago
> Why would a homeowner send 1-2 paychecks...
Can't the asset holder - the homeowner in this case - get rid of the asset which stopped performing? Why such a strange financial behavior? If the houses are financials - why not to deal with them as such?
indymike · 1h ago
That would be rational for the home owner, but for many losing money on the biggest investment they have is not really practical. Losing value on a percentage taxed asset is not really practical for govenrment.
Also - the mortgage lender may not allow a sale at a lower than loan value price. The result is foreclosure, and even more loss in value.
avmich · 2h ago
> Builders are walking.
Why? Builders are supposed to be doing the paid work, why would they walk out of it?
AnimalMuppet · 2h ago
If you buy a plot of land, go to a builder and ask them to build a house on it, sure, they'll do it. That's not what most builders do most of the time, though.
Most of the time, most builders buy a piece of land, build a house on it, and then find a buyer (or at least while they're in the process of building the house). If they're having trouble selling houses, then they're left with a bunch of houses on their hands, on which they're having to pay the interest. They don't want to be in that position.
aprilthird2021 · 2h ago
> Bringing prices down is usually a losing idea with existing asset holders
Good. They should lose because they abused government policies through NIMBYism to inflate their assets prices. Happy to see them lose
indymike · 1h ago
This would be nearly every family in America. I'm not happy seeing my kids, my 80 year old mother lose money they are counting on. This is really the problem - reducing home prices hurts homeowners. And homeowners are litteraly everyone.
DangitBobby · 16m ago
It certainly hurts homeowners who would be upside down on their mortgage, which would mostly be people who just bought a house and people with a 2nd mortgage. My house costing twice what it did when I bought it does literally nothing for me because so does every other house! I can't actually get anything from the increased "value". Actually, it mostly hurts me because I pay more in insurance and property taxes.
projektfu · 2h ago
Perhaps because they signed a contract and want to buy another house sometime.
drewcon · 2h ago
Austin. They’ve built more and prices have declined.
kasey_junk · 2h ago
It’s not just regulation either. Housing companies are not building as much as they did prior to 2008, which had substantially the same regulatory environment in most places.
The idea that we’ve started building enough to bring prices down is a non-starter.
PretzelFisch · 2h ago
Why would the builder want to build enough to let prices drop? They seem to play a lot of games to give buyers incentives that do not lower the sales price.
thechao · 2h ago
My wife really wants to build a house; we've started by doing some light remodeling using GC's who also build houses to a "get a feel for it". There's a strong incentive for a good GC to truly believe the estimate he gives you. (They're all dudes, around here.) However, that estimate is rarely close — usually the budget goes over 50–100%. Here's the thing: the GC gets paid off the total cost, not the original contact, and he gets a cut of the cost. So, really, there's no incentive at all for him to control costs.
A buddy of mine works for a large grocer down here (HEB). The way HEB builds is that they get a build contract and a bunch of lawyers, and the GC has to demonstrate that they have enough assets that HEB can go after to make them (HEB) whole. If the GC goes over estimate, then that's on the GC, not on HEB. HEB gets a building or they take the money back.
As an individual, you can "act like HEB" by going with a major builder. Down here that'd be Pulte or someone like that; alternately, there's a lot of high quality factory-built custom homes. I'm trying to convince my wife that we should build a metal building on post-and-beam with a crawl space. We can build a minimum viable house for 25¢/$ compared to a custom, and the quality is straight-up an order-of-magnitude better. The rest of the house can be finished out using off-the-shelf components.
khaoohs · 42m ago
I'd be interested in any details/links you can share about a metal building post-and-beam.
pixl97 · 2h ago
Well because they hold inventory. If homes didn't have a year long build pipeline with another 6 months+ holding for sale buffer they'd probably care a lot less. Otherwise a 10% drop in prices can lead to their bankruptcy.
avmich · 2h ago
Oh, that's good. Those are institutionalized builders who hold inventory. Let them go. Let builders who are paid workers to do the job, whose income doesn't depend on house price but is described in contract between owner, bank and the builder. What's wrong with such a schema?
bryanlarsen · 2h ago
> Where have we seen anything close to 'build more'?
It's considerably easier to build in Canadian cities than most American cities. Not easy, but easier.
Over the past ten years Canadian cities have seen incredible growth, due to high immigration levels. Toronto is the fastest growing city in North America. Vancouver isn't far behind.
Yet Vancouver has seen flat housing prices over the last 10 years. [1] (Though flat at a very high level). Toronto housing prices are down 5% in the last 12 months.
East Gwillimbury, the fastest growing municipality in Canada, is within Toronto CMA. Perhaps that is what you were thinking of? But Toronto CMA is not a city, neither legally nor colloquially. Its mostly rural area. Growth in the City of Toronto is relatively slow.
gilbetron · 2h ago
Median houses in Vancouver are $2-4m ?? Wow.
bryanlarsen · 1h ago
Suburbs are about $1M CAD, ($750K USD).
nancyminusone · 2h ago
Where I live, there are about a dozen new housing development sites. I pass by 3 of them on my way into work, and my drive is only 10 minutes long. I've lived here 15 years and haven't seen anything like it. Someone somewhere must think it's worthwhile.
Disclaimer: I don't live in a major city, I live just outside a minor one. It's all condos.
Aurornis · 2h ago
> Where have we seen anything close to 'build more'? Regulations in many major cities have prevented building more for decades and I haven't seen any loosening of these regulations (they were only increased during the Biden administration).
Housing prices are high everywhere, not just major cities.
Interestingly, in my state we have a lot of land for building houses if you drive to nearby cities. Some people uproot themselves and move 30-45 minutes away so they can have a much bigger, nicer, newer house. Most often when they start a family.
If you’re willing to move an hour away you can even get these big new houses for very affordable prices.
Many people don’t want that, though. They want to live in the city. So these big new houses remain cheap, while housing in the city remains expensive.
It seems like an easy solution would be to start knocking down houses in the city and building tall, dense buildings. Except that is happening, and the same people don’t want those either. Even condo complexes are having a hard time selling units.
What people here continue to want is the one thing that cannot be scaled: Full houses of their own that are in the city. No amount of demolishing buildings and building density will fix that, because it’s not what they want.
I was completely wrong in guessing that COVID and remote work would help housing prices by allowing people to move anywhere. Most of the people I knew who relocated due to remote work took the opportunity to move toward cities where their friends lived, not to cheaper areas.
I think we must continue to build, though. Eventually new cities and interesting locations will be bootstrapped. I think housing prices in popular areas will remain stubbornly high, though.
nemomarx · 2h ago
If the condos aren't selling, shouldn't we see the prices go down? There's gotta be an equilibrium at some very cheap rent for them
spicybbq · 2h ago
In the long run, yeah. In the short run, owners can carry unsold inventory for quite a while, hoping conditions improve, before there is pressure to do something (e.g. a balloon payment).
zahlman · 2h ago
> Housing prices are high everywhere, not just major cities.... So these big new houses remain cheap, while housing in the city remains expensive.
?
carlosjobim · 2h ago
> Even condo complexes are having a hard time selling units.
Because instead of purchasing a house, you're just purchasing the right to continue being a renter. Meaning that the only reason to buy is that you expect an even bigger sucker to buy it from you later. And with rapidly declining population and widespread poverty among the young generation, there aren't that many bigger suckers around anymore.
kiba · 2h ago
A condo just means the maintenance fee is explicit, rather than implicit.
micromacrofoot · 2h ago
The problem is that housing is a major investment vehicle, people in these cities always complain about what's going to happen to their property values so they prefer exclusionary zoning.
Developers have a hell of a time building in these areas even once they get zoning variances, because abutters will show up and complain about every single detail and try to make the property as small and unprofitable as possible. You start off with a 12 unit building with no parking and you end up with a 6 unit building with 12 parking spots in a garage that no one uses.
There's one instance in my neighborhood where the city and developer have been meeting with residents over the course of a year to try and come to an agreement on what should be built. There's just a derelict single-family house on the lot.
kiba · 2h ago
The problem is speculative investing, not making a profit per se. If your incentive is to prevent improvement of your community, then you're going to prevent making it worthwhile for anyone to come in and invest their effort. That could often means deterring developers, for example.
femiagbabiaka · 2h ago
I’ve never seen a comment that so reflects that the writer did not read the article as this. There are 3 or 4 examples quoted in TFA, all cited.
freejazz · 2h ago
> prevented building more for decades
What planet do people live on? Go to any neighborhood in NYC and you are going to see tons of construction.
sim7c00 · 2h ago
i am sure lots of ppl on this planet dont have the option to go around NYC to check out the construction. for various reasons....
also, lots of construction does not equal fixing lack of housing. it has to keep up with and overtake new ppl moving into the region, which often times it does not (so it has no impact on prices or availability, just population growth...).
idk about NYC specifics ofc. but thats how it work in my country. they build new houses, new ppl come in. still nothing available generally, and everything about 2x price over 10 years while income doesnt rise to compensate.
there is a lot of constructions of homes here too. but for the wrong reasons and with the wrong intensity.
freejazz · 46m ago
People are building plenty here. The poster said building was being prevented. That's not the case.
blitzar · 2h ago
> What Happens When Housing Prices Go Down?
Government bails homeowners out and prices go back up.
_heimdall · 2h ago
At least in the US, the government could care less about bailing out homeowners.
Banks are another story, we'll bail them out all day but tax payers and homeowners are left holding the bag.
onlyrealcuzzo · 2h ago
If you drop interest rates to 0%, it's hard to argue you're not bailing out everyone who's in debt (which is every home owner with a mortgage).
Sure, maybe you are PRIMARILY bailing out banks.
But you are also bailing out everyone with a mortgage and enough brain cells to refinance and cut their by-far-largest monthly expense by 30-50%.
jacurtis · 1h ago
Both you and the parent are correct.
The "bailout" for consumers is that they lower interest to 0%. That's what we did in 2007. If people can refinance their homes from 7% to ~2% then they save a fortune and it spurs buyers back into the market and current homeowners to move around and shuffle inventory.
Of course the Parent comment is also correct because banks get bailed out by low interest rates, but the government also bailed out several banks directly. Corporate bailouts are always a debatable topic. In one way we should let bad businesses fail, they failed because of the risks and choices they made and bailing them out is just inviting those mistakes to happen again. But on the flip side, consumers do need banks (as much as we refuse or hate to admit it). Yes banks make money off of us, but we as consumers also need banks. Which is why bailouts get approved.
We have seen this movie before. I'm not sure why everyone is debating the ending. We watched and lived the ending. It wasn't pretty in the middle there, but the market eventually recovered. Here we are getting ready to rewind and watch the movie again.
andsoitis · 2h ago
During the 2008 crisis, the primary focus of the government response was to stabilize the financial system, which was seen as necessary to prevent a deeper economic collapse.
dmix · 2h ago
That wasn't just a short term fix though, they changed the entire banking system and solidified the concentration of wealth into a small group of megabanks by introducing new rules that killed off most of the competition from smaller/medium sized banks while the larger ones got floated cash, so they could merge into even bigger ones instead of dying off due to their own poor decisions/misbehavior. That sort of thing always has ripple effects over the long term.
andrewstuart · 2h ago
There’s no such thing as “demand” in housing.
Only supply.
Housing has its own economics in which supply is the only solution ever put forward.
Not a single politician or economist ever says that most dreaded and awful word “demand”.
Property developers, politicians, economists, demographers, real estate agents, landlords all agree that supply supply supply will …….. errrr it will…… ummmmmm more supply will definitely……. something.
ragebol · 2h ago
Demand can be affected by people living together, or encouraging that in some way.
Be it having roommates, elderly parents living in, staying with ones parents longer, communes. None of them popular long term I think. Hence: supply
echelon · 2h ago
Demand is someone's desire to make the jump from renting to owning. Demand is someone's risk tolerance for moving. Demand is someone's appetite for a house just slightly out of budget. Demand is someone's desire for a second or third home. Demand is all of the buying forces in aggregate, regardless of the cause.
You can want a house, but if you can't pay the market price then there's no demand from you at that price point. So maybe you make a lower offer or look elsewhere.
Demand is simple. We're watching what low demand is like right now.
Inventory has been low (people like their locked in low interest rates), but it has been inching steadily up as people move, die, change or lose jobs, etc. The minute the supply significantly outstrips demand, the pricing will collapse.
Demand will stay low until the economy and housing market improves.
ta1243 · 2h ago
> having roommates
People in cities and colleges have done that for decades. Not just "roommate" in the Friends sense where you have 2 people living in a 2 bed flat, but roommate as in sharing the same room - indeed 20 years ago I knew of some places where there where 5 people sleeping on 3 single mattresses in a single attic in London, with nuclear-dub style bunk sharing.
Demand for what people want (a place to call their own without having to live with strangers) is far in excess of the supply, and has been for at least the 25 years I've been an adult.
andrewstuart · 2h ago
But not the rich, right?
The rich don’t need to cram more people in, everyone else does. True?
ragebol · 2h ago
The rich sharing their homes with many other people would reduce demand as well I guess. But they don't because they can afford not to.
Some may argue that the rich help in the supply by building new houses, but that makes them even richer. If it doesn't, they don't bother (a point from this article).
Apreche · 2h ago
Now if you want prices to go down, are you really going to do it by trying to decrease demand? What are you going to do, make your neighborhood a slum on purpose? Absolutely nobody is doing that.
No matter how nice a place people live, they always want it to be nicer. They want better schools, nicer parks, clean streets, quality infrastructure. They want to attract nice businesses and cultural institutions.
The problem is that doing this necessarily increases demand, and increases prices. Unless you are an owner, doing this risks pricing yourself out of your own home. So what can you do to keep rent down? Well, increase supply to match the increase in demand.
Now you have a new problem. Increased density puts pressure on the infrastructure and makes it a less-nice place to live. That park sure was a lot nicer when it was half as crowded. Those new restaurants sure were a lot nicer when you could actually get a reservation.
It’s a very difficult dance to keep all these things balanced. Ultimately everyone wants to make the place they live nicer, no matter how nice it is already. You can never try to manage this problem from the demand side unless you find a set of crazy people who love living in a sty.
dmix · 1h ago
You're just describing population growth and competing incentives, entirely normal things. They can be incentives from completely different sets of people at different times in their lives. Plenty of people are fine with density as long as the place they live is maintained and law is enforced, likewise plenty of other people grow tired of noise or have kids and move to quieter areas (areas w/ people who will then complain of urbanization).
Again none of this is something that benefits from heavily centralized control, unless you want cities to be expensive exclusive zones, and force poor people to only live in rarely built (and poorly maintained) government housing while the rest are forced out into sprawling suburbs, with just as restrictive building rules, which can only forever expand outward consuming forests and farmland + forcing more cars onto the highways.
Then everyone has to drive into the city for work, meaning a political base who doesn't care about downtown infrastructure like public transit that only serves a highly exclusive downtown.
That's a system where no one wins.
carlosjobim · 2h ago
> No matter how nice a place people live, they always want it to be nicer.
I'm trying to make sense of your argument. No matter how nice a vehicle people have, they always want to have a nicer one. But we don't see normal cars costing 50-80 years of your life to purchase.
Apreche · 1h ago
Cars are depreciating assets. They can only be maintained and upgraded to a certain extent before they must be replaced.
A public park, a street, a school, these also depreciate, but most of them can not be thrown out and replaced like a car. They require constant maintenance. They also have nearly unlimited capacity for upgrades. The school gym can get new equipment. The street can be repaved. The park can get new landscaping. Wherever you live, the public amenities can always be improved. There is always demand from the residents to make those improvements.
Nobody ever tells their town to uglify the neighborhood. They always ask to beautify it. That means they are always asking to increase demand, and therefore to increase housing prices.
9rx · 2h ago
Demand isn't talked about because demand is solved by high prices.
But, politically, we want to increase demand (by offering lower prices).
ta1243 · 2h ago
The demand is still there, it's just restricted. Someone living in the back of a van in a gym carpark on an industrial estate is typically doing that because the cost of a 1 bed flat is too high. Lowering prices allows that demand to be seen.
In the UK 8.5 million people in England are facing some form of unmet housing need. That's more than 10% of the population.
> More than 1.9 million households are hosting a ‘concealed’ household – for example, adult children still living with their parents.
Even when it costs nothing, there's always a limit to demand. Just look at say a hotel breakfast. I could have 50 sausages, 20 cups of coffee, etc. I don't, despite it being costless.
9rx · 1h ago
> The demand is still there
It's not, though. That's the whole political contention. That demand is, because of high prices, not at the levels the population want to see.
Demand is defined as having desire and willingness to pay for a good or service. High prices maintains the desire in most cases, but chases off the willingness. That's the whole point of having prices!
> Even when it costs nothing, there's always a limit to demand.
Now you're describing a (technical) shortage: A situation where an external mechanism prevents price from rising. In a functioning market, buyers will pay more to stave off demand. But if price is forced to remain lower than people have the willingness to pay (free, in your example) then there is no control mechanism to see people back away from demand.
But that's not a problem in the housing market. If you have the desire and willingness to buy a home, you will have absolutely no trouble finding a home to buy. Price is doing its job.
The problem is for those who only have desire. They are not part of the demand, but that doesn't mean they don't want their desires filled. Hence the political push to see an increase in demand. i.e. Enabling those with only desire to also find willingness by finding a way to lower prices (which means addressing supply).
nemomarx · 2h ago
I feel like we talk about demand a lot - Just in the form of first time home owner subsidies or etc. Subsidizing demand of course doesn't help the situation but I'm not sure how you sell reducing demand to the public exactly
9rx · 2h ago
> I'm not sure how you sell reducing demand to the public exactly
Especially when the current political pressure is to increase demand. The populace are complaining that, because of high prices, they can't afford to be a part of the demand.
conception · 2h ago
Restricting foreign and corporate residential purchases, tax increases for multiple home ownership are a couple of ways to lower demand as well.
nemomarx · 1h ago
Yeah, but I think those are going to be small effects. You'd want to try and encourage people to move to smaller cities to really move the needle I think, but obviously the larger cities aren't interested in that. And the jobs have to move with in some fashion for it to work and everyone likes having access to larger pools for labor too
amanaplanacanal · 1h ago
I assume most people owning multiple residences are renting out the extras. What you are describing would make more houses available to buy at the expense of having fewer to rent. This wouldn't be a net gain of available housing.
bach4ants · 1h ago
Are you saying that governments should try to reduce the number of humans?
Nursie · 2h ago
They know about demand and do all they can to stoke it.
All the various government schemes in the UK and Australia (I have no idea about other countries) that are aimed at helping primarily young people to buy homes - low deposit schemes, part ownership schemes, tax discounts etc etc, they all masquerade as helping but they stoke demand and add to price inflation.
ta1243 · 2h ago
Are you saying that people routinely buy 5 or 6 houses to live in (thus excess demand)
Or are you saying the only reason houses are expensive is because people refuse to live in cars in high enough numbers?
What do you mean by demand?
rcxdude · 2h ago
There's two factors that have driven an increase in demand for housing above population growth: fewer people per household and a strong bias towards living in a city. Some of this is cultural: a stigma against living with your parents, for example, and higher expextations for what someone just starting their career should be able to afford, but it's also economic: cities are where the jobs are and they're often not where people grew up, so if they want any independance they pretty much must move away into a city with everyone else.
ta1243 · 2h ago
There are many reasons demand is increasing, all good.
In the past a typical housing unit would be husband, wife, two kids. A 3 bed house. Divorce rates are higher now (better to be divorced than in an unhappy marriage - so that's good), so you instead you have divorced husband and one or two bedrooms for shared custody of kids, and divorced wife and one or two bedrooms for shared custody of kids
Thus what used to be demand for a single 3 bed house is now demand for two 3 bed houses, with no change in requirements
You are also right about cities, and not just any specific city. If you were born in London and get a job in Cambridge because you want to work for Astra Zenneca for example, that's a good thing. Having workforce mobility is a good thing, just because you are the son of a farmer doesn't mean you should be destined to be a farmer. You've also got people meeting and marrying people from outside their immediate geographic area, at least one of them will have to move.
There's then the social appeal of cities in general -- if you're the "only gay in the village" that's a miserable life. If you live in a city there's far more choice.
"living with parents" is on the increase, despite any "stigma".
> The number of families in England and Wales with adult children living with their parents rose 13.6% between the 2011 Census and Census 2021 to nearly 3.8 million.
Adults living with parents is not a good thing, and in the west it never has been. Adults should be independent, and learn to fly the nest and build their own lives.
Then you've got massive external immigration. As well as people moving from country and older mining towns, you have massive inward migration (in the UK this has reached an increase of about 1% population increase per year). This is a good thing for the economy (more workers, more productivity, more taxes), but comes with other issues - including more demand for housing.
AlexandrB · 47m ago
You're forgetting AirBnB: turning housing inventory into hotel inventory since 2008.
philipallstar · 2h ago
It's because it would mean looking at immigration numbers. If immigration creates far more demand than there is supply, as it does in various first world countries, then it makes house prices shoot up. But this is not a popular topic, as voters with houses don't care about their house prices going up, and voters without houses are generally younger and don't have the capacity to hear economic statements on immigration without auto-converting them into racial statements they've been warned about on CNN.
amanaplanacanal · 1h ago
Is immigration higher now than it has been historically? How did immigration impact housing prices in the past vs now?
O5vYtytb · 2h ago
Huh? Demand is local. Where I live there's a lot of demand because it's a desirable city and leaders talk about this demand consistently.
focusgroup0 · 1h ago
Housing prices will not go down due to inflation, unchecked immigration (ie, demand++), degrowth policies (supply--), and years of ZIRP. Be glad you got in when you did.
Apreche · 2h ago
The problem can not be solved by trying to manage supply or demand. We must ban the concept of the landlord entirely.
A landlord gets a loan from a bank to develop a residential property. That loan is paid by the tenants who live in that property. At the end of the day, the landlord owns the property. This is fundamentally unjust. If the tenant paid off the mortgage, they should own the property, or their portion of it.
Can you imagine this for anything else? Imagine I got a loan to buy a television. The television is yours in every sense but in the legal sense. It is in your home. You are the only person that uses it. Over time you pay me back the cost of the TV, and some extra for interest. Yet, even after you have paid me back, you have to keep paying. It’s still my TV, and will be forever. If any month you don’t pay, I can come and take the TV away.
Another way of looking at it is that a residential development in a high demand area is basically a guaranteed money-fountain. Banks buy them and gift them to whoever they choose. They always choose people who are already wealthy and low-risk, causing an increase in wealth inequality. A bank could choose a homeless person instead for such a low risk project.
Another idea is to only allow renting when it is rent-to-own. A developer may build a large development, but over time that development will eventually become a co-op.
Remove profit motive from housing entirely. When the only interest someone has in a home is living in it, prices will make sense.
partypete · 2h ago
The idea that a home loan is risk-free ignores decades of recent history. A quick google search for "2008 GFC" will bring you up to speed.
Given that home loans are not, in fact, risk-free, how do you expect anyone to risk the large up front cost of financing a home if they do not have any expectation of profit? The small profit that landlords make off of these investments is mostly that risk premium. As a tenant, I am not liable to the bank for hundreds of thousand of dollars if any one of hundreds of calamities outside of my control were to occur rendering my home worthless. In exchange for this relative lack of risk, I gladly pay the 2% premium to my landlord. This is not to mention the benefit of mobility, among others.
Home loans are one of the most accessible loans in modern western civilization, so no, banks don't "always choose people who are already wealthy."
I assure you that if we were to remove the profit motive from financing the development of housing stock, there would be far less of it and home prices would certainly increase.
carlosjobim · 2h ago
> how do you expect anyone to risk the large up front cost of financing a home if they do not have any expectation of profit?
This is done already, and it's not complicated: A property development company will present a project and sell subscriptions to people who want to invest (usually people who want to live in the apartments). These people will start paying a monthly amortization to the property development company, which uses that money to purchase the land and start building. People start paying this amortization a few years before construction commences, and continue to pay it a few years after construction is finished. After that, they own their real estate outright.
Yes, the property developer expects some profit from this. And most people who are subscribing except profit as well. They can sell their investment / subscription at any stage of the development. But the financial risk is spread among all investors.
jdsnape · 2h ago
Yes, I can imagine this for other things. We have exactly that model for TVs, other appliances, and most especially cars. Getting something on a lease is by no means restricted to houses. Sure, it's not always a great idea, but there are definitely circumstances where it is useful.
poulpy123 · 1h ago
None of them increase or even keep their value during their lifetime. (Also: you really rent TV and appliance long term without leasing in the US ?)
jaccola · 2h ago
Obviously the landlord offers something of value or the tenant would just do what the landlord did.
Your analogy is also somewhat unfortunate since people did, in the past, rent TVs! Now that supply is far greater than demand, a quality TV can be purchased for very little money.
Apreche · 2h ago
The tenant can not do what the landlord did only because they are not already wealthy enough for the bank to give them a huge loan. Even if a bunch of tenants band together to collectively develop a property, a bank will not choose them when a wealthy developer is available instead.
amanaplanacanal · 1h ago
Banks have essentially infinite money. The band of tenants is not competing with the landlord for the loan. If the tenants are likely to pay the loan off, they will get a loan, as well as the landlord.
I feel like you are skipping over the part where people bid for houses, a process which advantages people with more access to capital in a fairly obvious way.
In risk terms the landlord is a better bet because they have collateral.
Landlords have assets they can leverage to acquire more property, while renters have to save deposits from income that's steadily eaten away by... rent...
xyzzy123 · 2h ago
> Obviously the landlord offers something of value or the tenant would just do what the landlord did.
I mean, yeah, they had access to capital.
As I understand it the traditional answer to this is "the landlord took the risk", but in practice I find that explanation questionable when propping up and supporting housing markets is basically political job #1.
I think the landlord was just richer, and was able to use that to exploit the renter.
Ekaros · 1h ago
Sometimes landlords fails. You just do not hear too much about it because in retrospect it was obvious. Buying units in dying areas with low demand or over paying at times.
Generally only winners get looked at. Not the loses in places no one cares about anymore.
xyzzy123 · 50m ago
Sure, but I don't believe "some landlords fail" changes the fact that as a class, they are structurally advantaged over renters.
Landlords can leverage existing assets (having 1 property helps you get more), benefit from asset appreciation and get tax advantages. When infrastructure or amenities get built, they capture a share of the value. When jobs are created or wages go up in an area, again the landlord captures value. Their asset class is politically protected in many ways. Then there's the whole inter-generational thing...
To a large extent, if your parents were owners, you will be an owner and if your parents were renters, you will be a renter. It's not guaranteed of course, but the effect is very strong.
I'm no socialist but I know a rigged game when I see one.
changoplatanero · 2h ago
> Can you imagine this for anything else?
You mean, like, cars?
electriclove · 2h ago
I agree with your sentiment and I wish there was more discussion on how to actually solve some of the issues at the core of this. I believe that home ownership is a strong positive for our communities. And our government does incent home ownership but it is still difficult for many. I also think we need to heavily disincentivize home hoarding.
Ekaros · 2h ago
Rental services? Any online service? What you mean you pay your development costs from my fees and get to keep them at the end? Or same with streaming services.
newsclues · 2h ago
So you want the government to be the only landlord or does everyone get their own home from the government (if they can’t afford one)?
electriclove · 2h ago
Or limit people to owning 1 or 2 homes. Does it make sense for one person to own 100 homes and rent them out? Think about the distinction that permanently creates for people who live in that community. Something like that only benefits the landlord class.
amanaplanacanal · 1h ago
What to do with the people who would rather rent than own?
electriclove · 1h ago
Let them rent. There are many good reasons why someone would want to rent. Limiting the number of homes one can own spreads it out.
vel0city · 1h ago
How can they rent when there is practically zero supply of rental units because we've now made it illegal to own multiple properties?
electriclove · 46m ago
Think shades instead of black/white. Our current rules can be tweaked. For example:
1-2 properties can be considered primary homes and get all tax benefits
3-4 properties allowed but no tax benefits
5+ properties not allowed
rpgbr · 2h ago
>[…] does everyone get their own home from the government (if they can’t afford one)?
Uh… yes? I mean, housing is a basic right in most countries. Also, a humanitarian, right thing to do. That housing became big business (or business at all) is the real tragedy here.
newsclues · 59m ago
Cool, give me a free house. And when I burn it down smoking drugs, give me another one!
poulpy123 · 2h ago
Why not ?
ta1243 · 2h ago
Price is kept low so everyone can afford one, so the limited supply is rationed in other ways. I remember the local MP where I used to live boasting about how when she was a child her father managed to get a nice council house with the help of then then Local MP.
I.e. rationed based on party loyalty. Or nepotism.
We currently mostly ration on money, which is the least worse option if we refuse to increase prices. There is also rationing based on sexual favours, which I'd assume everyone would agree is terrible.
Many would prefer to ration on place of birth -- if you are not born in the city then you don't get to live in the city and don't get the job opportunities of the city.
If supply in say London suddenly doubled overnight though (magically make every borough the same density as Westminster - with all those big open parks), that would put downwards pressure on prices.
It would release the currently suppressed demand as those currently living in overcrowded situations could afford to live on their own, those currently living outside the city who don't want to could move in. I'm not sure what the supply would have to be to raise main-home occupancy in London to 90% with prices down at the same level as it is in Stoke, but it's far far higher than it currently is.
jennyholzer · 2h ago
landlords sounding like mussolini in the replies to this comment
> What happens when prices actually start to fall? Because that’s not just a hypothetical. It’s already happening in places like Phoenix, Atlanta, Miami, Dallas...
Then two paragraphs later
> In The Atlantic, Rogé Karma recently pointed out that housing prices are rising fastest in the very cities once seen as escapes from high-cost coasts, places like Phoenix and Dallas...
So which is it?
There is truth to the fact that the way the housing market is intertwined with the financial markets creates some risk, but those risks are manageable - a nationwide downturn in housing prices is exactly the kind of scenario addressed by the Fed's stress tests for banks.
The article is full of bizarre logic. An increase in housing supply leads to a fall in prices, which leads to a fall in supply? No, in fact the conclusion contradicts the premise. The author is making the classic econ 101 mistake of confusing the supply curve (which is supply as a function of price) and quantity supplied.
And finally the author explains his own solution which is... an increase in supply! But only the kind of supply he approves of ("small scale, incremental development"). Left unexplained is why this type of supply, if carried out on sufficient scale, wouldn't have the negative financial effects he worries about.
Strong Towns, Not Just Bikes, and all those content creators are fulfilling the “hobby” of city planning (ie, watching hours of city planning YouTube videos, but never actually organizing at a local level)
This is a really great video about one man’s experience with trying to improve his community, getting involved in local government, and his criticism that the city planning YouTubers always gloss over what this actually looks like - they just point out what we’re doing wrong.
https://youtu.be/bUs0ecnbOdo?si=8dVweyWfvIF5ddg-
So I think that’s why the logic doesn’t make sense. It’s not meant to be actionable. It’s meant to be easily digestible so that people participating in the hobby can feel enlightened.
Strong Towns gives actionable proposals all the time, and their main purpose is local organizations to actually do local change. To accuse them of being a content creation scheme that does no organizing tells me that you have not looked into this at all and are making immediate assumptions based on the aesthetics of their content.
> Price Drops Don’t Lead to Supply. They Kill It.
No one believes price drops cause an increase in supply. They believe an increase in supply causes price drops.
> If “build more” was going to bring prices down and stabilize the system, we wouldn’t be seeing these mixed signals.
People believe that increasing supply will lower prices, not "stabilize the system". The current system is plenty stable, and thats the problem.
I think arguments like the one in the article have over-learned the lesson of 2008. Yes the financial crash in 2008 wiped out so many home builders that capacity to create supply was lowered. But that's not the sort of event that is caused by high supply.
Yes, the cost of money (interest) was cheaper a few years ago. But the cost of money has gone up, primarily because central banks are also managing inflation by making borrowing more expensive.
This is why Trump is so angry about high interest rates and has threatened to fire powell again and again over it.
Small, local development gets built and becomes profitable based on demand of the local housing market, but almost all housing today is built by large developers. These large developers are responding to the demand not for housing, but for the mortgage itself. Thanks to nationalized mortgage securitization the buyers the market cares about are those buying these securities: banks, pension funds, insurance companies, etc. When prices fall these securities become less attractive financial products, which decreases the demand for large development.
Chuck advocates for local building, which can ignore this macro-level demand and instead respond to the actual local demand for shelter.
This seems to be just another good demonstration of Michał Kalecki's famous aphorism about how "Economics is the science of confusing Stocks with Flows".
3. Financ[ing] entry-level housing locally by using the city’s position to unlock favorable financing without incurring unprotected financial risk.
while performing the patented Obi Wan Jedi Hand Wave I would think.
I'd argue building more supply just makes the problem worse, since the builders almost always try to extract as much money from the potential buyers. With the internet and everyone reporting salaries most sellers price houses to extract as much money as possible included possibly expected "crypto" or other hidden sources of income.
The reality being we likely won't see a dip in home prices until the population holding homes ages out, saying there's a "housing crisis" is just spreading fear uncertainty and doubt to trick buys into unsatisfactory houses.
> When prices actually go down, builders get nervous, lenders get cautious, financing dries up, and projects disappear.
No, it depends on the causes that drove the prices down. Some of those will get builders nervous, while others will make them giddy.
> New construction has collapsed not because of a lack of land, permits, or even demand but because the financial risk has become unmanageable. High interest rates, shrinking margins, labor shortages, volatile materials costs… none of these are softened by falling home prices.
They are: if you can build a house in 1 day instead of 1 year waiting for some permit, your costs of capital goes down, so it can offset some of the other costs going up. If your permit doesn't force you to limit the size/number of units, you can spread your fixed costs over more units, raising your margins, which directly softens ... shrinking margins
One of the reasons there's so much gentrification is that it's much easier for builders to take a falling down house and replace 99.99% of it than to get approvals for completely new construction.
* If prices keep going up, then home ownership remains a luxury of the wealthy and an exploitation of the poor. Asset holders will be thrilled with returns, but the majority struggling to get or stay on the proverbial property ladder will grow increasingly angry at sky-high rents and prices with stagnant wages
* On the other hand, if prices come down then the broader economic engine will grow ornery and stagnate. Large home builders will cut back on builds, purchases, and labor, in an effort to push margins back up. Existing asset owners will be angry at losing (illusory/on-paper-only) money, and cut back on spending, purchases, or renovations until they see their valuations rise again. Only a small subset of prepared buyers will be able to take advantage of these lower prices before investors snatch most of them up and raise prices again anyway.
Housing is not a standalone crisis, but a symptom of a larger dysfunctional economic engine that simply does not work for the majority. Higher prices on core necessities should be met with a mixture of rising wages and price controls to reflect broader economic growth or support, but neither happens because of monied interests: if wages rise, companies will outsource and the problem perpetuates, while price controls prevent asset holders from maximizing their return on investment, a sin equivalent to murder in the eyes of the propertied class.
And so we have a group who benefits from nothing changing (asset holders, mega-builders, financiers), and a group that benefits from an all new engine design built for modern problems (the working classes, smaller employers, and - increasingly - insurance companies), fighting for the next century of housing policy.
I’m hoping the latter wins, despite the pain it would cause the former. Housing is a necessity first, and an asset class last.
A rather small part of the economy relies on high long term returns on housing. You can build homes and sell them for rather small margins and that's good business. Many types of businesses happily run on profit margins that are single digit percentages.
> Only a small subset of prepared buyers will be able to take advantage of these lower prices before investors snatch most of them up and raise prices again anyway.
In 2024 87% of homes in the US were bought by people who intended to live in them or use them as a second home. If you only want to count primary homes the number is still close to 80%.
> but a symptom of a larger dysfunctional economic engine that simply does not work for the majority.
Factually the majority of US families live in homes they own, about [65% of US families own their homes])https://fred.stlouisfed.org/series/RSAHORUSQ156S) that is not only a majority but nearly 2/3.
I wouldn't be. I bought my house to live in it, not as a financial vehicle. I would be thrilled if prices came down and others in my generation could afford a house because I had the dumb luck of purchasing one in 2018 before the shit hit the fan. I couldn't even afford my own house now.
I assume that 50% markdown wouldn't be a 50% loss on your assets or retirement.
There's a more selfish reason for wanting prices to not rise. I have kids. In a few years, they will be adults. If prices keep rising, how will they launch their own lives? I'll get asked to buy another house again.
Old rentals stay rentals, new construction is for people.
Still, tax policy alone won’t solve such a complex issue. We need deregulation in matters of zoning, and increased regulation in terms of rent-setting (both amounts and lengths). We also need higher-density housing near transit stops, regulations on sales of existing homes with fossil fuel heat (gas and oil) that promote their proactive replacement prior to sale, stripping HOAs of authority to police familial genetics or relationships in household makeup (to promote more shared housing in existing developments), and so much more.
It’s a complex crisis that requires a complex solution.
Rented houses are still housing people. The problem isn't renting, the problem isn't loans, the problem is there's not enough houses where people want them.
Everyone* wants to go see Taylor Swift. She comes to a stadium and the sell out is instant, the aftermarket is bloody and ruthless. The stadium has 90,000 seats, 2,000 floor spots, and they are gone before you can reload the ticket page.
Taylor Swift is the embodiment of "good jobs". The stadium is the local housing market. Those VIP booths side stage with room to move around? The mega mansions. The lower tier seats? Upper-middle class. Nose bleeds? Upper lower class/bottom middle class.
Now solve the problem of the true value of these seats being so expensive. You can add more seats (this stadium happens to be extremely modular) but the experience for everyone becomes worse in a multitude of ways. You can add seats above the nosebleed, but it doesn't really do much to affect the closer seats.
So how do you solve this? How do you handle people who want to sell their ticket? Is it even possible to give people who can hardly afford nosebleed a shot at mid tier seats?
*Yes, I know you have no interest in seeing Taylor Swift.
We actually ban nice places to live with walkability in the vast majority of the country. Our urban planning in the US been entirely focused on keeping out mixed uses, keeping out dense housing, the things that enable public transport to function at all.
Land and climate are much easier to manage if we were to simple legalize density and mixed uses. We are reaping decades of bad planning for car-centric lives, without planning ahead for future generations and their ability to find a home.
If you want great live music you can find that in a 1 in 10 bars around the country. (less if you want original music instead of covers). Likewise if you want to watch a dancer, though perhaps a different venue. If you want anyone sexy you can see sex better at a local strip joint. If you want to sleep with someone you can pick someone up in any bar (you probably couldn't sleep with Tayler Swift even if she was the type looking for a one night stand). However the shared experience of being a Tayler Swift fan is not something you can find if you stick to the local scenes. That national/international shared experience can only belong to a few people at any one time and no amount of schools, talent shows, scouting... can change that.
Not everyone can live in San Francisco, but there exist other equivalent "nice places" of which there are too few.
It seems to me that we already have multiple Taylor Swifts so having even more shouldn't be a problem. For many people, the school system is the reason why they own the house they do.
In my experience, many of the schools self-report having pretty bad math/reading comprehension amongst their students. I'm not picking a house based on it being "the best" or the one "I hear about the most". I picked it based on it actually having good outcomes. If other districts had that too I would've considered theirs.
Absolutely. And in fact there are lots of places that could support such things. In the US we call them "small towns" and "rural areas" and "the rust belt."
Areas where a lack of good jobs (as manufacturing left and farming became much less human intensive) drove folks to where decent jobs are (were?) more available.
Which drove up the costs of housing and, well, pretty much everything else, in those places.
However, with the technological changes we've seen over the past eighty years or so (Interstate highways, compute/semiconductor industries, ubiquitous networking, etc., etc., etc.), revitalizing those areas that have been left behind could boost both local economies as well as broader ones.
However, ALEC[0] and its corporate backers have sabotaged efforts to do so in pursuit of destroying competition and maximizing rent seeking. a lack of infrastructure maintenance is part and parcel of that -- as a lack of economic activity reduces the amount of tax revenue available for necessary infrastructure repairs and investments.
If companies could get symmetric, multi-gb internet, decent office space with decent road and rail connectivity to/from regional hubs in small towns and rural areas, more people would move in, prompting more housing development, more local businesses, more tax revenue, better infrastructure, etc., etc., etc.
This type of investment could have instant positive economic effects in poorer areas, and longer term (coupled with more housing), reduce the insane housing prices you see in NYC (median apartment rent in Manhattan is ~$4500[1]), SF, Boston, etc.
Unfortunately, statehouses appear to be fully captured by big corporations wanting to maintain their rents by stamping out any competition, the economies of those states be damned.
Sadly, the above can't happen unless the folks in those areas stop voting (in municipal/state elections) for the folks who are supporting policies designed to maintain the penury endured in those places.
There are so many good reasons to reinvigorate these areas, but we keep electing folks that won't bite the hand that holds their leash.
[0] https://alec.org/
[1] https://www.brickunderground.com/rent/nyc-manhattan-brooklyn...
Edit: Added the missing links.
your analogy requires the assumption that the stadium is already "at capacity" for the maximum comfortable number of seats
99% of American municipalities are nowhere even close to this capacity.
Companies want top talent for their workforce. They naturally will set up shop where they have easiest access to this talent (hence why you get industry hubs in different locales). The companies move to the spots for workers, and the works move to those spots for the jobs.
There's an alternative world where SF and San Jose look like Singapore or Hong Kong, and policy is one of the big differences
There's a ton of affordable housing outside the top ten cities.
For the most expensive places I'd advise young people to consider going there temporarily to get your career started, but don't stay unless you are making serious money -- enough to offset real estate costs. E.g. for the Bay Area I'd say if you're not making over $350k/year by age 30 you should leave.
Or taking a smaller venue and expanding that?
It really depends on how much you reduce costs. If you reduce costs enough, you can have increasing supply even in the face of falling prices. This argument sounds like one made by a hedge fund protecting its real estate investments.
The reality is that the housing market in the US (and most countries) is heavily distorted by government NIMBY regulations. Because of this, it's reasonable to expect that there is actually a lot of room to reduce the $/sqft if the market can build housing in general. Current costs are inflated by being forced into specifically prescribed solutions designed to grow the wealth of developers and landowners.
Stable firms, not out over their skis, can afford to entice buyers while still making a profit. Just like in a startup, the cost of money and the degree of leverage sets the [minimum] speed limit on the runway.
Is anyone arguing that price drops "lead to" (i.e. happen before) increases in supply? It seems to me that it's the other way around: supply increases "lead to" price drops. This is what supply advocates hope to see in HCOL cities with expensive housing.
The author is concerned that builders will stop building when prices fall, but that's rational. Suppliers should respond to changes in prices.
Other policy goals are possible. For example, instead of "affordable housing", your goal might be to help the home building and financing industries never experience a down year.
Exactly this. Once you've built enough new housing and so the price has dropped to the point where it's not economical to build anymore, you're done. It's mission accomplished. The goal was achieved.
But the whole point is that you have to actually build all that housing to get there. Which is what we want. The author seems to be deeply confused about basic economic principles.
Affordable housing used to include a room where you share a bathroom and kitchen with the entire hallway. Affordable housing used to include tiny shacks. Air conditioning used to be something not even the rich had.
The biggest political issue is that Americans have been led to believe their homes are assets which appreciate in value. The abundance mindset threatens the net worth of many such people, but they are not the landed gentry of a democratic society. And the people who have nothing and can barely afford rent outnumber them and should vote for their interests.
my sense is they, too, want to buy free-standing homes with nice amenities that are not really necessary (not rent an apartment or buy a condo) and that appreciates in value.
They can't be rationed with.
Social housing is the only thing that will really work.
I am not against cities building, but where I live in California the excessive zoning, permitting and delays are at the core of the problem.
Good hard working people are being priced out of my neighborhood. Social housing could be a huge step in stopping that process.
It’s amazing how little history people seem to remember or know. I think people might be open to trying again if you could address what went wrong last time (extreme crime and poverty traps)
Yes, of course there were a lot of grim council housing estates (particularly tower blocks) that had to be knocked down but the causes were often a lot more complex than the concept of social housing being fundamentally flawed.
It's amazing how little history people who think they know history actually know
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The stated goal is "build more housing so everyone can have a place to live", but the current incentives are "bundle these materials and labour under guise of another product so you can sell it for a profit".
Of course developers walk away when prices drop -- their objective is to make money, not housing. The fact that they build homes people live in is purely incidental.
Reality demonstrates the well known - the people who celebrate house prices going down don't have a loud voice in political circles and are ignored. Almost by definition they're going to be representatives of the world which doesn't have vast amounts of money and influence.
> Price Drops Don’t Lead to Supply. They Kill It.
And I love this one, it is the inverse of "nobody goes there any more, it is too crowded". If the price is low that means there is more supply than the market thinks it needs and more people who want a house are finding a house to live in. That may well cause less new builds, but more builds probably aren't necessary if the price is dropping. More people are being homed. At some point prices drop low enough that new builds should cease altogether.
It's changing though. I'm seeing more people, even homeowners joining this chorus. Insane housing prices make everything expensive, and people are sick of everything being expensive. Even homeowners.
I agree that builders leaving is good. It means the prices have come down and demand / supply is getting better
Not really, it just means that the builders can make more profit elsewhere.
But a big problem is that people try to view housing as not a commodity. They think that people don't move, don't change housing, don't need different things at different stages of their life.
If instead we actually view housing as the commodity it actually is, we would realize that the reason old cars are cheap is because we build new cars that are more expensive. That day old bread is only cheap because new bread was made today. Houses fall apart, the housing itself is actually going down in value every day. The land is the only part that rises in value, because we restrict its use so much.
New housing is nicer and more expensive than old housing, yet for some reason we are saying those with the least ability to pay should only be allowed to buy new housing. There are a ton of aging people in gigantic old houses that would like to downsize into something newer and smaller so that they don't have to walk as they age, yet that sort of non-car-dependent community is largely banned.
I strongly suspect that 1) higher housing prices make builders more likely to build (or at least to max out their ability to build), and low prices (at least below some threshold) cause them to be more hesitant to do so, 2) high prices make people less willing to buy, and low prices make them more willing (or at least able).
So far, so much "working like a traditional commodity". Where do you see it working differently?
People still pour money into them every 10-15 years. But have to invest their money in other assets.
They bought their NY house by selling the Ohio one. Price was roughly equal, maybe a little higher. Now the NY one is double what the OH one is worth, and I couldn't afford to buy my own house today. Conversely, I could pay cash to buy the house I grew up in, despite the lot being 4 times the size of mine.
There's definitely haves and have nots real-estate wise in different parts of the country.
I think this is putting the cart before the horse. The entire reason that building/lending/etc should exist, it's raison d'être, is to make housing more affordable. If that is achieved - mission accomplished? I don't care about these parties otherwise.
At least we aren't in a situation like 2009 where people walk away from mortgages without making a single payment because they expected to be able to flip within weeks and had no cash at all.
The 'sharpest rises' are from a long-term trend of a decade [2]:
> Over the past decade, the median home price has increased by 134 percent in Phoenix, 133 percent in Miami, 129 percent in Atlanta, and 99 percent in Dallas. (Over that same stretch, prices in New York, San Francisco, and Los Angeles have increased by about 75 percent, 76 percent, and 97 percent, respectively).
Here's my pictorial illustration of the curve because I like drawing silly plots in txt
[1] https://www.realtor.com/news/trends/dallas-home-prices-case-...[2]https://www.theatlantic.com/economy/archive/2025/06/zoning-s...
DFW was seen as a pretty affordable place a while ago. In 2015 could get a 2,200sqft 4-bedroom house with a larger lot and a pool for $250k pretty easily. By 2020 that price was $320k, still decently affordable, still seen as a pretty cheap place to buy a home. By 2022 the valuations had exploded. Houses down the street of similar quality were selling days after listing at $550-600k. This then leveled off, settling around $550k. Houses around that price were still seeming to move pretty quickly.
Now I have neighbors cutting prices. A neighbor trying to sell has had their house on the market for months. They've already cut about $70k from their original listing price. Three more houses nearby have also entered the market and have been around for a few weeks. Compared to just a couple of years ago where the average house was on the market for maybe a couple of weeks.
Whether or not a homebuilder builds homes depends on whether or not there's enough demand at a price point that's profitable. And markets aren't entirely localized, people will move for affordable housing if there's also enough jobs.
So lots of things affect whether or not homes get built: cost of building supplies, cost of land, cost of labour, growth rate of the municipality, demand for the specific unit type, zoning laws (which affect a bunch of the above), etc...
Remember, a house can cost as little as $100k to build, but nowadays costs $500k-$1M+. Price of land is a huge determining factor, cost to hook up utilities (if a new neighborhood, the builder often pays for it), interest rates (the homebuilder incurs a bunch of expenses before homes are sold and whole projects are financed, then it also affects the price buyers will pay), insurance, regulatory costs (the whole permitting process is $$$) etc...
Land and government costs are well.. decided by the government, some by regulation (where can you build, what can you build there) some by direct taxation.
Material + labor costs depend on the labour and material markets directly.
Everything else is just excuses not to build more housing, that would bring prices down.
Yes, the financial markets and investors may suffer, but that their problem. Sadly, (at least over here in a small EU country) the government is focused on them.... the solution both banks and parts of our government see is based on getting easier credit and not bringing the prices down... but the problem is not in "It's hard for young people to get loans", but that the apartment that was 120k eur 20 years ago is now 450k eur, and that young people don't need a 70k loan anymore but a 350k loan (with a higher deposit).
The sky is not falling. Let's keep moving towards what will benefit everyone and not get distracted by the totally predictable reactionary market signals.
And what is that?
So, what is it? OR perhaps you are actually saying that things are (largely) working well, so there's no major course adjustment necessary.
Without renters there would be no housing Ponzi scheme, so gotta keep the renters renting.
If by "housing Ponzi scheme" you mean house prices increasing then this isn't necessarily true.
Even in a world where private renting was illegal and people were forced to choose between home ownership and homelessness, house prices could increase over time because of restricted supply, increased populated and wage growth.
A very succinct way of describing the actual relationship. New homeowners are not "buying a house". This is a misconception. They are agreeing to pay _double_ the home's present value for the next 30 years and then get it.
New homeowners, who take out a mortgage, are:
a) buying a home (they get it immediately, not 30 years later; their name is on the title, they can make changes to it, they can sell it, etc.)
b) borrowing money because they don't have the cash to buy outright (or prefer to borrow because it is cheaper than liquidating another asset that is increasing in value)
c) the loan is secured by the property (the lender saw a large sum of cash flowing out and there's a risk the borrower will default)
Where have we seen anything close to 'build more'? Regulations in many major cities have prevented building more for decades and I haven't seen any loosening of these regulations (they were only increased during the Biden administration).
"Prices are softening. Delinquencies are rising. Builders are walking. And instead of asking what this reveals about the fragility of our system, we’re preparing to paper over it—again—with liquidity, leverage, and euphemisms. "
This is the plan from the potential future mayor of New York: Builders and investors will flee as a result of price controls and home value will plummet.
Detroit is a good example of what happens in the long term when investors and businesses flee the city. I lived there for 20+ years and it still has never really recovered.
https://cdn.auckland.ac.nz/assets/business/about/our-researc...
Let's be honest: it's a good example of what happens when some guys with a lot of money find a cheaper place to make something.
Same with St. Louis, Baltimore, Chicago, Cleveland, Buffalo, Camden, Gary, and so on.
I experienced this first hand when I worked for a Korean company that supplied parts to Hyundai and Kia.
They sent line workers from Detroit to train people in Alabama.
My coworkers in Alabama just could not believe the Detroit folks when they talked about how much money they earned.
We were being paid half as much in Alabama. And our area of Alabama had a much higher cost of living compared to Detroit and its suburbs.
So the company makes more money by moving their operations to the south where they exploit their workers without interference from the government.
Because that’s the explanation for why offshoring to countries with fewer regulations is a good thing. Yeah it’s tough at the beginning, but it theoretically gives the workers leverage over the company because there aren’t any cheaper sources of labor. It’s supposed to give the cheapest labor the option to grow a pro-labor movement.
I mean, that's a lot of people.
Also, the company doesn't pay people less all around. They pay workers less. The c-suite still makes more, and shareholders, who never did any work for the company whatsoever, get paid more. Car manufacturers haven't substantially lowered prices in years; so there are people paying more to get a car made by people making less.
https://www.boston.com/news/politics/2025/02/11/cambridge-el...
Bringing prices down is usually a losing idea with existing asset holders. Even a financially strapped homeowner does not want the price of her/his home to go down. Politically, this is a complete non-starter. Also, appreciating home values serve as a very strong way to attract talent to a city.
> "Prices are softening. Delinquencies are rising. Builders are walking.
What do you expect. Why would a homeowner send 1-2 paychecks a month to pay interest into an investment that is losing value? Why would a builder start making an asset that will be worth less than when they started building?
Can't the asset holder - the homeowner in this case - get rid of the asset which stopped performing? Why such a strange financial behavior? If the houses are financials - why not to deal with them as such?
Also - the mortgage lender may not allow a sale at a lower than loan value price. The result is foreclosure, and even more loss in value.
Why? Builders are supposed to be doing the paid work, why would they walk out of it?
Most of the time, most builders buy a piece of land, build a house on it, and then find a buyer (or at least while they're in the process of building the house). If they're having trouble selling houses, then they're left with a bunch of houses on their hands, on which they're having to pay the interest. They don't want to be in that position.
Good. They should lose because they abused government policies through NIMBYism to inflate their assets prices. Happy to see them lose
The idea that we’ve started building enough to bring prices down is a non-starter.
A buddy of mine works for a large grocer down here (HEB). The way HEB builds is that they get a build contract and a bunch of lawyers, and the GC has to demonstrate that they have enough assets that HEB can go after to make them (HEB) whole. If the GC goes over estimate, then that's on the GC, not on HEB. HEB gets a building or they take the money back.
As an individual, you can "act like HEB" by going with a major builder. Down here that'd be Pulte or someone like that; alternately, there's a lot of high quality factory-built custom homes. I'm trying to convince my wife that we should build a metal building on post-and-beam with a crawl space. We can build a minimum viable house for 25¢/$ compared to a custom, and the quality is straight-up an order-of-magnitude better. The rest of the house can be finished out using off-the-shelf components.
It's considerably easier to build in Canadian cities than most American cities. Not easy, but easier.
Over the past ten years Canadian cities have seen incredible growth, due to high immigration levels. Toronto is the fastest growing city in North America. Vancouver isn't far behind.
Yet Vancouver has seen flat housing prices over the last 10 years. [1] (Though flat at a very high level). Toronto housing prices are down 5% in the last 12 months.
1: https://realestatecoalharbour.com/blog/vancouver-house-price...
2: https://www.nesto.ca/home-buying/toronto-housing-market-outl...
Wouldn't that be more apt to be Langford? https://www12.statcan.gc.ca/census-recensement/2021/as-sa/98...
East Gwillimbury, the fastest growing municipality in Canada, is within Toronto CMA. Perhaps that is what you were thinking of? But Toronto CMA is not a city, neither legally nor colloquially. Its mostly rural area. Growth in the City of Toronto is relatively slow.
Disclaimer: I don't live in a major city, I live just outside a minor one. It's all condos.
Housing prices are high everywhere, not just major cities.
Interestingly, in my state we have a lot of land for building houses if you drive to nearby cities. Some people uproot themselves and move 30-45 minutes away so they can have a much bigger, nicer, newer house. Most often when they start a family.
If you’re willing to move an hour away you can even get these big new houses for very affordable prices.
Many people don’t want that, though. They want to live in the city. So these big new houses remain cheap, while housing in the city remains expensive.
It seems like an easy solution would be to start knocking down houses in the city and building tall, dense buildings. Except that is happening, and the same people don’t want those either. Even condo complexes are having a hard time selling units.
What people here continue to want is the one thing that cannot be scaled: Full houses of their own that are in the city. No amount of demolishing buildings and building density will fix that, because it’s not what they want.
I was completely wrong in guessing that COVID and remote work would help housing prices by allowing people to move anywhere. Most of the people I knew who relocated due to remote work took the opportunity to move toward cities where their friends lived, not to cheaper areas.
I think we must continue to build, though. Eventually new cities and interesting locations will be bootstrapped. I think housing prices in popular areas will remain stubbornly high, though.
?
Because instead of purchasing a house, you're just purchasing the right to continue being a renter. Meaning that the only reason to buy is that you expect an even bigger sucker to buy it from you later. And with rapidly declining population and widespread poverty among the young generation, there aren't that many bigger suckers around anymore.
Developers have a hell of a time building in these areas even once they get zoning variances, because abutters will show up and complain about every single detail and try to make the property as small and unprofitable as possible. You start off with a 12 unit building with no parking and you end up with a 6 unit building with 12 parking spots in a garage that no one uses.
There's one instance in my neighborhood where the city and developer have been meeting with residents over the course of a year to try and come to an agreement on what should be built. There's just a derelict single-family house on the lot.
What planet do people live on? Go to any neighborhood in NYC and you are going to see tons of construction.
idk about NYC specifics ofc. but thats how it work in my country. they build new houses, new ppl come in. still nothing available generally, and everything about 2x price over 10 years while income doesnt rise to compensate.
there is a lot of constructions of homes here too. but for the wrong reasons and with the wrong intensity.
Government bails homeowners out and prices go back up.
Banks are another story, we'll bail them out all day but tax payers and homeowners are left holding the bag.
Sure, maybe you are PRIMARILY bailing out banks.
But you are also bailing out everyone with a mortgage and enough brain cells to refinance and cut their by-far-largest monthly expense by 30-50%.
The "bailout" for consumers is that they lower interest to 0%. That's what we did in 2007. If people can refinance their homes from 7% to ~2% then they save a fortune and it spurs buyers back into the market and current homeowners to move around and shuffle inventory.
Of course the Parent comment is also correct because banks get bailed out by low interest rates, but the government also bailed out several banks directly. Corporate bailouts are always a debatable topic. In one way we should let bad businesses fail, they failed because of the risks and choices they made and bailing them out is just inviting those mistakes to happen again. But on the flip side, consumers do need banks (as much as we refuse or hate to admit it). Yes banks make money off of us, but we as consumers also need banks. Which is why bailouts get approved.
We have seen this movie before. I'm not sure why everyone is debating the ending. We watched and lived the ending. It wasn't pretty in the middle there, but the market eventually recovered. Here we are getting ready to rewind and watch the movie again.
Only supply.
Housing has its own economics in which supply is the only solution ever put forward.
Not a single politician or economist ever says that most dreaded and awful word “demand”.
Property developers, politicians, economists, demographers, real estate agents, landlords all agree that supply supply supply will …….. errrr it will…… ummmmmm more supply will definitely……. something.
Be it having roommates, elderly parents living in, staying with ones parents longer, communes. None of them popular long term I think. Hence: supply
You can want a house, but if you can't pay the market price then there's no demand from you at that price point. So maybe you make a lower offer or look elsewhere.
Demand is simple. We're watching what low demand is like right now.
Inventory has been low (people like their locked in low interest rates), but it has been inching steadily up as people move, die, change or lose jobs, etc. The minute the supply significantly outstrips demand, the pricing will collapse.
Demand will stay low until the economy and housing market improves.
People in cities and colleges have done that for decades. Not just "roommate" in the Friends sense where you have 2 people living in a 2 bed flat, but roommate as in sharing the same room - indeed 20 years ago I knew of some places where there where 5 people sleeping on 3 single mattresses in a single attic in London, with nuclear-dub style bunk sharing.
Demand for what people want (a place to call their own without having to live with strangers) is far in excess of the supply, and has been for at least the 25 years I've been an adult.
The rich don’t need to cram more people in, everyone else does. True?
Some may argue that the rich help in the supply by building new houses, but that makes them even richer. If it doesn't, they don't bother (a point from this article).
No matter how nice a place people live, they always want it to be nicer. They want better schools, nicer parks, clean streets, quality infrastructure. They want to attract nice businesses and cultural institutions.
The problem is that doing this necessarily increases demand, and increases prices. Unless you are an owner, doing this risks pricing yourself out of your own home. So what can you do to keep rent down? Well, increase supply to match the increase in demand.
Now you have a new problem. Increased density puts pressure on the infrastructure and makes it a less-nice place to live. That park sure was a lot nicer when it was half as crowded. Those new restaurants sure were a lot nicer when you could actually get a reservation.
It’s a very difficult dance to keep all these things balanced. Ultimately everyone wants to make the place they live nicer, no matter how nice it is already. You can never try to manage this problem from the demand side unless you find a set of crazy people who love living in a sty.
Again none of this is something that benefits from heavily centralized control, unless you want cities to be expensive exclusive zones, and force poor people to only live in rarely built (and poorly maintained) government housing while the rest are forced out into sprawling suburbs, with just as restrictive building rules, which can only forever expand outward consuming forests and farmland + forcing more cars onto the highways.
Then everyone has to drive into the city for work, meaning a political base who doesn't care about downtown infrastructure like public transit that only serves a highly exclusive downtown.
That's a system where no one wins.
I'm trying to make sense of your argument. No matter how nice a vehicle people have, they always want to have a nicer one. But we don't see normal cars costing 50-80 years of your life to purchase.
A public park, a street, a school, these also depreciate, but most of them can not be thrown out and replaced like a car. They require constant maintenance. They also have nearly unlimited capacity for upgrades. The school gym can get new equipment. The street can be repaved. The park can get new landscaping. Wherever you live, the public amenities can always be improved. There is always demand from the residents to make those improvements.
Nobody ever tells their town to uglify the neighborhood. They always ask to beautify it. That means they are always asking to increase demand, and therefore to increase housing prices.
But, politically, we want to increase demand (by offering lower prices).
In the UK 8.5 million people in England are facing some form of unmet housing need. That's more than 10% of the population.
https://www.housing.org.uk/globalassets/files/people-in-hous...
> More than 1.9 million households are hosting a ‘concealed’ household – for example, adult children still living with their parents.
Even when it costs nothing, there's always a limit to demand. Just look at say a hotel breakfast. I could have 50 sausages, 20 cups of coffee, etc. I don't, despite it being costless.
It's not, though. That's the whole political contention. That demand is, because of high prices, not at the levels the population want to see.
Demand is defined as having desire and willingness to pay for a good or service. High prices maintains the desire in most cases, but chases off the willingness. That's the whole point of having prices!
> Even when it costs nothing, there's always a limit to demand.
Now you're describing a (technical) shortage: A situation where an external mechanism prevents price from rising. In a functioning market, buyers will pay more to stave off demand. But if price is forced to remain lower than people have the willingness to pay (free, in your example) then there is no control mechanism to see people back away from demand.
But that's not a problem in the housing market. If you have the desire and willingness to buy a home, you will have absolutely no trouble finding a home to buy. Price is doing its job.
The problem is for those who only have desire. They are not part of the demand, but that doesn't mean they don't want their desires filled. Hence the political push to see an increase in demand. i.e. Enabling those with only desire to also find willingness by finding a way to lower prices (which means addressing supply).
Especially when the current political pressure is to increase demand. The populace are complaining that, because of high prices, they can't afford to be a part of the demand.
All the various government schemes in the UK and Australia (I have no idea about other countries) that are aimed at helping primarily young people to buy homes - low deposit schemes, part ownership schemes, tax discounts etc etc, they all masquerade as helping but they stoke demand and add to price inflation.
Or are you saying the only reason houses are expensive is because people refuse to live in cars in high enough numbers?
What do you mean by demand?
In the past a typical housing unit would be husband, wife, two kids. A 3 bed house. Divorce rates are higher now (better to be divorced than in an unhappy marriage - so that's good), so you instead you have divorced husband and one or two bedrooms for shared custody of kids, and divorced wife and one or two bedrooms for shared custody of kids
Thus what used to be demand for a single 3 bed house is now demand for two 3 bed houses, with no change in requirements
You are also right about cities, and not just any specific city. If you were born in London and get a job in Cambridge because you want to work for Astra Zenneca for example, that's a good thing. Having workforce mobility is a good thing, just because you are the son of a farmer doesn't mean you should be destined to be a farmer. You've also got people meeting and marrying people from outside their immediate geographic area, at least one of them will have to move.
There's then the social appeal of cities in general -- if you're the "only gay in the village" that's a miserable life. If you live in a city there's far more choice.
"living with parents" is on the increase, despite any "stigma".
> The number of families in England and Wales with adult children living with their parents rose 13.6% between the 2011 Census and Census 2021 to nearly 3.8 million.
https://www.ons.gov.uk/peoplepopulationandcommunity/populati...
Adults living with parents is not a good thing, and in the west it never has been. Adults should be independent, and learn to fly the nest and build their own lives.
Then you've got massive external immigration. As well as people moving from country and older mining towns, you have massive inward migration (in the UK this has reached an increase of about 1% population increase per year). This is a good thing for the economy (more workers, more productivity, more taxes), but comes with other issues - including more demand for housing.
https://www.theguardian.com/lifeandstyle/2024/mar/19/end-of-...
A landlord gets a loan from a bank to develop a residential property. That loan is paid by the tenants who live in that property. At the end of the day, the landlord owns the property. This is fundamentally unjust. If the tenant paid off the mortgage, they should own the property, or their portion of it.
Can you imagine this for anything else? Imagine I got a loan to buy a television. The television is yours in every sense but in the legal sense. It is in your home. You are the only person that uses it. Over time you pay me back the cost of the TV, and some extra for interest. Yet, even after you have paid me back, you have to keep paying. It’s still my TV, and will be forever. If any month you don’t pay, I can come and take the TV away.
Another way of looking at it is that a residential development in a high demand area is basically a guaranteed money-fountain. Banks buy them and gift them to whoever they choose. They always choose people who are already wealthy and low-risk, causing an increase in wealth inequality. A bank could choose a homeless person instead for such a low risk project.
Another idea is to only allow renting when it is rent-to-own. A developer may build a large development, but over time that development will eventually become a co-op.
Remove profit motive from housing entirely. When the only interest someone has in a home is living in it, prices will make sense.
Given that home loans are not, in fact, risk-free, how do you expect anyone to risk the large up front cost of financing a home if they do not have any expectation of profit? The small profit that landlords make off of these investments is mostly that risk premium. As a tenant, I am not liable to the bank for hundreds of thousand of dollars if any one of hundreds of calamities outside of my control were to occur rendering my home worthless. In exchange for this relative lack of risk, I gladly pay the 2% premium to my landlord. This is not to mention the benefit of mobility, among others.
Home loans are one of the most accessible loans in modern western civilization, so no, banks don't "always choose people who are already wealthy."
I assure you that if we were to remove the profit motive from financing the development of housing stock, there would be far less of it and home prices would certainly increase.
This is done already, and it's not complicated: A property development company will present a project and sell subscriptions to people who want to invest (usually people who want to live in the apartments). These people will start paying a monthly amortization to the property development company, which uses that money to purchase the land and start building. People start paying this amortization a few years before construction commences, and continue to pay it a few years after construction is finished. After that, they own their real estate outright.
Yes, the property developer expects some profit from this. And most people who are subscribing except profit as well. They can sell their investment / subscription at any stage of the development. But the financial risk is spread among all investors.
Your analogy is also somewhat unfortunate since people did, in the past, rent TVs! Now that supply is far greater than demand, a quality TV can be purchased for very little money.
I feel like you are skipping over the part where people bid for houses, a process which advantages people with more access to capital in a fairly obvious way.
In risk terms the landlord is a better bet because they have collateral.
Landlords have assets they can leverage to acquire more property, while renters have to save deposits from income that's steadily eaten away by... rent...
I mean, yeah, they had access to capital.
As I understand it the traditional answer to this is "the landlord took the risk", but in practice I find that explanation questionable when propping up and supporting housing markets is basically political job #1.
I think the landlord was just richer, and was able to use that to exploit the renter.
Generally only winners get looked at. Not the loses in places no one cares about anymore.
Landlords can leverage existing assets (having 1 property helps you get more), benefit from asset appreciation and get tax advantages. When infrastructure or amenities get built, they capture a share of the value. When jobs are created or wages go up in an area, again the landlord captures value. Their asset class is politically protected in many ways. Then there's the whole inter-generational thing...
To a large extent, if your parents were owners, you will be an owner and if your parents were renters, you will be a renter. It's not guaranteed of course, but the effect is very strong.
I'm no socialist but I know a rigged game when I see one.
You mean, like, cars?
1-2 properties can be considered primary homes and get all tax benefits
3-4 properties allowed but no tax benefits
5+ properties not allowed
Uh… yes? I mean, housing is a basic right in most countries. Also, a humanitarian, right thing to do. That housing became big business (or business at all) is the real tragedy here.
I.e. rationed based on party loyalty. Or nepotism.
We currently mostly ration on money, which is the least worse option if we refuse to increase prices. There is also rationing based on sexual favours, which I'd assume everyone would agree is terrible.
Many would prefer to ration on place of birth -- if you are not born in the city then you don't get to live in the city and don't get the job opportunities of the city.
If supply in say London suddenly doubled overnight though (magically make every borough the same density as Westminster - with all those big open parks), that would put downwards pressure on prices.
It would release the currently suppressed demand as those currently living in overcrowded situations could afford to live on their own, those currently living outside the city who don't want to could move in. I'm not sure what the supply would have to be to raise main-home occupancy in London to 90% with prices down at the same level as it is in Stoke, but it's far far higher than it currently is.