That's half a million per eviction case going to the property owner. "Just build more" doesn't work when the stuff built and already existing are not affordable What if we make all primary...
Still, Maalouf’s tenant activism has helped move the needle. The City of Los Angeles has offered the landlord $15 million to keep her building affordable through 2034, but that deal wouldn’t get rid of over 30 eviction cases still proceeding, including Maalouf’s, or the $25,000 in back rent she owes.
That's half a million per eviction case going to the property owner.
"Just build more" doesn't work when the stuff built and already existing are not affordable
What if we make all primary residences government owned. Tank the entire market and remove housing from market speculation and make them not investment vehicles. we'd never do it if course. But it'd be nice
In every case where you consider increasing supply in order to lower prices, the goods are relatively highly priced, else you wouldn't be considering increasing supply. So I don't see how you can...
"Just build more" doesn't work when the stuff built and already existing are not affordable
In every case where you consider increasing supply in order to lower prices, the goods are relatively highly priced, else you wouldn't be considering increasing supply. So I don't see how you can reach that conclusion with that premise. It's like saying trying to win when losing doesn't work because you're already losing.
I interpreted "stuff built" to be including the things being built in respond to "just build more" -- and if that's what they meant, it is indeed the case that just building more housing does not...
I interpreted "stuff built" to be including the things being built in respond to "just build more" -- and if that's what they meant, it is indeed the case that just building more housing does not help solve a lack of affordable housing unless you ensure what's built is actually affordable. This is because housing is not a simple supply/demand problem where more building==less expensive. It is very possible to have even an over-supply of luxury housing but still have a dearth of affordable housing.
Not really. Let's say the only units added are 100 "luxury" units. There are two scenarios: one where they're full, and one where there's substantial vacancies. For the former, this will reduce...
Not really. Let's say the only units added are 100 "luxury" units. There are two scenarios: one where they're full, and one where there's substantial vacancies.
For the former, this will reduce prices across the board. Those weren't filled with aliens, it means that that proportion of luxury tenants are being drawn away from the rest of the pool and into said luxury units. This will generally push prices downward.
For the latter, this simply isn't profitable for the developer, then. People do like making money. This will discourage "luxury" unit development overall, and if unprofitable enough, will force the developer to sell or pivot.
For some reason I feel like people think rich people only make things for rich people, or something, which just isn't true. Do you think the Walton family runs a low-cost supermarket out of a charitable spirit? No, it's just good business to capture parts of the demand-curve that are not fulfilled in the current market.
Developers will make affordable housing if they are able to build at large, not out of altruism, but because they will need to capture different parts of the market.
I think the economics of building housing is significantly more complex than your two scenarios, and I think the housing markets in places I've lived (especially when it comes to apartments in...
I think the economics of building housing is significantly more complex than your two scenarios, and I think the housing markets in places I've lived (especially when it comes to apartments in cities) very clearly illustrate that this is an oversimplified picture of things. It pretends that a city is a closed system, for instance -- if more luxury housing is built in Berlin, where I live, it is absolutely not the case that this housing will be filled by people currently living in affordable housing. In fact, it will almost definitely be filled by people moving to the city who can afford to live there.
We have a huge problem here because developers do not deem it profitable enough to build the right kinds of housing, and that's not something you can wave away by insisting that capitalism will inevitably fix it eventually if we just build more. We do need to build more, but it needs to be much more targeted than just relying on the whims of capitalism to not drive up housing prices. Supply and demand don't care about homelessness.
That’s why the metric needs to be the units available nationally, and the number of units needs to be far higher. Tokyo is the model. You just need to build more, far more in the hot areas. Rent...
That’s why the metric needs to be the units available nationally, and the number of units needs to be far higher.
Tokyo is the model. You just need to build more, far more in the hot areas. Rent has stayed stable in Tokyo for the last decade. Part of the reason Tokyo builds so much is that it has no jurisdiction over its own zoning, which is under national purview, where there is reasons to encourage building.
Given that Japan lives in an economy in which housing depreciates after it's built, I think there's a degree to which you cannot blindly apply all its lessons to economies in which housing is...
Given that Japan lives in an economy in which housing depreciates after it's built, I think there's a degree to which you cannot blindly apply all its lessons to economies in which housing is expected to appreciate in value. Certainly that can impact how appealing it is to build new.
Broadly I think we agree -- the US is choked by abysmally bad zoning, and we do need to build more. I just think that we need to be mindful that just building more will not be all that effective unless we adjust other levers.
Housing depreciates in Japan in part because of the building more culture there. If anyone in the US stopped to think about why a used house should cost more than when it was new, they'd surely...
Housing depreciates in Japan in part because of the building more culture there. If anyone in the US stopped to think about why a used house should cost more than when it was new, they'd surely realize it's because there's not enough alternatives, driving up the cost of housing.
I've lived in my condo for 3 years and the paint has a few marks here and there, the hardwood flooring has more scratches, the appliances are used, etc. Depreciation is the natural state of housing. That it goes up in spite of that is due to lack of supply.
I will reply to your other reply to me here, since it's also addressed here: obviously those that advocate for building more don't believe that increasing supply is the only lever to pull, but it's the main thrust of it. We know this. It goes without saying there's other factors.
The "just" in "just build more" implies a simplicity to the situation that isn't there, at least not everywhere, that's all. Building more is a huge part of the solution, but I don't actually...
The "just" in "just build more" implies a simplicity to the situation that isn't there, at least not everywhere, that's all. Building more is a huge part of the solution, but I don't actually think enough focus is put on other parts of the solution. Certainly the idea that capitalism will solve housing issues without government intervention is not something I think is borne out in reality.
My house depreciates as fast or faster than my car, at least in raw dollar amounts. Lot of moving parts and things go wrong all the time. Inflation, perpetual maintainence, and access to cheap...
housing depreciates after it's built
My house depreciates as fast or faster than my car, at least in raw dollar amounts. Lot of moving parts and things go wrong all the time.
Inflation, perpetual maintainence, and access to cheap debts are the main thing that stop homes from bottoming out in not-hot markets. Even then, there's a reason fix-er-uppers are way cheaper than move-in ready.
My financial advisor is encouraging me to invest in housing because the value of housing can be expected to go up over time in our economy. The costs of maintenance being more than offset by the...
My financial advisor is encouraging me to invest in housing because the value of housing can be expected to go up over time in our economy. The costs of maintenance being more than offset by the rising value of the property and (in cases of investment) rental income. I get that housing does depreciate in certain ways but comparing it to an automobile is disingenuous.
My initial point with housing depreciation was merely that the housing market in Japan is quite different and that we thus need to think a little harder about why what they're doing works rather than just blindly copy-pasting their policies as solutions.
It's a weird quirk of very recent times that housing values consistently rise so much. Historically, real estate wasn't seen as the same kind of investment as stocks and bonds because the only...
It's a weird quirk of very recent times that housing values consistently rise so much. Historically, real estate wasn't seen as the same kind of investment as stocks and bonds because the only value comes from the land and the building, and that inherent value probably doesn't change much unless the population booms...or NIMBYism stifles competition. So much wealth pouring into holding existing real estate is objectively terrible for the young but really good for old people that bought in decades ago and want to cash out (see the UK).
Rising real estate costs are definitely a problem for people who don’t own any. From a generational standpoint, it’s a bit more mixed. Old people spend money and that’s a large market. For...
Rising real estate costs are definitely a problem for people who don’t own any. From a generational standpoint, it’s a bit more mixed.
Old people spend money and that’s a large market. For example, healthcare is apparently 80% labor costs and much of that is spending by the elderly, especially at end of life. It’s also a growth industry with rising labor costs.
Second, even if they don’t spend it all, everything that remains will be inherited by younger people.
(These macroeconomic forces might not be personally relevant, though, if you don’t expect to inherit anything and don’t work in an industry that serves elderly customers.)
Nothing is perfectly efficient so there can be cases where developers overbuild luxury apartments and then find that they stay empty, but in the long term that doesn't happen. They quickly stop as...
Nothing is perfectly efficient so there can be cases where developers overbuild luxury apartments and then find that they stay empty, but in the long term that doesn't happen. They quickly stop as they find themselves losing money. And building luxury apartments can still lower rents for non-luxury apartments as demand moves high income earners away from middle class apartments and so on. If there's rentals sitting empty forever in hopes of snagging the "correct" rent rather than dropping rent, that's a failure in our tax code, not an indictment of the supply-demand curve.
I agree, it is a failure in our tax code, but the fact of the matter is that housing is not just a circumstance where you can look at a supply-demand curve without considering other factors like...
I agree, it is a failure in our tax code, but the fact of the matter is that housing is not just a circumstance where you can look at a supply-demand curve without considering other factors like that. Governments need to actively pay attention to what their economic policies (around housing and other things) are encouraging or discouraging rather than just blindly incentivizing building more without addressing other potential pitfalls.
What @sparksbet said. Esp, it's not a closed system. And I mean, I'm not an economist nor a politician, but I've unfortunately lived in enough cities where they've been trying to "just build more"...
What @sparksbet said. Esp, it's not a closed system.
And I mean, I'm not an economist nor a politician, but I've unfortunately lived in enough cities where they've been trying to "just build more" for decades without success towards resolving unaffordablility.
The basic premise is that you need more units than there are people who want to move into the city at that price. What happens when your city never runs out of people who are willing to move in? What happens after they become so unaffordable people will need to throw an entire extended family's wealth behind a unit, and you STILL have people buying?
The quick answer is that you basically need the whole world economy to cool before prices come even a little down. And then homeowners moan and wail and the government steps in to keep those prices bouyed.
It's not a free market: there's a world of people, and there's a government very much involved to keeping prices up, plus a world of other governments/companies who would scoop up units to rent to your citizens. They'll keep giving money to developers and keep making it easier for folks to borrow before they let prices crash
I believe you are correct. Or rather I agree with you. If the supply of housing can never saturate the demand for it, then the price will remain quite high. But if that's the case, any attempts to...
I believe you are correct. Or rather I agree with you. If the supply of housing can never saturate the demand for it, then the price will remain quite high. But if that's the case, any attempts to make housing more affordable will probably fall back to some form of rent control, where the right to stay somewhere amounts to a dibs system. But until we get to that point, I think most if not all cities can still try to alleviate that upward price pressure by adding more supply. Which cities do you have in mind? I would imagine London and NYC being at the forefront.
Even if prices don’t go down, one of the benefits of building more housing is that more people have a place to live. Yes, many of them lived somewhere else before, but it seems like that should...
Even if prices don’t go down, one of the benefits of building more housing is that more people have a place to live. Yes, many of them lived somewhere else before, but it seems like that should count for something?
Also, there’s the question of what prices would be in whatever alternate scenario you have in mind.
But it's not the case that more people have a place to live in that scenario. More people are living in a certain place, but without prices going down there aren't any fewer people facing...
But it's not the case that more people have a place to live in that scenario. More people are living in a certain place, but without prices going down there aren't any fewer people facing homelessness because they can't afford rent.
And I say this as someone who is part of that group who moved into a city with a housing supply problem and can afford more expensive housing. More people like me moving to a city can be good, but it's not good if it comes at the expense of people with less than me.
I mean, I sure celebrated when I got my apartment! But if our goal is to make these cities affordable to live in, we cannot rest on our laurels in this respect.
I mean, I sure celebrated when I got my apartment! But if our goal is to make these cities affordable to live in, we cannot rest on our laurels in this respect.
Something that's often forgotten with "gentrification" is the existing owners make a pretty penny selling or renting their property to the new highest bidders! While the wealth is distributed only...
but it's not good if it comes at the expense of people with less than me.
Something that's often forgotten with "gentrification" is the existing owners make a pretty penny selling or renting their property to the new highest bidders! While the wealth is distributed only to those that already owned property, selling the family home can be fantastic for the old owners. In many cases, wealth is being directly transferred to people that used to live in a poor area of town. Of course the dynamics are more complicated with renting, etc.
I live in a neighborhood that used to be 90% Black owned. The process that you describe happened, and each of those people got a chunk of change from selling the family home. But the community...
I live in a neighborhood that used to be 90% Black owned. The process that you describe happened, and each of those people got a chunk of change from selling the family home. But the community that used to exist there is gone. There are new communities, made up of different people, but gentrification did absolutely obliterate the social ties that used to exist there.
Where I live pretty much everyone rents, as only the very rich can afford to buy even a modest apartment. So the wealth transfer you describe unfortunately doesn't occur. It's just the same...
Where I live pretty much everyone rents, as only the very rich can afford to buy even a modest apartment. So the wealth transfer you describe unfortunately doesn't occur. It's just the same landlords raising rents on the same housing. No one remotely close to poor owns housing in Berlin.
Berlin's housing market is somewhat uniquely fucked in Germany to my understanding. It turns out rent control doesn't work and actually makes the housing market worse...just like every economist...
Berlin's housing market is somewhat uniquely fucked in Germany to my understanding. It turns out rent control doesn't work and actually makes the housing market worse...just like every economist has always said.
Berlin's housing market was already fucked prior to the rent freeze attempt, and the rent freeze was in place for a very short time in the grand scheme of things before it was overturned and...
Berlin's housing market was already fucked prior to the rent freeze attempt, and the rent freeze was in place for a very short time in the grand scheme of things before it was overturned and tenants were forced to make back-payments. It absolutely cannot be blamed for Berlin's housing market being fucked (although I'll definitely knowledge it didn't really help).
Exceptionally few ordinary people being able to own their own housing is exceedingly common in cities of a similar size and popularity to Berlin, is my understanding.
Berlin is actually a major exception within Germany based on everything I know. It's not the standard. In general, Germany is actually an international model for housing development, except for...
Berlin is actually a major exception within Germany based on everything I know. It's not the standard. In general, Germany is actually an international model for housing development, except for Berlin which has tried everything except building enough supply to keep up with demand: https://www.sightline.org/2021/05/27/yes-other-countries-do-housing-better-case-2-germany/
I'm well aware that Berlin is an exception within Germany in a number of respects, but I don't think it is an exception among cities of its size/station either in Germany OR internationally in...
I'm well aware that Berlin is an exception within Germany in a number of respects, but I don't think it is an exception among cities of its size/station either in Germany OR internationally in respect to how many residents rent their housing.
I agree Berlin isn't getting remotely enough new development, though. What new development it is getting is not affordable for most people, presumably because devs see it as less profitable. At the same time, you still pass empty undeveloped lots between buildings even in shockingly central parts of the city. Luxury apartment rents have risen enough that it isn't much cheaper than equivalent housing in Oslo anymore, and anything remotely affordable requires you to essentially participate in the Hunger Games to get an offer from a landlord. My spouse and I will probably stay in our current apartment until we leave Berlin entirely.
Berlin is exceptional both within Germany and international. Within Germany, it has the lowest owner-occupancy rate, and of course you're right Berlin has a massive supply shortage. Comparing...
Berlin is exceptional both within Germany and international. Within Germany, it has the lowest owner-occupancy rate, and of course you're right Berlin has a massive supply shortage. Comparing Berlin's rental rate of 85%, Barcelona has a rate of 40%, NYC ~70%, and San Francisco and Los Angeles 65% and 55%. I mostly checked cities which are considered to have terrible housing markets internationally for reference.
The statistics on that website for Germany are comparing German federal states, of which only two consist of a single metropolitan area the way Berlin does, so I don't think it's fair to compare...
The statistics on that website for Germany are comparing German federal states, of which only two consist of a single metropolitan area the way Berlin does, so I don't think it's fair to compare the rates of Berlin and Hamburg to those of entire states that include villages and rural areas. Cities throughout Europe (and most other places, I wager) have much lower rates of owner-occupied housing than rural areas, so this is not a like-for-like comparison. Berlin does have a lower rate of owner-occupied housing than Hamburg does but the difference between 17.4% and 23.9% is not particularly large. Given how low Sachen's rate overall is, I highly doubt Leipzig or Dresden have very high rates of owner-occupied housing either, but I'm having trouble finding reliable city-level statistics. This site (in German) claims Munich's rate is about 25%, which isn't far from what I'd expect given Berlin and Hamburg's numbers, but it's not exactly a scholarly source. While Berlin is definitely worse on this metric than other large German cities, it's not worse by the degree you might assume comparing it to federal states that contain more than a single city.
As for cities in other countries, you only compare to countries with far higher national rates of owner-occupied housing. Germany's national rate of owner-occupied housing is 47.5%, whereas the US rate is 65.7% and Spain's is 75.3%, so we're operating off different baselines there. I certainly wouldn't have claimed that the level of owner-occupancy I see here in Berlin is anywhere close to any US city other than maybe NYC, and these stats seem to bear that out. I would be more interested in comparing to cities like Zürich, Copenhagen, Vienna, Paris, Prague, London, and Stockholm. I wouldn't be surprised if Berlin still has one of the lowest owner-occupancy rates, but I think the competition would be stiffer. Unfortunately I'm not having much luck finding city-level statistics in these other countries either, at least not with the amount of work I'm willing to put into it.
Much the same experience. Unfortunately it's quite hard to find these statistics without knowing every country's national language! It's not necessarily a problem for everyone to rent. It may even...
Unfortunately I'm not having much luck finding city-level statistics in these other countries either
Much the same experience. Unfortunately it's quite hard to find these statistics without knowing every country's national language!
It's not necessarily a problem for everyone to rent. It may even make housing costs adjust faster to market changes. The underlying supply and demand curves still apply either way.
I don't think it's necessarily a problem for everyone to rent (outside of my general opposition to private landlords, but that's a separate matter), but it does mean that gentrification doesn't...
I don't think it's necessarily a problem for everyone to rent (outside of my general opposition to private landlords, but that's a separate matter), but it does mean that gentrification doesn't benefit the people that are being displaced in the monetary way it would if they owned their homes.
There has to be somewhere between “companies bought all the housing so theres none for the rest of us” and “government bought all the housing so we can no longer own property”
There has to be somewhere between
“companies bought all the housing so theres none for the rest of us”
and
“government bought all the housing so we can no longer own property”
Yup! Government builds affordable housing and punish/limit hoarding for money. See British Hong Kong 1970s and Singapore now. What percentage in US? Not subsidized privately owned, public. I think...
Yup! Government builds affordable housing and punish/limit hoarding for money.
See British Hong Kong 1970s and Singapore now.
As of 2020, 78.7% of Singapore residents live in public housing, down from a high of 88.0% in 2000.wiki
What percentage in US? Not subsidized privately owned, public. I think between that and 88% is the "in between"
It's a bit of an oversimplification for Singapore. What happened is that the government built the housing, and then gave people 99 year renewing leases; they're free to exchange those leases for...
It's a bit of an oversimplification for Singapore. What happened is that the government built the housing, and then gave people 99 year renewing leases; they're free to exchange those leases for money.
So in practice, when you go apartment hunting in Singapore, it's not like you go to the government; you are looking through offers on the public market. What Singapore did is ensure there were sufficient units built and floating around the public market by forcibly building, but they weren't trying to have price controls.
They're also drastically reducing the amount of units built this way, as private developers pick up the slack.
The Singapore model has several problems in its HDB public housing implementation. Here is a non-exhaustive set. You must be either married or over 35 to buy HDB property, the latter group...
The Singapore model has several problems in its HDB public housing implementation. Here is a non-exhaustive set.
You must be either married or over 35 to buy HDB property, the latter group restricted to small units. There is no gay marriage. The issues here are hopefully obvious.
The current system is Built To Order (BTO). A new build will be declared and it is essentially a lottery for who gets the opportunity to purchase. It is oversubscribed by many times, so many won’t get anything and will need to try a few again elsewhere. Only when the units are mostly purchased do they break ground, leading to wait times of 5-10 years to get your key if you even get a unit, let alone a good one. Frustrating, pushes people to get married earlier to start the long process, and drives up the resale market prices for those who can’t wait.
The government builds and subsidizes the initial sale, but resale is a private market. This means the initial owner can, when they sell after the minimum number of occupancy years, make a lot of money, but subsequent sales significantly less so. The BTO award is a lottery win in more than one way.
The govt allows citizens to use their publicly managed retirement savings (CPF) towards the purchase of a home, provided they put the sum back with interest should they sell and not buy another HDB. This, along with early messaging, has made the citizens see HDB as an investment, further driving up resale prices and dissatisfaction over any measures designed to reduce them.
As has been mentioned elsewhere, is that you don’t really own the unit; you have a 99-year lease. Yes, it is transferable, but it does not reset and is a ticking time bomb. On paper, when the lease runs out, ownership returns to the government and that’s it. It hasn’t happened yet, and nobody expects the government to essentially make an entire building homeless without compensation, but it’s all up in the air. Occasionally the govt will buy out the remainder of the lease after a building vote, but not super commonly.
The result is increasingly expensive, increasingly small units, increasingly an unavoidable risk, with young adults squeezed in the middle while.
Many of these problems could have been avoided if the government controlled the process end to end - build, sale, and resale - with a more well defined plan to shift people when redevelopment is necessary instead of a 99-year lease blowing up. Also at least gay marriage, but better options for non-married situations in general too.
The responses to your comment kinda made me mad this morning. Okay, maybe Singapore doesn’t map perfectly onto the United States. So what? Let’s try it anyway. I am so sick and tired of the “we...
The responses to your comment kinda made me mad this morning. Okay, maybe Singapore doesn’t map perfectly onto the United States. So what? Let’s try it anyway. I am so sick and tired of the “we have tried nothing and we are all out of ideas” attitude that pops up when talking about housing. Why don’t we just try Singapore’s solution and see how it works? The people who made our country designed the laws to be flexible and changeable on purpose. We are supposed to try things and fix things.
And let’s make our experiments actually large. We are the United States. We can throw around money like there is no tomorrow. Let’s spend a few billion running some experiments on high rent areas. Maybe they don’t work. So what? That’s not a waste of money, you just bought information with it. We waste so much tax money on random bullshit that doesn’t affect me or actively makes my life worse. I would much rather spend my tax money on random experiments to try and fix the housing crisis. Also make them big. If you don’t affect at least 1% of the market in an area, you are just wasting everyone’s time. If you don’t get above 10%, it’s probably not a good indicator of something that would work nationwide. You can’t just build 10 houses and say “look it doesn’t work!”
What if there was something that state or local government could do that cost $0 to implement, increased tax revenues, AND lowered housing costs? What if it's been proven to work in the US, not to...
What if there was something that state or local government could do that cost $0 to implement, increased tax revenues, AND lowered housing costs? What if it's been proven to work in the US, not to mention abroad, and recently too?
Well, there is - rezone land so that it can be developed more densely. Cost nothing for the government to simply loosen its own restrictions. Brings in more tax revenue from both higher land evaluations as well as more income tax and sales tax from a higher population. Takes little to no time to implement.
The problem at all levels is political first and foremost, and progress is being made - Walz, potentially the new vice president, lead the charge on zoning reform in Minnesota which worked so well to tampen down rent prices in the state. But it's hard enough to convince people to do something that cost $0 of taxpayer money.
We already know certain kinds of mixed-income public housing projects work well. They're just difficult to fund (raising taxes is politically unpopular), and many advocates usually start tearing...
We already know certain kinds of mixed-income public housing projects work well. They're just difficult to fund (raising taxes is politically unpopular), and many advocates usually start tearing eachother's proposals apart because the silver bullet never fits every group's preferred framework. Housing is a bit of a rorschach test where you can see whatever pet policies you want in it...
This is largely why most effective YIMBYs advocate for an all-of-the-above approach to building more housing. As long as enough housing gets built, the fundamentals of supply and demand will work.
The Singaporean solution was because the British had extracted wealth from them such that nothing was invested into housing for a long time. The buildings that did exist were so dilapidated people...
The Singaporean solution was because the British had extracted wealth from them such that nothing was invested into housing for a long time. The buildings that did exist were so dilapidated people were dying inside of them and they couldn’t he sold because everyone was poor, because so much wealth had been taken from them. As the government condemned and demolished these structures, the structures that they rebuilt was government housing.
I don’t think the situation is as severe here, and the us government would have to multiply Singapores program by like 1000 to come close to satisfying the housing needs of everyone who could use it. We cant even balance our budget so I don’t see such a massive undertaking happening.
The thing thats happening in the US in a lot of cities is that the property tax goes up for everyone at the same time, suddenly all these owners of old cheap apartments decide to sell. Then, whoever buys them demos them, displaces all the residents, and builds new fancy luxury apartments. This is whats happening to my city right now. They call it “revitalization” and my city is in a housing boom, building tons of housing everywhere that none of the displaced people can afford. Cheap housing is old housing and theres no old housing left.
What cities could do is structure property taxes based on the land sale, or time of ownership ( like every ten years) but cities actually benefit from such rapid selling and rebuilding so I doubt anyone will take that sort of action. The city benefits so much during these boom cycles, they’d never do anything to stop them, and its the boom cycles that displace the people who need cheap rental homes.
That's half a million per eviction case going to the property owner.
"Just build more" doesn't work when the stuff built and already existing are not affordable
What if we make all primary residences government owned. Tank the entire market and remove housing from market speculation and make them not investment vehicles. we'd never do it if course. But it'd be nice
In every case where you consider increasing supply in order to lower prices, the goods are relatively highly priced, else you wouldn't be considering increasing supply. So I don't see how you can reach that conclusion with that premise. It's like saying trying to win when losing doesn't work because you're already losing.
I interpreted "stuff built" to be including the things being built in respond to "just build more" -- and if that's what they meant, it is indeed the case that just building more housing does not help solve a lack of affordable housing unless you ensure what's built is actually affordable. This is because housing is not a simple supply/demand problem where more building==less expensive. It is very possible to have even an over-supply of luxury housing but still have a dearth of affordable housing.
Not really. Let's say the only units added are 100 "luxury" units. There are two scenarios: one where they're full, and one where there's substantial vacancies.
For the former, this will reduce prices across the board. Those weren't filled with aliens, it means that that proportion of luxury tenants are being drawn away from the rest of the pool and into said luxury units. This will generally push prices downward.
For the latter, this simply isn't profitable for the developer, then. People do like making money. This will discourage "luxury" unit development overall, and if unprofitable enough, will force the developer to sell or pivot.
For some reason I feel like people think rich people only make things for rich people, or something, which just isn't true. Do you think the Walton family runs a low-cost supermarket out of a charitable spirit? No, it's just good business to capture parts of the demand-curve that are not fulfilled in the current market.
Developers will make affordable housing if they are able to build at large, not out of altruism, but because they will need to capture different parts of the market.
I think the economics of building housing is significantly more complex than your two scenarios, and I think the housing markets in places I've lived (especially when it comes to apartments in cities) very clearly illustrate that this is an oversimplified picture of things. It pretends that a city is a closed system, for instance -- if more luxury housing is built in Berlin, where I live, it is absolutely not the case that this housing will be filled by people currently living in affordable housing. In fact, it will almost definitely be filled by people moving to the city who can afford to live there.
We have a huge problem here because developers do not deem it profitable enough to build the right kinds of housing, and that's not something you can wave away by insisting that capitalism will inevitably fix it eventually if we just build more. We do need to build more, but it needs to be much more targeted than just relying on the whims of capitalism to not drive up housing prices. Supply and demand don't care about homelessness.
That’s why the metric needs to be the units available nationally, and the number of units needs to be far higher.
Tokyo is the model. You just need to build more, far more in the hot areas. Rent has stayed stable in Tokyo for the last decade. Part of the reason Tokyo builds so much is that it has no jurisdiction over its own zoning, which is under national purview, where there is reasons to encourage building.
Given that Japan lives in an economy in which housing depreciates after it's built, I think there's a degree to which you cannot blindly apply all its lessons to economies in which housing is expected to appreciate in value. Certainly that can impact how appealing it is to build new.
Broadly I think we agree -- the US is choked by abysmally bad zoning, and we do need to build more. I just think that we need to be mindful that just building more will not be all that effective unless we adjust other levers.
Housing depreciates in Japan in part because of the building more culture there. If anyone in the US stopped to think about why a used house should cost more than when it was new, they'd surely realize it's because there's not enough alternatives, driving up the cost of housing.
I've lived in my condo for 3 years and the paint has a few marks here and there, the hardwood flooring has more scratches, the appliances are used, etc. Depreciation is the natural state of housing. That it goes up in spite of that is due to lack of supply.
I will reply to your other reply to me here, since it's also addressed here: obviously those that advocate for building more don't believe that increasing supply is the only lever to pull, but it's the main thrust of it. We know this. It goes without saying there's other factors.
The "just" in "just build more" implies a simplicity to the situation that isn't there, at least not everywhere, that's all. Building more is a huge part of the solution, but I don't actually think enough focus is put on other parts of the solution. Certainly the idea that capitalism will solve housing issues without government intervention is not something I think is borne out in reality.
My house depreciates as fast or faster than my car, at least in raw dollar amounts. Lot of moving parts and things go wrong all the time.
Inflation, perpetual maintainence, and access to cheap debts are the main thing that stop homes from bottoming out in not-hot markets. Even then, there's a reason fix-er-uppers are way cheaper than move-in ready.
My financial advisor is encouraging me to invest in housing because the value of housing can be expected to go up over time in our economy. The costs of maintenance being more than offset by the rising value of the property and (in cases of investment) rental income. I get that housing does depreciate in certain ways but comparing it to an automobile is disingenuous.
My initial point with housing depreciation was merely that the housing market in Japan is quite different and that we thus need to think a little harder about why what they're doing works rather than just blindly copy-pasting their policies as solutions.
It's a weird quirk of very recent times that housing values consistently rise so much. Historically, real estate wasn't seen as the same kind of investment as stocks and bonds because the only value comes from the land and the building, and that inherent value probably doesn't change much unless the population booms...or NIMBYism stifles competition. So much wealth pouring into holding existing real estate is objectively terrible for the young but really good for old people that bought in decades ago and want to cash out (see the UK).
Yeah, I think the current "line go up" housing market in the west is probably fundamentally unsustainable long-term.
Rising real estate costs are definitely a problem for people who don’t own any. From a generational standpoint, it’s a bit more mixed.
Old people spend money and that’s a large market. For example, healthcare is apparently 80% labor costs and much of that is spending by the elderly, especially at end of life. It’s also a growth industry with rising labor costs.
Second, even if they don’t spend it all, everything that remains will be inherited by younger people.
(These macroeconomic forces might not be personally relevant, though, if you don’t expect to inherit anything and don’t work in an industry that serves elderly customers.)
Nothing is perfectly efficient so there can be cases where developers overbuild luxury apartments and then find that they stay empty, but in the long term that doesn't happen. They quickly stop as they find themselves losing money. And building luxury apartments can still lower rents for non-luxury apartments as demand moves high income earners away from middle class apartments and so on. If there's rentals sitting empty forever in hopes of snagging the "correct" rent rather than dropping rent, that's a failure in our tax code, not an indictment of the supply-demand curve.
I agree, it is a failure in our tax code, but the fact of the matter is that housing is not just a circumstance where you can look at a supply-demand curve without considering other factors like that. Governments need to actively pay attention to what their economic policies (around housing and other things) are encouraging or discouraging rather than just blindly incentivizing building more without addressing other potential pitfalls.
What @sparksbet said. Esp, it's not a closed system.
And I mean, I'm not an economist nor a politician, but I've unfortunately lived in enough cities where they've been trying to "just build more" for decades without success towards resolving unaffordablility.
The basic premise is that you need more units than there are people who want to move into the city at that price. What happens when your city never runs out of people who are willing to move in? What happens after they become so unaffordable people will need to throw an entire extended family's wealth behind a unit, and you STILL have people buying?
The quick answer is that you basically need the whole world economy to cool before prices come even a little down. And then homeowners moan and wail and the government steps in to keep those prices bouyed.
It's not a free market: there's a world of people, and there's a government very much involved to keeping prices up, plus a world of other governments/companies who would scoop up units to rent to your citizens. They'll keep giving money to developers and keep making it easier for folks to borrow before they let prices crash
I believe you are correct. Or rather I agree with you. If the supply of housing can never saturate the demand for it, then the price will remain quite high. But if that's the case, any attempts to make housing more affordable will probably fall back to some form of rent control, where the right to stay somewhere amounts to a dibs system. But until we get to that point, I think most if not all cities can still try to alleviate that upward price pressure by adding more supply. Which cities do you have in mind? I would imagine London and NYC being at the forefront.
Even if prices don’t go down, one of the benefits of building more housing is that more people have a place to live. Yes, many of them lived somewhere else before, but it seems like that should count for something?
Also, there’s the question of what prices would be in whatever alternate scenario you have in mind.
But it's not the case that more people have a place to live in that scenario. More people are living in a certain place, but without prices going down there aren't any fewer people facing homelessness because they can't afford rent.
And I say this as someone who is part of that group who moved into a city with a housing supply problem and can afford more expensive housing. More people like me moving to a city can be good, but it's not good if it comes at the expense of people with less than me.
I think we can celebrate more people getting a place to live even though there’s more work to do.
I mean, I sure celebrated when I got my apartment! But if our goal is to make these cities affordable to live in, we cannot rest on our laurels in this respect.
Something that's often forgotten with "gentrification" is the existing owners make a pretty penny selling or renting their property to the new highest bidders! While the wealth is distributed only to those that already owned property, selling the family home can be fantastic for the old owners. In many cases, wealth is being directly transferred to people that used to live in a poor area of town. Of course the dynamics are more complicated with renting, etc.
I live in a neighborhood that used to be 90% Black owned. The process that you describe happened, and each of those people got a chunk of change from selling the family home. But the community that used to exist there is gone. There are new communities, made up of different people, but gentrification did absolutely obliterate the social ties that used to exist there.
Where I live pretty much everyone rents, as only the very rich can afford to buy even a modest apartment. So the wealth transfer you describe unfortunately doesn't occur. It's just the same landlords raising rents on the same housing. No one remotely close to poor owns housing in Berlin.
Berlin's housing market is somewhat uniquely fucked in Germany to my understanding. It turns out rent control doesn't work and actually makes the housing market worse...just like every economist has always said.
Berlin's housing market was already fucked prior to the rent freeze attempt, and the rent freeze was in place for a very short time in the grand scheme of things before it was overturned and tenants were forced to make back-payments. It absolutely cannot be blamed for Berlin's housing market being fucked (although I'll definitely knowledge it didn't really help).
Exceptionally few ordinary people being able to own their own housing is exceedingly common in cities of a similar size and popularity to Berlin, is my understanding.
Berlin is actually a major exception within Germany based on everything I know. It's not the standard. In general, Germany is actually an international model for housing development, except for Berlin which has tried everything except building enough supply to keep up with demand: https://www.sightline.org/2021/05/27/yes-other-countries-do-housing-better-case-2-germany/
I'm well aware that Berlin is an exception within Germany in a number of respects, but I don't think it is an exception among cities of its size/station either in Germany OR internationally in respect to how many residents rent their housing.
I agree Berlin isn't getting remotely enough new development, though. What new development it is getting is not affordable for most people, presumably because devs see it as less profitable. At the same time, you still pass empty undeveloped lots between buildings even in shockingly central parts of the city. Luxury apartment rents have risen enough that it isn't much cheaper than equivalent housing in Oslo anymore, and anything remotely affordable requires you to essentially participate in the Hunger Games to get an offer from a landlord. My spouse and I will probably stay in our current apartment until we leave Berlin entirely.
Berlin is exceptional both within Germany and international. Within Germany, it has the lowest owner-occupancy rate, and of course you're right Berlin has a massive supply shortage. Comparing Berlin's rental rate of 85%, Barcelona has a rate of 40%, NYC ~70%, and San Francisco and Los Angeles 65% and 55%. I mostly checked cities which are considered to have terrible housing markets internationally for reference.
The statistics on that website for Germany are comparing German federal states, of which only two consist of a single metropolitan area the way Berlin does, so I don't think it's fair to compare the rates of Berlin and Hamburg to those of entire states that include villages and rural areas. Cities throughout Europe (and most other places, I wager) have much lower rates of owner-occupied housing than rural areas, so this is not a like-for-like comparison. Berlin does have a lower rate of owner-occupied housing than Hamburg does but the difference between 17.4% and 23.9% is not particularly large. Given how low Sachen's rate overall is, I highly doubt Leipzig or Dresden have very high rates of owner-occupied housing either, but I'm having trouble finding reliable city-level statistics. This site (in German) claims Munich's rate is about 25%, which isn't far from what I'd expect given Berlin and Hamburg's numbers, but it's not exactly a scholarly source. While Berlin is definitely worse on this metric than other large German cities, it's not worse by the degree you might assume comparing it to federal states that contain more than a single city.
As for cities in other countries, you only compare to countries with far higher national rates of owner-occupied housing. Germany's national rate of owner-occupied housing is 47.5%, whereas the US rate is 65.7% and Spain's is 75.3%, so we're operating off different baselines there. I certainly wouldn't have claimed that the level of owner-occupancy I see here in Berlin is anywhere close to any US city other than maybe NYC, and these stats seem to bear that out. I would be more interested in comparing to cities like Zürich, Copenhagen, Vienna, Paris, Prague, London, and Stockholm. I wouldn't be surprised if Berlin still has one of the lowest owner-occupancy rates, but I think the competition would be stiffer. Unfortunately I'm not having much luck finding city-level statistics in these other countries either, at least not with the amount of work I'm willing to put into it.
Much the same experience. Unfortunately it's quite hard to find these statistics without knowing every country's national language!
It's not necessarily a problem for everyone to rent. It may even make housing costs adjust faster to market changes. The underlying supply and demand curves still apply either way.
I don't think it's necessarily a problem for everyone to rent (outside of my general opposition to private landlords, but that's a separate matter), but it does mean that gentrification doesn't benefit the people that are being displaced in the monetary way it would if they owned their homes.
There has to be somewhere between
“companies bought all the housing so theres none for the rest of us”
and
“government bought all the housing so we can no longer own property”
Well, we haven't even glanced in the direction of the latter in the US, so it's no surprise we haven't spotted much in-between.
Yup! Government builds affordable housing and punish/limit hoarding for money.
See British Hong Kong 1970s and Singapore now.
What percentage in US? Not subsidized privately owned, public. I think between that and 88% is the "in between"
It's a bit of an oversimplification for Singapore. What happened is that the government built the housing, and then gave people 99 year renewing leases; they're free to exchange those leases for money.
So in practice, when you go apartment hunting in Singapore, it's not like you go to the government; you are looking through offers on the public market. What Singapore did is ensure there were sufficient units built and floating around the public market by forcibly building, but they weren't trying to have price controls.
They're also drastically reducing the amount of units built this way, as private developers pick up the slack.
The Singapore model has several problems in its HDB public housing implementation. Here is a non-exhaustive set.
You must be either married or over 35 to buy HDB property, the latter group restricted to small units. There is no gay marriage. The issues here are hopefully obvious.
The current system is Built To Order (BTO). A new build will be declared and it is essentially a lottery for who gets the opportunity to purchase. It is oversubscribed by many times, so many won’t get anything and will need to try a few again elsewhere. Only when the units are mostly purchased do they break ground, leading to wait times of 5-10 years to get your key if you even get a unit, let alone a good one. Frustrating, pushes people to get married earlier to start the long process, and drives up the resale market prices for those who can’t wait.
The government builds and subsidizes the initial sale, but resale is a private market. This means the initial owner can, when they sell after the minimum number of occupancy years, make a lot of money, but subsequent sales significantly less so. The BTO award is a lottery win in more than one way.
The govt allows citizens to use their publicly managed retirement savings (CPF) towards the purchase of a home, provided they put the sum back with interest should they sell and not buy another HDB. This, along with early messaging, has made the citizens see HDB as an investment, further driving up resale prices and dissatisfaction over any measures designed to reduce them.
As has been mentioned elsewhere, is that you don’t really own the unit; you have a 99-year lease. Yes, it is transferable, but it does not reset and is a ticking time bomb. On paper, when the lease runs out, ownership returns to the government and that’s it. It hasn’t happened yet, and nobody expects the government to essentially make an entire building homeless without compensation, but it’s all up in the air. Occasionally the govt will buy out the remainder of the lease after a building vote, but not super commonly.
The result is increasingly expensive, increasingly small units, increasingly an unavoidable risk, with young adults squeezed in the middle while.
Many of these problems could have been avoided if the government controlled the process end to end - build, sale, and resale - with a more well defined plan to shift people when redevelopment is necessary instead of a 99-year lease blowing up. Also at least gay marriage, but better options for non-married situations in general too.
The responses to your comment kinda made me mad this morning. Okay, maybe Singapore doesn’t map perfectly onto the United States. So what? Let’s try it anyway. I am so sick and tired of the “we have tried nothing and we are all out of ideas” attitude that pops up when talking about housing. Why don’t we just try Singapore’s solution and see how it works? The people who made our country designed the laws to be flexible and changeable on purpose. We are supposed to try things and fix things.
And let’s make our experiments actually large. We are the United States. We can throw around money like there is no tomorrow. Let’s spend a few billion running some experiments on high rent areas. Maybe they don’t work. So what? That’s not a waste of money, you just bought information with it. We waste so much tax money on random bullshit that doesn’t affect me or actively makes my life worse. I would much rather spend my tax money on random experiments to try and fix the housing crisis. Also make them big. If you don’t affect at least 1% of the market in an area, you are just wasting everyone’s time. If you don’t get above 10%, it’s probably not a good indicator of something that would work nationwide. You can’t just build 10 houses and say “look it doesn’t work!”
What if there was something that state or local government could do that cost $0 to implement, increased tax revenues, AND lowered housing costs? What if it's been proven to work in the US, not to mention abroad, and recently too?
Well, there is - rezone land so that it can be developed more densely. Cost nothing for the government to simply loosen its own restrictions. Brings in more tax revenue from both higher land evaluations as well as more income tax and sales tax from a higher population. Takes little to no time to implement.
The problem at all levels is political first and foremost, and progress is being made - Walz, potentially the new vice president, lead the charge on zoning reform in Minnesota which worked so well to tampen down rent prices in the state. But it's hard enough to convince people to do something that cost $0 of taxpayer money.
We already know certain kinds of mixed-income public housing projects work well. They're just difficult to fund (raising taxes is politically unpopular), and many advocates usually start tearing eachother's proposals apart because the silver bullet never fits every group's preferred framework. Housing is a bit of a rorschach test where you can see whatever pet policies you want in it...
This is largely why most effective YIMBYs advocate for an all-of-the-above approach to building more housing. As long as enough housing gets built, the fundamentals of supply and demand will work.
The Singaporean solution was because the British had extracted wealth from them such that nothing was invested into housing for a long time. The buildings that did exist were so dilapidated people were dying inside of them and they couldn’t he sold because everyone was poor, because so much wealth had been taken from them. As the government condemned and demolished these structures, the structures that they rebuilt was government housing.
I don’t think the situation is as severe here, and the us government would have to multiply Singapores program by like 1000 to come close to satisfying the housing needs of everyone who could use it. We cant even balance our budget so I don’t see such a massive undertaking happening.
The thing thats happening in the US in a lot of cities is that the property tax goes up for everyone at the same time, suddenly all these owners of old cheap apartments decide to sell. Then, whoever buys them demos them, displaces all the residents, and builds new fancy luxury apartments. This is whats happening to my city right now. They call it “revitalization” and my city is in a housing boom, building tons of housing everywhere that none of the displaced people can afford. Cheap housing is old housing and theres no old housing left.
What cities could do is structure property taxes based on the land sale, or time of ownership ( like every ten years) but cities actually benefit from such rapid selling and rebuilding so I doubt anyone will take that sort of action. The city benefits so much during these boom cycles, they’d never do anything to stop them, and its the boom cycles that displace the people who need cheap rental homes.