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Comment by ac29 | Hacker News Reader

World population crossed 4B in the 1970s and 5B in the 1980s, now we are about to cross 8B in the next few years. I agree with your point about real estate becoming more heavily securitized, as well as being used as a method to escape capital controls. But, you cant ignore the fact that there are a lot more people both rich and working class competing for those major world city houses than there were 40 or 50 years ago.

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But the problem is the supply of housing hasn't kept up with that demand due to artificial limits placed on the market. Single-family zoning has made it illegal to build more of the dense housing that's needed in cities today.

https://www.nytimes.com/interactive/2019/06/18/upshot/cities...

To play devils advocate, surely removing the artifical limits won't help in the long run as the city will just continue to spraw until it hits natural limits?

Most American and European cities are significantly less dense than their Asian counterparts. There's a long way to go before they reach any natural limits.

which comes back to the original question - people who are used to larger spaces prefer to continue having those larger spaces. So houses are more sought after, which causes apartments' prices to not grow, which causes fewer of them to be built (as not as high appreciation).

It's partially a cultural problem imho.

Note, that kind of zoning is US specific issue. The situation zoning wise is quite different in Europe. At the same time Europe also has a housing crisis.

Don’t most European cities have pretty strict building height restrictions? Of course that’s not as bad as banning multi family housing complexes completely but it does seem like basically the same core issue

Yes, but even with a 5 or 6 story limit you can fit 10x as many families living in the same area of land than you can with single family detached housing. The problem is that people that own these detached houses don't want to see more dense housing being built in their area because that will "ruin the community feel" aka lower their property values.

cough Grenfell Tower fire.

Lots of tiny Jerry built flats in tower blocks are not the answer - even more so when the rise of WFH is taken into account.

The answer is to update codes to require new buildings have sprinkler systems, and not to put extremely flammable cladding on the side of a damned building. We absolutely need to be able to build more medium density housing more easily.

New buildings do have to have sprinkler systems - it's the older ones that are the problem. You can add cladding to a 1970s building without having to update it to the latest fire safety rules.

Also it is illegal to put extremely flammable cladding on the side of a building. The problem was that if someone sells you "non-flammable cladding" and they are lying, nobody properly checks.

You are aware of all the problems of quickly built high rise tower blocks both technical and social.

Population in Germany has been pretty much constant since 1970. I'm relatively sure that this is true in many other developed nations too. A more important factor than total population is the fraction of people who want to live in a big city. Urbanization has been ongoing, because jobs have increasingly moved to urban centers. Real estate in small villages is quite cheap.

Its very similar in many european coutries. The problem is that cities are owned by someone else than people living in it. Many flats are empty because development cartels can wait long time before they rent it. This way they push the price and cost perception more and more. They will do so to infinity because they have monopoly.

I've heard this a lot, but is it true? I know some flats are empty because they're between tenants or being renovated, but how many are actually empty for years at a time? The idea that not earning any rental now (and paying tax on the place) in the hope that you'll bump up prices years down the line seems risky to me.

I am not sure. I know how is it in my city. It got bought out by few foreign companies. The property tax is not very significant compared to having much higher rent in a year for foresable future.

Don't forget if nobody is renting then nobody is "destroying" the property. That's other tactic. You reconstruct everything so its "too good" to be rented cheap. This way you lower the pool of "normal" flats so their prices go up to a point where the "too good" is the only option.

It's apparent from the increasingly huge differences between rent prices. Often times the longtime landlords who own maybe one building are renting so it makes them enough money to take care of the property + good profit on side and they are happy. They don't check market prices often and are 30%+ cheaper. The rent prices are completely fabricated with no relation to running costs or price of the property.

Of course you will renovate it and rent it out to the top earners. You know what else? You'll ask for the highest deposit allowed since it doesn't cost you anything and filters out the problematic tenants.

You can do it differently when you are on the other side of the table. However you'll soon find out that most of these things are done for a reason.

It's pretty obvious that it's done for gatekeeping. Besides that whole insulting idea that lower middle class will trash your property.

Much more important question is that who has the right to live in a city. Maybe most of the people living in there, people who give that city its purpose and take care of it, want older cheaper flats.

Maybe these companies misjudged their customers and are just forcefully trying to feed on peoples need to live somewhere.

It may be insulting to you, it might be true that you or the people you know would never trash a property and still at the same time some people in your demographic might behave like that. Since it's zero cost to exclude the whole group, that's what the owner is going to do.

People with money are not perfect or of inherently better character, the banker that does coke on Friday is just less likely to use the floorboards as kindling compared to a junkie with more congruent background.

Wow now you threw lower middle class into same group as "floorboards as kindling". It has not been my experience with renting out flat at all.

Username fits i guess.

Only about 1% of the flats in Berlin are empty. Rents have tripled in recent years.

If there is a cartel it is the government.

Pretty much every landlord (also developers) is out there to stab the other landlords in the back if they have the option, which they don't have. The price increase is purely driven by the availability of people who are willing to pay for the price increase and the landlords are not allowed to solve the problem.

The obvious solution is to build more housing. We know how to do that! The obstacle is politics, not technology or economics.

Not really.

Some countries have wealth tax. Some countries don't.

It's sensible to park your money somewhere, where it's not taxed.

If you build more of it, yes, you will meet some of the housing demand (basically just for the richest), but housing is competing with rich people saving.

You need to tax unproductive behavior to rid of it.

Jurisdictions in China have started taxing investment properties on a sliding scale that ramps up a lot the more properties you own.

They have also put heavy restrictions on bank lending.

Basically they are desperately trying to slow/reverse responsibly an out of control housing bubble.

That said they have unique cultural and geographical issues in terms of the sheer scale of their urbanisation

If housing values become stagnant or gradually falling, fewer people will use it as a store of value.

Edit: or even if there is a prospect of this being the case.

The obvious solution is to make renting out properties illegal.

Assuming we went this route, housing prices would obviously fall in spectacular fashion. What do you suggest is done with the houses already rented out, does the government buy them from the owners? If so is it at a fair market pre-announcement rate or at a rate that causes losses to the owners, if for a loss what happens to the economy when those losses hit? What happens to the banks that own those mortgages? In addition why would you not now have massive amounts of empty housing as banks refuse to lend to unqualified buyers?

In addition, how do you account for the massive drop in new development that occurs as much fewer new houses are built as the housing prices are being deflated due to investment being banned? What about apartment buildings?

All genuine questions I would be interested in hearing a solution too?

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