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Comment by arcticbull | Hacker News Reader

Yes you're absolutely right, housing cannot be both a good investment and affordable by definition. Time to give up the narrative. It doesn't make sense.

I've mentioned this before but it's worth saying again: 1 square foot of housing is approximately the same price - adjusted for inflation - as it was in the 1970s, on average. [1] There's a few caveats however.

(1) New houses are 2x bigger on average than they were back then, and the average American family is smaller [1].

(2) City councils, and by extension zoning rules, in major metros preclude construction meaning that supply cannot meet demand. This benefits existing landowners to the detriment of both the next generation and renters. San Francisco is a prime example [2] - SF needed to build 6X as many houses as it did between just 2012 and 2016 just to meet the job growth in the area. This pushes the price per square foot inside metros up way above what they would otherwise be.

(3) Zoning rules outside of major metros, including setback rules and minimum size rules, parking rules, etc, make houses outside metros much bigger. Also, expectations have shifted. This pushes the square footage of suburban homes up - and with it the total price.

(4) This applies mostly in the last few years - but lower interest rates make houses that are more expensive much more affordable on a monthly basis, which is totally fine as most folks end up with a 30 year fixed rate mortgage. A drop from 3% to 2% makes a house about 25% more expensive cost the same amount per month. Yes, it increases down payments, but down payments tend to be up to 20% of the price - so an increase not of 25% but 4%.

So what can we do? Easiest thing is state-wide or federal zoning rules. Build up. Allow smaller homes. [edit](Stop with the mandatory parking.) In Japan, supply and demand meet, and a new 3 bedroom house in Tokyo is like 400K USD [edited for current data] - right around the cost of construction. This is thanks to their federal zoning rules. [3]

[1] https://fee.org/articles/new-homes-today-have-twice-the-squa...

[2] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage

[3] https://marketurbanism.com/2019/03/19/why-is-japanese-zoning...

View on HN

SF board of supervisors just voted unanimously against turning an old barely used church into 300 small shared-kitchen studio apartments, because it’s not “family friendly” enough. https://www.sfchronicle.com/bayarea/article/S-F-supes-say-no... (This will of course instead force 300 people who would live in those to awkwardly pair up and live as unrelated roommates in 150 scattered 2-bedroom flats, taking them off the market and contributing to high rents throughout the Bay Area.)

The board also just voted against turning a parking lot into a 500-unit apartment building, citing the recent Florida condo collapse as justification, and worrying that it will “gentrify” the corner of 6th and Market (!). https://www.sfchronicle.com/sf/article/State-investigating-S...

Imagine what has to be going on in your mind that you believe turning non-housing into housing will gentrify something.

Asking as someone who lived there until the first dot com crash: Does anyone actually need to live in San Francisco anymore?

Lets get more meta, does anyone ever need to live anywhere in particular /s

Well, it might not be true for the tech workers roaming HN, but there are still people who are forced to live in a big city to get a job!

No alarm intended, but does anyone need to live anyway? Once you understand that simply perceiving reality is the most wondrous thing we can do, simply being present in the universe is enough.

I'd say since the pandemic not really I guess, most companies accept remote, however since 10 years or so SF really became the center of the Silicon Valley (while it was more south bay/peninsula before).

It's going to take some time until tech workers stop flocking to SF and price become less ridiculous, if ever. I don't see it dropping below other world big cities like NYC however.

They can’t possibly believe this stuff. They have a financial interest in keeping prices high. That is the simplest explanation.

For those unfamiliar with San Francisco: 6th and Market is a very bad neighborhood, and the idea of "gentrifying" it on any timeline you will live to see the end of, is laughable.

Why is it even a bad idea? I would have thought that if it's a "very bad neigborhood", as you say, improving it is desirable.

Improving a "very bad neighbourhood" in the sense of "poor person's neighbourhood" tends to be undesirable for the people who are priced out as a result. Owners will do ok financially, but rents will rise, forcing many to leave the place they are settled in, may have grown up in, and often where their extended family lives.

If the alternative is to keep it a "very bad neighbourhood", I don't see how how the situation is not at least even. (Unless "very bad neighborhood" was an exaggeration. "Poor person's neighbourhood" certainly wasn't what I imagined, but I live in a place where most "poor person's neighbourhoods" are pretty good...just poor, that's all).

Yes, I am in favor of improving it. It's just that if we're talking about 6th and Market, getting it anywhere close to what we think of as "gentrified" is a long, long game, especially in San Francisco. It's a legendary corner.

But as others pointed out, the spot in question might not actually be right there, I was just commenting on the area mentioned by the parent, to add context for the non-SF people.

Uh, while many places in SF are indeed bad, the “sensitive” place the BoS claims to be protecting - Mint Plaza - is surrounded by apartments that already rent for $5500-$6500 per month.

In that case, it's even weirder -- for further context, Mint Plaza is at 5th and (more or less) Market, and there is a huge difference between 6th Street and 5th Street.

Ah, SF, sometimes I even miss it. :-)

Yes! The sharpest neighborhood difference I've ever seen is between 5th and Howard (Intercontinental Hotel, Pivotal, tech offices) vs 6th and Howard (reallllly sketchy area). (Howard is one block south of Mint and two blocks south of Market St.)

I used to work at 5th and Howard back when Tempest was an anarcho-syndicalist bike-messenger journalists' coke den.

We never exited towards 6th even then.

I did too! We went for lunch weekly :) Tempest has great food out of the Box kitchen, and they seat you inside at lunch during the week.

Yeah the project was to have been on Stevenson between 5th and 6th. At the closest point this lot is less than 100 meters from Mint Plaza.

I'm inclined to think a lot of people only live near cities because 1) they work in it and have no choice but to live nearby, otherwise suffer a nightmarish commute and 2) it's the only city near them. Why isn't building new, smaller cities a viable option? Surely building something from scratch also comes with advantages, like being able to plan and build infrastructure optimally from the start, rather than trying to retroactively update ancient infrastructure piecemeal. If we're going to go with a state or federal level approach anyway why funnel the money into existing cities?

I suppose a single example can't contradict "a lot of people," but I am one such person. I live in the city, because I like cities.

Same here. I pay a premium to live in NYC even though I work remote. I love the vibe and culture.

> why funnel the money into existing cities?

Among other reasons, we should because the existing cities are the most resource-efficient and lowest-environmental-impact living places we have at scale, and typically subsidize the infrastructure of other places.

True, though US "cities" are generally asphalt hellscapes. Design something like Houten, or let Culdesac loose to build a whole city, and now you're talking.

Sure, but based on how it’s current done it’s a huge drag on the economy when people pay $1.5M go houses that are worth $300k in other cities.

Seems like taking a short term hit in resource efficient and environmental impact in order to have people live elsewhere would be overall positive.

The reason people want the $1.5M houses rather than the $300k houses is likely because they're nicer places to live (ameneties, greenspaces, schools). If you build a new nice city 30 minutes from San Jose (apologies but I don't know how far you need to go out of SJ to have more space to build) you don't inteoduxe 300k housing, you just introduce more $1.5m housing.

It’s $1.5M because of limited supply, not because it has to be that expensive.

You’re ignoring two things: 1) many people don’t care about city living just access to jobs, thus a cheaper city with jobs is a good substitute and 2) sure there is a price premium, but $600k seems more reasonable than $1.5M.

And you're ignoring that many people _do_ care about city living.

> sure there is a price premium, but $600k seems more reasonable than $1.5M.

So now you've built $600k houses, not $300k houses. And if there are desireable jobs in the area, that pushes the demand for thouse $600k houses up to the amount that is paid in the area.

And you also need to bear in mind that a 2x increase in house price means much more than a 2x decrease in the number of people who can afford it.

I think it's more a lack of imagination. I gave up renting in LA and moved to a place where I could afford a great house with great local amenities for under $400k. I tried to convince my brother and his wife to move here but, although they can barely afford their condo fees, they're stuck in the mindset that anywhere outside LA is the "sticks". So it would mean losing their big shot at bigger career opportunities... even though they really only want to raise their kids and have no serious ambitions about that. Meanwhile they're in a tiny place while everything around them falls apart. It's frankly incomprehensible to me that people can't adjust to changing circumstances and re-evaluate their situation, and tack a different course. But my point is, you have to credit a lot of inertia to the reasons why people continue to live in places that are not affordable. Given the choice and if they knew they had job security elsewhere, I think most people would spread out to smaller towns, $300k houses and build the communities they want. They're just paralyzed by having to break with familiarity.

LA is, however, building more condos than most other areas. They tear down an old 1950s or early single family and put in four ~$1m units... that's better than the Bay area that refuses to do that. This is of course neighborhood by neighborhood so it may not be at the necessary scale to provide relief.

I love LA though but the housing situation really does suck.

No teacher can afford to live in the neighborhood if the house prices are that high. Why would the schools be better?

All else being equal, if you have two neighboring school districts, one with good schools and one with bad schools, people will be willing to pay more for houses in the good school district.

So higher house prices will tend to correlate with better schools.

The causation will be more like if you have two neighboring school districts, the one with higher house prices will tend to be the good school district because the kids’ will be coming from houses with educated and financially successful parents like doctors, engineers, lawyers, business owners, etc.

People often don't live in the neighborhoods they work in, and people often can't afford to own in the neighborhoods they live in. A teacher who bought a house 20 years ago might still be able to live there, for example.

I don’t understand the logic here. Schools are funded primarily through local property taxes. The town with the higher priced houses collects more property tax and can therefore allocate more funding to their school. This means they can pay higher salaries to teachers which means they can select for the best teachers. This attracts teachers that can’t afford to live in the town they teach in.

The secret about good school districts is it's mostly about good student & parent populations. It makes people angry when you say that out loud.

It's a highly cyclical thing. Schools that perform well are generally in rich areas, because that's how they're funded. Well funded schools have better facilities, more programs, and can hire more teachers, so have better student to teacher ratios. People want to send their kids to those schools, but need to live in those districts, so move there. The property value of those areas go up, which leads to more funding to the schools, etc.

Schools that perform poorly are usually in poor areas. They get less funding because the property is worth less in that area. They have more students, because it's cheaper to live in those areas, but have worse facilities, fewer programs, and they can't hire as many teachers, leading to even worse teacher/student ratios. People who can afford to move to better school districts do so, or find a private school they can afford.

People get angry when you say that because it's taking a complex issue and trying to simplify it in a way that's only true from a surface level.

The performance of a student is mostly dependent on the student's ability themselves, their social groups and how much their parents are able to give a shit, especially in today's age of the internet where access to information is not a limiting factor. A good school district that performs well is mostly a function of how much of the population is composed of that kind of student & parent combo and safe environment.

Beyond a bare minimum service level of functioning buildings, adequate nutrition, adequate medical care, adequate psychological testing, some basic school supplies and semi-competent, non-abusive teachers the finances do not matter.

If a classroom has a 1:10 ratio or 1:40 ratio or a 10 year old building vs a 90 year old building, big fancy gym vs an empty field, cool robotics lab or none at all, that barely matters in comparison and that what shows up as the difference in a well funded district vs a badly funded one.

A well funded good school district causes a shift in the student population, it's not the money that causes improvements in outcomes compared to population shift, so it is easy to mix the two.

Because the USA has a history of the above statement also being used for crypto-racist segregative bullshit, everyone thinks this really saying racist shit, but this applies the world over, including places without a long history of racism.

> A good school district that performs well is mostly a function of how much of the population is composed of that kind of student & parent combo and safe environment.

And that's tied to the school district, and is partially a function of how well funded the school is. People will money aren't going to send their children to poorly funded schools.

> Because the USA has a history of the above statement also being used for crypto-racist segregative bullshit, everyone thinks this really saying racist shit, but this applies the world over, including places without a long history of racism.

Outside of the US, funding for schools is often centrally planned, so most schools are relatively similar in funding, so you can't really properly compare.

Yes, this is tied to racism (white flight, segregationism/desegregationism), but this also applies to communities that are white and poor too.

Really, though, you're not very well educated on this subject. Your arguments don't reflect studies on the topic. You're making bold claims based on surface level thoughts; this is why people get angry when you say things like this.

The quality of the schools depends more on the amount of parental support the students receive than the quality of the teachers.

I lived in San Jose from 2015 to 2020 and I can't possibly fathom how anyone would consider it "nice". It's extremely crowded, traffic is a nightmare. You can't actually enjoy any of the amenities because they are always jam packed. I think the real reason someone buys a $1.5m house in the San Jose area is because it enables them to take a very high paying job.

This. It seems like cities in America now are a great dumping ground and tax shelter for offshore wealth, but virtually useless for actual Americans to work, live or play.

Eventually, even American multi-millionaires will get bored of buying $7M houses in LA and go fuck off to Phoenix, so who needs to live there and service them?

Cities or suburbs?

I believe a majority in the US lives in a metro area of at least 100,000 people, but only about 30% appear to live in a city of at least 100,000 people.

I think the difference is the suburbs, and I don't think that is a recent thing.

https://en.wikipedia.org/wiki/List_of_United_States_cities_b...

https://en.wikipedia.org/wiki/List_of_metropolitan_statistic...

I'm from LA. We refer to the entire metro area as "LA" or the "city"; basically, from Six Flags in the north to the Orange Curtain in the south, and from the beach to Pomona. And that whole area has been ballooned with speculation to the point where no one can buy a house on a normal salary. I still see no reason anyone needs to live there at the current prices. I encourage everyone I know who still lives there to just get out.

In the US almost all residential areas count as cities. For example there are tens of cities in just the Bay Area alone.

Right... we call these little suburbs "cities". City of Palo Alto. City of Berkeley. But we also pretty much consider the Bay Area as one big city, or maybe 3 if we're old school. If you say "Bay Area" anywhere, everyone knows you mean that giant beard that runs all over the bay.

Lol Berkeley is a suburb? It contains 120k people in only 10 square miles. It is twice as densely settled as San Jose.

Agreed, but that’s more a legal definition of a city. What most people think of as “living in a city” they don’t think of places like Belmont.

The US is not California. Have you ever been to New Jersey or New York?

For example the New Jersey has 52 cities - in a state with a population of just 8.8 million, so each 'city' only has on average 170k people - and that's if they all lived in a city! Many have populations in the low four-figures.

I'm not an expert on New Jersey, but there are signs everywhere for "Twps" which I guess are "townships". I'm guessing probably a lot of people live in them.

In New York State, a "town" seems to be not exactly a town, like a stereotypical "small town".

I've lived here most of my life and never really realized, but according to Wikipedia, a "town" in NY is more or less the equivalent to a "township" and within it are "villages".

https://en.wikipedia.org/wiki/Administrative_divisions_of_Ne...

"every piece of land in the State is part of a city or town, which, with the exception of the city of Geneva, is part of one and only one county. Not every piece is in a village or city. A village is part of a town; cities are not part of towns, but have the powers of towns. A village can be a part of more than one town. A village cannot be part of a city."

So more like a division of a county that's not part of a city than an actual town.

And where this is going, is that I think this is where a lot of people live, rather than cities per se.

An administrative division, where a lot of people live, that's neither a city nor a village, but has water and sewer and so on, sounds to me like almost a definition of suburbs.

These is no definition of "suburb" just as there is no definition of "downtown". A suburb is just a part a city with less dense housing.

You have:

1. Legal boundaries of cities, which are dependent on the state. Each state has a constitution that determines what the requirements are to be a city. Maybe it's only 10 signatures and filing fee. Maybe it's much more. There is also a well defined process for extending the boundaries. Outside the city you have unincorporated areas, but that's like places where you have to get water from a well and use a septic tank. That's not suburbs, it's country.

2. Because 1) is so random, government statistics office come up with their own definition of "statistical areas". There are metro-statistical area, and micro-statistical areas, and even these depend on which agency made the list.

3. Realtors keep their own definitions.

4. Things like advertisers and business have their own definitions depending on industry (e.g. media markets)

5. locals have their own definition.

At the end of the day, you have to pick a list and work with it, knowing the pros and cons and how that affects your methodology.

I can tell you first hand well water and septic tanks do not always go together in my part of the US. Nor do natural gas service and cable TV lines.

Also, in New York State, it seems like places outside cities are generally part of "towns" which are corporations?

I think it's easy to overestimate how much you know about other states.

Cities are resource efficient and low environmental impact only if you count the tight core/downtown and exclude all of the suburbs and sprawl surrounding nearly every big city in the US. Everyone driving an hour to get to everywhere is not resource efficient or low environmental impact.

Small cities/large towns are actually more efficient on average in the US since everyone is a 10-15 minute drive of everything.

Rural areas can be very inefficient.

When people say cities, they talk about them in the global context with functioning metro systems, not the sprawling monster american 'suburities' that require you to drive everywhere. If you want less suburities with their shit traffic, you'd support getting rid of zoning laws that force this form of city.

I don't like US 'cities'. I do like cities elsewhere in the world.

More about it: https://www.youtube.com/watch?v=uxykI30fS54

I agree, and I've loved the European cities I've visited, but this is an article about US housing prices and the parent was talking about "existing cities" and how they "are the most resource efficient we have", which is plain wrong. I am all for making them more resource efficient by making them more like cities in other parts of the world.

>Why isn't building new, smaller cities a viable option?

What's "smaller"?

It appears substantially more than half the country lives in a metro area smaller than the Columbus, OH MSA.

https://en.wikipedia.org/wiki/List_of_metropolitan_statistic...

Are you making a point about Columbus (the biggest city in the 7th most populous state in the country) that I'm missing?

MSAs can sometimes be rather small in area -- for instance, the Bay Area is split into 9 MSAs, all but one of which (SF-Oakland-Berkeley) are less populous than the Columbus MSA. So, everyone in the South Bay lives in a MSA smaller than Columbus (San Jose-Sunnyvale-Santa Clara).

If instead, say, you opted to take all CSAs with > 1 million people (per the 2020 census), you'd cover just over 2/3 of the population.

(Even so, affordability isn't purely a function of city size. Chicago is eminently more affordable than DC or SF despite being larger than either, whether you consider the CSA, MSA, or just the urban core.)

>Are you making a point about Columbus

Not really, I was fishing for context, for whether someone who says we need small cities considers Columbus small, large, or negligible.

No need to build new. There are plenty of existing underutilized cities with infrastructure in place to handle much larger populations : St Louis, Detroit, South Bend, Decatur, Buffalo . . . the list of places large and small goes on and on.

No good jobs there, which is why it's cheap. Cities arise as socio-economic hubs, it's not just about the housing price and a place to exist and store shit. The book order without design goes into good detail about this.

What jobs are in brand new greenfield cities suggested in parent post?

That's how White Flight happened

So to answer your question, because there's an enormous attack surface for elites to abuse the planning process to self-segregate, consume publicly funded infrastructure, and stick someone else with the responsibility for urban social problems

> 1 square foot of housing is approximately the same price - adjusted for inflation - as it was in the 1970s, on average.

Average over what, though? I'd assume that 1sq in a dense metropolitan quarter in high demand goes for a lot more than 1sq in a poor neighborhood or in the middle of nowhere.

The global average doesn't really mean anything except "somewhere in the US there is still affordable housing".

Most critics of rising housing prices that I know of aren't arguing that housing is becoming unaffordable everywhere but that it's becoming unaffordable in high-density places where housing would be needed.

You acknowledge this in:

> This pushes the price per square foot inside metros up way above what they would otherwise be.

Also shouldn't actions include at least having a look at building speculation in high-density areas?

>> the middle of nowhere.

So as a tech worker who's lived in the "middle of nowhere" and worked remotely for 20 years, why the hell is anyone paying a premium to live in San Francisco now?

Different lifestyles and requirements. No everyone is a tech worker who can work remotely.

Maybe covid now changes this now, but the ability to have stores and RL venues without having to drive will stay in demand, I' pretty sure.

Yeah, RL venues and stores will always draw people to the cities. This should be actually a cheap, cool thing for young people like it was in New York or San Francisco in the 60s, or the 80s. It probably will be like that about 20 years from now, when it becomes "cool" to live in a city again. We were so close to an urban renaissance... the period from 2000 until covid was the best time for urban centers and downtowns since the late 19th century, before trolley lines and buses and cars moved everyone out. I thought we were centralizing and going to a walkable, car-less future. Covid did change all that, because without office workers there's no lunch crowd; with no lunch crowd there are no restaurants; with no restaurants there are no hipsters wanting to live downtown (they alone can't sustain the restaurants). Then you have the riots and the meth population and everything boarded up. We're in for 20 years before downtowns recover as a "hip" zone.

The thing is, RL venues are important, but they do exist outside of San Francisco. Increasingly, very little exists in the urban cores, and yet the prices for rent are still insane.

If you spend $100/month on a thing and I, in a city, spend $500/month on the same thing it could still make strictly logical financial sense to live in the city.

Suppose you and I both save 30% of out net income. If I'm making far more in a city then my 30% savings will go very far in a not city location.

We can also assume if you spend 100/month on rent and I spend 500/month on rent it's the same "percentage" of the pay we make.

Yeah, I was looking for a job pre-COVID, and REALLY wanted something remote since I hate living in a big city.

No matter how hard I looked or negotiated, I couldn’t manage to get any remote offers or jobs in small towns in the USA that’d pay over about $140k. Meanwhile, with my experience it was EASY to get an offer for $300k in the Bay Area.

That means that even paying $3300/month to rent a run-down shithole and $6 per gallon for milk, I’m saving $120k a year vs the $40k I’d save in a small town.

The numbers get even more insane if you buy property in one of these hideously overpriced Bay Area cities. I haven’t done it yet, since a downturn could leave me holding the bag and trapped in this nightmarish place for 5 years, but the financial incentives are incredible

> That means that even paying $3300/month to rent a run-down shithole and $6 per gallon for milk, I’m saving $120k a year vs the $40k I’d save in a small town.

Exactly this. I hate the highly populated areas of the world but I'm working in one with hopes that I can buy a house with high speed internet within driving distance of a medium sized family-oriented town with a shopping + restaurant district. If cost of living is 1/3rd then your 120k savings just got you a whole bunch of slack.

Me too. My numbers are higher, and I’m probably older, but as retirement looms on the horizon, the goal is simply to make hay while the sun shines.

The exit strategy is to sell the ridiculously overpriced house, fully paid off, which has doubled in price in the last 8 years, and sod off to a lower COL area. Since I’m a Brit, a small castle with grounds in Scotland ought to be on the cards, for less than my 1500 sq ft ranch-style house here.

One piece of advice, the sun can shine a lot long than you think it would.

> The global average doesn't really mean anything except "somewhere in the US there is still affordable housing".

Friend, that's not what average means.

It means that more than half all houses cost less than X (because average => median). Not "somewhere in the there exists something less than X".

> "high-density places where housing would be needed."

Well you got half the country (actually much more - closer to 2/3, given that average >> median in housing).

This has been brought to you by your local RUMIA (Responsible Use of Math In Arguments) league.

Stay frosty out there, people.

Good point. Still doesn't say where that half is - probably not in high-density urban areas.

But it doesn't even have to mean that. It could also mean that certain undesirable neighborhoods cost far below the median, pulling the average down.

Well, we assume the bottom half of housing, or say, the bottom 60% of housing, would be in the bottom 60% of the nation in terms of desirability. But that doesn't mean it's undesirable or bad housing -- certainly it's not viewed as bad by all those people living there -- that's like 170 million people.

Average doesn't necessarily mean that, often the mean is used and often that's not equal to the median. If housing prices are left skewed then the median is going to be greater than the average so more than 50% of people would be paying more than the mean.

I think the point was that it is true specifically when it comes to housing (also income and wealth for that matter)

> lower interest rates make houses that are more expensive much more affordable on a monthly basis, which is totally fine as most folks end up with a 30 year fixed rate mortgage

Absolutely false in the long term due to feedback, although it is true in the short term.

With lower interest rates, people bid up the price of houses because they can afford to spend more on their mortgage. The amount spent on mortgage repayments trends towards the same figure as always (approximately as much as your wages allow).

I believe houses are a prime mover of the middle class economy, because it is something most people are willing to “invest” a lot of time working to achieve owning the property they want (often status driven).

I think we might be in agreement on this - I didn't mean that a house 25% more expensive was more affordable period. I meant it was almost equally affordable after it normalizes. This is a fact a lot of articles and graphs gloss over when they compare simply the top-line numbers.

> In Japan, supply and demand meet, and a new 3 bedroom house in Tokyo is like 400K USD [edited for current data] - right around the cost of construction.

Uh uh, apartment, not a house.

There's a huge difference.

It doesn't matter, honestly. You still own it. Owning apartments is normal in more crowded areas - like tokyo. I'm pretty sure apartments greatly outnumber houses in most of Tokyo.

And sure, there is a difference, but it is only minor as we are still speaking of living spaces that you own instead of rent.

Own as in own a garage, I wouldn't want to live there though.

In the most of the US you pay rent to the owner of the apartment you live in. A partitioned building where you own the unit you live in is usually referred to as a "condominium" or "condo".

Yeah that sounds pretty different from other countries like France or Japan where there is no such distinction.

When a developer builds a housing building, they sell the apartments to people who will either live there or rent it to someone else. Then when the owners sell their apartment later, it can go from a resident owner to an investor, or the other way around.

As a result there is a mix of owners and renters in any condominium.

I understand this completely - English is my mother tongue and I'm American. People do own apartments, especially in larger cities. A lot of folks don't call them condos: It depends on where you live and what the developer decided to call them. In fact, my idea of a "condo" isn't an apartment in a high rise or even half of a house you own, but rather row houses, mostly with a front and back yard (basing this off of condos in places like Kokomo, Indiana and Nashville, Tennessee). Owner keeps up inside, they keep up outside.

Renting is not owning an apartment: You can renovate an apartment you own, but not a rental. This is much the same as renting a house instead of owning it.

One part of them problem I think in USA "housing" market is that people want houses. In cities. Where as in rest of the world people are much more willing to accept apartments. Which are absolute necessity for cities. Ending being trade off living in countryside farther from services or in cities near them, but not in house.

> are much more willing to accept apartments.

That's the problem. Apartment is inhumane by default. No privacy, no private space. They shouldn't accept them.

Can you expand? What kind of privacy, for instance?

I don't want to hear my neighbors music, kids, party, someone having sex. I don't want to participate in group meetings. I don't want to deal with flooded ceiling or looking at another apartments when I look out of the window. I don't want to hear that me and my wife are walking to loud when we've just arrived from work.

That's just off the top of my head.

Adequate sound insulation can deal with most of those issues (I assume group meetings is a euphemism for hearing your neighbors? Otherwise unless you’re on a condo board or something there are no such meetings in U.S. apartments in my experience, it’s not a college dorm.)

I lived in concrete floored apartments for 7 years and almost never heard my neighbors. Never got any sound complaints. That said a lot of low-rise U.S. apartments are built with wood and may not be adequately insulated.

Apartments and condos in the United States are built as cheaply as possible. Developers love the 4 over 1 style which is the most they can get away with. Combined with hideous "developer modernity" styling.

Neighbor noise is the top issue with this style of housing, but it goes completely unaddressed during building. I've always wondered why nobody has tried to differentiate on that.

I would be happy to live in a condo instead of a house if I felt really comfortable that I wouldn't have to deal with noise. But as it is now even if your neighbors are quiet at first, they could sell to someone with a new baby and you're screwed.

I live in a townhome built in the 80s with crazy good noise isolaton, i assume it's easier with a townhome because they just run a thick firewall between units.

Still, I would think good noise isolation must exist at some condos. I imagine you could interview current residents to see how good the noise isolation is before purchasing.

It's entirely possible. My friend told that his almost newly built apartment had very good insulation. My parents is good as well, only noise really is the elevator if on other side of wall. My current rental isn't bad either. Though some noise get through. Last place was horrible though, specially with dog that made noises through the night...

So it is possible to have good noise insulation. In general the noise from outside is bigger problem than from neighbours. Only real case with issue is renovation as any drilling or hammering through travel in structures.

I think good sound isolation mostly comes as a side effect of concrete housing, or things like firewalls in the american housing market. I think it's a side effect of how house price = sqft so all the other important things go by the wayside.

When I looked up soundproofing, there are techniques that involve a few layers of drywall and sacrificing like a few inches of air space to have an airgap, so it is possible to do it relatively cheaply in new construction, but then you sacrifice sqft :/

Do you like open windows? Most of my neighbors like open windows. I like open windows.

I lived in apartments for a while (although not in cities).

Another thing is that they would need to inspect the apartment once in a while (with notice) to make sure you aren’t damaging it. Even with notice it is intrusive.

I am sooo much happier owning a house. I got so sick of white walls I couldn’t paint and the inability to have certain hobbies (woodworking? musical instruments? Not in any apartment I’ve been in)

You’re describing the difference between renting and buying, not apartments and houses.

You can buy apartments and rent houses, so they shouldn’t be conflated.

I suppose that's true. I usually live in college towns, where buying apartments is rare or impossible, so for me apartments were always rented.

I never hear my neighbors, unless someone is renovating, but that's rare.

One driver of that is the model of owner occupied housing as the primary mechanism of middle class wealth accumulation.

Traditionally SFHs tend to perform much better as investments than condos. When you’re in an environment of secularly rising prices, you’re heavily pressured to get on the property ladder.

People want to buy and own an SFH as soon as they can. Otherwise if they get a condo the risk is the SFH market moves away from them and they’ll be priced out when they need it.

I'm looking at houses in Tokyo right now. Yesterday I saw a 2SLDK in the Nippori area (2 bedroom with living room, dining room, kitchen, and storage room), and it was $600k. This is in the city, near central subway lines. If you want to live out in Chiba or Saitama, you can get a 3 or 4 bedroom for around $400k, but that's more similar to living in the suburbs.

Buying apartments here is actually more expensive than buying a standalone house, because they tend to keep their property value more than the houses (which usually are sold for the land - people tear the houses down and rebuild). If you're trying to verify what I'm saying, the apartments you'd buy here would be called a "Mansion", which is mostly a term for upscale apartment.

Edit: oh, I should mention that the interest rate here is insanely low (around 1% or as low as 0.5%), and you can get 35 year mortgages.

In addition to your points here, I found the hypothesis below very interesting. In a nutshell, American governments are incentivized to zone for expensive land that doesn't require much infrastructure. So we get giant, sparse suburbs and institutional opposition to affordable housing because that reduces the tax base.

'Local German officials, like local leaders everywhere, seek bigger budgets to provide more and better services to their constituents. What’s different about Germany is that the way to get bigger budgets is to increase local populations. And, as Professor Buettner says, “Ultimately, to get people, municipalities will need to support housing.”

The result is a system of incentives that is the opposite of “fiscal zoning”—the US practice of zoning land in ways that maximize local governments’ income and minimize their costs. In places with high sales taxes, such as Washington State, leaders zone more land for shopping centers. In places where residential property taxes are capped, such as California, they zone less land for homes and more for offices. In affluent suburbs, they often zone land for houses on large lots, excluding low-income people.

Maximizing property values is such a central concern of local government in the United States that Dartmouth economist William Fischel developed the notion into an entire political theory. His “homevoter hypothesis” holds that local governments are almost single-mindedly focused on maximizing real estate values, because homeowners typically vote their home values in local elections. German jurisdictions gain financially by maximizing population, not house values, and because renters outnumber homeowners in the country, homevoters are not the dominant electoral force in local German elections. Renters are.'

https://www.sightline.org/2021/05/27/yes-other-countries-do-...

>> (1) New houses are 2x bigger on average than they were back then, and the average American family is smaller [1].

This is good, because it means people can afford more.

>> (2) City councils, and by extension zoning rules, in major metros preclude construction

This is good because unregulated growth is a net drain on society. No one wants to buy a house if the property next door can be turned into a 30 story apartment building. More people own property now than at any time in history. How about that? Stop making babies, right now, and there will be plenty of space for everyone. I don't have babies, I own a house, everyone who has babies wants not just to pollute the world with their offspring and tax me to pay for their spawn's upbringing, they also think they deserve free property. Just don't have babies and problem solved.

Your (1) and (4) are assuming a direction of causality. Alternatively:

(4) Monthly payments on new mortgages are essentially fixed for any point in time. A drop in interest rates from 3% to 2% makes housing asset prices 25% more expensive, and along with them downpayments, real estate taxes, and the amount required to pay mortgages off early.

(1) In order for a house to keep up with market appreciation, it has to be a desirable to the future "average buyer". Monthly payments are relatively fixed, less bidding competition for land outside of metro areas means that the feedback effect in my (4) isn't as strong, and so a bit more money goes into the structure.

> housing cannot be both a good investment and affordable by definition.

Real estate is the only asset class where this isn’t true. The existence of the mortgage, which is one of the most unique debt instruments available to the general public, means that house price inflation only needs to exceed interest rates about about 0.6% to beat stock market returns.

I think you're missing the core idea.

For one party to see returns exceeding interest, another party has to pay for that (exponential) rate of return. It's unaffordable for the second party.

These prices compound, exponentially, and as a result younger generations spend much more of their money in wealth transfers to older landowners. It's unsustainable unless the wages of younger generations also start to rise at similar rates, which isn't happening.

> These prices compound, exponentially, and as a result younger generations spend much more of their money in wealth transfers to older landowners.

This is just factually untrue. House prices do not grow exponentially. The rate at which they grow goes up and down, but it’s never been exponential. The entire premise of your argument is indisputably incorrect.

Can you elaborate that? Under what assumptions will real estate beat what benchmark?

Real estate is the only asset class where you can very easily get 10-20x leverage, and at rates that are only modestly above the risk free rate.

If you used $1,000,000 to buy $20,000,000 worth of property in San Francisco, and you wanted to get a 15% annual return to beat the market, the numbers would look like this:

You’d be paying around $600,000 in interest, say you’ve got another $100,000 in expenses, and you want to get $150,000 for your return. That’s $850,000 that needs to come from somewhere, in San Francisco I think the rent to price ratio is about 1:50, so that’s $400,000 in rent, and the remaining $450,000 needs to come from house prices increasing. So to beat the market your property assets needs to appreciate by 2.25%, or about what the fed targets inflation to be.

This is only possible because the mortgage is a very unique debt instrument. As far as access to cheap debt goes, it is comparable only to the highest credit corporate and sovereign bonds. The only type of debt that a regular consumer has access to, that is somewhat comparable, are subsides student loans.

How do you with prime real estate markets like NYC, Bay Area, LA, etc? I would assume similar highly coveted areas will be exception to the rule. What about the Japan housing model? Apparently they don't have these property bubbles anymore.

what if some people want a bigger house because they want bigger family though? i guess some areas would have to be zoned for people who plan to have more kids than 2, i couldn't imagine raising a family of 5 in a 2-3 bedroom house, i was raised in a big family. 10 kids. so a bigger house came in handy

Buy/build a bigger house? The point is to eliminate restrictive zoning, not replace it with new restrictions that only allow tiny houses.

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