Sorry, youth here. The housing market remains screwed regardless of the actions of Zillow or Blackstone or whomever.
It is both a demand and supply problem, but short of creating a Hukou system I don't see any solution but building.
The massive buy-ups in West & Central FL have led to an unprecedented shortage in housing. Rentals get 400 applicants each day and people with money in the bank are facing homelessness. People without have little hope.
But I doubt this is an under building problem at all. Look at Seattle and the area, and there isn’t a shortage of new housing projects at all. They are mostly all luxury, which is the only way builders can make a profit on high land prices, and they sell very quickly regardless.
The U.S. built on average 276,000 fewer homes per year between 2001 and 2020 compared to the period between 1968 and 2000, according to the report which was covered earlier by the Wall Street Journal.
Had building continued at the same pace, there would be 5.5 million more units of housing, the report estimated.
To make up the shortage, the NAR report says the U.S. would have to build 2.1 million homes each year for a decade—more than it built each year during the housing boom of the mid-2000s.
Well, it isn’t weird that land runs out for new subdivisions. What is left is to build more dense (replace single family housing with apartments or town homes). Still, why is it zoning per se that is the problem rather than just the market? They have the same pricing problems elsewhere in countries with building booms (eg China).
dense housing is frequently not permitted by zoning. sometimes housing itself isn't permitted.
> What is left is to build more dense (replace single family housing with apartments or town homes).
yeah, that's exactly the thing that's banned in very many places where it would be most useful.
But where they are permitted, housing prices are still high. Higher even, like NYC and much of New Jersey near NYC. Is there a good example where increased density has led to lower prices, not higher ones?
Second, the economics of building dictate that skyscraper-level density will only happen in places where housing is relatively expensive. But there are plenty of examples of density leading to lower prices, in the suburbs.
Do you have specific examples? The only places I can think of are economically depressed (e.g. in the midwest, or in Florida swampland) and aren't particularly dense.
Maybe Houston? Houston is famous for having almost no zoning, but even Houston seems to be heating up these days.
Would it be interesting to point out that the US population growth also was much higher in the 1968-2000 period compared to 2001-2020 period on an annual basis?
https://www.cato.org/sites/cato.org/files/pubs/pdf/pa-823.pd...
I found the section "New Evidence on the Effects of Land-Use Regulation" to be quite interesting in past reads (and discussions) and probably relevant.
Seattle is a weird example for me (anecdotally). When I lived there in 2017-18 I found the rental market to be great. The city had incentivized building rental units and as a result there were great deals to be had. I was able to negotiate a 15% discount and dictate the length of my lease on Capitol Hill. I don't know what it looks like now, but it was great at the time.
> When I lived there in 2017-18 I found the rental market to be great.
The market was weaker in 2017 because of all the new rental capacity that came online. That capacity has long been filled and rents are skyrocketing ATM.
https://www.aeaweb.org/articles?id=10.1257/mac.20170388
>>We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by 36 percent from 1964 to 2009.
If you look at California exodus data, its mainly people making less than 100K, population is increasing for people making more than 100K.
Despite this, property prices are still increasing elsewhere. This is a worst of all worlds scenario.
I’ve got friends in Kansas City whose 100k house is now worth 300k. Friends in Omaha buying new construction for 400k. Housing shortages in Grand Rapids, Michigan where I am from. If you’re immune to all of this, you must be in either a very magical, or very undesirable place. It must not be California, that’s for sure.
Fixed the language for you.
As a "youth", I don't have any insight into this as I'm a renter for the foreseeable future, but my parents' and their friends complain about how difficult it is to get anybody to do any sort of construction / home upgrades, e.g. my parents putting in a heat pump.
Given how much the "you're a loser if you don't go to college" narrative has propelled people who may have been happy and skilled at carpentry, plumbing, electrical work, etc, into soulless corporate jobs, this seems like something that the US could take a page out of Germany or Switzerland's book, i.e. much more emphasis on non-uni career tracks starting in high school.
Yes - https://www.npr.org/2021/07/30/1022642064/planet-money-why-a...
In summary, the US has been underbuilding ever since the housing crisis, and this makes people avoid construction trades. Fixing it will take years.
Housing can't be both Affordable and a good Investment. Therefore the only proper value for a home is the price that it costs to build it. The way to do that is a 100% Land Value Tax.
People would still bid for the home. You might get one offer for $190k, another offer for $200k. But if enough homes got bid up in the area, taxes would rise and those high bidders would probably lose a small amount.
[0]: https://news.ycombinator.com/item?id=28525712
[1]: https://astralcodexten.substack.com/p/your-book-review-progr...
IMO, CA prop 13 is just as guilty as restrictive zoning. We'll never get to see the other side of the experiment, the people of CA would never vote to remove it. Prop 13 interrupts the natural cycle of housing.
The last part about Prop 13 seems like a bit of a cheap shot. CA is anything but a natural market.
CA government set that poison pill to ensure it must listen to its constituents and remain as "natural" as possible. Now we find they can't enact meaningful reform around zoning, building requirements, parking, or making the city more welcoming to trades, etc.
Why should old taxpayers carry the water for ineffectual govt ?
CA: "We refuse to make the changes needed to let more people in at a reasonable cost. We will instead take more money from one group, so that they leave and we can fleecce someone else ! "
Be very careful over-extrapolating based on known variables. That's my point.
For decades we've have the concentration of populations in a few urban centers because of employment opportunities and other factors. Two years ago, you wouldn't have even thought about that trend ending anytime soon.
Yet here we are with what seems to be the beginning of a structural change to the employment market to remote work for a significant number of potential jobs. We're not there yet of course. But this seems to have already been a boon to medium-sized regional cities (eg Boise).
This was all possible two years ago but it didn't happen. Covid was a big catalyst. No one predicted that.
Likewise, you see young people rejecting the 30 year mortgage, have kids then retire model that was the norm for Baby Boomers. Living remote, tiny homes, van life, etc.
I fully support residential real estate not being used for money laundering, hiding assets from governments and an exchange-traded asset class, to be clear. The focus there should be on the governments who create the rules that allow this to happen and not the players however.
Lot of people saying buying houses is hard, unrealistic, or impractical want to buy mansions with a 10 second commute to their workplace in silicon valley but the reality is most people are not living like that.
Wage workers are still buying houses no problem in what are considered "low income" areas as they have been and interest rates are better than ever.
It'd be nice to be able to afford a house where I grew up without having to tie a ridiculous amount of my net worth up in this one very pricey illiquid asset, even if I could get the mortgage.
But that’s not the case. It was straight white families who got cheap housing while at the same time holding minorities back.
You'd need at least one of these factors to be reversed, or demand for standalone housing to go down for cultural or economic reasons, before you see long term downward trends.
In general though I agree with the poster above that the affordability "crisis" is really an expectations crisis. Everyone wants to live in a nice neighborhood with great schools that is close to the top employers, but there's simply not enough space, so this results in high competition and therefore prices. For some reason nobody wants to move to the rust belt where houses are nice and cheap. People don't want houses, they want the BEST houses.
Sorry, my criteria for discussing economics is that someone knows what the term "real" means in that context.
Most local community colleges offer economic courses for not too much.
> For some reason nobody wants to move to the rust belt where houses are nice and cheap. People don't want houses, they want the BEST houses.
I would just like to live in the same neighborhood that I grew up in.
This pricing out hasn't always been the case and it's not like these "best" houses became considerably better - it's been the last 10-15 years.
Houses have labour and material components. The materials have a labour component too. It's now more expensive to build a house (per square foot) than it was 30 years ago because of wage inflation.
This is one reason why real estate is viewed as a good hedge against inflation.
The monthly cost to own a home is the same as it ever was, inflation adjusted. It's interest rates that have changed.
Three years ago, I could've bought a house at 60% of current market rate now in my town of 700K. I wasn't in a position to buy that house (under median) then, and I don't want to buy it now given market conditions. The other issue is that the median housing price in my city is now above the FHA limit for this area... so no 10% down mortgages. Again, that wasn't the case 3 years ago.
I also need to replace my lease vehicle next year, so there are two challenging life purchase decisions pending at the moment, and market/global conditions are putting pressure on both.
There are currently 71 homes for sale in Nashville, TN at or under $175K.
Zillow has been buying in my neighborhood, and they overpaid... plain and simple. The offers my neighbors received were too good to be true. I mean, $50k to $150k over the z-estimate. Everyone in Tucson is laughing at Zillow all the way to the bank. Prices are going to crash here and its going to be brutal.
I do WFH -- someday, I may head away from my current place, but I'm not that flexible yet.