Honestly have no clue how humanity expects to tackle this.
We're essentially operating an eternal monopoly game (someone got there before you, sorry future kids, you're out of luck) when it comes to housing.
How do we fix this?
We're essentially operating an eternal monopoly game (someone got there before you, sorry future kids, you're out of luck) when it comes to housing.
How do we fix this?
Oversupply will take care of the downstream issues. They will cease to be good investments and become commodities. Rents will have to come down in a competitive market.
Oversupply will have to be on a regional level. A vacant house in a small town doesn't compensate for an occupied house in a city 100km away.
Zoning laws prevent this in the US/Canada in many places. Existing homeowners don't want to change. More houses means more crowding, higher traffic, construction noise, obstructed skylines, more pressure on schools, police etc. We can't accept that argument when weighed against homelessness or poverty anymore. Fuck their skylines, shelter is a basic necessity and it often has to be close to work, shopping, school etc. Living in the middle of nowhere is not an option.
Land redistribution (which is structurally similar) only really tends to happen after a revolution and that tends to be bloody. Landowners throw resources at violent and politically extreme reactionaries to send off the threat of their rent entitlements being democratically revoked.
So, it's unlikely to happen soon and if it does happen it'll probably get pretty ugly first. The path of least resistance will be a gradual slide into a kind of neofeudalism.
https://threadreaderapp.com/thread/1510262323176374278.html
https://news.ycombinator.com/item?id=30891217
Great comment from the above thread: https://news.ycombinator.com/item?id=30897398
And when they do stop, it’s only to tear down a building so they can build another one in it’s place.
Japan is a deflationary case study.
https://www.asahi.com/ajw/articles/14538387#:~:text=Tokyo's%....
[1] https://robbreport.com/shelter/home-design/japanese-homes-ar...
Helps that the whole country is on a fault line; nothing is going to stand up for a while anyways so you may as well establish a culture of rebuilding.
https://gestaltu.com/wp-content/uploads/2016/08/120927-Japan...
Buildings always depreciate, and North America has its fair share of homes not intended to last generations. In Vancouver it's become common for wealthy homebuyers to knock down houses that are less than 20 years old to put up something fresh, but that didn't stop property values from appreciating.
And in China it's perhaps even more the case that homes aren't built to last, and they even have an oversupply issue if anything, as well as a much more advanced population decline than Japan did circa 1990. And yet real estate in China has still attracted so much investment speculation that it's even less affordable, and my guess is it's following the same trajectory that Japan did. Property speculation is a powerful force.
I think a much better explanation is that the Japanese RE bubble taught Japanese speculators a lasting lesson, and the subsequent demographic decline, universal zoning, and widespread availability of mass transit kept it cheap.
Land and real estate are also a huge income shelters for Chinese elites. They cannot appear too wealthy, so they buy real estate to hide their wealth. Only recently, last 5 years, has China instituted a national real estate registry. I wonder how much of the market disruption of the last few years is due to large players trying to divest themselves.
It's not clear that tilting the rent/own preference toward ownership results in a net increase of housing prices, because for every unit of homeowner demand it adds to the market, it also removes one unit of landlord demand.
I know there was stuff like proposing to pay people to move away, but I don't know if that's a real thing?
If you reward people for conserving a scarce resource, they'll use less of it.
If you reward people for wasting a scarce resource, they'll use more of it.
There's some natural human value attached to space, but in the current system people are incentivized to own more than they need, because to do anything else would be giving up free money, but the fact that everyone else is doing the same, ruins things for everyone.
Things have changed a lot since then but it seemed to have been very successful at fixing the housing crisis of the time.
Building housing is expensive but we manage to fund the military today. We were able to build a massive countrywide network of roads and highways and train tracks a 100 years ago. So fuck capital too. Of course they don't want to build it, and this is a _necessary_ consequence of making housing not be an investment. It will not be profitable to build. But it will be good for humanity anyways. So it has to be atleast partially funded by taxpayers. That might even mean we all collectively get screwed by high rents and high taxes for a decade while we do that. As long as it actually does benefit future generations, so be it. There's plenty of room for efficiency in building as well so that's not necessarily the only way. Subways cost 10-50x more to build today than they used to and there are hundreds of companies that live off leeching public funds.
The wealth of most of our political class is also tied to their real estate holdings. 1/5 of our politicians are landlords in Canada; our housing minister has multiple properties. Make it make sense.
> We were able to build a massive countrywide network of roads and highways and train tracks a 100 years ago.
Building the first road/train track connecting A to B pays for itself (probably many-fold) in increased revenue from taxes you can collect because such a connection significantly increases the economy.[1] It's not clear that more housing will have that impact.
And for all the people complaining about zoning and NIMBYISM: That's a very local phenomenon in a few cities. Where I live we have neither of these problems, and housing is still a major issue. I'd wager that's true in most US cities that have housing problems. Preaching about zoning and NIMBYism is merely showing a disconnect with the rest of the country and is a red herring.
Solve the incentive problem - at current building prices builders cannot afford to make housing for lower income folks. Either make the cost to build cheaper or, as the parent says, get the government to subsidize building it so they can make a profit.
[1] Fixing up existing roads doesn't, which is why if budget isn't properly allocated for maintenance, you'll get poor infrastructure.
The main thing that impedes is is regulatory/zoning limitations
And while I'm mostly in favour of code limits (so, minimum size, insulation requirements, fire-proof requirements, etc) most of the impeding regulations are things like maximum height size, blocking developments based on the "character of the area" (read: NIMBYS complaining) etc
That's one of the reasons of past housing bubbles
"Oversupply" is also dependent on the actual target market. Several places lack cheaper housing but have an oversupply of more expensive ones (more bdrs, fancier areas, etc)
How is this supposed to un-break the housing market?
This is an exception to the tax rule and it’s a significant factor behind house prices (artificially low interest rates, and supply being other causes). It actually became a “smart” investment to over leverage for a primary residence because it’s a tax free investment that outperformed interest rates and other taxed investments.
It's not compatible wih the strange religious belief that homeowners should be handed free money from the government at the expense of everyone else, including their own children, for not doing anything socially useful.
That's the root problem, but it'll take a while to fix, because people like getting free money at the expense of other people as long as there's enough hoops to jump through that they feel like they deserve it, even when they don't, and enough hoops for them to not click that they are everybody else's "other people" and probably losing on the deal overall.
That doesn't preclude ownership - condos and co-ops work as well as apartments.
Out in the boonies a land value tax wouldn't discourage single family, because the land is not valuable (in comparison to a city).
They lead to increases in density (i.e. more housing) because there is stronger incentive to build more living units on smaller pieces of land.
Currently, in kentucky, if you own a certain acreage (it's something low like 10) your property is taxed on it's agricultural value instead of it's real value. So you build a 2.5 million mcmansion on a 10 acre lot and you pay taxes on 10k in agricultural value instead of taxes on that 2.5 million.
All the huge property speculators own large lots in the big cities and they won't subdivide and sell to individuals because if they subdivided they would have to pay taxes on what it's worth instead of some ridiculous "agricultural" value. One of the big builders here owns a 300 acre plot in the heart of the city. They pay taxes on like 50k agricultural value instead of the millions it's worth and drive up the prices of other lots because of it. They can speculate at no cost.
Mind you, they sell the lots in .2 acre plots when they develop them and the new homeowner pays taxes on the full value of the plot + house.
Shifting land to large housing use cases is one of the main ideas.
This "conversationalist" approach is what NIMBYs hide behind. We can't build in Las Vegas because of a tortoise species. We can't go beyond N levels due to "conserving" the history of a district.
Let the public (ideally across a broad area like a state or country) decide what areas need to be conserved for habitats. Don't let private land trusts / conservationlists be the mask that NIMBYs hide behind.
That aside, the point here is that if something is being held for the common good, it should be held in common. "The Government" isn't a perfect check or steward, but there's actual accountably there, something which does not exist at all in the case of private ownership.
Of course, it would be a change from the existing setup, resulting in a different layout, so some ecosystems might be damaged and "replaced" by worse ones.
One would hope that, if a big change like this were to occur, it would be paired with some support to protect existing habitats.
This is a bug not a feature (but yes, is a problem).
It's basically "inflation that affects you less the more property you own" and people seem aware that inflation can collapse societies if not tamed.
A counter-balancing wealth transfer like a UBI or some kind of pension scheme for people not yet retired that ties into the tax raised from land would work. But we'll bumble into it step by step as usual, no point rushing to create a better world when we can keep making it worse for a few decades.
A temporary one. Ensure only people over a certain age who own land are excluded, and only while they are alive. Once they die (or sell), the inheritors/new owners are not excluded. And ensure you can't make it perpetual by placing it into a trust.
Individuals, or lenders through financing.
> Which party eats the losses?
Lenders
> How would this actually result in more housing?
Really interesting in how this would be modeled.
Or not yet anyway; if we see the bubble pop it perhaps will, but that's far from a clean solution. The crux is how do you incentivize building a lot, and I mean a lot, without expectations of appreciating property values? And yet if you have expectations of appreciating property values, how do you prevent speculators from driving up prices and making things unaffordable?
I'd also note there are plenty of cities with massive housing affordability problems but little in the way of historic buildings (Hong Kong, San Jose & much of SV etc.). Even in my own city (which often rates as one of the least affordable for housing), historic buildings make up a small percentage of total housing.
Most houses built since 1920 don't have the same value. But the meme of "old=worth preserving" still lingers on. In San Francisco there are old row homes built as temporary housing after the 1906 Earthquake. They are preserved only due to their age, not any intrinsic value. Houses built in first half and mid century are developing major structural issues. Their foundations may be cracking beyond repair. Their plumbing and electrical are several generations beyond current standard. They may have been built in a more temperate climate and lack central heating/cooling. Their layout may not make sense for a modern lifestyle.
These houses should be torn down, and new ones built in their place. But this is really difficult to do in some areas due to preservation committees holding on to every scrap of history. Instead you get completely insane practices like gutting a house except for 4 posts and rebuilding a new house within it. Or building a new houses around an old one.
The lot next to my apartment was like that. Instead of razing the structure and building a new one, they had to engineer a way to build a new house around what was a literal rotting shack. The new structure retains almost 0 of the original framing, and definitely retains none of its architectural features. So the project cost probably hundred of thousands more, and took months longer, just to satisfy some petty council's need to never tear down an old building.
As the oldest generation dies off, I would hope to see these attitudes change, and the USA open to more rebuilding. But unfortunately these rules will remain on the books. The capital class has no incentive to change it, because it would disrupt their control over the housing supply.
An interesting thought experiment, in any event.
Landlords would subdivide houses into individual rooms and rent them out.
> they wouldn't be able to evict someone if their circumstances changed and they were unable to pay the extra.
Maybe not via the courts, but they would just shot off the water, and the heat, and then invite unwanted guests to live in the "unoccupied" apartment, until the non-paying tenant left.
Isn't our current crisis primarily a shortage of low income housing? Is all low income housing a "slum"? Landlords would be competing for good renters, so they would be incentivized to offer good living environments.
>Maybe not via the courts, but they would just shot off the water, and the heat, and then invite unwanted guests to live in the "unoccupied" apartment, until the non-paying tenant left.
They couldn't do so legally as long as the tenant continued to pay the official rent amount, any more than any landlord can currently shut off utilities to a tenant who is paid up on their rent.
The answer is just to build more housing.
There aren’t enough future kids for this scenario.
'lack of space' is not the issue for the most part.
It's largely a choice, not a need.
You don't get to live in the choicest places in the country, that's not part of the equality deal.
Someone owns them, raise the taxes on them until someone lives in them.
> - 6,694 of those vacancies were units currently listed for rent that hadn’t yet found tenants. Another 1,031 were homes for sale that didn’t yet have buyers.
> - 6,294 were homes with either current owners or renters that were just not living there. This can happen for any number of reasons: hospital stays, long trips out of town, delayed move-ins, even cases of homeowners who have died but are still technically counted as the resident.
> - 8,523 were “occasional use” homes—i.e., these were second homes, vacation homes, some types of short-term rentals, or just any unit that was accounted for but not lived in most of the year. (The Mercury-News references these but classifies them separately from vacant homes, whereas the census considers these vacancies in themselves.)
> - Finally, the census designated 11,760 homes in the catch-all category of “other vacant.”
"Other vacant." Is a hodge-podge of condemned units, units in foreclosure, units in renovation or seismic retrofitting, a plethora of other corner cases and odds and ends, and homes actually just sitting empty doing not much.
(source: https://sf.curbed.com/2020/2/24/21149381/san-francisco-vacan...)
https://www.lendingtree.com/home/mortgage/vacancy-rates-stud...
I'd prefer if we focus on simply increasing the supply. Ban single family house zoning. Encourage more high density apartment buildings. Build more cities.
Additionally, remove all zoning laws. The free market will handle zoning.
In the West in the 20th century governments implemented some common sense policies to keep socialism at bay. Countries that didn't, like Russia, were engulfed by socialists.
Look at how many young people openly admit to being communists. If this rent-seeking is sustained we'll eventually get the Khmer Rouge.
Woah there, let's not throw the baby out with the bath water!
Zoning laws in the US seem very broken, but they are much more sensible in much of the world.
A free-for-all seems like a bad idea - would you really want to live next door to a knackers yard, an abattoir, a tannery, a coal power plant, a chemical plant, a fish processing factory etc, a rubbish dump, a night club?
I'm not sure about all of that, but I think having bars, restaurants, stores, etc. intermingled within short walking distance of houses in suburbs would certainly be great.
No thank you.
Right now we are trading housing (and food, water, government services) for cheap labor in many countries.
The other recent phenomenon/issue is loose monetary policy. When interest rates are too low, asset values increase. We have just had a period of very low rates for an extended period of time. As interest rates rise, prices should level out or drop off.
While I agree with this, bear in mind that for some people, housing is the only "investment"/inflation hedge available to them. Without public pensions, lower to middle class people need something to fund retirement and we should be careful that " make residential property a much less attractive financial investment" doesn't just hurt those people vs the REIC, Berkshire Hathaways, etc.
If there was any more leeway to raise rent and keep renters, it would have been raised already by landlord
In the longer term and at the macro level, renting ultimately competes with cost of mortgaging. If the cost of home ownership goes down, so should rents. Again, government backed loans could help those renters who can afford the monthly repayments but lack the upfront deposit/capital to purchase.
What is needed is lower residential house purchases prices which will flow into rental costs (eventually). In the long run, rents are always based on the underlying asset value.
The other thing that could help lower residential property prices is obviously on the supply side, which I have deliberately avoided.
Monopoly prices = increasing prices reduces revenue.
Also look up "rent seeking".
- Overriding local governments and HOAs and loosening zoning regulations. Let developers build almost any kind of housing almost anywhere they want.
- Banning or severely restricting the sale of residential units to companies, LLCs, and corporations.
- Using taxpayer money to train more construction workers and building more houses, then selling them on the open market
- Banning the sale of land and housing to non citizens or non residents