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>You won't convince someone to build a new apartment building if they can't make money

You don't really need to. Do what Singapore (or Vienna) did. Create a Housing and Development board, build the housing that you need... and that's about it.

These bizarre contortions that people go through of schemes and tax credits and mechanisms, it's the same as the healthcare sector, one single bloated mess.

When you look at the model that Germany is following in some areas, it seems like a nice long term way to stabilize housing prices.

https://tribunemag.co.uk/2022/07/germany-mietshauser-syndika...

Government housing projects had a bad outcome in the US... "The Projects".

Your statement isn't wrong but can be misconstrued to imply that government housing led to bad outcomes.

I very strongly suggest reading through citations of https://en.wikipedia.org/wiki/Subsidized_housing_in_the_Unit....

tl;dr: "The Projects" were primarily concentrated outside of major economic centers, were left out of public transportation (and other) infrastructure projects. Mix in the government sanctioned racism and segregation of economic groups, "The Projects" in the US were doomed before they even started.

Here is a nice article that compares public housing between the USA, Singapore, and Vienna and talks about how the USA could do better.

https://charterforcompassion.org/shareable-community-ideas/p...

> You don't really need to. Do what Singapore (or Vienna) did. Create a Housing and Development board, build the housing that you need... and that's about it.

Unless you can explain how that's different from what the Warsaw Pact did, or show that the Warsaw Pact housing, while horrible, was still better than what the free market would produce, then I'm not going to sign up for your solution.

It's pretty clear that no evidence would convince you to abandon your zealotry, because otherwise you'd make the trivial effort required to discover that Vienna or Singapore do not look like the Warsaw Pact.

> It's pretty clear that no evidence would convince you to abandon your zealotry...

Personal attacks are not cool here.

> ... because otherwise you'd make the trivial effort required to discover that Vienna or Singapore do not look like the Warsaw Pact.

I know they don't look like the Warsaw Pact. But the policy that Barrin92 is proposing sounds like Vienna, but also sounds like the Warsaw Pact. In one place it works; in one place it produced monstrosities.

My question is: If we adopt this policy, why do we think we're going to get Vienna's outcome instead of the Warsaw Pact's?

it isn't really. Eastern bloc housing looks butt ugly but it was cheap and equitable. Singapore's just richer and probably hired an interior designer. The problems start when you try to centrally manage every box of cornflakes you make, not national infrastructure.

I'll go one further and tell you there is no such thing as free market housing and never has been, just like there's no free market submarine or free market interstate highway. These are big governmental and corporate projects and at best the market shuffles the occupants around after the fact. Every project like that is communist even in the good old US of A, just don't run the entire country that way and you're golden.

So your argument is, not that Eastern bloc housing was good, but that it was good enough to be far better than homelessness? That's... probably true. Given the choice, I'd probably take a Warsaw Pact apartment over a cardboard box.

[Edit: There are submarines that are free market, and are for sale to (wealthy) private individuals. There are also free market interstate highways; they are toll roads. Still official interstate highways, but privately owned and operated.]

> You won't convince someone to build a new apartment building if they can't make money.

Demonstrably false. The city of Venna Austria builds housing for people because people need housing, not because it expects to make money. This kind of thinking demonstrates a depressingly narrow view of human possibilities.

https://www.huduser.gov/portal/pdredge/pdr_edge_featd_articl...

> about 5,000 annually

That's not a lot of housing production for a city of 2 million.

That's quite an old article; it'd appear to be more like 9000/year as of 2016, of a a total of 13,000.

From the article:

“Vienna’s city government owns and manages 220,000 housing units, which represent about 25 percent of the city’s housing stock.1 These city-owned housing units, called social housing, are meant primarily for lower-income residents. The city also indirectly controls 200,000 units that are built and owned by limited-profit private developers but developed through a city-regulated process.”

So according to this data the government controls about 50% of the housing in the city. Seems pretty good to me! As someone else said the article and data are a bit old, but it sounds like they’ve been keeping up with demand if they had 50% when this article was written. (They’ve been doing this for 100 years)

> There are many good reasons for real estate to be an investment vehicle. You won't convince someone to build a new apartment building if they can't make money.

Why is real estate being an investment vehicle required for builders to make money?

Because you need them to outlay capital now in return for likely future profits? That's literally what investing is.

Companies make cars, people buy them, everyone knows that a car is a depreciating asset (except for current used car shortages, and certain collectible classics) but people still buy them.

This is because they are very useful.

A house or an apartment is also quite useful without being an asset that appreciates in value. The whole rental market is based on this concept.

I don't see why housing needs to increase in value to incentives people to build it.

And in Japan this is exactly the case, it's not typical for housing to increase in value in Japan.

This seems to miss the point. Within this metaphor, the companies that make the cars are the construction and real estate developers - both of which are driven by the profit motive.

You can have a profit motive driving behavior without something being an investment vehicle.

Cars are an example of that. Even when scarcity has driven the cost of cars up (such as during the recent pandemic), everyone recognized that more could, and would, be produced, and so no one viewed them as an investment vehicle, that adding time in somehow increased the value over the initial purchase price.

Housing is viewed that way. Part of that is due to location; there is innately a level of scarcity (not everyone can live in (insert city)), but there is also massive artifical scarcity. Even where there's room, there is NIMPYism and zoning regulations and etc that keeps enough housing from being built in areas people are able to live (i.e., close enough to civilization to be able to buy groceries without an hour long drive each way, for instance), forcing pricing up, in a positive reinforcement loop (scarcity = pricing goes up = people buying for the 'investment' rather than a place to live = more scarcity)

It costs a ton to build a house in the US. If I gave you free land likely it would cost you more to build a new home there than it would to buy an equivalent which would include the land.

It does cost a lot, but in most cases you're going to get more bang for your buck. (and you can also forgo features you don't like or need: like a homeowner's association; or pre-existing utility connections you don't want).

The other thing about building a home - particularly if you're in a high-demand area, the appreciation in the first 2 years is pretty insane.

I don't know. Maybe. Maybe you are not. Some older homes are really well built. Some are not. Some modern homes are well built. Some are not.

You can certainly buy an existing home without HOA.

Here is exactly why:

In America, this is basically the ONLY way "normal people" can make money (or at least used to be - those of us who didn't "get on the bus" in time have missed out).

Unless you create valuable intellectual property (ie. inventor, etc), or unless you're a doctor or lawyer, you're mostly just barely getting by. Those of us who were able to invest in housing, and take that ride, might actually have enough economic security to retire on.

So why does it have to be that way?

Because the politician who tries to change this system, will get voted out of office.

I don't want to say bad things about democracy. I love democracy, and I think it's one of the most important human innovations of the past 2000 years.

But the way we practice it in the USA; we're basically voting for our own extinction.

Yeah, I understand the politics of it, and you're right that it's incredibly politically challenging thing to change.

But it's not a fundamental property of how markets for housing have to work. Housing doesn't need to be an appreciating asset for building housing to be a viable business to be in.

That doesn't address the point. Think if food was an investment item, rather than just a thing farmers make to sell at a price greater than what it cost them to make it.

Similarly, why aren't houses just a thing that costs a bit more than the bricks and labor required to make them?

>Similarly, why aren't houses just a thing that costs a bit more than the bricks and labor required to make them?

Because words like "housing" and "houses" in conversational speech hides the fact that it has 2 major components: (1) land and (2) the building structure

The big part of rising housing prices or "scarce housing" or "demand exceeding supply" is really about desirable geographic locations.

Sure, raw materials prices like lumber and copper pipes go up in price too but it's also the rising land value that's contributing to the "return on investment". That's the component price that doesn't work like food commodities. My home is decades old and has outdated technology that today's brand new homes have upgraded but nevertheless, my so-called "house" has tripled in value because a new hospital down the street was built 10 years ago and all the doctors want to live in my neighborhood to have a short 10-minute commute. If someone actually bought my so-called "house", they may bulldoze it and rebuild a new more modern home on it.

>> The big part of rising housing prices or "scarce housing" or "demand exceeding supply" is really about desirable geographic locations.

Only to a point. Many desirable geographic locations have a lot of local factors that prevent additional housing from being built with the intent of housing more people (think homeowners defending their "property values", zoning laws, etc). Similarly, homes being "investments" means there's a self-perpetuating cycle; builders build luxury homes instead of multi-tenant buildings, because they know that's what companies want to buy (being flipped the easiest with the highest rate of return), so even when there is new land being developed, market forces push it to being an "investment" rather than housing people. Income inequality furthers this; why use the land and sell a modest home to a worker, when you could use the home and sell a luxury home at a much larger markup to the rich?

Right, that's a major point. So why is it that we're ok with land prices rocketing? After all the immutable properties of land are not going to change from us pouring more money into it. You don't get more central London land from raising its price.

It's like a sink that eats up economic gains.

> Because you need them to outlay capital now in return for likely future profits? That's literally what investing is.

A builder is paid to build. They profit if their revenue is greater than their costs. That is certainly possible even if housing isn’t an investment vehicle.

The makers of candy bars manage to profit yet I doubt many people buy them as investments.

Builder != Developer. The builder is a service provider and definitely doesn't finance construction.

> Builder != Developer. The builder is a service provider and definitely doesn't finance construction.

What in my post doesn’t apply for developers exactly? They finance construction if they expect to profit. They can profit even if the final product later doesn’t increase in value. In fact, why would they see that profit anyway? Any increase in value would end up in the final owner’s pocket not the developer.

There are 2 aspects to this. Development should absoulutely be a thing this is investment in the same way investing in a manufacturing company is investment.

Buying/building property to rent should absolutely be a thing as well. There's a service there. But the idea that i buy a house now and in 5 years it's worth more than i paid for it (relative to income) needs to die

Depends where you buy the house...

tell that to the bitcoin bros.

Maybe I have misunderstood what you're saying, but it wouldn't be a (good) investment vehicle if they didn't make money.

In more civilized countries, plenty of housing stock is built by the government, which is why it is not treated as an investment commodity for speculation.

The problem is people hate new housing. Until you change public perception of this relegating this to the government is going to make the situation worse.

Right now, private builders can bribe people to allow construction if the market price is high enough. If the government had to do it, there would be basically no new construction. It's politically unpopular and very expensive, so it's an easy project to axe.

People hate new housing because it’s 95% luxury condos and McMansions in the US, precisely because we rely too much on the private sector to build housing. Of course they will only focus on units with the fattest margins.

The land is the investment here, not the building. Buildings generally go down in value over time, just like most other things. It’s the land that’s gets more expensive as demand increases but supply doesn’t change.

Correct. It is hard to make more land.

> You won't convince someone to build a new apartment building if they can't make money.

This is orthogonal to the investment value of the apartment building as an asset. Surely you generally build rental properties to make a profit via rent, not to make a profit on the land & building - thought you'll factor that into your models.