To meet demand, US needs 4.3M more apartments by 2035
multifamilydive.com
multifamilydive.com
This seems off - do they mean legal documented immigrants, because there are reports of 3000 undocumented people a day illegally coming into Texas via Mexico, some of whom are being bussed to other parts of America?
The concerns with 'building more apartment buildings' are resources in area - water, energy, transportation - and past disasters with places like Geneva Towers in South San Francisco which deteriorated into a crime ridden hell that had to be demolished in the '90's.
https://www.foundsf.org/index.php?title=Remembrance_of_Genev...
I'm all for more housing but the US is a big place yet everyone seems to want to live in very small areas of it, egged on by the YIYBY crowd.
https://www.statista.com/statistics/183648/average-size-of-h...
https://www.statista.com/statistics/240267/number-of-housing...
Which is to say, yeah, maybe we don't need to build tons more, but we do at minimum need to use what we have and we aren't.
I would assume 10% unoccupied is the minimum needed.
I welcome the talk about more housing, but people need to remember: most of what we need aren't rentals. We need places people can own.
you’re talking about induced demand (i think that’s the term?), which is very real and makes the 4M figure in the article a bit misleading, but such demand isn’t likely to be infinite. consider an analogous endgame: i create a product which can dispense sushi for free. i give you a plate of 100 pounds of sushi, at no cost. you’re not going to eat it all, you’re not going to infinitely expand your demand to meet the available supply. supply really has met demand in this scenario.
i think a similar thing would apply to housing. even the very well-off don’t tend to purchase the maximal number of vacation homes they could afford. and i don’t think there’s any technology short of cloning that would cause a person to desire infinite residences: you can only be in on place at any given time…
Western countries rely on immigration induced population growth to keep their economies healthy. Would it not makes sense to prepare for a future where that well has run dry?
[0] https://www.un.org/development/desa/pd/sites/www.un.org.deve...
The world is getting older as well. The US will find itself increasingly competing for young, working age immigrants with other western nations. People in the developing world will also have less incentive to immigrate as their nations become more and more developed (look at India - it's still a much poorer than the US, but that gap used to be a whole lot bigger).
TLDR take the population pyramid into account, but still build baby build.
(disclosure: part time real estate investor/developer apprentice)
Maybe I have a dirty mind, but is the higher density supposed to help people meet others and promote reproduction or something? It seems kind of cynical that people are forced to pay more for less in modern times, especially with higher taxes. I wish I had a house vs. having a 1 bedroom priced at ~3k per month. My rent is basically the equivalent of a mortgage at this point. I don't really want to have to have a car though so I guess that limits my living options.
If you want to live on an acre of land in a 3k-5k sq ft home, you’ll have to do it in Iowa City versus say, downtown Chicago (or within ~50 miles of the/a city core). Desirable land has a cost, both from an acquisition and upkeep perspective.
[1] https://www.calculatedriskblog.com/2022/06/may-housing-start...
>but, but, apartments are bad.
Or
>nuke the suburbs
Both these takes are wrong. We need diversified development that meets peoples needs at all levels of society. From soviet style concrete apartment blocks to 3 acre single lot McMansions and everything in between.
F unbridled YIMBYISM, but especially F “BUT it will ruin neighbor character” NIMBYISM.
Fill in the gaps, be empathetic, and welcome new people to the neighborhood.
Urban3 has done some very interesting research into who pays for the suburbs. Guess who pays? It’s not the suburbs!!
But even if homebuilding increased to the point of keeping prices steady, it would probably be enough.
Using rising home values as a retirement account is essentially just a pyramid scheme.
Like, just think about how this has to work. It only functions if home values drastically increase between purchase and retirement, right? Let's say they have to double, for it to be significant for retirement savings: that means that each generation, houses are getting twice as expensive for the next set of buyers. Literally exponential growth in housing prices.
This can only happen a few times in a market before only people with a lot of wealth already -- intergenerational or otherwise -- can still afford the homes; just look at the bay area for an example. I grew up in the south bay, and hardly anyone from my childhood still lives there: they can't really afford it. To buy a house there, you usually need two people in tech with high salaries (and even then it can be stretching things a bit). Is that what you want?
The current situation in places that have had incredible growth in property prices is that people are funding their retirements, not from saving during their work years, but off the backs of their kids and grandkids, because they got lucky in where they chose to settle down. It's unearned wealth, plain and simple.
The ideal price of housing is zero*.
* okay yes obviously there's caveats there, but the fact that unlike other consumer goods where inflation is obviously held to be bad, people treat increasingly unaffordable housing as a good thing is insane.
Paying down a mortgage builds equity in the home. It's because homes are relatively illiquid and most people choose to own instead of rent that housing works rather well as a de facto retirement account. I see no issue with that personally.
> Like, just think about how this has to work. It only functions if home values drastically increase between purchase and retirement, right?
No it doesn't, for the same reason as stated above: accrued equity as a mortgage is paid down. Also, average home appreciation in the US roughly tracks inflation (which makes sense).
> just look at the bay area for an example
Why would you look at the most extreme real estate market in the country to draw any important conclusions?
> It's unearned wealth, plain and simple.
No it was just an investment whose return variance is principally explained by randomness. And of course not representative of the larger set. Almost everyone who has money in housing loses out after accounting for opportunity cost and things like maintenance + repair + property taxes.
Irrelevant. Mere equity in a home with a flat value is essentially unaffected by lowered property values overall: you'll not be forced to 'save' as much, but the point of saving was to not have a mortgage payment anymore. If you don't need to 'save' as much to reach the same outcome, if anything that's a net good.
The only real downside here is if you were counting on moving to somewhere not affected by lower property values, AND you didn't invest the money elsewhere that would've gone into more expensive housing. But for most people, it's a good thing.
> Also, average home appreciation in the US roughly tracks inflation (which makes sense).
Your data is out of date. It used to hover around 200k current dollars on average, but now it's far higher. The increasingly terrible zoning and other building regulations finally caught up to us: https://dqydj.com/historical-home-prices/
And note that it tends to be particularly bad anywhere the economy is good. Of course, some of that is expected, but the effect is just more drastic than it should be.
> No it was just an investment whose return variance is principally explained by randomness.
No, it's just luck compounded by regulations that favor handing out wealth to the elderly over the keeping costs reasonable for younger people.
Some of this is hilariously false and the rest is incoherent. There is simply no way to argue that lowered property values won't result in a net destruction of wealth for people holding mortgages or paid off homes.
> Your data is out of date. It used to hover around 200k current dollars on average, but now it's far higher. The increasingly terrible zoning and other building regulations finally caught up to us: https://dqydj.com/historical-home-prices/
You can't measure from a point of extreme dislocation. We're clearly off trend at present and there's no reason to believe it won't revert, as is being widely discussed right now. Somewhat obviously, monthly mortgage payment inflation cannot greatly exceed wage inflation, on average.
> No, it's just luck compounded by regulations that favor handing out wealth to the elderly over the keeping costs reasonable for younger people.
You're still thinking about extreme markets. And in those markets regulation is only part of the answer. The truly salient determinant of prices is how quickly demand for housing in a region increases, which is fundamentally unpredictable.
For people with existing home equity, sure. But how much does that actually benefit them? You can only actually make use of that money in a meaningful way if you either get a mortgage again, or if you leave and go somewhere cheaper (if it's more expensive than your current area, the current situation makes you even more screwed compared to the hypothetical).
Anyway, I was talking about the eventual steady state of the system: as a general principle, low home values would not destroy wealth, any more than reverting back to sane car prices will "destroy the wealth" of car ownership.
> We're clearly off trend at present and there's no reason to believe it won't revert
It might revert, yes, but unlike the insane housing bubble before, the current situation doesn't appear to be caused by financial shenanigans. There's just a lot of demand chasing not many houses. And if it does revert, it'll almost certainly be because of long-term changes in demand or supply. For demand, that would mean a long period of stagnation or recession.
> You're still thinking about extreme markets.
And what we're seeing is that increasingly, even markets that we didn't think of as "hot" are getting expensive. Random places look increasingly like the bay area I grew up in in the 90's, when it was already quite expensive, but not insanely so like now.
https://www.lendingtree.com/home/mortgage/vacancy-rates-stud...
Easily takes care of the half a million people experiencing homelessness as well.
Right from the article you linked, 2nd parg:
"But this doesn’t mean millions of abandoned and dilapidated homes are withering away in the suburbs. Vacant homes can be unoccupied for many reasons beyond being uninhabitable. For example, a house can be vacant because it’s still on the market to be sold or rented or it’s a vacation home not currently in use."
Homes under management for long term housing or resale kept in unoccupied states longer than reasonably expected incur penalties.
Homes kept unoccupied due to being priced out of reasonable band may do so for limited duration--every loophole has to be addressed with financial incentives.
This includes reducing the business potential of domestic and foreign private equity groups picking up homes at depressed rates like what blackstone did.
Residential property rental and transactions related to residential property must be way less lucrative.
The problem is growing; why take a demand-side approach? Especially one so prone to making lawyers and government officials rich? You’re just trading like-for-like as demand grows over time.
FWIW, I’m in favor of nationalizing zoning laws as Japan has done to fix supply.
Also, this doesn't seem to answer my question. How should expropriation be done exactly?
/s
In these comments you seem more concerned about lowering the number of vacant homes than lowering the number of homeless people. I feel that's the wrong approach.
We need to look and take lessons from systems that at least somewhat helped the problem. Of course, adjusting for the US situation, which might be just different. Compared, to, say Eastern Europe, I feel like US can just afford having so many homeless (e.g. free food and medicine for homeless in California). In many other countries homeless would not be able to survive, so in some weird sense we can call it a luxury, not a problem.
Out of curiosity, you do realize there are lots of countries without homelessness, right?
Really curious to learn other ways to solve the problem. What those other countries you mean?
But Japan, for instance, has very, very nearly no homeless.
No, it's a fairly recent and entirely cultural phenomenon. For one thing, there was no homelessness at all in North America before the Seventeenth century or so.
My ski house in Vermont does absolutely nothing for the homeless people in my neighborhood in New York. If you put someone in that ski house what would it do? Sure it would put a roof over their head, but there are no jobs, no soup kitchens, no homeless resources. They would need a car whereas in New York they can walk and use mass transit. The town in VT is already strapped supporting many in their community (I do charity there as well, and let me tell you it's more dire than much of the New York area).
The solution is to house them here in the New York area where they are (and in fact New York does a better than average job of this).
As for it being a misallocation, I own a $1M apartment in NYC and a $300K house in Vermont. If I just owned a $1.3M apartment in NYC my bills would be exactly the same, there would be 1 fewer "vacant house", and the homeless would still be unhoused. The real misallocation is how much I get paid as a software engineer relative to other professions of similar difficulty. I happen to spend my fun money on a ski house instead of a boat or a bunch of vacations, but there's no moral difference between a vacation home and other leisure spending. So really you are arguing that some people shouldn't have such a surplus when there are homeless people. Maybe that's true, but it's one of the most unpopular positions in American politics and if you are an ally of the homeless it's not a fruitful argument to make.
I'm interested in modifying the system which allows for such outcomes, not managing the outcomes themselves. Please take a systems-level approach that seeks root-cause adjustment and not simply an amelioration of symptoms.
I count myself as progressive but am almost disgusted by how many progressives try to muddy the water here because they don't like to face the fact that they have to give something up to make their neighbourhood more accessible to those who are well-off people.
Anyone who doesn't take housing policy seriously on the issue of homelessness is either naive, or doesn't actually care about the issue and instead is trying to use it to push some other agenda.
Where will this person find a job? Where will this person get help organizing their lives? How will this person transport themselves? Where will this person get help for any significant issues in their lives (e.g. substance abuse, mental disorder, etc)?
This is where your "system-level approach" breaks down - you can't bring the support infrastructure for this to a small Vermony ski town and also to all the other small towns in America. This is, as your first post says, poor resource allocation.
Zoom out a bit and observe the broader systems which conspired to guide the invisible hand to allocate a largely unproductive property in Vermont to exist in the first place. I'll be very clear - I'm not advocating for unhoused people from New York to inhabit this property. If that's how you've decided to read it I implore you to go back and begin steel-manning instead.
Even high-functioning and privileged individuals seldom have their shit together 98% of the time. I can't go 5 days without doing something chillingly stupid.
It is frankly astounding that we achieve better than 98% on any homelessness metric. A long forgotten ancestral memory says: there but for the grace of God go I.
Root cause: humans stink individually but we are robust in aggregate.
- Steinbeck, The Grapes of Wrath, chapter 25
Many other countries have historically avoided famine in part because their political systems depended upon and heavily favored local agricultural interests--not the laborers, but specifically the financial security and opportunities of the agricultural land-owning classes. And when and where they didn't, e.g., Ireland in the late 19th century or China in the mid-20th century, things played out in predictable fashion.
Such emphasis doesn't create an optimal state of affairs for maximizing overall wealth and economic equality, but it's one way, however primitive, to buffer volatility and minimize the chances of catastrophic food failure; and helps explain why such seemingly unfair socio-political favoritism, often with seemingly perverse side effects, persists today, let alone in the 1930s.
Only since the 1920s and commercial fertilizer use has food become abundant to such a degree, and logistics so sophisticated that we could fathom supplying excess food to multiple entire countries.
It is doubtful that the people who conceived plans for providing such aid foresaw all the consequences of their actions, because there was simply no historical precedent for such a scale of intervention. Food was scarce. Countries usually didn't have enough of it. It only seemed like the best way to alleviate that was to just _give people food_.
As it turns out, maybe that wasn't the best way, but it was lieky a lesson that needed to be learned the hard way.
Do you mean that we don't have enough vacant homes?
Person A: My machine needs 4 GPU to train this model in <6 hours.
Person B: There are 1000000 GPUs in Japan.
Do you see how that's not helpful?
edit: then Michigan, Pennsylvania, Georgia, Ohio, Illinois, Alabama, South Carolina, Virginia, Missouri, Tennessee, Arizona, Wisconsin, then, finally, Louisiana.
Meanwhile NYC is <5% which can barely manage to support people moving around within the city, never mind other people trying to move into the city.
https://www.thecity.nyc/2022/5/17/23108792/nyc-apartment-vac...
Of course, that's the exact thing which is hardest to do, since economy is king and economic incentives don't align with that proposal at all.
edit to add: A couple of people have mentioned that the vacant homes are not in desirable locations. As an anecdote, I live in Park Merced in San Francisco and there are dozens and dozens of empty units here ready to move in. There are also dozens of families living in RVs around Lake Merced a few blocks away. I'm saying that the obvious thing to do is for SF to exercise eminent domain, pay the company that owns Park Merced for the property, then let the people in the RVs live in the homes. That might seem a bit expensive, but SF's annual budget for dealing with homelessness is one quarter of a billion dollars.
We could convert Park Merced into a place of healing and renewal where folks who need help can come and live in a home and have access to e.g. addiction treatment or whatever.
The simple answer is, volunteers first and if that's not enough we can do a lottery. That's just off the top of my head.
> and who’s paying to subsidize the rent?
US Government. We'll take it out of the defense budget. In the interests of National Security and all that.
I really don't think it's that crazy of an idea. The details would be messy but we could house everyone overnight if we really wanted to.
It sounds so wasteful to buy such expensive real estate, lose property tax revenue, and assume perpetual maintenance costs just to house a fraction of the homeless you could elsewhere.
Build more housing and give it to them.
> Isn’t it reasonable to expect your homeless population to backfill with other RV dwellers looking for the same?
Yes, but there's only about 500,000 homeless people in America. It would not quite double the city population. (Last I checked we were around 800,000.)
Park Merced alone could hold thousands more families if we converted the garden apartments and townhomes to towers, although that wouldn't be the only option. The entire Sunset District is almost all single-family homes. SF is a young city, there is lots of room.
> It sounds so wasteful to buy such expensive real estate, lose property tax revenue, and assume perpetual maintenance costs just to house a fraction of the homeless you could elsewhere.
Perhaps, but compare that to the opportunity cost to society of keeping all those families living in RVs. That's the real waste, eh?
Give them homes, let their kids grow up in stable homes, check back in three generations, eh?
I'm hugely in favor of guaranteeing housing, but putting homeless people in random houses and apartments scattered across the country is unlikely to actually work. Do any other countries actually do this to solve homelessness?
We need emergency and temporary housing with heavy support for many homeless people, and then more standard housing for people once they're more stabilized.
Some US homeless are mentally ill, but the majority are people without any safety net-- either societal (since they reside in the US), or familial.
I mean this is essentially true by definition, but it doesn't conflict with mental illness or substance abuse problems being factors as well.
I don't disagree with your point though. We could do much better as a society. There should always be some bare minimum safe and secure housing available, even if it's basic.
Because it isn't the 1950s anymore. The middle class that was able to afford those homes no longer exists, the rich have gotten exponentially richer, and everyone else has or is increasingly being priced out of housing.
I grew up in an English village that, apart from a handful of Tudor buildings, was entirely Victorian growth. I imagine that had that growth occurred in the 1950s then it would be a very different place. Indeed by the 1990s almost all the shops had closed and we were effectively a suburb of our local town.
Here in California they used to have main streets but they ripped them all out in the boom, replacing them with thoughtless concrete modernity. Then those all failed when malls were invented and if you’re lucky your city tore it out and you’ve got some fake 90s interpretation of corporate utopia as your downtown.
No answer for air quality. Except is indoor air quality any better in a new suburban house than a new apt in a walkable area?
That being said, SF is famous for their moldy condos. I've had apt neighbors that smoked cigars, cigs, and weed that crept into my room.
Oh to be young again.
I was in the market for a year and was interested in something outside of a city. I could afford the larger 5 bedroom homes, but had absolutely no use for that amount of space. Nice 2 bedroom homes in the suburbs just aren't a thing for some reason. Smaller homes exist, but the quality drops dramatically.
Perhaps there is an untapped market for high quality 1-2 bedroom homes outside of cities. I'd certainly buy one.
The other reason is that during the baby boom we already built on much of the conveniently situated land (flat, close to existing areas and infrastructure, vacant or agricultural). Now we have to go and build out infrastructure, perform grading, tear down the previous building, clean up its toxic waste, etc. It all costs money. Much of Silicon Valley was built on orchards. Now we’re trying to build on superfund sites.
Here is a really good video about it: https://www.youtube.com/watch?v=7IsMeKl-Sv0