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Comment by flockonus | Hacker News Reader

Back on the first wave of "built in America" workers could afford to buy houses and have a decent standard of living with their salaries, so it was an attractive proposition. Now lower income salaries can't afford a decent living, no wonder workers are not interested in such jobs, they can't make a good living on it.

It's not that the factories are being cheap (at least not in all cases), but the gov has to step in and bring real estate price under control, this is often the biggest economic gap that hurts our generation.

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> It's not that the factories are being cheap (at least not in all cases), but the gov has to step in and bring real estate price under control, this is often the biggest economic gap that hurts our generation.

This will never happen.

The only way to get affordable housing is to build a lot more housing than is currently being built. But that means:

* Higher density living

* A sustained decrease in residential property values

Both of these would be very unpopular with voters. The second point would also probably cause some serious economic problems, as a lot of peoples' and businesses' decisions are based on property values generally going up faster than the rate of inflation.

Bingo! Real estate prices and rents are so high precisely because this is what the majority (that is, homeowners) want: they want their home equity to go up. And they will vote for whoever makes it more likely.

Want to solve it? Scrap democracy (so no one gives a damn what people want), or scrap market economy (so the Party will provide free housing to everyone). I'd much rather stick with expensive rent.

Or just have everybody kill everybody else. Reduce the population and you reduce demand for housing, food, energy, and all those other pesky necessities of life that have become too expensive.

/s, but history shows that this is how things usually end.

Yup. I see this as increasing pressures. What matters is the rate of increase.

Everyone is competing to ensure they are not at the bottom. But:

- will the pressure rise slowly enough to simply pressure those at the bottom to have less children.

- will the pressure rise cause those at the bottom to explode. IE riots in the streets etc

I think the second option as more likely. By definition, those in power are out of touch with those at the bottom.

It's a coordination problem. They'll vote for people who prevent it locally, but if you move power a bit up to the state level there isn't nearly so much interest in preventing it, which is why other countries don't have this issue outside the Anglosphere.

Even moving from per-district to at-large city council members is enough to improve things, though we seem to be moving in the other direction there.

This seems like a very Big Coastal Metro-centric view that is probably true in those areas but doesn't capture what's happening elsewhere. Home prices in Metro Detroit, for example, used to be quite reasonable and have recently exploded to being rather unaffordable for most people. There hasn't really been any population growth to speak of, so it's not clear to me why would we need or want more housing to be constructed in order for prices to be reasonable, as was the historic norm.

Even in a cheap area in a western red state, last year, flippers bought a house, slapped a for sale sign and doubled the price the next month. Those are still sitting unsold. And now houses are being bought by flippers who are slapping an extra 2.5 times the price they got it for in the same month. None of these houses are selling. Just sitting empty.

That sort of thing should end with the end of low interest rates. When interest rates were near zero, borrowing money to purchase unused real estate could be profitable if you could sell some of it. No longer true.

Right, unless those flippers paid with straight cash, they are going to have a hard time raising more money to buy more houses, and they might go underwater on the current ones.

To see what that looks like on steroids, China's economy is at real risk of recession due to property developers running out of cash and failing to build promised developments. (Most apartments in China are purchased before construction starts, so you can buy a house and not end up with one in the end.)

Even if investors pay cash, they need cheap interest rates to be able to sell at a profit to people who need a loan.

The average time to flip a house is 45 days to 6 months. Let’s pretend it’s going to cost $500 more a month in interest rates, that’s only $3000 more dollars. If you could do 3 in a year you’ll only lose about $10k.

I wish the tax on flipping houses went up. Something is sleeping there that it economically makes sense. Like if I sell 1 car, ok, but if I sell 10 I need a dealer license. Same should happen with the flippers. More regulations, because they’re cutting corners all the way.

Rather than targeting flipping, I think ownership of more than one housing unit should be taxed progressively and become prohibitive rapidly.

Do you feel that renters should be punished economically (which I think would be an inevitable consequence of that policy)?

I think amount of renters would rapidly drop off.

I agree. Some to ownership. Others to homelessness.

It depends on what facilities the country would provide. Assuming it's USA it's homelessness. If it was another country, it might be provided social housing.

Why not skip the taxation and homelessness and just build the social housing?

That's also an option, however, it does not remove enough profits from land ownership rent seeking.

> it does not remove enough profits from land ownership rent seeking

You'd prefer to create excess misery to satisfy a sense of vengeance? Versus just solving the problem?

Land ownership rent seeking creates misery. It should be curbed.

What should people that expect/hope to move soon do?

What should young and poor people who can't afford a down payment do?

rent...

I think /u/carom agrees with you (that renting is the best choice for many), even if they don't realize it.

It's worth considering that some of us want to rent. I've moved for work a few times, so I rented because it wasn't worth the hassle of buying a house, living in it for 2 years, then selling it to move. Some people move to a big city to start a career, with the intentions of moving back towards home when they've cut their teeth.

Having the option to rent is a good thing, being forced to rent when you don't want to is a bad thing. Hopefully we can accommodate both.

Under your scheme, if I own a property, it is cheaper for me to make it a single family home than to subdivide it into multiple units? Why are you punishing who make housing available to others?

I rent out one single family home that I couldn't sell when I moved and a 4 unit building where I currently live in one of the units. I never understand these comments. The 4 unit building could be torn down and made a SFH or I could build 14 units which my city desperately needs. If you keep adding rent control and payment vacations and eviction moratoriums and taxes it will be a SFH.

I think your dream is every property is tenancy in commons, but that is legal now and not popular. The reason is zoning. Rich people can compete with two families easily and by limiting the number of units that is all they need to compete with. Much more difficult to compete with 10 families if the lot is zoned for 10.

Anyway, these policy suggestions are maniacal. Go buy and build housing and you'll see how much work it is. Make a startup that makes TiC and construction easier. Go change zoning laws.

Making construction easier just makes those guys lives easier, I doubt it'll result in more housing. Look at the red states with no regulations like Louisiana. They're terrible places to live. Nothing gets fixed with no/low regulation.

I do think his idea about high taxes on a 2nd+ home makes sense. The only problem with it is that it doesn't apply globally, only nationally. You'll have rich people have a palace in the US, Spain, and Australia instead of 3 in the US.

For my own life and approach to this, I moved around a lot and lived in austerity saving up money for a home. I don't want zoning laws to change at all because there's already too many multi-tenant buildings. Pull up the sex and gun offender maps, it's disproportionately those people. And I'm currently a tenant myself (while obeying the laws and having a clean record).

I'd rather see taxes on 2nd+ homes than zoning change. We already built 'out' with suburbs and have plenty of land available for developers to build on and make money. With the internet we no longer have to all live in a city either. It seems to me like his idea, minus the global snag, is generally on the right track.

But I am not a fan of multi-tenant housing near whatever home I purchase, just because of the sort of short-sighted people that often make up renters. They should be in homes anyway, not renting, in an ideal scenario.

Both. And IRS penalties.

I think Airbnb rentals need to be curtailed.

I'm my county there are 65k people. It's also the largest county by size in Utah Iirc, in my city which is the biggest city in the county there's around 40k.

When we had to move it was horrifying and scary trying to find a place. There seemed to be no vacancies. Someone posted a listing on Facebook marketplace and there were 20 replies in under 5 minutes.

However, the are 400 apartments that used to presumably be college(we're a college town) or regular residential homes.

So the irksome thing is the fear of being homeless is very real even if you have money to move to another place, there aren't any. But there's 400 places that could be available which would raise supply if short term rentals were banned or taxed steeply enough that revenue for short term might only be 500 more per month instead of 3000 more.

This is happening everywhere not just my part of fantasia.

They don't have infinite money to do this, not anymore. Eventually the market's going to clear or they're going out of business.

Although in my experience people are convinced there's "vacant houses" absolutely everywhere based on not seeing the lights on at night. It's not true and this is not a major contribution to the housing crisis.

This is also a nice description of the stock market over the last few years. Buy high and quickly sell higher. Works great until the music stops.

https://www.zillow.com/homedetails/303-Atherton-Ave-Atherton...

Scroll down to price and tax history.

This house has been on the market for at least 15 months and has had its price slashed by over 3 million dollars and nobody is nibbling.

It's become a bit of a running joke around here, trying to guess if it's still the most expensive listing in the local paper each week.

As an aside, the local papers are really just pages and pages of real estate ads with a few paragraphs of news sprinkled here and there. Can literally rip out half the pages and not lose a single line of news.

The places that have cheap housing stock are usually places that are undesirable to live in because of crime, an undeserved reputation for crime, and generally pathetic government services.

Metro Detroit has low housing expenses because the government provides no services. Even if we assume low crime, if a middle class family were to move to urban Detroit, because Detroit has been deliberately designed so all the rich people live in the suburbs, that family will have no decent schools to send their kids to. So they will basically be trading their child’s education and future for a cheaper rent.

That’s almost always a terrible decision. And that’s before we consider the fact that the governor of Michigan probably doesn’t give shit about Detroit or Flint or the fact that those families are drinking lead in their water. L

Flint's water has been fixed for years.

I'm finding conflicting reports about this. Some say it's been fixed for all houses in Flint, others say there's 2000 houses where it still hasn't been fixed.

But there's apparently a lot of people who simply don't trust it because they're been lied to for too long.

>Metro Detroit has low housing expenses because the government provides no services.

The parent claimed that prices in Metro Detroit have gone up and become unaffordable.

Detroit was designed for rich people. Unlike almost any large city, it consists of large, single family homes, each on a relatively large parcel of land. It was a city, before "the riots," that was one of the richest in the world. Everyone had cars. There was so much entertainment that new music genres came from Detroit.

> The places that have cheap housing stock are usually places that are undesirable to live in because of

The leading cause for people not wanting to live somewhere is almost certainly the ability to find work (relatively) nearby. Large amounts of crime are only really a problem in sufficiently large cities (obviously with exception) and particularly poor ones, both of which stem from a lack of sustainable income:CoL ratio.

I don't think you've lived somewhere that has failing city services. One of the last places I rented for a while, the city was the only trash service. Optimistically my trash would get collected 3 times a month at best. Sometimes I was lucky to get trash picked up 2 times a month. We frequently had a "queue" of trash bags that had to be loaded after each trash day. I remember moving out and leaving a backlog of trash in the garage, simply because I had no way to dispose of it all.

And when the trash isn't collected on my day? Better bring the can in immediately, otherwise I'll get fined by the city for having my can out too long.

In the same place, the government mandated regulated power simply decided that they were not going to read my meter because of a "dog behind the gate" (there was no gate). Their solution was to have me pay an "estimated" charge that was several times my monthly income.

It's absolutely unlivable long term to be some place like that.

It's a perverse incentive providing poorer service enables more fines. Of course the cost benefit of this approach is rarely considered by the government involved.

It's separate parts of the city, at least where I was talking about. The police issue the citation and collect the revenue, not the garbage collection part of the city.

Fundamentally it's just the same thing as any other city service: they have no actual obligation to provide any service. Your recourse is to move to another jurisdiction, which I did.

Unaffordable is relative. $150k for a 1500 sq ft house is pretty common there...Detroit needs better incomes, not more housing. On the other hand, SF needs more housing, not more income

People also need to stop flocking to the Oligarchy of cities. New and upcoming cities need to become the norm because those are the ones with a maxima of opportunity plus lower costs.

As in all industries, so long as we refuse to consider alternatives, they'll hold all the power to raise the price. It happens with brands like Apple, it happens/happened to big brand name cities like Miami, Austin, San Francisco ...

Higher density is not actually required. There are hundreds of square miles of unbuilt land even within 30 minutes driving distance of Palo Alto and the rest of Silicon Valley. It's just not possible to build there due to environmental regulations, government ownership of the land, and so on.

As for sustained decrease in residential property values, yes, that is the real problem. Voters who own homes won't vote for policies that let everyone else have a cheaper home. It is going to need to happen in some other state, and that state will need to draw away so many workers that California house prices fall anyway, and then maybe the policies will change.

The main limit there is usually transportation infrastructure, but there is not exactly room for more lanes on any of the Bay Area's highways, let alone space for new highways.

Rail scales better, but that's also not really getting a move on anytime soon, and in any case rail scales better if density is high development and nearby.

Ah yes, just tear down the redwood forest.

Or farmland, because that's just unused space, right?

That's how it's been seen traditionally in the US, unfortunately. Silicon Valley in California used to be the site of the largest fruit producing area in the world from the beginning of the 20th century until the 1960s, but technology turned out to be more profitable. The Orlando area in Florida was also a major citrus producer until the 1970s and the coming of Disney World and other theme parks that located there to get traffic from Disney visitors.

What about the empty, smelly, marshland? Sure there may be some limited wildlife there but what about you know, people who want a house affordable enough to have a family?

Limited wildlife in wetlands? No. Wetlands are among the most richly bio diverse ecological niches. Humans regard themselves as somehow outside the system in which they evolved.

Smelly? The presence of volatile compounds interacting with your olfactory receptors that trigger certain aversive reactions is a poor justification for destroying a natural habitat.

The smell they're referring to is probably the Milpitas Stench, which is probably coming from a San Jose garbage dump. It is quite… noticeable.

https://milpitas-odor.info/about/

There are millions of square kilometers of undeveloped land that are not within 30 minutes of the most expensive real estate in the USA. Preserve it elsewhere, let families have homes here.

Low density areas do not produce enough property taxes to fund the infrastructure required to maintain them. They're not sustainable.

Pretty sure the taxes in this area would. And besides, most of the USA is low density. Why does this specific area need to remain unbuilt?

Pretty sure based on what?

"As a young engineer, I remember sitting in a city council meeting where a senior colleague presented my analysis on the massive backlog of road maintenance the community was facing. My estimation was that the city's capital budget needed to be increased by five times just to keep from falling further behind"

"Analyses of new developments suggest that a minimum of $20 in private wealth is needed to sustain, for the long term, each dollar of public infrastructure investment. A ratio of 40:1 would provide an optimal buffer for future uncertainty. Yet, when we examine modern North American localities, it is common to find ratios of 1:1 or worse. That is, in the current development pattern, it takes one dollar of public infrastructure investment to create one dollar of private wealth. That’s a formula for economic disaster."

https://www.strongtowns.org/journal/2018/8/22/the-more-we-gr...

The Strong Towns argument is not convincing. Most local governments spend far more on public safety than on road maintenance. The roads are generally fine. Sure public works department employees can always point to long lists of needed maintenance work, but if it takes a few weeks to fix a pothole on some residential street that's not a crisis.

This is just bad reasoning. How much they spend on other items is irrelevant to whether the amount they spend on roads is sufficient. The effects of deferred maintenance take years or decades to show up. Then a bridge collapses or a road needs to be completely redone and there’s no money to fix it.

The same effect scales to other services anyway. You need more cops to cover 50 square miles than 10 square miles and if the areas is low density it’s producing less $ / square mile in taxes so they can’t afford it.

No that's not how it works. Many low-density areas have very few law enforcement officers, and still have low crime rates. Whereas some of the densest cities actually need more cops because the residents act out in antisocial ways.

Strong Towns just cherry picks data to support their preferred political narrative. I actually agree with some of their recommendations, but let's not be fooled into believing that they're doing high quality analysis.

Maybe, maybe not. That doesn't change the fact that "we spend more on public safety so the amount we spend on roads is enough" is straight nonsense. They are two different things with different requirements. How much is spent on one has nothing to do with how much needs to be spent on the other. You can underspend on roads for quite a while before things start obviously falling apart. People notice pretty quickly if the cops or ambulance aren't showing up though.

Since this area seems to mean Silicon Valley, you're aware of Prop 13, yes? Ain't nobody paying property taxes here.

The density is required if you don't think that commuting for a hour by a slowly moving car is the best use of everyone's time, and building and maintaining a huge highway is the best use of your limited tax funds.

Density + public transportation save a lot, on both counts. You may not be a fan of Manhattan, but 1/10 of its density, aka low-rises, already make proper urban infrastructure sustainable.

Is density or the huge highway required? We're commuting to a huge number of white collar jobs completely unnecessarily. Move information, not people.

So much property value is tied up in this assumption we need to be close to jobs to work and it's all a lie. Many of the jobs that do require an in-person presence are only located where they're located because the assumption is the jobs need to be there to serve the workers who don't need to be there in the first place. I don't think any part of how we're making cities actually makes sense, because they're designed for the world of 2020, and not the world of 2030.

People have this mindset that's outmoded, they think about how to get the workers into offices. The thought now should be how to get goods and services to the workers.

As a software engineer, I work from home, and it's OK. Living in a dense city means I can walk to a park, or a grocery store, or a to my doctor, but it's a just a nice bonus.

But the article is talking about factories, blue-collar jobs that require actual physical presence.

Factory jobs are a small fraction of the overall economy. Take the white collar cars off the road and you've freed up capacity. Then build roads for industrial purposes.

I do some work with blue collar industrial clients now and again as a favour. I work remote and contract out the various things I can't do remotely to an MSP or various local installers. A factory has an accounting department, it has managers pushing paper all day (although these usually can only be hybrid remote positions), that sort of thing.

You certainly need to build a freaking road to the facility and arrange for the transport of workers but honestly congestion on these roads isn't as much as an issue as disrepair and maintenance because of the heavy trucks driving across them. Talk to anybody running anything industrial and they want to hire some white collar people to automate some stuff to either cut labor costs or expand the business, hopefully the latter, and these people are likely to work hybrid.

I guess you are right and I should give more consideration to industrial uses of transportation infrastructure which are just as relevant as ever.

Where I live (in Europe), every factory has buses which ferries the workers to and from the factory even from remote villages. It isn't hard to do.

Let's look at projections for the world of 2030, shall we?

https://www.bls.gov/emp/tables/employment-by-major-industry-...

Most jobs are not office jobs and cannot be done remotely.

Density appears to be required because letting people do remote work causes them to live in cities /even more/. When they do spread out, it doesn't encourage low density, but rather even far out places like Spokane become unaffordable.

Besides that, low density suburbia is a very artificial post-WW2 invention, traditional villages were dense enough.

Indeed so; I've been to small towns in western Poland which are many centuries old, and they are pretty dense, sometimes downright tight. I've been to a number of small towns in Ireland and England, and they look properly urban, nothing like suburban sprawl.

> and building and maintaining a huge highway is the best use of your limited tax funds.

And once again, the growth ponzi scheme strikes

https://www.youtube.com/watch?v=7IsMeKl-Sv0

It's not strictly required, but it is desired if you don't want to keep cutting into nature. Not to mention more efficient all-around. Car-dominant suburban sprawl is a terrible model in the long run for a variety of reasons.

> Both of these would be very unpopular with voters.

We need to find a way to never be in this situation again. For example, create Special Economic Zones where by law housing construction is expected to constantly be happening, and it is impossible to prevent it by law.

One of the founding principles of this country is “no taxation without representation.” Disregarding the will of the voters seems to run contrary to that.

If the law obliges construction to happen, and the law prevents it from being prevented, then the will of the people is expressed legislatively. This would normally be considered an expression of representation. This kind of a SEZ could be terminated if the relevant people elected relevant representatives to the relevant legislature.

Pro-housing principles have been quite popular with California voters; Scott Wiener (the state senator with the most aggressive upzoning bills) is the most popular elected official in SF even. It's just they're only popular at the state level, not the local level - that's what it means to be a NIMBY. But none of the major YIMBY policies have lost anyone an election yet that I know of.

The will of the voters is sometimes different depending on what you ask them.

If you ask people if they support a constitutional right to free speech, they'll probably say yes. If you ask them if someone should have a right to say some specific disagreeable thing, many people will say no.

Similarly with NIMBYism, people say they want houses built and support candidates who say they'll fix the housing crisis, but if you ask them about some specific planned development close to them, they say no.

I have no idea what the will of the voters actually is on this issue. Everyone agrees there's a problem, but most people are against all solutions.

> If you ask people if they support a constitutional right to free speech, they'll probably say yes. If you ask them if someone should have a right to say some specific disagreeable thing, many people will say no.

Source? I think most people are going to understand that speech you disagree with is part of freedom of speech.

If the speech gets offensive enough, you can get people to say it shouldn't be protected.

Is Fred Phelps holding a sign saying "Fags die, God laughs" at a military funeral protected speech? It was non-obvious enough that it went to the Supreme Court, meaning a lot of people thought he had no right to say that.

Do you have the right to burn a US flag in protest? There literally were laws banning that until the Supreme Court said that's protected.

I don't think it'd be hard to find people who are still in favor of a flag burning ban, or who want to ban offensive speech near funerals.

I don't have statistics but anyone who was around for those examples knows there were plenty of people on both sides.

> that means

Density is unavoidable. But residential values can freeze or barely grow in nominal terms. That won’t cause a crisis.

Public housing built to be sold at an affordable price, not let to wards of the state, maybe with an aim at redeveloping blighted areas, is a model I’m fond of. (See Roosevelt Island.)

I don’t think the public can building housing well. Public housing projects aren’t typically seen as desirable places to live.

Some public sectors have success with this (e.g. Singapore, Vienna)

I think the main issue I have with it as a proposal is that the fiscal resources required to sustain such a program only exist at the federal level, and it's not ethical to embark on such an endeavor if there is no solid 60-vote bloc in the Senate and poor people are at risk of getting the rug from pulled out from under them. (See how our current housing authorities are doing to know how that plays out.)

> fiscal resources required to sustain such a program only exist at the federal level

Some USA resort towns and counties do it. They are flush with vacationer tax dollars and short labor, so local gov't builds housing mainly for workers.

The feds don't have the funds to do this, though the feds can borrow from the future apparently indefinitely.

Most states and localities cannot borrow anywhere near as much before testing the markets. (For a non-state example of how horribly that can turn out, look at Puerto Rico.)

Puerto Rico is mis-managed in budget, revenue, and planning. Also, not a USA State.

Some USA ski towns have tens of millions banked and are using that to build.

Am interested in learning why you think USA feds can do these local housing projects. Feds run massive fiscal deficits.

We can look to the communities the Soviets built mid-century. They were organized around the concept of community, something sorely lacking in big metro urban neighborhoods.

https://www.rbth.com/history/333420-socialist-communal-citie...

counter-example. How much of suburbia was built on the GI bill?

There is more than one architype of public works projects

GI Bill suburbia was built by private home builders and contractors, not the government. They were not public works. The government subsidized the loans.

Government loan subsidies, government loan guarantees, additional subsidies in the mortgage interest rate deduction, local government paying for infrastructure (roads/utilities), ...

perhaps I take a broader definition of public works than you do.

Also, say a city or state government wants to build a low-cost/low-income housing (or take historical examples if you will), the type of undesirable stuff the parent was talking about. Who do you think actually does the building work? Is it government employees, or is it sub'ed out to private builders and contractors?

And if it is government workers, can you please explain why say the Army Corps of Engineers would be better or worse at building a bridge than say a private contractor? Which of the two is more incentivized to cut corners and do things on the cheap wherever possible?

Of course the government subcontracts the work out to do the actual construction. By the government has no incentive to build livable housing. Government employees don’t live in the housing. The government doesn’t have a business reputation to uphold. As crazy as it might sound, those who live in a community just might have a better understanding of how it should be developed compare to those on the outside.

>...perhaps I take a broader definition of public works than you do.

You're taking an incorrect definition of "public works". Words have meaning: "Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community."

Suburbia was not constructed by the government, and is not for recreational, employment, and health and safety uses in the greater community. It is for the use of a private owner.

Suburbia is by definition not a public works. QED.

>Who do you think actually does the building work? Is it government employees, or is it sub'ed out to private builders and contractors?

Many times it's a mix of both. Cities and states employ thousands of plumbers, electricians, etc. Nonetheless, if you get a house constructed by WestCoastHomeBuildersLLC, but they subcontract a large percent of the actual construction out to subcontractors, you'd still say your house was built by WestCoastHomeBuildersLLC. That's who you'd go to for warranty issues, for construction progress, etc. Same applies for the government and public works.

>And if it is government workers, can you please explain why say the Army Corps of Engineers would be better or worse at building a bridge than say a private contractor?

For the same reasons private industry is better at building practically... everything.

>Which of the two is more incentivized to cut corners and do things on the cheap wherever possible?

Government for sure because they can save money and face zero liability issues down the line. Insanely impossible to be fired so you can be lazy and cut corners all day and you'll still keep your job, and they projects are constantly cutting corners to save on materials. Then after you poison (Camp Lejeun) thousands of people you just shrug because no one goes to jail.

So pass laws to provide incentives for bare bones low income construction, and disincentivize excessive luxury construction. In a lot of places you can't build unless you also build a certain amount of parking, the same approach could be applied to affordable apartments.

We also need laws against large scale speculative home purchases. An individual having a vacation home/rental unit or two is one thing, but home flippers and large scale property rental corps are a big problem.

Maybe "desirable" isn't the right word, but I walked through several public projects recently in my area and they are much safer and better maintained than the historic image. Talking to people there, it was evident that they were not the "freeloaders" so often portrayed by a certain group of politicians either - many were there because of health care costs and other calamities that were beyond the person's control. I was there in the middle of the day and it was obvious that a whole lot of people were out at work - again, not the image so often unfairly portrayed of the unemployed freeloader. The houses and grounds were clean and well-maintained, more so than the poorer neighborhoods surrounding them.

Every real dollar you add back to worker consumption via housing affordability measures is a real dollar you remove from non-worker consumption via a reduction in investment income via rents, mortgages, and housing sales. Housing is a market where there's extremely little productivity gains available for improving the size of the pie as a whole - at best you can improve energy efficiency, commuting waste, or other non-valuable housing related consumption. But if all you're doing is making housing more financially affordable, you're going to have to deal with the fact that Peter's financial savings is Paul's lost rent-seeking, and Paul is generally a pensioner that votes.

How about productivity of local businesses who can now find workers more easily, or at all, for the salary the businesses can afford?

> Housing is a market where there's extremely little productivity gains available for improving the size of the pie as a whole - at best you can improve energy efficiency, commuting waste, or other non-valuable housing related consumption.

If housing prices are rising in the area then generally (not always) there's more demand for housing than supply. Increased density generally leads to increased economic activity (more housing = more residents = more commercial activity = higher tax revenue.) Viewing the housing market in isolation is a mistake.

> But if all you're doing is making housing more financially affordable, you're going to have to deal with the fact that Peter's financial savings is Paul's lost rent-seeking, and Paul is generally a pensioner that votes.

Yes and that's the problem. Veto powers in most residential politics tend to be strong and so Paul's veto generally overrides Paul's demand.

> Housing is a market where there's extremely little productivity gains available for improving the size of the pie as a whole

Sure, as long as you believe you must never change the laws around housing. In that case, you can stop the whole conversation there.

On the other hand if you wanted to actually do something you could pass a federal law or constitutional amendment giving individuals the right to posses no more than one home without undue restriction. For example, construction codes simply get more and more strict across the nation each year. For the simple reason that the industry lobbies for it, as it increases their opportunity for profit. There's no actual need for this as it isn't like humanity hasn't been building homes for thousands of years.

Americans aren’t going to voluntarily move to high density housing to work in factories. It’s just not the culture.

They will if the pay is good enough. See: tech workers.

Tech is a bubble that's about to burst. No one is going to pay factory workers anywhere close to that.

Why should residential property values increase anyway? It's not like the population growth in the US (overall) is staggering. Property prices the last couple of decades are largely artificial. They've long been disconnected from the supply and (non-speculative) demand, that's (one important reason) why the market's been unable to solve the problem. The signal is broken.

> Why should residential property values increase anyway?

Total non-worker consumption is equal to the unconsumed portion of total worker production, the worker-to-retiree ratio is getting worse each year, and total productivity gains are stalling. Working-age adults have to get squeezed somehow on pain of retirees voting different policies, and housing/rent/mortgage is the least flexible in terms of household budget and least politically obvious pathway for it.

Housing prices are mostly supply and demand driven, but it's the supply and demand of location, not of the building itself.

Next to that, the maximum price is largely defined by how much people can and are willing to borrow with a typical income for the location and the type of building.

And with location being in short supply, locations (and houses) go for maximum price. With rent going up, maximum price will come down, to keep total price the same.

> how much people can borrow

This is the main factor, and it's a result of the monetary policy of the last decades.

Since this number has been increasing compared to wages, it's becoming less sensible to build apartments for rental. But at the same time, those are needed to increase density and availability of affordable housing in attractive cities.

It's a mess.

It's complicated. The loose monetary policy is certainly one aspect. Another is that most American city-center residential areas are still zoned at low densities. If organic growth could lead to organic densification in central locations, there would be less impact to the housing market, but American zoning is stuck in the aftermath of WWII and is loathe to densify.

Yep. One study^1 estimates that zoning and land use restrictions across the country leads to an (unnecessary) increase in housing costs worth 2% of the US GDP (about $400 billion).

[1]: https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.32.1.3

Environmental regulations and such also artificially increase the price of older buildings because you can buy existing buildings that don't fulfil new regulations but can't build new ones. This is effectively a top-down supply restriction of low quality housing.

Because everybody wants to live in the same place. You can get houses very cheap in places that are not popular.

it's the underlying FinTech of housing loans that is the systematic driver of high house prices.

To get low house prices we would have to destroy Fintech of house loans which will not happen.

Well for one thing houses have gotten much bigger and nicer.

> It's not like the population growth ... is staggering

It is staggering. California in 1990 was 29 million. In 2020, it's 39 million. If this is not staggering, I don't know what is.

Everyone loves to talk about fixing the supply issue, but no one wants to touch the demand issue.

In what sense? Zero population growth, or incentivizing corporations to not congregate in only like six metro areas in the entire US or what?

In most developed countries experiencing population growth, it's mainly driven by immigration. That's pretty easy for a nation state to control.

For what it's worth, current policies in Europe may already be enough[0]:

> The EU-27’s population is projected to increase from 446.8 million in 2019 and peak to 449.3 million in 2026

The situation in China is apparently similar[1]:

> China’s population will peak in 2022 due to negative natural growth

[0] https://ec.europa.eu/eurostat/statistics-explained/index.php...

[1] https://www.ft.com/content/28a1f975-8374-4b87-b2ba-2e60ddf20...

No, the lack of supply was intentionally created to stop "the demand issue", by which they meant "other people having children". And California certainly doesn't produce enough houses for even their own children; talk to any suburban boomer and they'll tell you 1. their kids have moved out of state and 2. their kids don't deserve to live near them and had better become millionaires first.

This was popularized by 70s books like Cities as Growth Engines and The Population Bomb, which IIRC also caused China to ruin their demographics by introducing the one-child program. It was recently parodied in movies by that Thanos guy. It is not your new idea that everyone else is ignoring.

One solution would be to discourage the use of housing as a vehicle for investment, perhaps by requiring that in most cases the owner lives in the property.

What about people that prefer to rent for whatever reason? Or have to because their financial situation? These options would become more rare, likely more expensive.

That would make it much harder to move, because you end up owning two houses when you do that. Also, some people like renting and have enough problems finding rental housing.

Literally you just have to build more housing. It's fine to say this.

I personally like the Georgist take on this one (Lars Doucet on substack has a good explanation).

The basic idea is to tax not the house, but the underlying land value.

One solution would be to discourage the use of housing as a vehicle for investment

Sweden does this through various policies. The main outcome is that finding a rental apartment is virtually impossible.

> * Higher density living

i don't think it'd actually be that unpopular IF it comes with decent public transport + walkability + mixed use and such, like in europe.

I HIGHLY doubt it is possible to do in the near term in the US.

High density living done in Europe is only a few cities and most of them aren't much of a step up. Realistically people would have to look at Tokyo-scale high density living as a starting point to tackle most complaints.

Why not? I ask this as european that lives in an appartement close to city center. We have about 32 families in the space where you have typically a big us house. And no I don’t live in poverty - 100sqm rooftop, own garage spot and really enjoy my 10min cycling time everywhere.

I work daily with people from Boston. I think downtown is not that different in terms of willingness to have similar lifestyle.

I think many don’t know how good density living means and it would be totally doable also in the US, not overnight. I guess there is still a big of a perception: Without your big house and garden your are nothing/« you didn’t make it » . Once this is gone I guess it could go fast.

Stating your living conditions without naming rent/mortgage, income and location isn't very useful. Average Joe can't find a place in most cities, and educated, young Europeans are struggling to earn median while being pushed to work in the cities.

European cities also aren't that dense, generally speaking. Building high is an exception and only pushed recently, in places with infrastructure already present.

>European cities also aren't that dense, generally speaking. Building high is an exception and only pushed recently, in places with infrastructure already present.

Buildings 5 stories high get similar or higher density than anything but the most extreme high rise neighbourhoods and are a better place to live. Easily get to 15k per km2 without highrises.

100sqm rooftop, own garage spot and really enjoy my 10min cycling time everywhere.

In many major European cities, a place like that will cost a lot more than nice house in the suburbs. In fact we ended up moving to a house in the suburbs in large part because because we could not afford an apartment like that.

We rent - unable to buy such an apartment. But yeah it is not in a major EU city only smaller 200k inhabitants but international and well connected.

Because the supporting structure isn't there in the US. Kinda a chicken and egg problem, cant squeeze more people in because parking but public transport isn't worth it for low density areas.

Good examples of high-density living are not found within the EU. For this you should look at f.e. singapore.

What about.... building a massive new City somewhere?

A new City for the Wealthy, with modern infrastructure.

Another new City that is designed for Manufacturing, with new housing and infrastructure based on those needs.

It is called a suburb. You can plan whatever you want, and people might or might not come. But if it isn't next to an existing city nobody will come.

Closed cities, like those in Russia/Soviet union are exception. Either people were forced to come or the incentives were too high to refuse.

It doesn't mean high(er) density living at all (at least not how it is understood in the rest of the world). The US is mostly empty space, no flats or whatever required.

Higher density happens because investors want to maximize the use of land in desirable areas, not because land is unavailable or difficult to zone. I live in Bucharest, a city of incredibly high RE development, and most of the new buildings are more compressed and crowded in on each other than they were under communism, which is a common occurrence in the former Soviet satellite states [1].

From my window, I can see across the Delta Vacaresti, a wildlife reserve that was once a neighborhood that Ceausescu just had time to raze to the ground for some new insane scheme before his people shot him. Across the way, I see three massive multistory residential blocks going up, crowded together like pedestrians on a metro train at rush hour - only one side of the front-most block has any view of the Delta, while the others literally live in each other's shadows, lacking sunlight.

By contrast, communist design principles designed a whole neighborhood, with schools and hospitals and doctors, with the 'megablocks' seen as small cities in themselves that needed dedicated support systems.

https://www.youtube.com/watch?v=1eIxUuuJX7Y

People have an idea that the suburbs were this magical place where you had cheap housing, fast commutes, large gardens and a family of 6 children.

Just because you see it in a sitcom doesn't mean it's true. Or to quote the guys who did the big bang theory: "We went to the apartments of real physics post grads and they were too depressing to put on television." The same was true for suburbs in the 1950s which could be afforded by a family of four with only the father working.

> The second point would also probably cause some serious economic problems, as a lot of peoples' and businesses' decisions are based on property values generally going up faster than the rate of inflation.

But that's a big problem. If housing prices go up faster than inflation, then eventually most of our costs of living will be housing. And here we are, apparently.

I think it's also a big problem that housing costs are ignored in inflation calculations. I think that has lead to the rise in housing costs in general having been ignored. And now it's become a problem.

I think something missing here is that people often want to live in urban areas. For many young people, these are the places where all the interesting things are happening. You're always surrounded by other people and culture. Prices are high in these areas because they are so attractive; we need to increase supply to meet it

people don't just want to live in cities, they want to live in a few specific neighborhoods within those cities.

for example, a peculiar thing has been happening in baltimore. average housing prices have been steadily going up while the population is actually shrinking. there is a glut of supply citywide, with entire blocks sitting vacant. but the competition over units in a few cool neighborhoods is enough to totally offset that.

we could provide satisfactory homes and services to everyone in america, if we made it a priority. but we will never be able to build enough supply in the most desirable neighborhoods. people just need to get over that.

> * Higher density living

USA is non-uniformly populated. The middle of the country is nowhere as dense as the coasts. Our goal as a society should be better land use across the whole country. That would require incentives on the government level.

I will never understand how today's industry productivity is the highest it has ever been, yet workers wages/purchasing power hasn't followed, it even got reduced. What the heck is going on?

Isn't it because there's a ton of new supply of labor from around the world?

The west defeated the socialist alternative lurking behind the iron curtain and all bargaining power of unions went to hell. Rollback started right after the discovery what a brittle giant the Sovjet Union really was (about 1970s-1980s) and kept going ever since.

Stand alone, with no gun to its head, capitalism auto decays into the neo-feudalism of the guilded age. And alot of the gullible citizenry supported this return to nothing.

Without the politics angle, just adding a new ~two billion poor people to capitalism, over the course of mere ~10 years, will depress wages (imagine US took in a a couple hundred million very poor refugees from Afria and Asia, that are happy to work for half the US minimum wage or less - that's the equivalent of what happened thanks to globalization and free trade). Things might stabilize now, as we enter into de-globalization and the wage levels in Asia will not influence wage levels in the US as much.

Cheap labor, easily available. People willing to work for lower and lower wages, since it is still better than the conditions in their home country.

Simple: A lot of the productivity gains of the last decades is thanks to globalization, automation and digitalization - basically, many high-paying manual jobs were eliminated by machines, a lot of lower-paying manual jobs (or environmentally problematic production that would have needed expensive adjustments in the US/EU) was shifted off to China, and digitalization eliminated or vastly improved paper-pusher jobs.

Additionally, the standing of unions went down over time, as a combination of legitimate unions-gone-rogue scandals, anti-union legislation being enacted and union-protection enforcement being reduced.

The result was that the capitalist owner and leadership class enjoyed absurd amounts of net worth gains, and the worker class was left unemployed or with stagnating wages at best. To prove that: CEO payments exploded 940% since 1978, S&P went up 707%, while average worker pay went up only 12% [1] in the same time frame.

[1] https://www.epi.org/publication/ceo-compensation-2018/

You are saying the owners want to pay everyone as little as possible, so why would CEO pay go up? I suspect the reason is more about competing for the best CEOs because of their importance to a company.

CEO pay is peanuts compared to what raising wages to all employees would cost.

People assume that inequality is expensive. It isn't. Income inequality is what a failing society does to motivate people by meeting their greed rather than meeting their needs. An island of concubines is a lot cheaper to give to a CEO than paying 100,000 employees enough for an electric car.

> Income inequality is what a failing society does to motivate people by meeting their greed rather than meeting their needs.

Workers are not greedy for simply needing enough money to rent or own a home! In the same time frame, average US-wide rent has gone up from ~200$ to 1100$ [1] - that's a 450% increase. In "hot" areas such as SF, the development has been even worse [2]. On top of that, other necessities of life such as groceries have also continuously gotten more and more expensive [3], not to mention more expensive to obtain as neighborhood grocery stores closed down in favor of large malls.

We're talking about bare survival here. The costs of living have exploded for decades, while wages have been stagnant. People couldn't set aside money as a result, and now we have over half the US population unable to cover a 1000$ emergency without going into (even more) debt [4]. Wanting more money is not greed in these conditions.

[1] https://ipropertymanagement.com/research/average-rent-by-yea...

[2] https://medium.com/@mccannatron/1979-to-2015-average-rent-in...

[3] https://www.usinflationcalculator.com/inflation/average-pric...

[4] https://www.cnbc.com/2022/01/19/56percent-of-americans-cant-...

Ok, but that has nothing to do with my post.

Of course it has. You're claiming that societies are "motivate people by meeting their greed", whereas the reality is that people are struggling to survive instead of being greedy.

You missed the little word "failing" there.

Try reading with your eyes, not your ideology.

The upper limit for wages is how much the work produces. The actual wage is determined by how many other people will do the job for less.

This is why when economists say wages are linked to productivity it is true, but only in the same way my cars theoretical top speed limited to the speed of light...

All of the profit from increased productivity has gone to the executive caste. None has gone to workers.

Additionally, widespread and unchecked propaganda has brainwashed the public into believing that unions are bad and that the most evil word you can say in public is "socialism".

One possibility:

As productivity has increased, so has availability of credit. Servicing debt is soaking up our increased productivity. I don't think it's just a coincidence that the FIRE sector has grown so spectacularly.

Because what matters was never productivity but competition. That's inbuilt into the capitalist philosophy. With that, it doesn't really matter that X company's productivity skyrocketed if Y's company, X's competitor, also does. They both will try to grow has much as possible, invest as much as possible in R&D, (...) or they are out-competed by the other.

We should always remember: If a company could, they would have free labour. Expert professional volunteers. That's how a company can maximize their profits. So every single year, every company is, unless forced by laws, wage competition (from other companies) or by force (unions), behind rationalizations, pushing for, unconsciously, getting close to that ideal of free labor.

Also remember that today, free labour has a limit. They can't really pay zero, because people have mortgages, etc. So actually, the modern "zero" is when the workers have zero profit, ie, savings, or even go into constant debt, and have the government pay for it with subsidies.

And this is exactly what we've been seeing the last decades.

Or rent prices in general. It's absolutely obscene how expensive rent is where light rail is available near Philly. $1400+/month for a 1 bed room. I can rent cheaper inside of Philly proper.

sure, but then youre in Philly proper

So, quality of location and buyer demand seem to have a large impact on this problem. I'm not sure how the government is going to solve this, other than making Philly nicer and thus more enticing to live in, or just forcing you to live there anyways.

If Philly was cleaner, it would instantly compete on a much higher level. As someone who grew up in the area and loved (loves?) it I’ve never understood how dirty the city compared to other major cities. On cleanliness, it competes with New York and San Francisco but it is… Philly.

Maybe the dirtiness is demonstrating an unreclaimed lead and air pollution problem, which would explain Philly residents' reputation for violence and throwing batteries at each other.

> but the gov has to step in and bring real estate price under control

You do realize that the government created the inflation problem, right? The high amounts of stimulus spending plus years of deficit spending created this situation.

Let's not let the federal reserve off the hook with insanely low interest rates for so long.

Zero interest rates also meant construction was cheap. The fact that we didn't construct anything using them was the problem. Higher interest rates are going to make that worse unless we have more public housing investment.

It's important to realize that the GOAL of the Fed was to raise inflation, but since they can't create money (only change rates and bond terms) it affected primarily financial assets... so we have had financial asset inflation since the dotcom boom (and entry of China into WTO) because of the Fed mandate. For long term growth we should have spent money (eg on broken bridges and infrastructure), but that requires congress to allocate funds so instead it was all monetary (and tax cuts).

The only thing I would add to your comment is that it was all on purpose. As you note, the inflation was on purpose. But also the not repairing our infrastructure. That was on purpose too. It was the greatest wealth transfer from the common people to the wealthy that has ever happened in the history of the planet. The biggest mistake people make is believing this was all just "incompetence." Mistakes of this magnitude are not made innocently.

True but inflation was triggered by the Russian Invasion of Ukraine.

Inflation was at 7.8% the day before Putin's Price Hike.

Better with a source but you are correct. https://tradingeconomics.com/united-states/inflation-cpi#:~:....

How about inflation was triggered by a combination of COVID supply change problems and further exacerbated by sanctions placed on Russian due to the Ukrainian invasion.

How about: Politician will lie about anything to get elected.

The day before the invasion we were looking at 6% inflation with everyone expecting it to get worse.

The day before the invasion everyone knew it was going to happen.

Apart from Zelesky apparently.

You're absolutely correct. Bullwhip effect was temporary inflation (but less likely to shift expectations) and then Russian (and OPEC+) effects on energy costs (which are likely to shift expectations and wages). The Fed has been trying to get inflation up since 2008... and have stated that they will target "average 2%" inflation over an unspecified term. Since inflation has been below that for a long time they wanted it to run hot. They want to inflate away some debt, just without imploding banks/insurers.

No politician wants to admit that the source of housing inflation is the government: ZIRP, QE, stimulus, deficit spending combined with ever greater regulations and restrictions on land use have fused together into ever rising housing prices.

It appears that no sensible politician is willing to admit the problem let alone propose comprehensive solutions.

I idly dream about overturning Euclid v Ambler and its follow-ons.

I actively dream about this. Hard to believe it is constitutional—-overreach of police powers.

65% of voters or thereabouts are homeowners iirc. Untouchable.

Most voters don’t see housing price inflation as a bad thing. They see it as a good thing because it means their net worth is increasing.

More like step out. The biggest issue with housing today is lack of supply, and the biggest cause of that is the restriction on development imposed by planning regulation. It shouldn't be a 20 minute walk from a detached house to downtown San Francisco. It's a nice idea, but every house like that could be part of an apartment building housing 10 times as many people. US cities have jobs, entertainment, amenities and services, so demand is always going to be high; supply has to be allowed to meet it.

Or bring back manufacturing to the flyover states where there is plenty of land and affordable housing.

But then where would they grow all of that subsidized corn and soy?

I don’t agree with this anymore as housing prices exploded last year in areas that don’t have any lack of supply or building constraints.

what did you see?

Government is one of the primary reasons why housing is so expensive. In some areas, the cost to develop a plot of land has gone up 10x in as many years. Permit process is expensive and takes time. Laying utilities is expensive. Paying the myriad of fees is expensive.

In one place I lived, the cost of developing a plot of land for single family use was almost $70k, and that was not an expensive state like California.

And then mortgage rate hikes have to be considered. Buyers are walking away from contracts and homes being built because rate hikes made the homes unaffordable.

Less government is the solution, not more.

Investors owning real estate has done more to move prices up than permits.

Investors buy a quarter of all stock and have an incentive to lobby for keeping supply low.

The solution is more government regulation reducing the number of units big investors can own, building small public housing units throughout their cities (not big projects), and making investing in property less appealing for big players via rent control, landlord tenant laws, zoning up, etc.

Isn't Amazon cheaper than your local electronics store? So therefore, won't big players be able to be cheaper than smaller ones? So then what is the logic behind stopping big investors? Also don't understand the thought process behind not having big government projects

Big projects are considerably more specialized to maintain. You don't just need a guy with a pressure washer, you need someone who can get a whole rig hanging over the edge of the building. The plumbing, elevators, fire suppression, trash collection, heating and cooling, and electrical systems require specialists.

They also centralize poverty, which has effects on the local area. The workers in those buildings need to travel all over for their work.

Small, two to four story apartment buildings can largely be managed by handymen. They can be distributed throughout a city, placing them in communities that can support them. The people who live there can work in their local communities.

Beyond that, their initial capital costs are lower, and it's easier to find land that is zoned for 4 story buildings than 40 story buildings.

> Isn't Amazon cheaper than your local electronics store?

Cheaper? Maybe. Better? Absolutely not. Amazon might save me a couple bucks, but the hassle and time dealing with quality control issues, poorly managed inventory, lack of local experience, etc makes the dollars I save disappear I into increased headaches.

The thought of renting a home from Amazon vs the local bookstore is nightmarish to me.

Amazon is forced to compete on price because electronics supply is flexible. People can find other retailers.

Even if every regulation was struck from the books tomorrow, housing supply doesn't have anywhere close to the same flexibility. It's limited by the availability of undeveloped (or redevelopable) land, and just as importantly, by the location of that land. You can't just create more land next to the metropolis of your preference. There are practical and physical limits.

You can create more houses on the same land with technology called "taller buildings", mass timber construction, single stair apartment reforms, upzoning, &c.

The above comment saying corporate investors lobby for reducing supply isn't true though. It's individual old NIMBYs and small time developers who lobby for that. Big companies like BlackRock are passively investing because it's so easy when the local government already wants to help them by restricting supply, but they don't individually show up to city council meetings and lobby for this stuff.

You really can defeat them by showing up. No California YIMBY policy has lost someone an election yet.

You're quite right! If only so much of the viable, desirable land wasn't already occupied.

Many of the people currently occupying it would be happy to sell it to you so you could do infill development and they could move to Hawaii! It's just illegal to do it now.

(Or they could stay in place - California requires this to be possible through "right of return" laws.)

Forcing people to pay $3000/month in rent to a small time mom and pop landlord instead of $3000/month to a REIT (owned by the 401ks of those exact same small time landlords) does nothing for either housing affordability or equity. The main political force behind restricting housing supply is incumbent homeowners, not large investors.

Many types of housing are simply not feasible to build and operate except by large investors (e.g large apartment buildings), and banning entire categories of in-demand housing artificially restricts supply and drives prices up.

Imagine if we banned CPUs built by large corporations. Do you think that would make CPUs cheaper or cause massive shortages and drive prices up?

Existing housing is expensive because a substantial portion of the stock isn't owned by the residents. Housing is used to extract rents, by wealthy individuals or businesses, and rent-seeking drives up prices.

New housing is expensive because of safety regulations, environmental regulations, and zoning restrictions. Those categories are listed in increasing order of negotiability: some zoning makes obvious sense (e.g. separating industrial areas from housing), but housing density mandates seem less defensible to me; meanwhile, I don't particularly feel like relaxing safety unless something can be demonstrated as clearly irrelevant due to age, or requiring gross overbuilding. I invite someone more fluent in the subject matter to enlighten us with the relative impact of each factor.

If it were so easy as "less government"! (Which, I agree, is often a good idea.)

The problem is that a house is seen as in investment vehicle. Buy a house, its value will always grow, they said. So people who bought houses expect their values to grow, and loathe their values to go down even a little bit.

Now the value (aka cost) of a house has grown so much that it's unaffordable for large swaths of regular working population, even well-paid. Cheaper housing is badly needed.

But cheaper housing also means that "value" of existing houses will go down! Either from being next to a cheaper house, or from a general downturn on the housing market (aka housing becoming more affordable). Every house owner will hate that! And these house owners are voters.

Now life savings of an old lady from the working class depend on a young family from the working class being unable to afford a similar (or any) house. We're in a pretty bad situation here :(

> The problem is that a house is seen as in investment vehicle.

That's not an alternative to the problem of bad regulation, it's the reason for the bad regulation. "Seen as an investment vehicle" doesn't mean "the corporations" are hoarding them, it means every old person is counting the house in their net worth, and the government tries to prop them up while at the same time providing affordable housing for the poor. This causes the "missing middle" effect, where there isn't anything in between for those of us who could theoretically buy something unsubsidized.

It can't be just that. I have the skills, tools, and basically enough cash to build what would have been a nice house on decent land in California 20 years ago. But it's nowhere near enough now. By the time you buy 2 acres on the edge of town, get all the connections to utilities you need, get everything approved and permitted, and pay for all the materials, you're well beyond what most regular people can afford. In 1998, I had a highschool friend who's mother was going to law school at 40 years old, and his dad was an employee in the construction industry. In 2 years over weekends, while the mother still paid for law school, they build a house that today is worth well over a million dollars on 1 acre. A construction worker with a wife going back to college isn't pulling that off today. If they could, they would do it full time and build one of owner builder homes and sell them. It doesn't pencil out these days at all from government fees and material costs. It's not just 'oh houses are expensive because owners want them to be'.

I agree, California is a special, exceptionally difficult case. Due to reasonable policies which allowed it to be a hotbed of tech innovation since 1960s, it has enough inertia to allow it enforce pretty crazy policies, and still stay very much afloat.

Well, problems with electricity, water, and wildfires destroying towns? Transportation problems and a housing crisis? Never mind, Silicon Valley and Hollywood will fill the state coffers all right!

Tides turn slowly, but they are turning; I'm afraid Californian voters are heading towards a series of rude awakenings.

The scariest thing about California I don't think left leaning people realize, is that tons of conservative Californians are leaving.... and many of them are business owners. Not just business owners, but some of the most clever, hard working, helpful, interesting people Ive known. Between 2000 and 2018, several great people I knew died young. I used to say that only the good die young. But now the good also move out of state. My neighbor that would mow my lawn and sweep my sidewalk gutter if I was out of town. Gone to Nevada. Race car driver that owned a mobile office trailer building company. Gone to Idaho. Master electrician that could do work alone that would required engineers to reexplain to regular electricians, gone to Utah. Cabinet company manufacturer, family owned for 30 years. Idaho. The nicest most helpful towing company owner I ever met? Closed down this summer and went to Utah. I'm not exactly sure if I want to live here myself if all that's left is crime, tent cities, and tech workers.

Every time I get cajoled into visiting my wife’s family out there my experience is just a long stream of internal “how do you live like this?” moments.

>Why is there a carcinogen warning on the rental car?

>Am I the only one bothered that an in-laws car was broken into in his own driveway in a residential zone in the middle of the day?

>Does nobody else see there’s a guy shooting a deuce on a bus stop?

>Did I really just spend 15 minutes in line for 6oz of soft serve ice cream?

>The first thing you discuss with your middle school class is pronouns? Not, like, here are the fire escapes? Or maybe, this is what we’re going to study?

>Why do all these 40-somethings dress like teenagers?

>Well, I guess no outdoor wedding photos… too much smoke… everything a few miles away is on fire.

>I guess there are just tents at basically every intersection. Huh.

>You’re paying 3K a month to live in a 60s era cracker box? Bummer. My mortgage is less than a third of that for twice the house and five times the land.

Permanent residents seem to have this defense mechanism where they just act like it isn’t happening. I’m pretty happy with flyover county. Given how easy remote work is now, I really don’t get why so many stay. Other than programming from the paid mouths in (info/e)ntertainment beating the drum of urbanization and ‘oh it’s just the zoning’

If it were as bad as your post says, people wouldn't pay 3K for a cracker box.

None of your points ring true at all for a 42 year old born and raised here.

I hate the housing costs as much as anyone.

I've been here for 40 basically, and while his comments were slightly exaggerated, they all basically ring true. The most exaggerated one is the smoke being THAT bad. Other than the 2020 smoke Armageddon I've never even noticed fire season. But I assume he just means that in general our public lands are mismanaged.

I've been offroading and riding dirt bikes for 20+ years. Without a doubt, fire roads in the mountains are falling into disrepair. When they do clear them, they do so so lazily that it for sure will alter their response time if they ever need to use them. And that's just one tiny example.

I think OPs list was pretty accurate, just a little exaggerated but I think you know what he means.

Nothing you said is inconsistent with “the government has arbitrarily made housing more expensive because that’s what the voters want since most of them stand to gain from their most valuable asset increasing in value.” As time goes on the old methods stop raising the value and newer ones are needed. Eventually this process leads to insane regulation as all the “easy” stuff is already done.

> step in and bring real estate price under control

The feds can step out of real estate manipulation by removing the mortgage interest deduction.

Don't the feds create the entire residential mortgage market in the first place through Fannie Mae? That's why we have flat-rate mortgages when other countries have ARMs.

That one tax deduction doesn't matter, not when there's a shortage. It's already the most people can afford to pay.

thank the stupid loose monetary policy with interest rates never coming back up and balance sheet never coming back down. the fed wanted to make sure people could buy housing and its strategy was to do that by making loans cheap but this distorts the market.

I saw a commercial today from Greg Abbott in Texas claiming that he wanted to pass a law that made income tax permanently illegal in the state. Meanwhile, people are getting gouged with almost no positive movement in income year over year at the same time that properties are appreciating about 15% a year in value.

Isn’t the actual problem competition from factories overseas they have lower safety standards and wages? Just because there’s more housing doesn’t mean you suddenly have a good wage. You still have to save up for retirement, and some people invest in mutual funds instead of buying property

Overseas European here. Our safety standards are likely on par or even higher in many cases. Wages for factory workers surely are higher on average as well and you don't save up for your retirement here as this is already deducted from your wage or partly funded by the government.

> the gov has to step in and bring real estate price under control

I wouldn't assume the issue wouldn't be resolved better by the local/state/federal government stepping out of this area more.

It's complicated... the fed should manage the economy in such way so people are not forced to move in a couple of megacities to find jobs.

That sounds like an interesting thing for the government to mess with. No one is forced to move to specific places; there are jobs everywhere. Certain types of jobs, e.g. acting or tech, are best done where the money is, which is Hollywood/Silicon Valley respectively, but huge numbers of jobs are not.

Real estate prices are just a symptom of our never-ending inflation due fractional reserve banking.

https://workableeconomics.com/

Explains it all pretty well

The Georgists would like to disagree with you :-D

And apparently we can thank the Petro dollar system for gutting US manufacturing.

Georgism is largely orthogonal to monetary policy. Georgists hold that public improvements to land & location largely have their value captured by landlords, and as a result landlords enjoy large un-earned incomes simply by getting there first. This misallocation of resources can be fixed with a land-value tax, which returns the surplus to the state where it can be allocated to more public benefit projects, up until the return from those projects is less than the cost in taxes.

Inflation and central bank policy is separate from this. If you have a highly inflationary monetary policy, landowners will still reap the benefits of inflation in increased rent, and they will still turn a profit on mortgages, which are paid back in dollars that are worth less. The main difference is that they'll also have a LVT that grows with inflation, and so they face continuous pressure to keep the land is uses that generates the most economic value (rent). But unexpected inflation is effectively a discount on their purchase price, if they pay with borrowed money; this doesn't change under a Georgist system.

Despite inflation, prices of many goods are cheaper today: look at laptops, monitors, TVs.

That's only because the materials and labor needed for them is far less than in the past thanks to technological improvements, plus economies of scale are generally better now (population is much larger: lots of consumers in other countries like China buying the same stuff).

Take a look at the hand-soldered circuitry in an old TV or radio and it's obvious why those things were so expensive.

I am all in favor, and beg for a bill, that would simply declare that publicly-owned, publicly-traded companies may not legally possess housing, unless they built it themselves. Manage, yes; own, no. Never going to happen though.

It’s mostly local voters that are the issue not companies.

Good luck trying to lower property prices. This is a case of what’s good for the country is rarely good for the people making these choices. People living outside a county don’t decide their policies are but still suffer from them.

You have written “it’s” instead of “its” on the last two occurrences of the word. It should be without the apostrophe, as it’s indicating possession. I used to get this wrong all the time too.

That's not going to fix anything.

I dunno; a lot more house purchases are being bought as investments now, rather than places to live, than ever before. https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...

They're rented out to people who will live in them.

Yes. And? The thread is about people buying houses, not people affording rent.

I was replying to "rather than places to live".

It's only an investment because somebody is willing to pay rent to cover the mortgage the purchaser paid and supply profit to the owner. If there are no renters willing to rent then nobody is able to profit.

Moreover the reason why more housing has become investments is because capital costs of the housing market has increased. If local governments and fiscal policy try to make housing prices increase forever, then eventually house capital costs become high enough that only corporations or co-ops can own them.

>> It's only an investment because somebody is willing to pay rent to cover the mortgage the purchaser paid and supply profit to the owner. If there are no renters willing to rent then nobody is able to profit.

Not true; if housing prices continue to increase, then even without rent it becomes a reasonable investment. But that's just it; people need a place to live, so with housing becoming harder to purchase due to higher competition, more people end up renting, becoming this negative feedback loop.

>> Moreover the reason why more housing has become investments is because capital costs of the housing market has increased. If local governments and fiscal policy try to make housing prices increase forever, then eventually house capital costs become high enough that only corporations or co-ops can own them.

So local government and zoning can be part of the issue, sure, but again, 1/4 of the homes sold in the past year were to institutional investors looking to rent them out. Those homes -could- have gone to a family; instead they became rental units. Relevant when we are talking about home ownership.

As to fiscal policy, I sort of agree with you, but not quite. It's less fiscal policy (after all, both a potential homeowner and a business can float a loan), but the scale at play. An investment company can get millions loaned out to them just by dint of being a business with cashflow, and so can pay well over appraisal. Homeowners can't; the loan there is made on the basis of the property as collateral. That innately means they're not competing on a fair footing.

> Not true; if housing prices continue to increase, then even without rent it becomes a reasonable investment.

Only if other investments with the amount of capital needed for housing don't produce better results and you can guarantee that there will be buyers of the property post appreciation. There are very few (but they are there) housing markets where real estate has appreciated faster than stock markets or other asset classes and can offset taxes in selling the home. If you're using housing purely as an investment vehicle there's also the risk of a downturn causing real estate prices to decrease due to the low liquidity of housing (compared to, say, a fund).

Even in that case it becomes diversification. It is still a reasonable investment.

> the gov has to step in and bring real estate price under control

No government has ever managed to repeal the Law of Supply & Demand. Because it's The Law. Communist countries never succeeded at that, either.

Denial of the Law of Supply&Demand is about as effective as denying the Law of Gravity, or passing a law that π=3.

A couple of obvious examples of failure are rent control and anti-gouging laws.

Communist countries did succeed because they controlled demand. Although I don’t think people would like the solution that much, e.g. three families living together in a 3 bedroom apartment, one family per bedroom.

No, they didn't. They just had supply&demand based on how long you were willing to wait, the black market, barter, privilege, and a market of favors and counter-favors.

Also waiting lists. Everybody gets their own apartment… in 20 to 30 years.

Real estate prices today have little to do with supply and demand. Why else have real estate prices grown hundreds of percent all over the developed world in the last 3 decades, despite relatively low population growth?

Like claims of perpetual motion, if it looks like Supply&Demand is not applying, then something is being overlooked.

In this case, I suspect your facts overlook the fact that population growth is not even across a country. Population growth has grown a lot in places that are more attractive to live in, and declined in areas that are less attractive. For example, in Spain, I read about many abandoned villages going for a song because the population moved to the big city.

In the US, population declined in Detroit and rural areas, and grew in the cities. Housing prices followed those trends.

You bring up a good point. But there are other important reasons. Particularly the availability of cheap money for speculation in the housing market. The reason for this is the historically low interest rates.

What happens when the interest rates go back up?

Let's say they go from < 1% to > 10%?

If we're lucky, the market recalibrates on a more affordable level. Workers start seeing real wage increases. Speculation and stimulus gives way to real economic development.

If we're unlucky, the interest rates are not allowed to increase for fear of falling house prices.

That just means construction has been made illegal. There's no reason "cheap money for speculation" would be easier to get than "cheap money for construction" otherwise; speculation is riskier!

And when interest rates go back up, it gets even harder to finance construction.

There is money for constructing large expensive apartments who people who can acquire a bank loan would like to buy as an investment. There is little money for constructing cheap small simple rentals, because rentals are paid by wages, not inflated loans. But this is the segment where the demand is highest.

The cheap mortgages distorts the price signals, making the market less efficient.

This is a great question, I recently visited Australia where property prices are absolutely ridiculously inflated, they appear to be in a slight reversal currently; However, people are borrowing and paying millions (AUD) for shacks, just because they're near some water...yes the area is nice but these are old houses which are not really near public transport, good schools, hospitals or other amenities. Some of them I saw were built in a flood plane.

Why? What's driving this? Was it the historically low interest rates, which have now just rocketed in Australia back up to > 5% ?

Who will fuel the next property boom to pay for it? Feels almost like some apex has been reached and it's going down from here.

Especially as like others have said, it doesn't seem like the developed world is growing rapidly enough to sustain the demand. Immigration might help fuel more demand, but then pressure is taken away from real estate elsewhere, which would incentivize people to stay put, besides, it's not like immigrants often land in the developed world with 2 million dollars to spend on a shack in a remote location.

It's fascinating to say the least. Interesting times ahead for property speculators and I guess, everyone...

If it had enough political will do, the government could build more supply and reduce prices, no, like in Hong Kong and Singapore? There are a whole spectrum of government-directed solutions to try keep prices down that comply with supply and demand.

Building more supply in order to reduce prices is not repealing Supply+Demand, it is acknowledging it.

I was backing up the OP talking about the government stepping in and bringing prices under control, which for some reason you assumed must have meant violating supply and demand.

"bringing prices under control" with the government usually means price controls of some sort, which is denying S&D.

I always felt like calling the communist countries communist was like calling our republic a direct democracy. Maybe in spirit I guess, but not exactly in practice. You're in California right? What is the rent control/housing like where you are, if you don't mind my asking?

I live in Wa state. While we don't have specifically rent control, there are all kinds of other regulatory interferences with landlords. For example, one is that the tenant is not responsible for damage to the rental from domestic violence, the landlord is. Seattle will provide free lawyers to tenants who want to sue their landlords. Seattle made a lot of extensions to the rent moratoriums. There are requirements that someone building a new apt building must also build some "affordable housing" units.

All these things do is force rents higher.

https://www.seattle.gov/housing/renters/know-the-law#renters...

Regulation can influence supply and demand. Raising interest rates lowers demand (I would say most significantly it lowers speculative demand).

The government has to step in by stepping out.

1. There is a problem. 2. Government steps in to fix problem. 3. Government creates two new problems by fixing the first one. 4. Repeat x 2

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