There Is No Housing Crisis

Renters want housing to remain affordable and to increase no faster than inflation.

Owners expect (and bank on) the value of their house increasing faster than inflation.

Both cannot be occur at the same time, at least not for long. As home prices increase, so too will rents. And if rent stays flat, the price of housing is forced to remain flat as well.

Housing cannot simultaneously be affordable if it is also supposed to increase in value endlessly. Someone has to lose.

To solve the housing crisis, Americans need to be deprogrammed out of this belief that owning a home is supposed to yield a return. It makes literally no sense to expect or feel entitled to a return just for owning property. Barring improvements the value of the home should depreciate slightly as the house gets older.

That’s not to say that home values should never go up anywhere. As a city improves compared to other areas and brings more jobs and better services, home prices there should reflect the increased value associated with living in an area that is better than other places. Home prices should not being going up everywhere at the same time, which is what Americans expect to happen —- that almost all property should appreciate in value on average.

  > Unlike most services and commodities, the price tag on rental units has no real relationship to the cost of providing housing. Rents are determined by “what the market will bear,” as economists say.

So we get “build baby build” and “r/fuckcars” and “microservices vs monoliths” and “OOP vs FP” and all the nuance of the argument gets lost.

I agree with this article that building new housing is only one of many interventions that government will need to handle to bring down the cost of housing. But I don’t think the idea will ever go as “viral” as the supply and demand arguments that you see everywhere.

I'm not seeing words like "immigration", "immigrant", or "foreign" at all within the article.

I don't think that this topic can be seriously discussed without factoring in the impact of immigration.

The cost of housing is just one of many significant economic distortions caused by bringing in a relatively huge number of people each year.

At least in Canada land is not that scarce (even in desirable areas like the GTA) you just aren’t allowed to build on most of it.

This is why land development is so commonly associated with corruption. The best way to make money is to buy up artificially restricted land and bribe the government into letting you build.

This doesn't hold up to basic scrutiny. According to https://www.zumper.com/rent-research/vancouver-bc, "As of August 2023, the average rent for a 1-bedroom apartment in Vancouver, BC is $2,800"

So let's pick a median apartment but an owner who thinks they can wait out a higher rent. What extra revenue do we believe is reasonable for them to hold out for? Let's be EXTREMELY generous and say they want to hold out to get $3200.

The maximum legal rent increase in BC is 2%/year. On a 5 year timeline, the baseline is 2800+2856+2913+2971+3030=14,570. If they somehow get $3,200, that's instead 3464+3396+3329+3264+3200=$16,653. A difference of 2083$!

Wow, 2 thousand dollars, that's a lot of......wait, no that's literally less than ONE month of rent revenue. Holding out for even ONE month and having the unit unoccupied erases ANY possible benefits from the extra rent.

I really really liked everything else about this article. But this super fundamental mistake makes me question the credibility of the author :/

We especially need more of a certain kind of housing, housing we used to build and don't anymore. Housing aimed at renters with entry level jobs who may not have a car.

We've underbuilt for decades, so it seems to also be negatively impacting more middle class Americans, but I haven't studied that anywhere near as much as I have studied what is causing chronic homelessness for many Americans, something we didn't see at this scale in the past.

I recommend the writings of Lars Doucet: http://gameofrent.com/

Where this goes wrong: The market has no purpose other than to facilitate exchange. People buying property are buying because they correctly believe the price will go up because the supply/demand characteristics of the market indicate that will happen. Yes, we did produce more houses than we created additional households for the last several years, however, at least as of 2021 Canada had the lowest housing stock per capita of any G7 nation, so the market is still extremely tight so prices should and did rise. If you don't like that the correct answer is still to push for policies that increase supply (despite what this marxist crap says). The nuance is that we have structural issues in Canada (and many other places) that limit the speed at which we can build housing supply that people actually want and that incentivizes knocking down the low end cheaper rental units and building luxury units instead because of scarcity in high density zone residential land. So the policies we need to push for are things like getting rid of minimum parking requirements, rezoning vast swaths of single family home zoned land to at least allow multi family medium to high density, especially around the core, and supporting this newly rezoned land with better transit, better walkways, better bike paths to get more people out of cars and into transportation better suited to higher density.

"Building more homes won't solve the housing crisis, because [ landlords, immigrants, greedy developers ] will buy them all up!" is a popular rallying cry against even attempting to build more homes. But a more honest statement of their complaint, "building more homes won't solve the housing crisis in its entirety without additional measures to help the most vulnerable" would admit that building more homes is absolutely part of the solution, not part of the problem.

and

> A housing system that serves all but one group is not in a state of crisis; it is one based on structural inequality and economic exploitation.

I think my point here is the lack of common understanding of what "crisis" means and a belief the linguistic narrow interpretation is "this is not a crisis" because its a systemic failure in design and goals.

Well, "capitalism is in crisis" has been a catch-cry of the left for 80+ years and remains true, despite a lot of shareholder value being made along the way.

There obviously is a massive underlying problem around affordable homes. The article is trying to draw focus to it but I find the "its not a crisis" thing somewhat small as a hook to hang it on. If you're young, or fleeing DV, it's a crisis indeed.

The phrase which comes to mind is "permanent crisis" which I went looking for, and indeed it's been a thing for a very long time.

So no. I disagree. Housing IS in crisis, it's a permanent persisting crisis, which advantages the investor side at the expense of social well being at large.

And if like me you are at the end of your mortgage and working life, you have almost certainly been complicit in this crisis, a fight of the old against the young. We mortgaged the 60s and 70s against the future, and now the future is impoverished.

That sounds like a high school debate method - "Webster's Dictionary defines 'crisis' as ... This does not meet that definition. Therefore this is not a crisis."

As a counter-example, people have been using the term "climate crisis" since at least the 1980s. Does decades of use make the underlying situation a permanent state of affairs that we should accept?

Furthermore, the idea of "crisis" used in this structural fashion has been around for even longer. A quick Google Scholar search found Holton (1987) "The Idea of Crisis in Modern Society" in The British Journal of Sociology:

] In the contemporary world we are told that 'crisis' threatens us on all sides ... I want to examine the analytical utility of the crisis metaphor for an understanding of the contemporary western world. ...

] The metaphoricality of the language of social crisis draws of course on older aesthetic and medical usages. In the aesthetic structure of drama, for example, crisis is manifest through a key moment or moments in a narrative wherein the dilemmas of human life and the fate of human actors are dramatised. This structure presupposes that crisis is an abnormal and discontinuous feature of narrative rather than a permanent fixture. ...

] The crisis metaphor has of course been translated into social enquiry as a means of dramatising perceptions of social pathology, social breakdown and disorganisation, and to give full vent to feelings as to the intolerability of the present. Its use is thus embedded in discourses about social change and debates about appropriate forms of political action. The assumption is that crises are unacceptable, and that they can and ought, sooner or later, to be resolved.

The phrase "housing crisis" is based in this latter, metaphorical use. Tranjan appears to require it only fit the former and older definition.

Holton goes on to write:

] While the use of the crisis metaphor in social criticism is not without pronounced disadvantages, it does retain a considerable degree of utility. In the first place it underscores the refusal to accept all features of social life as necessarily 'given' and 'unproblematic'. In so doing any notion of 'normality' is itself brought into question. The social pathologies identified by crisis theory pre-empt the 'normal' functioning of social life, while yet leaving space for successful recovery, if the appropriate social changes eventuate.

The term "housing crisis" is used for exactly that purpose - to refuse to accept the current situation as necessarily given and unproblematic.

Ricardo Tranjan's essay rejects the term "crisis" precisely to normalize the long-term structural issues which the crisis-ist consider unacceptable and "ought, sooner or later, to be resolved."

> Rents are determined by “what the market will bear,” as economists say.

No? I mean, they can be that way, but the author clearly knows about rent controls, which determine rates in a different way than simply what the market will bear.

> The purpose of the rental market is not to ensure the highest possible number of families is securely housed. The purpose of the rental market is to extract income from tenants, and as far as this goal is concerned, it works like a charm!

The purpose of a produce market is to extract money from selling produce, not to ensure the highest quality of nutrition.

That doesn't mean the government can't regulate produce sales to set minimum quality levels. Nor does it mean that the government can't regulate the rental market, even if doing so reduces profits.

The government could also build its own housing projects, without financial incentives to outside developers, with the goal of providing secure housing to many people, and without the goal of extracting profit (or even break-even) from the tenant.

Just like it builds streets and parks which aren't funded by user fees.

> For example, proponents of the “supply-side” argument frequently point to low vacancy rates as an indication that supply is low, which drives rents higher. During the COVID-19 pandemic, the national vacancy rate went up from 2 percent to 3.2 percent, a 60 percent increase. What happened to rents? They, too, went up, by 3.6 percent. In Toronto, vacancy rates more than doubled between October 2019 (1.5 percent) and October 2020 (3.4 percent). What happened to the average rent in the city? It rose by 4.7 percent. A Canada Mortgage and Housing Corporation report explained that, in hot markets like Toronto and Montreal, landlords chose to wait longer to fill vacancies or offered one-time rent discounts instead of lowering rents.

In 2021, a prominent housing expert, Steve Pomeroy, demonstrated that “between 2006 and 2016, Canada added 1.636 million households and built 1.919 million new homes . . . almost 30,000 extra homes were constructed each year compared to the increase in the number of households.” And yet housing prices and rents went up at a breakneck speed during those years. Neither Pomeroy nor I contend that Canada has enough housing or that additional supply would not be beneficial. The point is that supply alone will not solve the problem.