Homes “unaffordable” in 99% of nation for average American
cbsnews.com
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I don't think that works.
If the Chinese builders are idle, it isn't because they don't have work to complete - the entire crisis is because people basically prepaid for their homes and the builders have yet to complete a lot of them (I think there's a strong implication of embezzlement here). And the Chinese government is desperately trying to find a solution that will get complete homes to the people who have paid for them.
In any case, I don't think a lack of construction companies and/or workers is the problem. It's that local governments are making it impossible to build. We're not going to get more homes built to attacking something other than the bottleneck.
"Even 1.4 billion people can’t fill all of China’s vacant homes, ex-official admits "
https://www.cnn.com/2023/09/23/business/china-too-many-homes...
I mean, we could quickly end the US real-estate shortages completely domestically if we were willing to upzone and build insane tenement-style high-rises like the Chinese are willing to do.
In my 20s I lived near Manhattan and my goal was to move into Manhattan. But.. it never happened. Way too expensive. I beat my head against that wall for a couple years but it became clear it was impossible.
So I moved to a (back-then) much cheaper area of California and bought a house.
No. But pragmatically just like in finance "the markets can remain irrational longer than you can remain solvent", housing policy can also remain against you for decades or way more. As an individual, sometimes it's better to move and have a nice house and lead a good life than to spend a lifetime fighting policy.
Not sure what you are implying. That we don't need more housing because we have enough abandoned hovels in places no one wants to live?
The common thread (for the first 3 of 5) appears to be vacation destinations or 2nd houses that are often cabins.
West Virginia has a decreasing population. Alabama, I don’t know.
The states with the most vacant homes are Florida, California, Texas, and New York.
https://www.lendingtree.com/home/mortgage/vacancy-rates-stud...
It's the 'stop hitting yourself' of housing policy.
Not only do you not have a way of knowing that for sure, history would indicate otherwise.
Housing is fundamentally a good with limited elasticity, therefore the market on it's own without a good dose of regulation could easily become disastrous.
For a historical parallel, take a look at what happened in industrialising countries when the market was the one making decisions about housing where it was needed (next to the newly appearing factories/otherwise urbanising areas). The result was people living in horrifically cramped and squalid conditions (alongside other fun ones such as company towns) which was literally one of the main inspirations for socialism and communism.
Regulations on housing are a must, but their impact needs to be carefully managed and offset with appropriate incentives, policies and subsidies to make sure housing is of good quality (nobody should live in asbestos and lead paint filled pods under a highway next to a chemical factory) but abundant.
I'd go with relax over end, because surrounding infrastructure still needs to scale with the amount of people living there, and having very dense skyscrapers next to low height buildings is not great from an urbanist perspective; but there's nothing stopping most American cities from upzoning to 8-10 floors, and upgrading transit and city infrastructure to match the increased density (you're going to need more internet, water, sewer, electricity but nothing fundamentally unfixable).
So that's why I'd go with 'end' personally.
See: London.
It's worth asking, does density solve high cost? Is there evidence for that?
The first reaction is sure, supply and demand. Dense means more supply thus lower cost. But density also brings induced demand.
Where are these very dense cities that are also very cheap?
The two densest cities in the USA are NYC and SF. Neither is known for cheap housing.
Demand is only induced when you give the thing away for free.
Just say you personally want to go out and solve the housing problem, what is stopping you? Like you can just go buy some houses, tear them down, and build more densely. You will definitely make money. That was my thinking and I was prepared to put my money down to make it happen. I was stopped at the planning stage by zoning.
I was under contract to buy land and started the planning for building. I had an idea of how many buildings I wanted to construct, where they would be laid out and was starting to get permits. So I went to the city to start getting approved for permits, I was told by the employee at the city planning department that that was not going to be possible and that the maximum number of homes that could be built on this lot was exactly ONE. Even though the lot could have easily held 5 single family homes, it was zoned for one house.. Meaning that the planning department would automatically decline my permit application based only on the fact that that land had been designated for one house instead of five. That's what "single family" means here. It had nothing to do with the quality of the buildings or their layout.
So I thought that was ridiculous and asked how I could get around that, I was told that I would have to go to the city zoning commission and either get the lot rezoned or get a variance (special lingo for an exception). She laughed at me and said that that was very unlikely to happen.
I went to the zoning commission meeting that was held monthly. Can you guess who runs that commission? Homeowners from the area! Guess what they did not want me to do. Build more housing! Those people do not want to see the character of their town change, they don't want to see anything change. The people in charge of determining what gets built in cities are the people with a vested interest in keeping supply low to maintain their investments. And the thing is that when these zoning laws were set up the cities all basically just copy/pasted from one another, so they all have the same system with only small differences.
Needless to say, I backed out of escrow, did not go through with buying the land, and learned a very valuable lesson about how housing works in the US.
This is a separate issue from building codes. The building standards in the US are determined by codes which have nothing to do with zoning and can be as stringent as one likes.
Take a look at the city of Cupertino zoning map: https://www.cupertino.org/our-city/departments/community-dev...
You will be amazed at how much of the city is single family zoned. Meaning that it is required to be super low density and that even if a developer bought all the houses in a neighborhood they would not be allowed to build any more densely than what is already there.
Uber fixed the taxi industry (and then started taking a cut for itself) by just flouting the law -- until it had a fait accompli that most people liked.
The same thing will have to be done with housing, by people who have the resources to do it.
The problem is, it's difficult for this to be a grassroots civil-disobedience thing. That's called building a favela. Though honestly that could work too.
What the example of the favela (or, before that, the homeless camp) highlights is that property is as much about security (violence/force) as about construction. The camp can always be bulldozed. That's what a lack of property rights actually means, materially. I don't know how one provides security in a civilly-disobedient way.
Are you sure about that?
Or, taking it up a level, living in an RV somewhere in a gray area of legality or where there’s little enforcement (such as the RV’s on El Camino Real in Palo Alto)
>where the hell is the money for them coming from?
No problem, the 1% can afford to pick up the slack better than ever.
Sometimes people who make even more than you, or who inherited a significant amount. Most often, though, it's people who already bought and sold at least one other house. And often these categories overlap. A not-uncommon scenario is that the parents bought the house for absolute peanuts back in the 50s, then passed it on to their kids who sold it for a million or two so they could buy the houses you see. But whether the inheritance was dollars or a house, they'll never talk about it. "A little bit of a bump" is the most they'll admit.
REIT
> where the hell is the money for them coming from?
From thousands of investors
Institutional buying peaked in 2022 and has fallen off a cliff as interest rates have gone up
Uh, not sure where they came up with the 28% number. Given the traditional advice is 1/3 of income, 35% is not that far.
Also, they are only looking at single-income purchasers. Given that I don't know many single people buying houses for just themselves, they should really be looking at overall household incomes.
I get that home prices suck, but 99% of Americans not being able to afford a home is obviously not a real statistic.
... definitely a minority situation, though.
Did a dig, though:
"The latest number is considered unaffordable by common lending standards, which call for a 28 percent debt-to-income ratio." (From the sauce: https://www.attomdata.com/news/market-trends/home-sales-pric...)
This is apparently a common metric? First I've ever heard of it, personally.
The fact of the matter is that the take home pay for someone making $40K is ~2,300. 10% is $230/mo, which you cant even get a lease for anymore...But people need cars, so they are overleveraged.
Which is a massive issue in itself too. In many parts of the US and Canada a car is necessary for daily life, so everyone is forced to spend non-insignificant amounts of money on one or multiple cars, which is very wasteful.
> Home Affordability Report showing that median-priced single-family homes and condos are less affordable in the third quarter of 2023 compared to historical averages in 99 percent of counties around the nation with enough data to analyze.
The actual report is saying that 99% of counties have worse affordability. Not that 99% are unaffordable.
You're right. They essentially doctored the numbers to get the result they wanted because it makes good news. QED.
That's not even what they said. In 99% of the Nation (really 500 hand-picked counties), the _average_ person can't afford the home. Obviously, half of the people are above average!
https://www.forbes.com/advisor/mortgages/mortgage-to-income-...
https://www.cnbc.com/select/what-is-the-28-36-rule-for-buyin...
https://money.com/what-is-the-28-36-rule/
https://www.investopedia.com/terms/t/twenty-eight-thirty-six...
A better study would certainly include multi-income households, but I think it's worth considering that multi-income households present serious opportunity cost. It is not "free" to have both partners work - assuming you have a partner at all. In previous generations, you had the "breadwinner" and "homemaker" - two clearly defined roles that fulfilled real needs.
When both partners are working, who is taking care of the kids? Who is cleaning? Who is meal planning, shopping, cooking, and doing laundry? One or both partners need to then take on all of this in addition to their full-time jobs. This is exhausting, and I'm convinced is the mechanism behind the proliferation of managed services in the household. The monetary cost of these, and other necessary services like daycare, are not insignificant.
Assuming that people should have dual income to afford a home is an insidious theft of quality of life. If both partners' time needs to be spent working to earn money, there is less time for traditional homemaking and hands-on parenting. What are the consequences of this, not just to the individual but to society?
This is a false nostalgia. For most of human history men and women did equal amounts of labor. A non-working wife was a status symbol of urban society.
> When both partners are working, who is taking care of the kids? Who is cleaning? Who is meal planning, shopping, cooking, and doing laundry?
If we really want to go back to "previous generations" this was almost entirely done by grandparents or extended family. The idea of a nuclear family household is almost an entirely modern invention. Expectations that a single income was to support an entire household was solely belonged to the post-war baby-boom - before that even children were expected to work!
I'm not saying there is not merit to a single-income household or some people shouldn't enjoy it. But I object to any framing of it as "traditional".
If anything, part of our problem with our current housing market is that in the last 100 years we have mostly obliterated multi-family/multi-generational households from cultural acceptance.
But! there are over 3000 counties in the US. This is not even close to the meaning of "unaffordable in 99% of the nation..."
People might not like hearing it, but homes are in fact affordable if you don't choose to live in an overpopulated metro. And even then homes are affordable if you're not buying one that's being flipped with a few panels of drywall that you could've installed yourself.
And before you say, but you need to make good money still so the average American still can't do this! There are good starter homes on my street that sell for 5-10,000 dollars. That is within reach of a vast majority of americans.
/s
The first three rules of real estate are location, location, location. It's easy to find cheap homes in areas where there are no jobs and no services.
Not saying remote work doesn't expand the options - just that it isn't a panacea for all the issues that lead to expensive housing.
Ironically it’s the well off office workers who are most likely to be able to work remote, the exact people who are least impacted by housing prices.
I've been fully remote for 10+ years and still only live in large metro areas mostly because I couldn't handle living in a large house in the middle of nowhere with nothing to do and no one to interact with.
The reason the metro is overpopulated is because that's where all the jobs are. Move away from it, and you'll quickly discover that the cheaper homes outside of it are now unaffordable for you, because your wages took a nose dive.
Housing is priced proportionately higher near populous metro areas because the wages are also proportionately higher.
There is no "magic hack" for real estate. You get what you pay for in terms of location and proximity to jobs/schools/social life.
I mean you just invalidated your own argument with the 2nd part, but sure. Wasting time in a commute negates any discount you might have had.
The total number of counties isn't all that important, the number of available homes per county is much more important.
Price to income ratios in my home country are more than double the US's - not to mention the insane interest rates required just to beat inflation.
You seem to imply that it's entirely based on personal preference that people live near "overpopulated metros", rather than the reality that people live near cities because that's overwhelmingly where jobs are.
I just went to zillow and set up a filter for houses between 5K to 10K in all of the USA.
(edit: fixed my filter)
While I see some houses in that price range, they are in need of significant rebuild (fire damage, foundation problems, etc). A far stretch from a good started home. If you only have <$10K to buy a house you are unlikely to have money to rebuild it.
In any event saying "uproot your entire life and move someone cheaper" is a mean non-answer. Is it so unreasonable to ask for affordable housing for most in the biggest population centers?
- A studio condo in Durango, CO with < 500sqft
- A 3-bedroom townhouse in Gooding, ID with ~ 1000 sqft
- A 3-bedroom townhouse in Tremonton, UT with ~ 1400 sqft
- Nothing in Pullman, WA
I don't consider any of those to be overpopulated metro areas. And I do consider $300K to be unaffordable for even above average income starter families.
If you move into overpopulated metro areas like Denver, Boise, Salt Lake City, or Seattle, the prices double and more.
Everyone wants to have their cake and eats it.
> if you don't choose to live in an overpopulated metro
oh, you mean where the jobs are? Yeah how selfish of people to want to live where they can find work, or where their family lives, or where they grew up, or where there's a variety of food places and stuff to do.
The real problem is zoning. Most of these "overpopulated metro areas" have a pretty low population density because apartments are banned in 99% of the city (due to exclusionary single-family zoning). If townhouses & apartments were actually allowed to be built over the past 50 years in most American cities, there could be easily 3-10x the amount of housing available, reducing sprawl and driving down housing costs. The pendulum is swinging back and zoning is starting to loosen up, but after decades of bad policy, it's going to take a very long time for it to actually make a difference.
I searched all of Texas, and here's an actual house for sale for less than $10k .... that has fire damage.
https://www.zillow.com/homedetails/204-E-Wharton-Ave-Electra...
While that's a ridiculously low number (something tells me our definitions for "good starter homes" don't align), it's not THAT far off from similar properties in my wife's hometown in the midwest.
But let's _also_ talk about aspects of locality that affect quality of life (and along with it, real estate value):
- Neighborhood schools: absolute crap. 1/10 on the GreatSchools rating system.
- Civic resources (parks, libraries, etc.): none within a short driving distance. Parks not maintained. Libraries closed, partially due to the books they made available (this is one of those areas where books are being banned).
- Local employers: forget about it. The local industries and companies that setup shop there left town long ago. Nearest town where you might have a career of some type is about 70 miles away.
- Healthcare: some kind of urgent care, but it's of middling-low quality. If you have a semi-serious condition, you've got 100+ miles to anything resembling a hospital.
- Crime: exactly what you would expect. There is no opportunity, and people get desperate. Heavy, rural drug addiction.
- Population: trending older, as most people are retiring. People of means fled the area due to lack of opportunity.
- Transportation: there's a new highway bypass going way outside of town! Oh, but local transportation is entirely unreliable. No buses, taxis, uber, etc.
It's not part of an overpopulated metro, but that's what you get in this particular neck of the woods.
Did you leave out a few zeroes or is that per month?
If you actually meant 5K-10K, what town do you live in. I'd like to look at those houses.
"Data was analyzed for counties with a population of at least 100,000 and at least 50 single-family home and condo sales in the third quarter of 2023."
It's not as if they cherry picked the counties to make their case.
We can talk of unaffordable as buying a home leaving the buyer with little extra cash to spend on other priorities or unexpected hardships. Or discuss specific drivers of high housing prices, such as NIMBYism, regulation or labor shortage. But it helps to have conversation on non-stupid terms.
The point of the median is that if the median price is higher than most people can afford, then less houses will be bought. If you live in SF and can only afford a $200K house, one isn't going to pop up for you to buy.
No housing should be built in any of those. Or sprawl, don't do that. Or buildings over 2 stories. Also, all new units need 3 parking spaces, even if they're on top of a subway or train station.
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