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I can't speak for the US but in the UK you have the issue of deciding where to put the public housing.

If you try to stuff it all into somewhere like London then you end up either with huge overcrowding (it's really hard to double the capacity of 150 year old infrastructure) or with people living so far out of the centre that commute costs really start to bite.

If you build new towns then you have to be really careful to somehow distribute the wealth properly otherwise you just end up with slums.

I actually think that for the most part what people aren't willing to accept is that the capitalist model actually does allocate housing fairly well according to need, it's just that if you're on the wrong side of that equation then it feels terribly unfair to be asked indirectly via the market to move to a cheaper area.

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The current model seems to give existing capital owners a strong veto on the creation of new supply while providing little representation for the beneficiaries of new housing

Housing and jobs zoning needs to be better distributed. Why does all the work activity have to be concentrated in small city centers and housing spread out so much?

City centers need a higher proportion of residential and other places need a higher concentration of commercial/industry. That isn’t a market issue because these things are controlled by local governments.

There wouldn’t be a housing crisis if your zoning required 1:1 jobs to homes ratios, or even anything close.

What I want to see is “there’s no more office space available here, we’ll have to move somewhere else”

That and square footage limitations for worker density in office spaces.

A whole lot of the housing crisis boils down to local governments allowing a whole lot of office space growth and not much residential growth.

In the U.S. I don’t think this is a concern, thankfully. Most of our cities have infill opportunities. In Columbus, Ohio where I live there’s hundreds of acres of surface parking lots. Buy them up and build housing blocks like in NYC. This solves lots of problems. [1]

> I actually think that for the most part what people aren't willing to accept is that the capitalist model actually does allocate housing fairly well according to need

I generally agree as well, but it seems like we are no longer satisfying lower ends of the market and developers would prefer to not build rather than build homes that don’t hit their IRR numbers. The federal government in the US could build housing and auction it off to individuals or families or run a sort of lottery system. Could add a few rules to prevent bad actors from renting the places out or something along those lines.

[1] As an aside everyone working for the housing agency or federal transportation admin should have to read The Death and Life of Great American Cities and be treated in that knowledge before taking a job there.

Is there a reason that private developers aren't doing this already? Zoning?

Zoning and parking minimums. When it’s illegal to build a bowling alley without 128 parking spaces you end up bulldozing your city for parking.

In the UK we have a lot of stuff like that too, not necessarily codified, just that the default position is that you can't build somewhere unless you have permission and the local council will probably block it (as a result undeveloped land is <10% of the cost of developed/developable land).

Feels like that's a far easier target to attack first.

The Uk has a hideously restrictive planning process designed to ensure no building is too interesting

This is the problem that a lot of people are overlooking; it's not just a lack of property developers, NIMBYism, etc but a major part is policy and zoning laws, which aren't being challenged / changed enough.

Every boomer trying to preserve their home values and easy parking is doing it on the backs of younger generations.

Everybody's solution is relax zoning and parking requirements, until it gets done and then a predatory developer applies to build one of these monstrosities beside your house.

No… I’m trying to move to bloommerewede.nl. Hardly a monstrosity

edit: https://www.bloommerwede.nl/ in case anyone is looking.

Some others have mentioned a couple of key points such as zoning and parking requirements, but it's not just that. Other factors include a real estate development company's rate of return. If they buy a plot of land, let's say a quarter acre, they can fit let's say one $250,000 house on it, though likely that leaves them with too much space for the one house so let's say they go and build two $250,000 houses on it. Awesome right?

But if you're the real estate company that's a lot of overhead and duplication. Maybe you need to get twice the permits. You need twice the customers to buy. You have to bring your construction crews out to build two sets of crappy counter tops and kitchen cabinets.

How do you solve that problem? You build one $500,000 house (or more). You say the counters are "granite" and the floors are "hardwood". It's a forever home!

Now the two families that can afford the $250,000 houses each can't afford the $500,000 house of course or else they would be looking for a $500,000 house. So now they're out and the builder can sell the $500,000 house and make extra money.

There's nothing wrong with this, but it clashes with a problem that we face as a society which is not enough housing at prices that the public deems affordable.

The market can theoretically solve this, but sometimes markets get caught in local minimums that are misaligned with what the public wants. This could be an area where the government can step in and provide contracts to smaller builders, or just contract to build larger housing units (think of the now very expensive housing in NYC) and sell them at little to no gain or just give them away on a lottery system.

The money that would be needed to be spent is rather minuscule in comparison to the money we spend on other things. I'm unsure why we don't pursue a policy where we allocate, say, $100 billion toward building smaller and mixed-use housing. We have plenty of money to do so and it's really great for the whole country economically - I don't think anyone loses out. Congress needs to act.

Your example fails if there is nobody who can afford a $500k house. So long as there is demand for the $500k houses it makes sense for the developers to build than and not 2 $250k houses, but if developers can sell all the $500k houses they can build it means they are not building enough and that is a problem you need to fix (by enabling them to build more)

You're right - the example does fail if nobody can afford a $500,000 home.

I think the challenge is that for the foreseeable future enough people can afford those homes, which leaves us with the other two probably not having a great housing situation until we've saturated the market with the $500,000 homes (or equivalent given an inflation rate or whatnot).

Certainly my example is an oversimplification, but I just wanted to highlight that it's more than just zoning code or parking minimums (parking minimums in particular are very nasty) and that there are other economic incentives or factors. Some real estate companies may prefer to just sit on cash given the 4% interest rates we're seeing today. It depends on their IRR target.

Unlike, perhaps, software services, it seems to me that it's difficult for new entrants to enter the market and scale quickly to lower prices, and when they do enter the market they wind up with the same calculation that the other home builders do and just build the same thing. The factors that would enable home builders to build more include changing economic incentives.

I'm not sure how we change those incentives. I've seen various programs and policy ideas floated around, I believe Harris wants to provide a $25,000 downpayment assistance, for example. But in my mind all of these programs and policies are just treating the symptoms instead of the disease. The disease is society wants more housing and at a lower price. The market is failing to address this. We could try to come up with incentives and plans, or we can go back to basics: supply and demand. The government can increase the supply directly - and just provide contracts to build more housing at a lower price point, particularly in cities where there exists more economic opportunity. Incentives and other policies seem like a middleman ready to be taken advantage of.

The market does very well where it is allowed to work. However that tends to be out in the new suburbs which are far enough from the city center that it forces unreasonably long drives if you have something to do in the center.

I generally agree, but for "products" like housing there are too many interfering influences to really sit back and say well the market will take care of it. The government gives enormous subsidizes to road and highway construction, for example, think about lending regulations, zoning rules, hook ups for city utilities, etc.. That's not much of "allowing the market to work". I don't think it's fair to say when housing is built in one way it is the free market at work but when it's built in a different way it's all government regulations.

We often times think of zoning being restricted in cities, but it's arguably more restrictive outside of cities. Notice how everything that is built is the exact same spread out suburban lots, with no mixed use development, giant highways, giant parking lots, Wal-Marts, Starbucks, and other developments? Is there a single developer in the United States that's building differently en masse?

My wife and I live in a historic neighborhood close to downtown Columbus. There are bars and restaurants and shops nearby, a park in the middle, etc. The home prices here are quite substantial because it's a nice, charming village within an urban environment. Though it's not the only one.

People move here and pay large sums of money to live here. Clearly it's worth a lot right? So why don't developers build more developments like this when there's such high demand and prices command such a premium? One could build the homes a little closer together, make the streets a little more narrow, add buildings and churches and market stalls within. The economic value is clearly demonstrated. What's the barrier?

Where you are concerned about letting market forces go to work I agree, one way to do that is to stop subsidizing a specific development pattern.

Suburbs often have to stick to state building codes. Even when they don't have to, most just follow the example of what everyone else done and so they put in zoning that forces that same layout. This needs to be fixed first.

Developers (and the bankers that fund them) do what they know works. They are not the ones seeing issues for the most part - they get their money. Most will not change. However when I look I see a small number of neighborhoods that are different scattered around - mixed use does happen in a few places (though badly - location location location applies to mixed use and most of them are putting the stores in location that are inconvenient for anyone who doesn't live there and so not enough people will use them to support the stores). Which is to say if it is allowed you will not see overnight changes, but a few developers will try something new and eventually some will find the formula for success and then other developers who are watching will copy that. We are looking at 20 years from making useful changes before we can use useful results - but it is still a change worth doing.

I agree. Though I think you point out a problem with mixed use development, we shouldn’t throw the baby out with the bath water. Where I live and in other similar neighborhoods, the fact that they are great neighborhoods invite visitors regardless of transportation concerns.

You cannot have any infill opportunities of parking lots unless there is great public transit. If people need to drive they need to store the car someplace. Not only are parking lots cheap, they also spread out all the traffic which is a big problem car oriented cities face. Parking lots are a solution to the problems of density, if you don't need it you need to solve traffic first, otherwise cities need to get less dense to support the limits of cars.

There's a lot to unpack here...

We don't need to replace surface parking lots all in one go. We can do that over time while we introduce good transit options and make our cities a lot better. We can also construct stacked parking garages instead of having surface parking lots. There are a lot of options here. As we replace inefficient and economically draining parking lots we can introduce housing and areas for business. As we introduce these we increase the viability of transit. It's a bad idea to focus on supporting or building parking lots which are not used that often. It's not good for anyone except those who are extracting economic rent.

> If people need to drive they need to store the car someplace.

People need housing too. We also need more small businesses and economic opportunity. Car storage is not a priority. We have an overabundance of it anyway.

> Not only are parking lots cheap, they also spread out all the traffic which is a big problem car oriented cities face.

Parking lots are cheap for the owners to build and operate, but they're incredibly expensive for cities. I don't follow the logic here about spreading out traffic. Typically traffic problems [1] are due to everyone using the same highways at the same times. That's not really solved or addressed by parking lots. If it were, we could just build parking lots instead of expanding highways, but in addition to that being economically stupid, it wouldn't solve the problem.

> Parking lots are a solution to the problems of density, if you don't need it you need to solve traffic first, otherwise cities need to get less dense to support the limits of cars.

It's kind of a chicken-egg problem, but the Overton window is shifted so far to the left that we need to shift it back to something sensible. So instead of even caring about cars and parking lots, we need to care only about housing, small and local businesses, and transit and just neglect cars/parking lots. Otherwise we'll just continue to build more parking lots and highways which drain the local economy and never actually do anything economically productive.

Today society invests 99% of its effort toward car-only infrastructure which is brittle, expensive for taxpayers, and bad for citizens. We should flip that around for a few years.

[1] We don't have traffic problems, and if we did they'd be solved by getting people out of cars. When people think about traffic problems they are thinking about the time they use the highways at the peak times. We shouldn't optimize society to cater toward "car traffic between the hours of 4PM and 6PM at the costs of all other development patterns".

There are two possible solutions to traffic: create an alternative to driving - mass transit; or spread things out so that there are less places in any one place someone wants to go.

Parking lots accomplish the later by limiting what can exist in that area, and the more empty they are the better as it means there are less people going to that one area. Of course there is a cost to this - if you don't have as much to do in one area it means you need to drive to more areas, and quickly you reach a point where some things in your city are not a reasonable distance and so most people go there (in the case of walmart this doesn't matter as there are plenty of others, but a niche/specialized store cannot capture the whole population and in turn this means it will struggle to get enough interested customers to stay afloat). It also means that jobs on the far side of the city are not in range.

Parking ramps allow for more density - but they are not only a lot more expensive, but if people pay the price they invite more traffic to the dense areas that already has too much traffic, while a lot spreads limits traffic because there is only so many places you can walk to from a parking space (the distance places may not have anything in range).

I agree it needs to be a gradual transition to mass transit. Density does enable many more things in a city (the point of a city is all the things you can do - if you don't like it move to Alaska), and mass transit done well enables more of those things. However note that I qualified that with done well - many cities only have poorly done mass transit and the ridership shows.

Thanks for the great discussion! (Sincerely)

It's people wanting to live in the city without paying the price, essentially wanting their cake and eating it too.

Affordable homes can be had out in more rural areas (and I don't mean Bumfuckistan, I mean smaller cities and towns), the problem is everyone wants a flat in Manhattan or Tokyo without paying up. Metropolitan real estate has always been expensive, this in itself is nothing new.

And people who (rightly or wrongly) believe they have a right to find a new house in the same place they grew up, regardless of their current earning power.

Houses in cities ought to be cheaper than in the countryside. The use of space is denser, utilities have much shorter lines and roads are just that small thing between all the houses not long stretches trough the landscape.

What we have to discuss is the distribution of living space, just like here in Austria I guess in the UK there's a lot of older people still living in the same house as a couple (or even alone) as when they had their children still living with them. We need incentives for people to downsize when they are still able to do it on their own.

>The use of space is denser

That is precisely why land in cities is more expensive.

There are more people wanting land in a given area but the given area doesn't scale to the population, so people start paying more to have more of that limited space thereby driving out those who can't (or don't).

It's like how some people will pay for first/business class or premium economy class on a jetliner so they have more of the limited space in a flight cabin than those who didn't pay up.

The problem, which frankly isn't an actual problem, is that some people feel like bitching up instead of paying up for a good that is valued highly. We can discuss endlessly whether the valuation of city real estate is too high, but the conclusion is always going to be either paying up or getting out.

The cost of infrastructure to a house is only a tiny fraction of the cost. This is where you (and strongtowns who advocates for this view) fail! Sure they will spend $10million/mile to pave a road, but that road will be used by many people for a few decades before it needs to be redone and so the true cost is only a few dollars per year per person, even in rural areas.

You have this exactly backwards.

Houses in the countryside should be cheaper because they are easier to build and the land has less value.

What’s potentially more expensive out in the country is the infrastructure. The house price is lower to reflect that, the overall cost of ownership/living may be the same or higher as a result.

I think that it depends on the details. Wanting a flat in Manhattan is a lot different than wanting an apartment near a subway line.

I always looked down on them while living there, but the US is fortunate to have so many mid-sized cities. In Australia, and likely many other less populous countries, people are being corralled into the sprawl of Sydney, Melbourne, or Brisbane because there are no jobs elsewhere. I have no desire to live in a ``dynamic world class city" whatsoever, but we need to be in striking distance of one for my wife's work. We'd probably consider Newcastle or Hobart or something otherwise.

I hope someone else with more experience chimes in, but I hear London is egregious in this regard. I'm not sure how many people actually aspire to live there.

When I sold my modest house in a great location to a generational market of buyers who all grew up with decades of zero-interest financed lifestyles, it was very eye opening. Presented with the choice of location, price and product they demanded all three. I assume they are still trying to buy a home.

This is an excellent take on the intracacies of where to build housing.

The "capitalist model" does indeed address supply and demand issues. However I feel it breaks down when the market is globalised and housing is used as safety deposit boxes rather than actual places to live.

London is a peculiar in that the communities are propped up by the renters. Having lived here all my life I have gotten used to communities changing hands every 5 years or so.

It's beyond me why housing security isn't more of a thing here for those with jobs crucial to a thriving local community - e.g teachers, healthcare workers etc.

It's apparent that what we have isn't a fully liberal capitalist market, but a game of monopoly.

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