The housing market isn't for single people
thewalrus.ca
thewalrus.ca
Housing is too expensive because it's illegal to build enough of it.
No, multi-generation households will not save us. We should not make it impossible for young people to move to cities where high-paying jobs are, or force anyone to stay in abusive homes because we have made it impossible to live on your own.
This is part of the problem, and one that many people actively want to avoid discussing so it is important to discuss it, but it is only part of the problem.
I think for real reform in this area you need to have the government strictly regulate rental properties.
That includes determining the rental price, and imposing fines for empty units.
Every time there is a stimulus check or an increase in minimum wage the detractors say "this will just be captured by the landlords".
We need to have clear stipulations for rental prices and ideally link it to another value that also changes over time.
I would argue a 1 bedroom apartment should have its rent capped at less than 40% of the monthly take home of someone on minimum wage.
Let the landlords and employers battle over who gets the bigger slice of that pie, while allowing the workers to survive their petty skirmish.
Here is Adam Smith talking about a minimum wage:
> A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation. Mr Cantillon seems, upon this account, to suppose that the lowest species of common labourers must everywhere earn at least double their own maintenance, in order that, one with another, they may be enabled to bring up two children; the labour of the wife, on account of her necessary attendance on the children, being supposed no more than sufficient to provide for herself: But one half the children born, it is computed, die before the age of manhood. The poorest labourers, therefore, according to this account, must, one with another, attempt to rear at least four children, in order that two may have an equal chance of living to that age. But the necessary maintenance of four children, it is supposed, may be nearly equal to that of one man. The labour of an able-bodied slave, the same author adds, is computed to be worth double his maintenance; and that of the meanest labourer, he thinks, cannot be worth less than that of an able-bodied slave. Thus far at least seems certain, that, in order to bring up a family, the labour of the husband and wife together must, even in the lowest species of common labour, be able to earn something more than what is precisely necessary for their own maintenance; but in what proportion, whether in that above-mentioned, or any other, I shall not take upon me to determine.
https://www.gutenberg.org/files/3300/3300-h/3300-h.htm#chap1...
In what US city can someone on minimum wage raise two children? On the US federal minimum wage?!
People conflate the carrying capacity of the economy with GDP, but these are different. The economy grows but requires fewer workers over time. As the carrying capacity decreases, the population decreases. On the ground, this manifests as the inability to afford child rearing.
The excerpt you cited assumes that this race of workers must afford to perpetuate itself in order to be viable. It cannot perpetuate itself, and it is not viable.
Federal minimum wage is a strawman in large cities.
I'm in a medium cost of living city and I doubt I could find a minimum wage job listing if I tried. Fast food places and government buildings even advertise $15-20/hr jobs because they can't hire enough people.
> Federal minimum wage is a strawman in large cities.
I did first mention city minimum wage, and only referenced federal minimum wage after to drive the point that federally this discrepancy is even more grotesque.
States with "large cities" that use the federal minimum wage:
> Five states have not adopted a state minimum wage: Alabama, Louisiana, Mississippi, South Carolina and Tennessee. Three states, Georgia, Oklahoma and Wyoming, have a minimum wage below $7.25 per hour. In all eight of these states, the federal minimum wage of $7.25 per hour generally applies.
https://www.ncsl.org/labor-and-employment/state-minimum-wage...
> I'm in a medium cost of living city and I doubt I could find a minimum wage job listing if I tried.
Tell me your city and I will find you a minimum wage job posting.
The number of jobs paying minimum wage was around 1% several years ago. It’s certainly gone down.
Minimum wage jobs are also highly biased toward young people, not parents raising two children.
> Tell me your city and I will find you a minimum wage job posting.
Show me a minimum wage job posting and I will find you a higher paying job with better conditions in the same area.
We already have a fine for empty units. They're called property taxes, and they're the strongest and easiest-to-use tool that local governments have for reducing vacancies.
>I would argue a 1 bedroom apartment should have its rent capped at less than 40% of the monthly take home of someone on minimum wage.
Then you're making it de facto illegal to build new housing. No bank is going to lend money to anyone to build more housing if they can't charge enough rent to cover the loan.
>In what US city can someone on minimum wage raise two children? On the US federal minimum wage?!
Maybe not the US federal minimum wage, but Austin has become the second-most affordable city in America (median rent price to median household income ratio), just by permitting a huge number of apartments.
You need to address wages as well.
> Then you're making it de facto illegal to build new housing. No bank is going to lend money to anyone to build more housing if they can't charge enough rent to cover the loan.
This implies you think landlords are trying their best to lower prices, only charging enough rent to just cover their loan payments, which is absurd.
But landlords only provide a service when rents and mortgages are roughly similar - they’re buying long and selling short as it were.
There used to be political will to do this. Nowadays what I see around me, is that developers keep plopping down housing projects either in the middle of nowhere or in some highly undesirable area (like next to the train tracks, or some old industrial development) and sell the resulting apartments at crazy pricess. Zero infrastructure of course.
Fixing exclusionary zoning rules isn't a society-scale project.
“You can build this 100 home development but it will need to pay for remodeling the school” type things happen all the time.
Years later, Some developments / developers will petition to annex themselves from the outer reaches of their adjacent jurisdictions to prevent the city from growing into these areas and 1) exerting control and 2) obtaining the roads, utilities and treatment facilities, and drainage facilities. Municipal Utility Districts (MUDs) are a popular avenue for this, and arguably works in some cases. Adjacent cities may not have the existing tax base, utility infrastructure and operations, and public works to support the type of growth in some areas. My experience is just in the past ~7 years working in the Civil field in Texas. Probably variations on this across the US at least.
Funny you mention schools, because on at least one project of mine, we've constructed a public middle & high school along with a charter school on-premise. No doubt that was a big selling pitch during the early development meetings.
(This is one of the reasons that senior developments slide through easier, as they don't impact the student base much but do provide tax revenue, which usually makes the city's job better.)
In the 1970s and 80s there were riots. Now most voters are old and own a house so they don't really give a shit. Hell they WANT prices to go up because it is their pension.
> just need to build a house/apt but supporting infrastructure, such as water, power, waste, public transport, supermarkets, and figure out how to connect it to the city's infrastructure.
No, you don't. 40yr ago, before you people <broadly gestures at HN with a certain finger on each hand> ruined it, it was common for even small time developers to build entire streets of houses on well and septic with 100a panels and pay the utility for a transformer at the end of the street. Obviously they weren't doing this downtown and obviously this doesn't work in all climates but there's no reason it can't be done everywhere east of the Mississippi.
A lot is being built. The problem is ruthless cost extraction, parasitic chain of agents and agencies, and oftentimes real estate is the only investment vehicle free of capital gains tax. Have you seen what is being built everywhere from Australia, through Europe, to America? 20-30 sqmt apartments where you walk in straight to the kitchen and sleep next to the oven and dishwasher, if the place is even large enough to fit the full kitchen.
This is a factor in some places, but a gross over-simplification in others.
There are neighborhoods full of affordable new construction houses not far from where I live. They sell slowly because people would rather live in the popular areas.
There are affordable high density housing options for rent here. They stay on the market because everyone wants their own house.
It's not even about remote work here, as the popular location for office builds and jobs is actually closer to those affordable housing neighborhoods few people want to live in. Being near the office buildings is actually a reason why they're undesirable.
There are some obvious broken housing situations like San Francisco, but I don't see permitting reform as a magic cure-all in every city.
Permitting reform made Austin, Texas the second-most affordable city in America by rent to income ratio.
>There are neighborhoods full of affordable new construction houses not far from where I live. They sell slowly because people would rather live in the popular areas.
Mortgage rates rose and property prices have not yet fallen to match reality. I would bet that this is a much stronger factor in preventing those new homes from selling rather than buyers simply having a preference for different neighborhoods.
A lot of us are in the US, where (except for SF and handful of specific cities) housing is legal to build practically everywhere, municipalities are handing out free money for any form of development, so people do build tons of new housing all over...
...and the prices still rise anyway.
80% of the buildings within a 1 mile radius of me did not exist at all 20 years ago. There's almost 5,000 new units around. Half of the new apartment buildings are only at like 70% utilization. We barely hit 1% population growth year-over-year.
Prices are at 40 year record high prices anyway (yes, even after factoring for inflation).
I live in Tokyo, famed for its "housing affordability".
Guess what, it's completely unaffordable for normal people now, because of people purchasing homes for investment purposes. Rent is still affordable but has a rapid upward trend as well.
But house prices have exploded upwards since covid, and wages have not.
So it's an extremely similar situation to everywhere else in the world. And the underlying reason is the same: people buying because they think real estate will go up in value.
By the way, as a fun fact, the most common mortgage in Japan is a ARM. Last I checked, 70-80% of mortgages in Japan are variable rate. The BoJ is currently on a path of adjusting rates upwards. So we will see how this all shakes out. If a situation like the GFC happens, it will not be pretty.
Seattle even right now is ~110k ish HHI, median home price is ~$800k, so that's 7-8x, before COVID I think it was around ~650k, so around 6x. Also Seattle is known for being pretty expensive, a lot of cities like Houston have an even better multiplier.
It just doesn't seem that different to me. Feels like a lot of people are unhappy with property prices and think it's uniquely a US problem, whereas the system in the US actually works decently well compared to a lot of places. (It would take many essays for me to list all the flaws, I'm not saying it's perfect I'm just looking at it relatively speaking).
In that case the numbers are far worse.
OK. Why is it an investment?
Yes, per-adult, multi-generation family homes are even more cost-effective than for couples (even accounting for smaller pensions compared to salaries), and both are more cost-effective compared to singles.
Apart from growing prices, my experience (not in Canada though) is that living spaces are growing too, as we are not satisfied to live in the same cramped 20m2 studio as singles were 30 or 50 years ago.
I conjecture that this is, at least partially, caused by modern people being more isolated and even when they do socialize there's less "third spaces" to get together with friends so someone ends up having to host the superbowl watch party in their apartment, for example.
Median home sizes have gone from 1400 sqft in the 70s to 2400 sqft in recent years.
https://www.bankrate.com/real-estate/average-home-size/
Part of it is the economics of construction. Part of it is growing threshold for “bare minimum”. In unit laundry was optional in the 70s and I’ve heard people wanting a “laundry room”. Pandemic has pushed the need for an office. Larger kitchens and more storage space is also a big difference in newer units vs older ones.
I did not have laundry facilites of my own until I bought a house.
Because you literally need more square footage to amortize all the regulatory required and industry checkbox required bullshit over. Ain't no different than General Motors saying "no more small cars from us in the US".
Hard to draw too many conclusions since "down 15%" is still "way to fricking expensive", but...
Some of us might be satisfied, but zoning and development approvals seems to have a hatred of small apartments. The ones that get proposed meet fierce opposition from locals who are afraid of having too many neighbors who aren’t rich people.
The issues starts to arise that people with two income households are more likely to lose one of those jobs and that puts a lot of pressure on the finances if you need both jobs for your house payment.
In your $100K scenario, that single person pays about $6K more in taxes, but has $36K more in take home pay per person, so that additional tax bill seems reasonable in light of their ability to pay it and pay for their cost of living.
the very first financial discussion I had with my wife (fiance at the time) was that we will always live off a single salary and 2nd salary will always go into future bucket (we tap in for larger purchases or fancy vacation here and there). I don’t think many families are setup this way though - in my limited personal experiences a loss of one source of income leads to sale of the house/condo and move (rent or downsize)
If both partners typically work: rent rises to eat nearly all the gain.
If AI makes everyone 20% more productive: rent rises to eat nearly all the gain.
If minimum wages lift the bottom earners from $7.50/hr to $18.50/hr: rent rises to eat nearly all the gain.
* landlords not wanting as much money (unlikely, although it happens at small scales)
* rent control-type policies
* competition
And as far as I know competition is the only thing that works at scale. Although, people tend to emphasize intralocal competition as where this gets fixed. But I tend to think that the even larger issue is that so many places suck to live in (due to schools, jobs, culture, lack of prosocial governance...) that everyone with options congregates in the good ones.
There's an effect every larger than all of those, though, which is wealth disparity. If incomes differ by fewer orders of magnitude then prices can't vary as much across markets. At the end of the day when rich people can and do buy 2-5 homes and everyone else can barely buy one of course you're going to have problems.
- competition from new builds
- competition from different locations
The first was killed by restrictive zoning. The second still exists but is no longer useful. You can move to West Virginia for cheap rent, but you'll have to move to a location without jobs.
The combination of far less people moving across states and of jobs concentrating in expensive places to live is what killed that second type of competition.
We do this in other industries all the time.
Health insurance is heavily regulated to ensure that there are profit caps (think 80/20 rule) this means that the company is legally compelled to actually spend a certain amount on customers of said product.
Imagine if landlords were compelled to spend 80% of their rent dollars in improving the space or helping the renters.
This notoriously does not work at all.
Look up pay-vider structure and the type of manipulation of medical loss ratio it enables.
You need more housing. Rents in Austin have collapsed because the city made it legal to build a lot more housing.
It doesn't work for landlords that just want to extract wealth from others.
Relying on private developers that only want to build luxury housing is kinda how we're in this current mess. Expecting them to solve the problem we know, build more housing, is just silly. They didn't do it when money was the cheapest it ever was the last 15 years, they aren't going to start building it now.
This is why the government needs to step in and build more/better public housing.
It works for Vienna, this young chap even speaks about it at great length:
https://www.youtube.com/watch?v=LVuCZMLeWko
I sure hope he goes into politics, we need people with this type of imagination to better our society and give us hope for a better future which we can create now, not later.
Landlords will get around this by raising other fees but not calling them rent, like pest control, garbage pickup, coffee room supplies, pets...landlords could do this all day long.
This is a huge economic opportunity for exactly the people we've been shafting: build us millions of zero emissions buildings and infra. I have no idea why Democrats aren't making this the front page of their platform.
https://www.theargumentmag.com/p/no-country-for-young-famili...
Meanwhile, a really important dynamic to keep in mind is that in most inner-ring suburbs in the US, the primary driver of home values (and of property taxes) are school systems. If you don't actively enact policies that work against the dynamic, you get trapped in a spiral of increasing prices, in part because parents can bid up prices and suffer them only for the span of time their kids are in school --- "renting the schools".
Both groups could live somewhere else, but don't.
[0] https://www.austintexas.gov/department/get-boarding-house-li...
Don't want to pair up, or can't meet/find someone with which to pair up?
Because from your massive oversimplification, you're making it sound like everyone has 50 potential partners knocking on their door daily asking to hook up or get married, and they tell them to get lost so he/she can keep play videogames in peace.
Have you asked single people why they're single to better understand the issue? I think you'll find that most people actually WANT some sort of loving partner in their lives. Otherwise the pet industry wouldn't be so massive in the west if people were so happy living alone without any company.
People of my parents' generation got married way earlier, typically in early to mid 20s, so it was natural for them to build a life together.
And plus, rich kids with properties from parents money, has nothing to with the growing loneliness epidemic I was discussing on why people don't pair up despite economic pressure to do so.
Marriage is basically economically obsolete at this point and is primarily done for the sake of tradition and tax breaks. In the context of having children, marriage has devolved to a business contract that lasts until the children have left the nest.
Marriage also has other useful facets, such as a contract to deal with healthcare decisions in case of emergency.
It is also a town that has seen explosive growth in tourism, so the new trend is that people are only willing to rent 6-8 months to normal people. Rest of the year they'll rent out their unit on airbnb, where they can earn 3-5 times more.
So what happens, is as I wrote, they only rent short-term during tourism season, and then find regular renters that are willing to live 6-8 months in the apartment.
"Some people are fine with getting a roommate, but what if you’re not?[...]Usually, people get to a certain stage of life, and they like their independence.”"
No usually it's the other way around. You get to a certain stage of life, your household size grows. There's exogenous factors like lack of construction but all other things being equal, housing used to be more affordable because the entire nation didn't consist of single person households. Multi-generational homes and large families were the norm because it saves resources. People who decide to want to live independently are going to take a financial hit.
If you're not interested in a traditional family I'd strongly suggest societies think about cooperative housing collectively and having a flat mate or two individually.
When you are married (or acting like married) a shared bedroom is good. However single people often want that personal/private space all to themselves.
https://housing.unc.edu/apply/rates/
Yep, at the moment renting a room at UNC costs 2200 a month if you share it, nearly twice the mortgage on a 3 bedroom house. There's some disease in the american economy where cost cutting code actions magically inflate costs, and we buy it.
I think shared bathrooms are vastly cheaper, but also vastly less desirable.
Look at how many houses now have “en suite” bathrooms for more than just the master bedroom.
Most of the relaxation-oriented holiday industry is definitely designed for couples and families, but backpacking, adventures, and cultural immersion are, in my opinion, better alone so that you don't have the easy escape of sitting around with your partner. And if you want to relax nothing's stopping you from booking a few nights alone at a Japanese onsen or one of those treehouse style resorts in a Central American rainforest. I've spent many nights at onsens in between more outdoorsy climbing and skiing legs of trips in Japan.
Singles are left to pay double occupancy rates or stay at hostels.
Paraphrasing madd scientist, Dr. Frankenfurter, from the Rocky Horror Picture Show:
I didn't make it, for you!
And why shouldn't it be easier to own property with the resources of two people behind the purchase?
When I moved to SF when I was 25, I sure could not afford a house or even a condo.
But I sure could have bought a house in the Tahoe area.
Would the commute suck? Yes. Could I have made a go of it? Slept in my car during the week?
I sure would have built a lot of equity, plus you'd have a cool place to go on weekends and invite your friends.
But why are we building a world where that is necessary? That's an awful world.
But it isn’t.
I think a big part of the problem is we’ve lost the shitholes; it used to be 20/30 years ago you could be making good money in the city and choose to live in a crappy apartment/house that others of your salary tier wouldn’t look at; that option is mostly gone. The shitholes are infinity dollars a month.