Anyway, increasing supply isn't going to solve our many problems leading to widespread homelessness and financial insecurity, but the Ezra Klein dunces aren't ready for that conversation yet.
Why not?
(I guess I'm a "dunce", but I'm one that's ready for that conversation)
"increasing supply isn't going to solve many of our problems leading to widespread homelessness and financial insecurity"
It would just help with some of them.
But that's a statement that's obvious on the face of it - cheaper housing costs buy time if you lose your job, and makes it easier to have a bigger emergency fund, but it isn't an infinite reprieve. So. The charitable interpretation still hits a wall because that would be acknowledging that supply would help with some of them, and the "dunces" nonsense suggest that they wouldn't agree even with that.
(In some states in particular, though, home ownership is uniquely protected in ways that would help fight homelessness, so increasing supply and incentivizing selling-to-an-owner vs being a landlord could be very helpful too.)
It really is housing and scarcity at the bottom of all the other symptoms we see.
Inelastic labor supply into soggy labor demand is the issue. One that is solvable, but only if we acknowledge the problem. Of course, most people with a fortune have their fortune predicated on not understanding the problem, so every venue of discourse which can be bought (which is most of them) struggles to understand the problem. But that doesn't mean you should struggle to understand the problem.
Where do you increase supply? The most desirable places to live like urban centers, or more likely more and wider suburbs. In a vacuum many people will say it doesn’t matter and poor people should move to where they can afford; but many people have strong connections to where they grew up and are not inclined to abandon their lifelong support systems because the pricing in one area has gone up.
How do you increase supply? Ugly 5-over-1s are cheap to make but not desirable, not particularly dense. Single family homes are even less dense. Most supply proponents are talking about these or luxury condos.
How much is the new supply? If we build new homes but they are still unattainable to the people who need them, then we didn’t help much right? Which leads me to
Who gets the new supply? Are they put on the open market for speculators/investors/landlords/private equity to gobble up or are there provisions for ensuring the housing goes to people who don’t already have housing or are physically real people not llcs etc.
Tl;dr we could build a million houses but if they are in undesirable places, unfavorable designs, or allowed to be snatched up and resold at the same high prices we already have, then supply alone wouldn’t fix unaffordability of housing across the nation.
Ezra Klein is an intelligent man, but he has put his intelligence towards selling hopeful visions to professionals who want hope rather than an earnest diagnosis of the dysfunction afflicting our culture, geography, labor market, and welfare system.
Prices are set through a combination of supply-demand and cost of providing housing. Almost all increase in housing costs are coming from land price increase, due to land shortage from planning policies that limit land use density.
Housing has been made into an investment first, and a home second, by creating housing austerity and shortage. The only way to prevent housing from being an investment is to stop the artificial shortage of housing.
Houses are lousy investments.
You may very well be right. However, everyone I hear saying how much money they made off of their house neglects to mention any of the expenses I listed.
And I didn't add in any of the expenses I listed earlier if I'd kept it.
As for accounting guidance, just what are you driving at? Are those expenses I listed not real? They certainly took real money out of my account!
When you live in your own house, it's called "implicit rent" but when you actually rent it out at market rates it's just called "rent."
There are a few housing markets where what you say will be true, but it's not true of most of the US by any means.
Renting a place out has other costs. Tenant damage, tenants who don't pay rent, tenants who sue you (and landlords always lose), lawyer expenses, time when it sits vacant, vandalism, advertising, having to deal with the tenants, etc.
That’s so obvious it’s nearly a truism.
Rate of new houses is below the rate of new households, and it’s been that way for years.
Sure, as with every other good.
But there’s a long way to go between current property prices and raw construction costs.
How much? Searching a bit suggests that net profit margin in housing industry is about 8.7%
Consindering an investor can get ~3.75% in zero risk T-bills without lifting a shovel, that's about an extra 5% net profit to get involved in building housing.
Which isn't nothing, it's a decent profit. But I also wouldn't call extra 5% a huge difference.
This is absolutely false, not true, disproven, and made up.
Social housing builders are good for many reasons, 1) they provide competition to the public market, and when efficient don't need to return profit to shareholders so provide a very good competitor in places like Finland and Singapore, 2) social housing builders smooth out the business cycle, because new housing is needed just as much when at the downturn of the business cycle as at the top, so it greatly helps provide stable employment and a stable workforce for housing construction, greatly improving housing.
But the idea that new idea drives up housing prices in any way is, at best, a fiction. It's mostly a lie from landlords and homeowners to try to justify their continued extraction of profits from their idleness.
Someone should tell the local housing market that then, because this pattern has consistently manifest over the last 20 years here. Without exception everyone I've seen make this claim isn't invested in residential real estate and hasn't closely watched how prices shift in response to new construction. In any event if you're trying to advance the claim that gentrification is a myth you're going to need to bring some serious proof to back that.
https://news.ycombinator.com/item?id=44914153
It is rather fascinating that you would bring up a "gentrification is a myth claim," why would you try to insert that into my mouth?
Gentrification happens all throughout the US, but in the current era it's from the under discussed type from the original literature in the 1970s: through lack of construction. When there's not enough housing to go around, prices rise, wealthier people are the only ones who win the bidding war, etc etc. See Boyle Heights in LA for a classic example of this. No new buildings, massive gentrification because there's not enough housing to go around.
See also in LA for the neighborhoods where prices are not rising: the only places they are building lots of apartments.
Perhaps there was some era when the "rent gap" style of gentrification was actually prevalent, but it hasn't been that way for decades. It's all just shortage driven gentrification in every example I have been pointed to in recent times.
Probably because the sentence you quoted and responded to points explicitly to gentrification as a primary driver of the phenomenon in question. You know, that thing you said was false, untrue, and entirely made up?
"It's all just shortage driven gentrification in every example I have been pointed to in recent times."
Fair enough, allow me to provide a few counter-examples from the regional housing market:
- three massive mixed-use development projects (in different local cities) each added thousands of rental units and mixed walkable retail to what were aging downtown-adjacent neighborhoods. Demand in this quadrant of the city spiked in response. Home prices (regardless of age or condition) in a 10 block radius tripled over the course of 4 years. Surrounding commercial real estate owners where quick to pick up on the increase in traffic and promptly raised commercial rents, driving the majority of pre-existing businesses out. These were (entirely predictably) replaced by national franchises. Area residential landlords, seeing rising commercial rents and real estate prices promptly increased rents.
- There is a phenomenon in local "blue collar" neighborhoods where developers are buying a handful of adjacent lots, scraping the existing structures, subdividing the parcels, and then putting up these utterly vile two and three story skinny block houses that combine all of the worst aspects of private home ownership and apartment living. These new units are generally priced between 175% and 500% of the pre-existing average of similarly sized houses in these neighborhoods. In every neighborhood I've bothered to watch where these things have gone up the sell price of for housing in these neighborhoods has gone up between roughly 75% to 200% over a ~4 year period following. During the same time period cost of similarly sized houses in similar neighborhoods in the area has increased by maybe a 3rd, which suggests that blanket demand for the area isn't the primary driver of the increase.
- Then there's the time two county planning boards colluded with the largest developer in the state to conjure a medium sized bedroom community from thin fucking air (well a swamp actually but you get the idea). ~1k new units added to the market a year for the last decade, targeting the entire spectrum from "affordable" apartments to two golf course communities. The price of housing and lots have skyrocketed in the surrounding area, to the point that section 8 landlords in neighborhoods 10 miles away are backing out of their agreements so they can capitalize on the increase in local rents.
The one thing all of these instances have in common is new capacity was added to an area and local rents and real estate prices increased rapidly.
Nah, what actually happens is the lower rung housing is either flipped to capture the increase in area pricing or the lot gets scraped, again to capture the increase in area pricing.
> That’s so obvious it’s nearly a truism.
And that is why Manhattan, due to having the most housing units per square mile, is one of the cheapest places to live in the US.
Since it's not, it is not a truism that merely increasing the housing supply will decrease prices. It takes more than that.
As long as you have excess people willing and able to buy $1M studios, every new studio will get snapped up. Prices can only begin to drop if you build so many that you exhaust the supply of people willing to pay $1M and the highest bid left is $900K.
Think of it as analogous to bond issuances. Just because the government issues more and more bonds the price won't drop as long as there are buyers to clear the price. Bond price only drops when they run dry of buyers at the higher price and must start accepting lower offers.
More housing will not make manhattan cheaper than Charleston, West Virginia, but it will make manhattan cheaper than how manhattan is today. That's the point.
Your argument is like saying obese people should not go on diet because statistically the people who go on diet are more overweight than average.
Where I live has ~21k units for ~45k residents (47%), and a median home price of $440k or so. NYC has about 3.6 M housing units for ~8.5 M people (42%), and a median home price of $870k. For NYC to make up that 5% they would need around 425k housing units.
Obviously these numbers can’t tell the whole story, but it does seem like the supply is fundamentally more constrained in NYC than here, and here is already pretty tight, with very low vacancy rates, high rental prices, and expensive homes.
Anyway NYC plans to build 200k units over the coming decade, increasing the supply in order to reduce the cost. Of course that’s not the only item in the plan to reduce costs, but it’s a major component.
https://www.cambridge.org/core/journals/perspectives-on-poli...
The society you desire can’t exist unfortunately as much as I’ve thought it could and worked for it
Society has always (yes always) “bent” toward dominating hierarchies because individuals want the stability of being part of the dominating group.
Or join an existing one.
It’s a mix of the lifestyle not being exactly what people thought plus them getting culty. In many cases it’s more the latter than the former.
a) these communities often depend on consensus decision making. Problems that require collective action get nearly impossible when the society gets too big
b) People underestimate how much they depend on greater society in a modern context
c) It’s normal for future generations to have evolving values. The original idealistic notions tend to lose their luster to those who were born into it
There are others more unique to communes, but I highlighted those because they also make it hard for the inverse libertarian ideal to work as well. Meaning it has to do as much with human nature as any ideology.
A commune, however, can be.
Then talk to your local NIMBY. Housing crisis is not due to capitalism being evil, but due to constraining people from building. Healthcare is getting better all the time, we had MASSIVE breakthroughs this year at ASCO (which were made possible by big pharma!). As for education yeah, it could be better but it's completely tangential to the topic.
There is increasingly becoming more of a divide between haves and have nots, and it has a temporal component because of how equity has appreciated over the last decade or so. Both housing and stocks.
People from a decade ago have seen absolutely unsustainable appreciation in their assets while doing nothing. That is putting them at structural advantages against younger generations that will not see those same appreciations. It's like the bus has left without them. No matter how hard and fast they run, someone asleep on the bus will always be ahead of them.
The lowest quartile of income have had the highest growth the past four years.
Could you provide source? I don't think that's true.
If there is a reckoning, the most pain will be the demographic here on HN, living in the suburbs. Not the billionaires living in the Hamptons or Napa.
The fuel of this fire is white collar high earners. Its also why not much is probably going to change, because these people also vote a lot. It's not billionaires and Black Rock driving up home prices, that's for sure...
Group Wealth Income/yr Spending/yr
50–95% ~$75–80T ~$11–13T ~$9–11T
95%+ ~$95–105T ~$7–9T ~$5–7T
75–85% ~$18–22T ~$2.5–3.0T ~$1.4–1.8TIt creates austerity which means the wealthy do just fine while those with less suffer and overpay and transfer what little they do have to the wealthy.
Degrowth is a fundamentally unequal program which causes massive inequality and suffering. Only with growth does power lessen for those with the most.
What is this supposed to be implying and how do you square it with the massive amount of money being poured into "disruption" and VC investment, etc, in the US?
Where is degrowth being practiced at scale, and how has that caused more of a divergence between the wealthy and the rest than the opposite pro-economic-growth, pro-efficiency policies that brought us Walmart, Amazon, etc and happily shit-canned all the displaced workers from the less-efficient-but-more-evenly-distributed businesses they replaced?
GDP growth rate, for instance, in the US doesn't have a significant inflection point around Reaganomics and its increases in deficit spending + "pro-growth" lowering of tax rates on the wealthy. We've never really gone away from that philosophy despite not seeing increases in growth + seeing a LOT of increases in inequality and the elites thriving while everyone else gets squeezed.
Perhaps "growth" is driven primarily by cultural and technological factors (especially the latter!) and inequality is driven primarily by whether or not a population has the balls to say "even if economies of scale suggest that wealth will concentrate in big mega-players, we want to fight that"? And the US had the will to do that 90 years ago, but was successfully brainwashed into giving up on it *despite the 50s in particular being still seen even by those on the right as a "golden age" of both growth and "everyman" quality of life?
If the PC revolution had started seven years earlier and the Iranian revolution had occurred seven years later how would our views of Carter vs Reagan (or some other Republican in 1984 instead) change? But which of those things did they actually cause personally?
People say that right up until someone wants to do something and then it's all "not in my back yard" and "won't somebody think of Alex Jones and his gay frogs" or whatever their line is.
I'd say nobody is willing to put their money where their mouth is but it's not money. They'd made more money with growth. It's speculative bullshit "what ifs" that could be mopped up easily if they happened. The problem is people's beliefs, ideology, religion, whatever you want to call it.
The idea "oh but a richer person than me benefits" becomes the reason for blocking housing, eliding the fact that a poorer person benefits, the true thing the NIMBYs try to prevent.
At least, that's true in my area. People that already have housing, are comfortable, start to rail against all this economic growth and say that we should block all change to buildings to prevent it.
Anybody who is actually serious about providing more opportunity to those with less realized that we need more housing, where the jobs are. It's the homeowners and well-established that pursue degrowth and austerity.
The only thing it does to be anti "NIMBY" is aid in unchecked price hikes on "low cost" high density housing that none of us can afford.
A rising tide raising all ships sounds great and all, until you notice the tide seems to only be rising on one side.
Inequality is the result of allowing economic growth, i.e. freedom.