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Comment by amazingamazing | Hacker News Reader

It is very simple. Housing is not built.

This is at least 80% of the problem. The system is behaving exactly as you'd expect it to with even an Econ 102-level understanding. New supply isn't being built, or is being severely hamstrung, and more people want the supply and are willing to sacrifice (often too much) to get it. Add in rent-seeking behavior, both figuratively and literally, and prices quickly double in even mediocre areas with minimal long-term prospects for growth.

Relaxed zoning requirements for SFH and MFH buildings, relaxed or eliminated height restrictions for high rise density projects in urban areas, eliminating rent control, and a laundry list of other things would help alleviate the upward pressure.

Even if new stock were built, new homes in Houston start around $300k for a 3/2 configuration, but those are bought up nearly instantly because not many are built, and the remaining stock are $400-700k.

I grew up with 6 family members in a 3/2 house that was 1250sqft. Houses today start at 2000+ square feet in the USA. We DON'T need that. On top of that, there is very limited stock of homes for people who no longer have kids.

Every type of manufacturing in the US has gone toward lower throughput, higher price. Luxury apartments, 2500 square foot houses with no yard, $50k for a car. And it is because we are all comparing ourselves to each other and wanting to appear like we can afford this lifestyle, and its finally breaking. But it was allowed to go this way, because it was working. Pricing out the bottom 25% didn't negatively affect the profitability of the companies making these items, in fact, it made them more profit.

The answer is still build more (which you basically admit yourself in your first sentence).

Homes skew larger and more expensive precisely because it's so hard to build them so developers need to make more money from each one. The fixed costs per unit are too high, so the ones that need to be lowered or eliminated should be. That will incentive building more units not just more expensive units. You'd see a lot more 1200sqft new builds if it was more economically viable and developers could make a profit on a $125k home instead of needing $400k.

> You'd see a lot more 1200sqft new builds if it was more economically viable and developers could make a profit on a $125k home instead of needing $400k.

You do see them, but they are factory built. I could have a $75k manufactured home dropped onto a $20k slab, with $15k utility hookup, and have 3 beds and 2 baths and 1200sqft. It is viable outside of HOAs and "master planned communities" but it is hard to find places in the US that allow this in a "desirable" area.

I agree we need more, but we need smaller too. My parents right now have a 3600 sqft house they will die in, and can't maintain because they are in/approaching their 70s. They built it in 2008 for around $190k when there were still 2 kids at home, my grandmother still lived there, and my sister had a baby on the way.

Now their home is valued at $750k according to the county (after fighting and revising it down from $800k), and if it weren't for all the homestead exemptions and senior rates and whatever other tax breaks they were given, their property taxes would be over $25k/yr.

They've actually tried to sell it a number of times, but 0 bites even discounting it down to $500k, because the town they are in has no comps (single level 4 bed, 4bath on 3 acres).

Build Moar seems to be too simplistic. There's just too much demand and too much investment capital seeking profit. No matter how much you build, most of the housing supply is going to get sponged up by investors, landlords, and private equity, and the price isn't going to go down. You'd probably have to 4X to 5X the current housing supply to make a dent in prices.

When investors buy housing they almost always rent it out, increasing the supply of rentals and decreasing rent prices relative to the alternative universe in which no new housing is built.

> most of the housing supply is going to get sponged up by investors, landlords, and private equity

To earn a return through renting or appreciation. If there are more houses than buyers returns drop.

> You'd probably have to 4X to 5X the current housing supply to make a dent in prices.

So do that.

>You'd probably have to 4X to 5X the current housing supply to make a dent in prices.

Not at all. The important thing here is that price is set on the margin. Relatively modest supply increases can have outsized price effects. As an example, consider rents in Austin - something like 30% housing stock increase led to 16% drop in median rent, all while Austin simultaneously had massive in-migration, i.e., rents fell despite demand surging.

As another example of margin behavior: vacancy rates matter a lot, a modest vacancy rate increase can crater rents, which we see in the CRE market.

It's interesting to say something sounds simplistic when your argument is basically "I feel like __________" and in fact the evidence shows exactly the opposite.

Building new housing stock drives down the price of older, more beat up housing. So new housing being more expensive is fine, expected, and helps a ton still.

> And it is because we are all comparing ourselves to each other and wanting to appear

No. No no no! It's because capitalism rations by price and weights by wealth. Once inequality cooks up enough the whims of the wealthy outweigh the needs of the poor.

It is not the strength of those whims that squishes the poor, it is the strength of those whims multiplied by relative wealth that squishes the poor. The whims did not grow out of control. The multiplier did. Extreme inequality is the problem.

Not that simple. In Australia over the last 10 years, the number of dwellings increased by 19% while the population increased by a smaller 16% [1]. Yet house prices still doubled. This is the same trend that has continued for decades, growth in number of dwellings has tended to outstrip population growth but house prices shot up since 2001 when the tax settings were changed to massively benefit speculation.

We also have a pretty high number of unoccupied dwellings that are left empty, since some investors see the bother of renting them out as not worth the money, since they’ll make so much when they sell that it doesn’t matter!

1. https://australiainstitute.org.au/post/is-population-growth-...

We are talking about America. In your case housing would be even higher if it were not built. People continue to make things more complicated than it is.

Build, and keep building until it is cheap. Also, you would need to consider the specific places.

The claim is that if you increase supply the price will drop. The counter-example is a case where supply was increased and the price doubled. The question is why did that happen?

It very much looks like the "just build" model is insufficient to explain what's happened in that case.

Because demand outran the supply. Prices drop when demand falls below supply. Not when new supply is added.

Diiid you read what they said about Australia?

> the number of dwellings increased by 19% while the population increased by a smaller 16%

That is the opposite of demand outrunning supply.

People/businesses own multiple homes.

Demand for housing increased faster than supply. As people gain wealth they demand more housing, so just looking at population changes doesn’t tell you much about housing demand.

Where is the demand coming from, is what I'm getting at. Because it's not from the population on this case, it would seem.

First, lets remember that housing is extremely inelastic, Demand doesnt need to outstrip supply by very much for people to start bidding up properties and prices to double.

Ive never been to Australia, cant speak to the specific situation there, but where I live it is very common for people to have roommates. Many people even share bedrooms to save money. Post covid labor prices for the lowest paid workers has increased substantially. These low paid workers are the most likely to have roommates/shared rooms, and one of the first things they do when they get more money is move into places of their own. Where I live at least you also see the opposite happening. Since housing supply is legally unable to expand people who previously would be living on their own now often find themselves needing roommates, pushing housing demand down.

There are also many people who want second homes and tons of other ways for housing demand to shift without changing population.

What exactly they build in Australia, livable dwellings? In New Zealand cities they build 5 meters wide, two floor row houses, upstairs and downstairs split into separate apartments 25-30 sqm large. It's an investment token, not a dwelling. Across Europe they build the same housing tokens but buildings have more floors and are from a concrete instead of wood.

The law of supply and demand doesn't go away. If raw population numbers don't support increasing demand, something else does. My first guess would be less people per house, perhaps culturally driven like fewer roommates and families spreading out.

I think you have the hit the nail on the head, if you have unoccupied or a lot of buildings going out of the market at the same or similar rate as new units coming online than you are falling behind. I didn't do the background research on Austrialia but this I think happens a lot in the US we have a bunch of poorly built things that need to be rebuild in 30-50 years so we are not increasing active housing as much as new construction sometimes suggests

You can sprawl further out and you can build infill in sparsely populated areas, but you run up against the reality that desirable areas are going to be expensive because they're desirable, and the cost of demolishing existing multifamily homes to increase density further becomes infeasible in already dense areas.

I bet you actually can find affordable housing in the middle of nowhere / towns where people are actually leaving.

This is not to say there isn't low hanging fruit that market rate housing can help with, and some areas have more room for improvement that way than others, but there's a limit to where that takes you that reveals a deeper problem: we treat housing as an asset that "should" continue to appreciate indefinitely, and we even subsidize people using extensive leveraging to acquire it.

The price of homes has drastically gone up even in some communities around the world where no housing is being built because there is no demand for it; the given region is experiencing severe depopulation as everyone leaves for the faraway big city, except for a few elderly holdouts. Yet owners feel some kind of pressure to keep their asking prices high. To me, that means the situation is far from simple.

Areas even in the USA where housing is not built but people leave and there is low demand are very cheap.

I think there is another element, private equity (PE) has got involved in the housing market, and like anything that PE gets involved with it burns it to the ground and then exits with it's profit leaving behind a wasteland. PE equity will do anything to get their profit no matter who it hurts

This would not matter if housing could be built.

Yeah I tend to agree with this point. PE is a boggie man for not building enough housing where it matters. In fact if we could build more houses PE could buy it at above market prices all day and builders could boom and eventually rents would drop because PE aren't going to hold empty units because its investiments.

Private equity owns about 500,000 homes nationwide, so like less than a half of a percent.

Anyway they got into the housing market because the margins are so good because everybody refuses to allow new housing to be built. Congratulations, you played yourselves.

> you played yourselves

Owners played non-owners

Does it matter if they only own a small fraction of the homes? There's some studies that show that in markets where institutional investors do buy, prices typically noticeably increase for houses afterwards, even if they only own a tiny fraction of the housing units.

There's plausible argument as to network effects (e.g. my neighbor is charging that much, so why can't I?), as well as changing unit types to rentals, limiting owner-occupied supply and hence driving up prices.

I mean, I imagine it can be kind of similar in the stock market, where that you don't actually need to buy all a company's shares in existence to bid up a stock's price... you only need to buy enough of the available float to raise prices (sometimes which can be <0.5% of shares in existence).

I'm not sure it is that simple. The housing units per capita numbers on first impression would suggest the number of housing units is keeping up with population growth, raising the question of why that isn't sufficient.

Some quick Googling for number of housing units in the US in 2006 and 2026 says 128 million then and 149 million.

Population then was 299 million and is 334 million now.

That's 16.4% more housing units and 15.4% more population. In terms of housing units per capita that's 0.45 now, and 0.43 in 2006.

Looking farther back it as 0.34 in the 1970 census, 0.39 in the 1980 census, and 0.41 in the 2000 census.

There was a dip from 2008 to 2016 from 0.428 to 0.419 then it resumed going up [1].

[1] https://fred.stlouisfed.org/graph/?g=Mc22

It's not just about sheer numbers but distribution - the areas where they're most needed are the ones that are building the fewest units, exceptions (Seattle, Austin) aside

I don't think it's that simple. In my town, we're building like mad (thousands of units) and it is possibly slightly impacting pricing in that the rise is not as meteoric as it was 7 years ago. But new buyers are still priced out. Houses are vacant. There must be other factors.

The cost of land and labor to build a house is relatively the same no matter what house you build. This also applies to apartment buildings.

Fancy it up a bit (mostly nicer appliances) beyond that and you take a $300k house to a $1M house.

Developers make about 20% on the total ( https://www.nahb.org/news-and-economics/press-releases/2025/... ). They'd rather make 20% of $1M than 20% of $300k. Same work crew either way.

Next question then becomes "is it better to sell 3 houses at $1M each ($600k for the developer) out of 10, or all 10 houses at $300k ($600k for the developer)?"

This also applies to apartments. Do you build 200 "luxury" units? or 200 affordable ones?

Yes, great. Now ask the "why" housing is not being built.

And then ask the next "why".

Owners don't want it built. Owners vote. Non-residents (and many renters) don't vote.

Wrong. As an average owner I have 0 pull on the local council that instates building codes.

Also, everyone wants to live in the same dozen places.

This reductionism doesn't seem useful. The population of people who want to buy homes has not grown in any way that is proportional to the cost of a home.

I've yet to hear anyone say why "build more" isn't a valid answer to lowering the cost of housing. Even if new builds stay at exactly the same price they're at today, the price of older homes will decrease as supply increases.

And I don't just mean in this thread, I mean ever. It's always hand-wavey "it doesn't work like that" when the evidence suggests that it does.

The underlying issue is that converting single-family suburbia to medium-density multifamily ‘ruins the neighborhood’, and cities don’t have the courage to eminent domain homes and replace them with apartment buildings themselves, so they outsource the housing function to the Free* Market, which is most definitely not interested in terminating the SFH market. Between the profitless-ness of apartments for the real estate industry and the use of suburbia zoning to discriminate since the early 20th century (nowadays in the guise of HOAs), the problem to solve isn’t in housing or urban planning, it’s in dethroning capitalism and classism. That’s why no explanation presents itself for why more housing isn’t a good idea: it’s a fine idea, but the U.S. ethos of ‘fuck you, got mine’ takes precedence, and it’s uncouth to say that out loud here.

Commercial new-build apartments happen elsewhere in the world, plenty of them in my city.

And then it’s $2000/m for paper thin wall and cheapest materials possible and has more stringent qualification requirements than a mortgage.

I asked why "build more" isn't a valid answer and your response is that we need to dethrone capitalism and Reddit-tier nonsense about HOAs?

Why is your solution "put 3 families in this single-family home" and not "build more single-family homes?" If the market isn't "interested" in "terminating" single-family homes what makes you think it would be a good thing to do so, other than the fact that it would hurt a cohort of people you seem to hate?

If you got rid of height caps, minimum lot sizes, and loosened zoning capitalist developers you hate so much would jump at the chance to build medium (and even high!) density housing. No need to have the government steal homes from people to do it.

Most U.S. cities cannot sustain purely-capitalist upzoning from low to medium; the profits for developers simply aren’t there, and the elected officials aren’t willing to upset homeowners. Three of the five cities I’ve lived in over the past fifteen years made the changes you describe to single-family zones. Developers largely did not, as you suggest, jump at the chance to build higher density housing. In one case where they did, their bank demanded they as part of the loan terms to set a minimum rent per apartment that was higher than neighboring single family homes, leading to persistently high vacancy rates, nonstop turnover, and a profitless development with 0% ground-level retail rented in the middle of a business-tourism district. So, for most U.S. cities, either they need to step in and commission redevelopment of the single-family homes of their voters, and take the profits or losses themselves on both their accounting books and their election outcomes, or upzoning simply won’t happen at all.

Every amount of new housing will be purchased by competitive investors. You are heavily underestimating the amount of money unsophisticated investors have, and the psychological effect of owning more and more of territory. Most people will never say no to owning more money and territory.

Tax homes that aren’t your primary residence to the point where it’s not a good investment.

This never works in real economy with real people. Even in Germany with very rigid address registration laws people invest in real estate like there's no tomorrow.

In other countries with lax address registration laws like Poland, real estate can be the only investment vehicle without capital gains tax. Yes, if you sell real estate in Poland after 5 years you pay zero capital gains tax and anyone can buy (please invest and make that mofo pop). Opposite to every other investment vehicle from bonds to shares to even currencies where the capital gains tax exists.

It's just pure rectified human greed.

In the context of rentals, wouldn't we expect ~100% of private sector rental units to be purchased, owned, and operated by investors?

So what, they will rent it out? If there's a lot of new housing being rented out, it drives down the rental prices, drives down the purchase prices, etc. Any investor that sits on vacant housing is losing money. When there's extreme shortage landlords can do this because the rise in value happens from the shortage and maybe the rents aren't worth it.

The only cure to investors buying housing is to build enough housing to keep it from being a good investment.

You don't tend to see a lot of this in expensive cities - the acquisition cost is too high. Investors tend to buy in lower cost areas.

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