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Could you please describe exactly how could housing get continuously cheaper when there are more people every year and the demand for good locations is increasi

Could you please describe exactly how could housing get continuously cheaper when there are more people every year and the demand for good locations is increasing? (Edit: I asked a sincere question. Don't downvote without explanation, please. It's really tiring, anti-discussion and makes it seem like you don't have any good point at all.)

sleavey 8y ago
I guess, meet and exceed housing demand and improve less affluent areas. This involves government money but most seem happy to let the public take the bill in the form of continuously inflating house prices instead.
jplayer01 8y ago
We currently have a feedback loop where rising prices attracts investors who sink money into real estate, which reduces supply and raises prices, which attracts investors, etc. There are a number of factors that incentivize reduced supply such as reduced incentive to build lots of new buildings because that would increase supply too much and reduce prices and an increased incentive to build a small number of luxury apartments instead, which further raises property values. If ownership wasn't seen as an investment vehicle, this feedback loop would be broken. People would only buy because they need it, or in the case of landlords, the rents they could secure from rentees would be much lower because of the lower market value of the object and the overall lower rent prices across the entire market. Of course, sufficient supply has one big condition: Zoning laws are relaxed, allowing enough supply to be built in the first place.
- usaar333 8y ago
  It depends where you are. I'd argue the SF Bay Area is not being driven by investors (many investors think it is bad to invest given the very low rent yields), but by supply constraints themselves. The supply constraints are not so much financial, but being driven by residents who don't want their neighborhood to change. And since they don't suffer (no property tax increases come with the home value increase), there's not much push back other than the moral argument that their children can't afford homes anymore.
  - jplayer01 8y ago
    You're right. I just didn't want to write an essay. There are a number of incentives that motivate owners to prefer supply constraints.
snovv_crash 8y ago
Build more. Better transport. Encourage remote working. Allow denser construction. Relax ridiculous laws that push up construction costs. The trouble is, lots of people will lose money...
- credit_guy 8y ago
  You can bribe those people. If any new building on your block gives you a tax abatement for 5 years (which is then absorbed into that building's construction costs), then you bring a serious economic incentive to YIMBY. You can tune up the amount of tax benefit until YINBY outvotes NIMBY, and then you're good.
  - snovv_crash 8y ago
    That sounds like a way to make construction more expensive. Transfer money from new buyers to existing owners. This is against the entire premise of the article.
    - credit_guy 8y ago
      All things being equal, it would, indeed. However, the main driver of the high real estate prices is the artificial scarcity of locations. If you can remove that, you'll see prices collapse all over the country. To remove this scarcity, you need to fight NIMBY.
Lazare 8y ago
Yes, there are more people every year, but in the US, there aren't a lot more people every year. Population growth is at 0.7% and falling. On the other hand, I see no reason to think that "demand for good locations is increasing". What counts as a "good location" is in flux, but people always want to live in "good locations". I see no reason that it's more important to live in a "good location" today than 5 years ago, or 50, or 3000. So what I see is a fairly static number of people who'd like to live all over the place, but a decent chunk wanting to live in large, dense, desirable cities. Which are, not surprisingly, quite expensive. > how could housing get continuously cheaper Housing, as opposed to land, is a manufactured good, and we're getting better at manufacturing things every year. As for land, we can use it more efficiently (higher density, fewer parking lots, more transit, etc.) It's well documented that many cities (Los Angeles is an infamous example) drive up the cost of housing and bias new developments towards luxury units due to building codes that, eg, require very inefficient land use and a large number of parking places. Alternatively, we can work towards changing what is desirable. In 1920 something like 5% of the entire US population lived in New York City; now things are much more spread out. Today a hefty slice of software engineers live (or want to live) in San Francisco, but that's not an immutable law of nature. I mean, taken to an extreme, if you build an absurd number of houses in San Francisco without sufficient infrastructure, the combination of massively increased supply (all the new units) and decreased demand (because it's no longer a great place to live) would absolutely lead to house prices dropping. That doesn't sound like a good policy (and is certainly not what the parent comment was suggesting!) but there's no particular reason why house prices can't continuously fall.
- ragequitta 8y ago
  In regards to whether or not a good location is more desirable today than 5, 50, or 3000 years ago it definitely is. Reminds me of a story I found about Greyhound going down in my neck of the woods. https://www.theguardian.com/world/2018/oct/29/canada-greyhound-bus-ending-urban-rural https://www.theguardian.com/world/2018/oct/29/canada-greyhou... Relevant bit: "More and more people are leaving rural Canada, and the people who remain are often the ones who are unable to leave.” Since 1950, the rural share of the country’s population has fallen by half." So while population growth isn't fantastically large, people are flocking to urban areas (for many pretty obvious reasons).
village-idiot 8y ago
Population growth is very low, the technology to make homes should get cheaper, and old homes degrade and become less desirable as the rich continue to build new homes.
camgunz 8y ago
You build more houses, supply/demand, etc. There are many, many good locations in the US where affordable housing been be built. You can also replace low density housing with medium/high density housing.

sleavey 8y ago

I guess, meet and exceed housing demand and improve less affluent areas. This involves government money but most seem happy to let the public take the bill in the form of continuously inflating house prices instead.

jplayer01 8y ago

We currently have a feedback loop where rising prices attracts investors who sink money into real estate, which reduces supply and raises prices, which attracts investors, etc. There are a number of factors that incentivize reduced supply such as reduced incentive to build lots of new buildings because that would increase supply too much and reduce prices and an increased incentive to build a small number of luxury apartments instead, which further raises property values. If ownership wasn't seen as an investment vehicle, this feedback loop would be broken. People would only buy because they need it, or in the case of landlords, the rents they could secure from rentees would be much lower because of the lower market value of the object and the overall lower rent prices across the entire market. Of course, sufficient supply has one big condition: Zoning laws are relaxed, allowing enough supply to be built in the first place.

usaar333 8y ago
It depends where you are. I'd argue the SF Bay Area is not being driven by investors (many investors think it is bad to invest given the very low rent yields), but by supply constraints themselves. The supply constraints are not so much financial, but being driven by residents who don't want their neighborhood to change. And since they don't suffer (no property tax increases come with the home value increase), there's not much push back other than the moral argument that their children can't afford homes anymore.
- jplayer01 8y ago
  You're right. I just didn't want to write an essay. There are a number of incentives that motivate owners to prefer supply constraints.

snovv_crash 8y ago

Build more. Better transport. Encourage remote working. Allow denser construction. Relax ridiculous laws that push up construction costs. The trouble is, lots of people will lose money...

credit_guy 8y ago
You can bribe those people. If any new building on your block gives you a tax abatement for 5 years (which is then absorbed into that building's construction costs), then you bring a serious economic incentive to YIMBY. You can tune up the amount of tax benefit until YINBY outvotes NIMBY, and then you're good.
- snovv_crash 8y ago
  That sounds like a way to make construction more expensive. Transfer money from new buyers to existing owners. This is against the entire premise of the article.
  - credit_guy 8y ago
    All things being equal, it would, indeed. However, the main driver of the high real estate prices is the artificial scarcity of locations. If you can remove that, you'll see prices collapse all over the country. To remove this scarcity, you need to fight NIMBY.

Lazare 8y ago

Yes, there are more people every year, but in the US, there aren't a lot more people every year. Population growth is at 0.7% and falling. On the other hand, I see no reason to think that "demand for good locations is increasing". What counts as a "good location" is in flux, but people always want to live in "good locations". I see no reason that it's more important to live in a "good location" today than 5 years ago, or 50, or 3000. So what I see is a fairly static number of people who'd like to live all over the place, but a decent chunk wanting to live in large, dense, desirable cities. Which are, not surprisingly, quite expensive. > how could housing get continuously cheaper Housing, as opposed to land, is a manufactured good, and we're getting better at manufacturing things every year. As for land, we can use it more efficiently (higher density, fewer parking lots, more transit, etc.) It's well documented that many cities (Los Angeles is an infamous example) drive up the cost of housing and bias new developments towards luxury units due to building codes that, eg, require very inefficient land use and a large number of parking places. Alternatively, we can work towards changing what is desirable. In 1920 something like 5% of the entire US population lived in New York City; now things are much more spread out. Today a hefty slice of software engineers live (or want to live) in San Francisco, but that's not an immutable law of nature. I mean, taken to an extreme, if you build an absurd number of houses in San Francisco without sufficient infrastructure, the combination of massively increased supply (all the new units) and decreased demand (because it's no longer a great place to live) would absolutely lead to house prices dropping. That doesn't sound like a good policy (and is certainly not what the parent comment was suggesting!) but there's no particular reason why house prices can't continuously fall.

ragequitta 8y ago
In regards to whether or not a good location is more desirable today than 5, 50, or 3000 years ago it definitely is. Reminds me of a story I found about Greyhound going down in my neck of the woods. https://www.theguardian.com/world/2018/oct/29/canada-greyhound-bus-ending-urban-rural https://www.theguardian.com/world/2018/oct/29/canada-greyhou... Relevant bit: "More and more people are leaving rural Canada, and the people who remain are often the ones who are unable to leave.” Since 1950, the rural share of the country’s population has fallen by half." So while population growth isn't fantastically large, people are flocking to urban areas (for many pretty obvious reasons).

village-idiot 8y ago

Population growth is very low, the technology to make homes should get cheaper, and old homes degrade and become less desirable as the rich continue to build new homes.

camgunz 8y ago

You build more houses, supply/demand, etc. There are many, many good locations in the US where affordable housing been be built. You can also replace low density housing with medium/high density housing.