6 ms·

That's what I don't understand, if population growth is stagnant or declining, how is it these housing prices are reaching such heights?

whatshisface 6y ago
Because nobody wants to hold currency for extended periods of time.
- rgrieselhuber 6y ago
  Bingo
- 0xfaded 6y ago
  Or more precisely, once a house attains some value beyond providing a roof over heads, the price of a house is no longer representative of a house, but a government backed asset that can never depreciate lest the pension funds fold.
  - supertrope 6y ago
    A single house's price can easily go down. Even an entire city like Detroit MI can devalue. But those mortgage backed securities represent the national average. With climate change the music may suddenly stop for flood prone areas like Miami once investors stop underwriting 30 year mortgages.
- blockyhead 6y ago
  Not when the government is printing it by the trillions.
Clubber 6y ago
We make up for it with immigration. I believe legal immigration is well over a million a year. https://www.pewresearch.org/fact-tank/2020/08/20/key-findings-about-u-s-immigrants/ https://www.pewresearch.org/fact-tank/2020/08/20/key-finding...
amanaplanacanal 6y ago
The US is still growing its population, via immigration rather than births.
r3drock 6y ago
One explanation is rising amounts of space per person, the apartments are just getting bigger.
- whatshisface 6y ago
  When you watch the price of the same unit grow over time, it's not usually because the owners are building more. :)
- scatters 6y ago
  And decreasing household size.
usefulcat 6y ago
You can find cheap housing, the problem is it's all in places where most people don't want to live. For example, Detroit, or any of thousands of small towns all over the US. Not picking on Detroit, it's just an obvious example of a large city that used to have a much larger population.
- Frost1x 6y ago
  That's a sort of two way street though. In areas affordable housing exists, there often aren't many opportunities financially speaking, especially in the labor market. It's one thing to live in a city, work for awhile to bank up capital, and then move somewhere with a low COL area to live comfortably with some supplemental income from the region with knowledge of that nest egg if investments you currently have. It's an entirely different story to live in such an and accumulate enough capital to purchase a home. Often, jobs are few and far between that are competitive, even after adjusting for COL. Employers in these areas often have less competition for positions and therefor have more leverage. Acquiring debt in these areas when you start your career could make it difficult to climb out of. Its not true with all positions. A lot of healthcare positions can pay better in these areas due to what are essentially government subsidies through medicare/medicaid. You'll occasionally have some industrial organization doing specialized work people with advanced degrees can prosper in but they need to strategically target these areas.
- bonestamp2 6y ago
  That does make sense at least. The places with the least opportunity and/or desirability are going to be the cheapest.
- WillPostForFood 6y ago
  There is a lot of cheap housing in places that people are willing to live, but people need a push to change. Allowing work from home, schools, and lockdowns have been helping provide the push. Most cities have reasonable housing prices, it is just distorted by a few areas which have become extremely unaffordable. Detroit is an interesting example. People did want to live there, but as the jobs declined, so did the city. If jobs can come back, the city can come back.
- 6y ago
blockyhead 6y ago
Because people want to live in the city. I bet you can find really cheap houses in the countryside. Iirc A couple of days ago there was even a post up on HN that listed places where the government would give you land for free, and I think also some starting capital.
mgolawala 6y ago
Home prices keep reaching new heights in some areas due to: 1) Migration. Immigration from outside the country, but also internal immigration within the country from less economically vibrant parts to more economically vibrant regions. 2) Falling interest rates keeping the monthly mortgage payment the same or lower despite higher principals 3) Expectations that the price trend for homes will continue to look like the past. This expectation can lead to people buying more housing than they would normally consume. 4) Shrinking household sizes. You have gone from an average household size of 3.33 in the 1960s to an average household size of 2.53 today. That may not seem like much but you would need ~25% more housing today to accommodate the same population. 5) Larger house sizes. From a median of about 1000 sq ft in 1950 to 2300 sq ft today. The above can combine to keep pushing up house prices in some areas (as we see in the US) even as the population growth of a country stagnates.
- wishysgb 6y ago
  In my opinion the thing that is leading most to inflation in addition to your points above, is that there are way too many land lords anyone who makes a little money goes and buys a house, increasing demand.
- bobthepanda 6y ago
  Also add; limited housing development. Most new housing development after the war was gotten by turning farmlands and nature into single family houses. A lot of places have reached the limits of how far one can expand and run into some combination of geographical barriers, legal barriers (e.g. protected park or farmlands), or the barrier posed by time (most people have an upper limit of how long they are willing to commute.) The next logical step in density, subdivision of existing lots and/or intensifying into homes that accommodate two, three, four families in a place where a single family house stood, is pretty much illegal on most residential parcels in the US. Pre-zoning, neighborhoods were free to densify as they desired, so even in older single family neighborhoods there are sprinklings of slightly more intense development. But in 2021 zoning reform is hotly contested because people feel like they should have control over what their neighbors do with their land, and the overall result is that there isn’t too much developable land left.
pojzon 6y ago
Rich elites buy-out all properties/flats in cities because its a better overall investment taking to account inflation. People who slave in that situation consider themselves unhappy and thus consider moving to a houses outside of the city. Due to limited infrastructure outside of the cities -> only a part of outskirts are really habbitable for those families. The demand in this case is higher than supply. Demand is so low only because city politicians are too inefficient in providing new places with infrastructure.
com2kid 6y ago
> That's what I don't understand, if population growth is stagnant or declining, how is it these housing prices are reaching such heights? Housing prices around me are directly correlated to school quality. The same house near a good school is literally 1.5x-2x the price. The supply of good public schools is very limited. A good private school is ~20-30k a year. Figure that is worth 300k, not even counting that that over the years tuition prices will go up. So people pay to live near one of the handful of good schools. Seattle stopped busing kids awhile back, instead aiming to keep kids at "local" schools (IMHO to save money), so now unlike the opportunity I had as a kid (test well, get into a good school in the "right" part of town) the city is perpetuating generational poverty. This has the effect of making pockets of the city have well rated and poorly rated schools. Previously schools were kinda mixed in quality, good programs and teachers at many different schools. Sure some had a reputation, but now the ratings are incredibly bi-modal, and housing prices follow that distribution. Oh also in the last decade, the population has increased by 21 million. The growth rate is slowing, but it isn't zero. The way American cities are managed, it isn't possible to add sufficient housing. E.g. in 2019 around 40k people moved to the Seattle metro. 14k building permits were granted[1]. To put that in perspective, the most construction friendly city in America, Houston, approved 38k permits. (Not sure if these are for housing units, are permits overall inclusive of multi family dwellings). FWIW Dallas got ~131k new people (US Census Bureau) No surprise there is a problem. American cities are not capable of building fast enough. [1] https://www.wfaa.com/article/money/economy/dallas-fort-worth-ranks-second-new-residential-construction-report-shows/287-7e9b6117-e006-41bf-b8ed-ba0297c913f3 https://www.wfaa.com/article/money/economy/dallas-fort-worth...
- treis 6y ago
  >Housing prices around me are directly correlated to school quality. Because "school quality" is basically indistinguishable from "socio-economic status". It has little to do with the quality of buildings or teachers or other resources. It's mostly about the ability and willingness of parents to be involved in their kid's life and the standards they hold.
rayiner 6y ago
In the U.S. 1) Population continues to grow due to immigration and higher birth rates among immigrants. 2) Population is growing in some areas and declining in others, which is matched by housing prices increasing in some places but falling in others.
nradov 6y ago
To some extent homes in affluent are expensive because they are expensive. Most rich people don't want to live near poor people and so they'll pay extra for that even if it seems economically irrational.
- deleted 6y ago
  [deleted]
IkmoIkmo 6y ago
Interest rates is much of it. Just calculate the total payments for a 30y, 100k mortgage in 1980 when the interest rate was 15%. It's 455k in total. The same amount as a 300k mortgage for today's 3% interest for 30 years, also 455k total. In other words, the monthly payments / total payments are the same and thus just as affordable at 3x higher prices, simply because interest rates dropped so much. Second, there's indications of further concentration. If you have a 10x10 square of land and 100 people, you can each live on one square (spread-out) You can also all live on one square (concentrated). The price levels of the homes in the lived-squares of course grows the more we concentrate, even if total population is constant. Concentration isn't a straight-line, e.g. NY depopulated in the 80s, but does tend to arc towards further urbanisation, further concentration, further population density. In large part because cities are knowledge/network centres, and our economy is based on knowledge/networks, whereas before our economy was based on e.g. agriculture, which is the opposite of concentrated. I'd be very interested to see if that will ever change due to a working-from-home / remote-work, and even virtual reality to have meaningful social and entertainment experiences remotely. It used to be if you lived in a small town, there'd be few jobs, few bars to meet people, few concerts to go to, no cinema. Many moved to the city despite higher prices, less room, noise and pollution and crime, in search for work and social life. But with remote work and VR, the calculus might change. (not 100%, but many a little bit, enough to bring a little bit of balance to the ever-growing concentration of people in a few big cities).

whatshisface 6y ago

Because nobody wants to hold currency for extended periods of time.

rgrieselhuber 6y ago
Bingo
0xfaded 6y ago
Or more precisely, once a house attains some value beyond providing a roof over heads, the price of a house is no longer representative of a house, but a government backed asset that can never depreciate lest the pension funds fold.
- supertrope 6y ago
  A single house's price can easily go down. Even an entire city like Detroit MI can devalue. But those mortgage backed securities represent the national average. With climate change the music may suddenly stop for flood prone areas like Miami once investors stop underwriting 30 year mortgages.
blockyhead 6y ago
Not when the government is printing it by the trillions.

Clubber 6y ago

We make up for it with immigration. I believe legal immigration is well over a million a year. https://www.pewresearch.org/fact-tank/2020/08/20/key-findings-about-u-s-immigrants/ https://www.pewresearch.org/fact-tank/2020/08/20/key-finding...

amanaplanacanal 6y ago

The US is still growing its population, via immigration rather than births.

r3drock 6y ago

One explanation is rising amounts of space per person, the apartments are just getting bigger.

whatshisface 6y ago
When you watch the price of the same unit grow over time, it's not usually because the owners are building more. :)
scatters 6y ago
And decreasing household size.

usefulcat 6y ago

You can find cheap housing, the problem is it's all in places where most people don't want to live. For example, Detroit, or any of thousands of small towns all over the US. Not picking on Detroit, it's just an obvious example of a large city that used to have a much larger population.

Frost1x 6y ago
That's a sort of two way street though. In areas affordable housing exists, there often aren't many opportunities financially speaking, especially in the labor market. It's one thing to live in a city, work for awhile to bank up capital, and then move somewhere with a low COL area to live comfortably with some supplemental income from the region with knowledge of that nest egg if investments you currently have. It's an entirely different story to live in such an and accumulate enough capital to purchase a home. Often, jobs are few and far between that are competitive, even after adjusting for COL. Employers in these areas often have less competition for positions and therefor have more leverage. Acquiring debt in these areas when you start your career could make it difficult to climb out of. Its not true with all positions. A lot of healthcare positions can pay better in these areas due to what are essentially government subsidies through medicare/medicaid. You'll occasionally have some industrial organization doing specialized work people with advanced degrees can prosper in but they need to strategically target these areas.
bonestamp2 6y ago
That does make sense at least. The places with the least opportunity and/or desirability are going to be the cheapest.
WillPostForFood 6y ago
There is a lot of cheap housing in places that people are willing to live, but people need a push to change. Allowing work from home, schools, and lockdowns have been helping provide the push. Most cities have reasonable housing prices, it is just distorted by a few areas which have become extremely unaffordable. Detroit is an interesting example. People did want to live there, but as the jobs declined, so did the city. If jobs can come back, the city can come back.
6y ago

blockyhead 6y ago

Because people want to live in the city. I bet you can find really cheap houses in the countryside. Iirc A couple of days ago there was even a post up on HN that listed places where the government would give you land for free, and I think also some starting capital.

mgolawala 6y ago

Home prices keep reaching new heights in some areas due to: 1) Migration. Immigration from outside the country, but also internal immigration within the country from less economically vibrant parts to more economically vibrant regions. 2) Falling interest rates keeping the monthly mortgage payment the same or lower despite higher principals 3) Expectations that the price trend for homes will continue to look like the past. This expectation can lead to people buying more housing than they would normally consume. 4) Shrinking household sizes. You have gone from an average household size of 3.33 in the 1960s to an average household size of 2.53 today. That may not seem like much but you would need ~25% more housing today to accommodate the same population. 5) Larger house sizes. From a median of about 1000 sq ft in 1950 to 2300 sq ft today. The above can combine to keep pushing up house prices in some areas (as we see in the US) even as the population growth of a country stagnates.

wishysgb 6y ago
In my opinion the thing that is leading most to inflation in addition to your points above, is that there are way too many land lords anyone who makes a little money goes and buys a house, increasing demand.
bobthepanda 6y ago
Also add; limited housing development. Most new housing development after the war was gotten by turning farmlands and nature into single family houses. A lot of places have reached the limits of how far one can expand and run into some combination of geographical barriers, legal barriers (e.g. protected park or farmlands), or the barrier posed by time (most people have an upper limit of how long they are willing to commute.) The next logical step in density, subdivision of existing lots and/or intensifying into homes that accommodate two, three, four families in a place where a single family house stood, is pretty much illegal on most residential parcels in the US. Pre-zoning, neighborhoods were free to densify as they desired, so even in older single family neighborhoods there are sprinklings of slightly more intense development. But in 2021 zoning reform is hotly contested because people feel like they should have control over what their neighbors do with their land, and the overall result is that there isn’t too much developable land left.

pojzon 6y ago

Rich elites buy-out all properties/flats in cities because its a better overall investment taking to account inflation. People who slave in that situation consider themselves unhappy and thus consider moving to a houses outside of the city. Due to limited infrastructure outside of the cities -> only a part of outskirts are really habbitable for those families. The demand in this case is higher than supply. Demand is so low only because city politicians are too inefficient in providing new places with infrastructure.

com2kid 6y ago

> That's what I don't understand, if population growth is stagnant or declining, how is it these housing prices are reaching such heights? Housing prices around me are directly correlated to school quality. The same house near a good school is literally 1.5x-2x the price. The supply of good public schools is very limited. A good private school is ~20-30k a year. Figure that is worth 300k, not even counting that that over the years tuition prices will go up. So people pay to live near one of the handful of good schools. Seattle stopped busing kids awhile back, instead aiming to keep kids at "local" schools (IMHO to save money), so now unlike the opportunity I had as a kid (test well, get into a good school in the "right" part of town) the city is perpetuating generational poverty. This has the effect of making pockets of the city have well rated and poorly rated schools. Previously schools were kinda mixed in quality, good programs and teachers at many different schools. Sure some had a reputation, but now the ratings are incredibly bi-modal, and housing prices follow that distribution. Oh also in the last decade, the population has increased by 21 million. The growth rate is slowing, but it isn't zero. The way American cities are managed, it isn't possible to add sufficient housing. E.g. in 2019 around 40k people moved to the Seattle metro. 14k building permits were granted[1]. To put that in perspective, the most construction friendly city in America, Houston, approved 38k permits. (Not sure if these are for housing units, are permits overall inclusive of multi family dwellings). FWIW Dallas got ~131k new people (US Census Bureau) No surprise there is a problem. American cities are not capable of building fast enough. [1] https://www.wfaa.com/article/money/economy/dallas-fort-worth-ranks-second-new-residential-construction-report-shows/287-7e9b6117-e006-41bf-b8ed-ba0297c913f3 https://www.wfaa.com/article/money/economy/dallas-fort-worth...

treis 6y ago
>Housing prices around me are directly correlated to school quality. Because "school quality" is basically indistinguishable from "socio-economic status". It has little to do with the quality of buildings or teachers or other resources. It's mostly about the ability and willingness of parents to be involved in their kid's life and the standards they hold.

rayiner 6y ago

In the U.S. 1) Population continues to grow due to immigration and higher birth rates among immigrants. 2) Population is growing in some areas and declining in others, which is matched by housing prices increasing in some places but falling in others.

nradov 6y ago

To some extent homes in affluent are expensive because they are expensive. Most rich people don't want to live near poor people and so they'll pay extra for that even if it seems economically irrational.

deleted 6y ago
[deleted]

IkmoIkmo 6y ago

Interest rates is much of it. Just calculate the total payments for a 30y, 100k mortgage in 1980 when the interest rate was 15%. It's 455k in total. The same amount as a 300k mortgage for today's 3% interest for 30 years, also 455k total. In other words, the monthly payments / total payments are the same and thus just as affordable at 3x higher prices, simply because interest rates dropped so much. Second, there's indications of further concentration. If you have a 10x10 square of land and 100 people, you can each live on one square (spread-out) You can also all live on one square (concentrated). The price levels of the homes in the lived-squares of course grows the more we concentrate, even if total population is constant. Concentration isn't a straight-line, e.g. NY depopulated in the 80s, but does tend to arc towards further urbanisation, further concentration, further population density. In large part because cities are knowledge/network centres, and our economy is based on knowledge/networks, whereas before our economy was based on e.g. agriculture, which is the opposite of concentrated. I'd be very interested to see if that will ever change due to a working-from-home / remote-work, and even virtual reality to have meaningful social and entertainment experiences remotely. It used to be if you lived in a small town, there'd be few jobs, few bars to meet people, few concerts to go to, no cinema. Many moved to the city despite higher prices, less room, noise and pollution and crime, in search for work and social life. But with remote work and VR, the calculus might change. (not 100%, but many a little bit, enough to bring a little bit of balance to the ever-growing concentration of people in a few big cities).