8 ms·

U.S. Housing Market Is Nearly 4M Homes Short of Buyer Demand

51 points by whack 6y ago

testfoobar 6y ago
Housing can't be simultaneously an investment and affordable. For current homeowners, one good way to preserve and grow the value of your home is to support policies that reduce new supply from coming on the market. New supply is prevented from coming on the market through high costs and ever expanding rules and regulations. Persistent low housing supply is the expected outcome when housing is treated as an investment.
- zamfi 6y ago
  > Housing can’t be simultaneously an investment and affordable. This just isn’t true, it is only a contradiction if the type of housing remains constant, which it does in zero-development, extreme-construction-cost markets like San Francisco where public policy forbids the modification of (almost) any housing to increase density. Here’s how it would work otherwise: family buys single family home in year A for $100k. Lives there for a while, then sells in year B for $200k. The buyer is a developer, who then constructs a larger building on that same lot consisting of 4 apartments that now each sell for $100k again. Original family gains in wealth, developer makes tidy profit, new families can still buy a place to live for $100k. All numbers inflation-adjusted, you pick A and B to make whatever return you think is reasonable. This is how densification happened almost everywhere until zoning laws went crazy mid-century. Note what you don’t get out of this arrangement: a neighborhood that doesn’t change for 40 years; the ability to live in the same type of house your parents did, in the same neighborhood, for the same price. But you could have the same amount of (indoor) space they did, and outdoor space through public parks and the like. What’s not sustainable is everyone having a suburban style detached single family home without increasing density in perpetuity. That is what leads to this contradiction. The non-density alternative is sprawl, where prices rise in long-established neighborhoods, and outlying new developments are where you can buy new houses for less—which is what you observe all over California.
  - jchonphoenix 6y ago
    If you draw out your argument inductively, I think you'll find you proved the opposite of your claim. You get smaller and smaller houses until they cannot go smaller. Side note: smaller also translates into not affordable.
    - zamfi 6y ago
      Not smaller houses — apartments that can be equally large.
  - endisneigh 6y ago
    Your example is incomplete - let’s say the lot can support up to 100 apartments, but it’s expensive to do so and profitable only in the long run. Now comes prospective buyer C who can’t afford to live there unless new developer D buys and builds. However B is ok with their profit and doesn’t sell. Unless you tax in a way such that the maximum capacity must be used (and that can be gamed easily) you’ll always run into this. This is the ideal situation but then incumbents will fight to change what maximum means. The problem is that there’s no standard. If it were said that a living space must be 300sqft + 300 soft per person things would converge, but without that you get sprawl or comfortable density. A decent compromise is locale adjusted limits but then you run into the same original issue. Rinse and repeat.
    - zamfi 6y ago
      > Unless you tax in a way such that the maximum capacity must be used Indeed, there have been proposals to address this!
  - blackoil 6y ago
    Do it a few times, and you'll reach caged houses and kowloon of Hong Kong. Not a desirable vision.
    - filoleg 6y ago
      I mean, you could also reach something like Tokyo as well, which is pretty desirable for a lot of people.
- xnx 6y ago
  Precisely. I'd love for someone to "disrupt" this sector with radically better quality at lower prices, but entrenched interests have foiled every attempt so far. I watching to see what effect a higher percentage of remote workers and ubiquity of Amazon delivery will have in the coming years (e.g. increased movement to exa-burbs and rural areas. conversion of office and retail space to apartments/condos). There's plenty of land for housing, just not affordable in the short list of most desirable spots.
- teeray 6y ago
  But it has been treated like an investment, so that’s where we have to start from with solutions. How do we put the genie back in the bottle without bankrupting everyone?
- KoftaBob 6y ago
  Why does someone's primary home need to be an investment vehicle at all?
  - foogazi 6y ago
    Doesn’t need to be, but it can Society wants stability and homeownership provides that. So owning a home is valuable - add capitalism, land, time and you get an investment whether you want it or not
  - AnimalMuppet 6y ago
    It doesn't need to be. But people look at what has happened to house prices over the last 30-50 years, and see that it has been a good investment. So people are buying houses thinking "investment plus place to live" instead of "place to live".
- belltaco 6y ago
  I wish housing was more like the market for cars. People generally don't buy cars and sit on them as an investment for years waiting for them to gain value to flip.
  - paconbork 6y ago
    The difference is we don't demand that automobile manufacturers only make "affordable" cars and people with cars can't stop new cars from being made
- candybar 6y ago
  > Housing can't be simultaneously an investment and affordable. I see this cliche often but it's simply wrong. Housing prices don't need to increase over time for housing to be a good investment, as long as the rental yield is sufficiently high relative to cost of capital.
sadmann1 6y ago
Why would anyone sell now that the dollar is getting printed in the trillions?
101001001001 6y ago
I am at the tail end of a 4 year journey of building my own house. It started with 3.5 years of research. Because of the pandemic and wildfires impacting lumber prices, this might be the worst time in a hundred years to build anything that’s made of wood.
- mistrial9 6y ago
  for the US Market, how does price inflation, local govt collusion and rent-seeking by boomers fit in, in your opinion?
  - stevehawk 6y ago
    The problem with the US market isn't really any of that.. it's the extreme shortage of raw materials due to construction booms throughout the world, but particularly in the US because money is "free" (low interest rates). Lumber is at least twice the price it was a year ago, if not more. Cement is up (so concrete is up). Rumor is that China just cut off fiberglass shipments to the US so now a lot of other tangential goods are going to go up (showers, bath tubs, hot tubs, insulation, etc). Great time to be a builder, bad time to need a building.
    - lifty 6y ago
      OP did mention price inflation as one of the factors.
  - mistrial9 6y ago
    https://www.gov.ca.gov/wp-content/uploads/2019/01/EO-N-06-19.pdf https://www.gov.ca.gov/wp-content/uploads/2019/01/EO-N-06-19...
  - deleted 6y ago
    [deleted]
- lastofthemojito 6y ago
  Is it bad enough to consider alternative materials? Concrete? Metal? Or are those solely for high-fashion, super-high-costs houses one would see on Grand Designs?
bane 6y ago
The market is quite insane right now. We have a second property we're likely to sell this year, and the market estimate is up over $70k from last year. When we talked to a realtor we were informed that it would probably move inside of 2 days with multiple competing offers. This is over 50km from the nearest major city. Buyers are waiving nearly every contingency, they know sellers basically have all the marbles right now. It's a 180 degree turnaround from 3-4 years ago when the same property would have lost us over $100k on the market. A nearly $200k markup over less than 4 years is crazy.
- sigstoat 6y ago
  > We have a second property we're likely to sell this year, and the market estimate is up over $70k from last year. When we talked to a realtor we were informed that it would probably move inside of 2 days with multiple competing offers so, if it'll go so fast, couldn't you sell for even more? i keep hearing these second hand tales of houses going under contract in <24 hours, and that seems to imply at least a few more dollars could be squeezed out of the sale.
  - awb 6y ago
    If you have 30 offers within 2 days, but then reject them all waiting for another buyer, the buyer you wait for has to outbid the 30 previous buyers to make it worthwhile. The likelihood of that is slim. Most serious buyers are ready to go in this market and will come in strong with their best offer days after it hits the market. Plus, realtors put a lot of pressure on sellers to accept an offer especially when it's over asking price. They'd rather have 2 sales a week at 98% of max price than 1 sale a week at 100% of max price.
    - brudgers 6y ago
      Realtors would rather have a sale in two days at 70% of market value than a sale at 110% in ninety days. With the quick sale they have vastly reduced expenses. No brochures, web-site pictures, open houses, etc. Fewer showings also save time. An extra $10,000 in the purchase price puts about $200 in the agent's pocket. And $9300 in the seller's.
brobdingnagians 6y ago
What are analysts saying about where this will end? Housing prices can't go up forever like this. And when the demand drops will the prices crash? I guess what I'm asking is, is it a bubble? EDIT: just a month ago there were all the stories about how San Francisco's property prices were plummeting. It seems like a wild ride.
- SavantIdiot 6y ago
  Agreed. This growth cannot continue. But I feel like I've said that before over the last 30+ years. Houses are so expensive, and rising so quickly for shite buildings, that it is unnerving. I recently looked up my first house I bought in 1991 for $100K in Emeryville and it is going for $900K now. There's no effing way I could afford to live in my old house, my salary/net-work didn't increase 10x in 30 years. This is scary as hell.
- dlp211 6y ago
  To address your edit, it is possible and perfectly reasonable for prices to be dropping in San Francisco, while still having a massive shortfall of housing units and prices to be skyrocketing elsewhere. Prices will continue to go up significantly in places that are deemed desirable to live in until the prices are so high as to deter enough demand, then price growth should stabilize somewhat or recede if the market overshot. When will this end? When there are enough houses to house people in the places they want to be housed.
  - StavrosK 6y ago
    The problem is that the people that make those places desirable to live in can no longer live in them.
- tartoran 6y ago
  What if the dollar is about to take a dip that it's never been seen before and people are locking out wealth into these homes, would that be a bad thing? I'm not talking about very expensive homes in very desired places, recently the mid covid trend to buy homes outside large cities due to not having to be in close proximity to offices made prices go up significantly. It may sound like a bad deal but if one takes a mortgage now for x amount (which seems high), that amount would mean a lot less in the not so distant future so even if prices come down a bit it might still be a potential good achievement.
fnord77 6y ago
the market is all over the place. in SF, the price of single family homes have gone to the moon, while the price of condos are down 10-33%. (yes, 33%)
fnord77 6y ago
I wonder too how much of the housing demand is for legit dwellers and how much is for money launderers looking for a safe place to park money. I've always suspected that condos in big cities are semi-fungible places to put money you want to hide from people.
- ilamont 6y ago
  Big foreign investment firms that buy office buildings, hotels and shopping centers around the world have a new favorite real-estate play: single-family homes in American suburbs. These institutions are partnering with U.S. housing companies to buy or build rental homes by the thousands. In suburban neighborhoods near cities such as Atlanta, Las Vegas and Phoenix, blocks of families are sending monthly rent checks to ventures backed by Canadian pension funds, European insurers, and Asian or Middle Eastern government-run funds. https://www.wsj.com/articles/that-suburban-home-buyer-could-be-a-foreign-government-11618306380 https://www.wsj.com/articles/that-suburban-home-buyer-could-...
burlesona 6y ago
Anybody have a billion dollars and want to go build some new cities from scratch? Seems like now would be a good time. The labor and material shortages are definitely complicating factors, but historically the biggest problem is that places with a lot of jobs tend to not permit much housing to be built in the first place, thus the recent labor and material problems are merely compounding a regulatory created deficit. Edit: to riff on this more, in most of the world you can make decent bricks by baking the dirt underneath your feet (not quite that easy, but close). A lot of places also have ample quarryable stone. So if you had sufficient capital and a bit of know how to get it started, you could set up a new city with a largely local material supply. You’d have to import some labor, but labor shortages are more a function of regional wages than of there literally being no one around willing to work. The hardest part is the location, as you’d need to find a place that was close enough to vibrant economic centers to pull in jobs, but not within the regulatory ice bath of those same places. That’s a tough one, but there are some places that could work.
- TameAntelope 6y ago
  I have neither the capital nor the skillset required to do this, but if I heard of something like this actually taking place in a way that looked like it had a reasonable chance of success, I'd sweep the floors just to be part of it.
  - burlesona 6y ago
    Same here. I think it’s time for a new model city, oriented to pedestrians plus micro mobility, running on green power, and with some pandemic firebreaks designed in. More affordable and entrepreneurial. In the same way that Levittown set the template for the following 50+ years, I think we’re hungry for a new model for the next few generations of human habitat. Building that is my life dream, but I have yet to figure out a way to do it without quantities of capital that I don’t have access to, so instead I post on HN :)
- Gibbon1 6y ago
  > Anybody have a billion dollars and want to go build some new cities from scratch? Seems like now would be a good time. Something I found out. In the ten years after WWII the Federal government used it's WWII command economy powers to force builders to create new housing. I think I've come down on the side that the current fad of monetarism plus the free market doesn't provide enough house stock. And reliably creates price bubbles.
b1gtuna 6y ago
This is frustrating. After realizing I can only afford a small condo in Metro Vancouver area, I moved to a low COL city (relatively) 3 years ago. While the prices are still somewhat affordable from the West Coast standard, prices have gone up significantly in the past year alone.
- marto1 6y ago
  > This is frustrating. Understatement of the century. People started very bloody revolutions for much less.
the_economist 6y ago
According to the U.S. census the US is building houses at the fastest pace since 2006. About 1.74 million housing units per year. https://eyeonhousing.org/2021/04/housing-starts-spring-forward-in-march/ https://eyeonhousing.org/2021/04/housing-starts-spring-forwa...
mjevans 6y ago
Only 10 years short? This has been happening for far longer than just the last economic downturn / recession(?). Even then there both weren't the right type of houses being built nor enough housing.
sakopov 6y ago
I know virtually nothing about real estate and this question might seem dumb. I hear people are paying in the excess of $100K over asking prices on homes in some areas. Are these exuberantly high prices offsetting low interest rates for buyers?
vannevar 6y ago
"Demand" is a bit misleading right now. A friend of mine put her place up for sale in Houston and 80% of the offers she got were investors. I suspect that it's not so much about actual housing demand, but the same huge appetite for investment that is driving the stock market boom.
- alert0 6y ago
  There is a ton of money exiting the bond market looking for yield, this is driving up stocks reducing earnings. Probably a lot of people exiting their previous investments looking for places to park their cash. I'm in this boat.
- AnimalMuppet 6y ago
  And that's going to further mess up the housing supply for people who want to buy instead of rent.
  - brundolf 6y ago
    I wonder if property tax could be stratified so people who actually live in their property pay less than outside investors? If something doesn't change, we may be careening towards a dark deepening of economic inequality.
    - timw4mail 6y ago
      It exists, it's called the Homestead exemption.
      - AnimalMuppet 6y ago
        I looked that up. It seems to apply to shielding part of the equity in your house during bankruptcy, which seems to be unrelated to brundolf's comment about property taxes. Are there states that have different tax rates for lived-in and rented property? If so, can you supply some specifics?
- comeonseriously 6y ago
rmah 6y ago
I was speaking to a friend who works in the real estate side of banking and he informed me that the shortage was partly due to the foreclosure protection currently in place. He said that once that's lifted, a LOT of resident real estate will be entering the market. In short, if you own now and are thinking about selling in the next 6 to 12 months, sell sooner rather than later.
Shadonototro 6y ago
what a boring civilization we built nothing make sense, and nothing is fair
zamfi 6y ago
We have made it extremely expensive to build new housing in much of the United States. Between Byzantine development regulations, density and growth caps, local zoning boards that allow any development to be dragged through years of negotiation as long as neighbors show up for meetings, the actual “building” part is very hard to get to. Beyond the cost of lawyers, years of property taxes paid while negotiations stall, etc., the years-long timescale of these developments also makes financing hard to come by, limiting the number of projects in progress at any given time. No surprise that the result is not enough housing, and a huge increase in price: demand is growing and relatively inelastic — the population keeps going up and everyone needs housing!

51 points by whack 6y ago

Housing can't be simultaneously an investment and affordable. For current homeowners, one good way to preserve and grow the value of your home is to support policies that reduce new supply from coming on the market. New supply is prevented from coming on the market through high costs and ever expanding rules and regulations. Persistent low housing supply is the expected outcome when housing is treated as an investment.

zamfi 6y ago
> Housing can’t be simultaneously an investment and affordable. This just isn’t true, it is only a contradiction if the type of housing remains constant, which it does in zero-development, extreme-construction-cost markets like San Francisco where public policy forbids the modification of (almost) any housing to increase density. Here’s how it would work otherwise: family buys single family home in year A for $100k. Lives there for a while, then sells in year B for $200k. The buyer is a developer, who then constructs a larger building on that same lot consisting of 4 apartments that now each sell for $100k again. Original family gains in wealth, developer makes tidy profit, new families can still buy a place to live for $100k. All numbers inflation-adjusted, you pick A and B to make whatever return you think is reasonable. This is how densification happened almost everywhere until zoning laws went crazy mid-century. Note what you don’t get out of this arrangement: a neighborhood that doesn’t change for 40 years; the ability to live in the same type of house your parents did, in the same neighborhood, for the same price. But you could have the same amount of (indoor) space they did, and outdoor space through public parks and the like. What’s not sustainable is everyone having a suburban style detached single family home without increasing density in perpetuity. That is what leads to this contradiction. The non-density alternative is sprawl, where prices rise in long-established neighborhoods, and outlying new developments are where you can buy new houses for less—which is what you observe all over California.
- jchonphoenix 6y ago
  If you draw out your argument inductively, I think you'll find you proved the opposite of your claim. You get smaller and smaller houses until they cannot go smaller. Side note: smaller also translates into not affordable.
  - zamfi 6y ago
    Not smaller houses — apartments that can be equally large.
- endisneigh 6y ago
  Your example is incomplete - let’s say the lot can support up to 100 apartments, but it’s expensive to do so and profitable only in the long run. Now comes prospective buyer C who can’t afford to live there unless new developer D buys and builds. However B is ok with their profit and doesn’t sell. Unless you tax in a way such that the maximum capacity must be used (and that can be gamed easily) you’ll always run into this. This is the ideal situation but then incumbents will fight to change what maximum means. The problem is that there’s no standard. If it were said that a living space must be 300sqft + 300 soft per person things would converge, but without that you get sprawl or comfortable density. A decent compromise is locale adjusted limits but then you run into the same original issue. Rinse and repeat.
  - zamfi 6y ago
    > Unless you tax in a way such that the maximum capacity must be used Indeed, there have been proposals to address this!
- blackoil 6y ago
  Do it a few times, and you'll reach caged houses and kowloon of Hong Kong. Not a desirable vision.
  - filoleg 6y ago
    I mean, you could also reach something like Tokyo as well, which is pretty desirable for a lot of people.
xnx 6y ago
Precisely. I'd love for someone to "disrupt" this sector with radically better quality at lower prices, but entrenched interests have foiled every attempt so far. I watching to see what effect a higher percentage of remote workers and ubiquity of Amazon delivery will have in the coming years (e.g. increased movement to exa-burbs and rural areas. conversion of office and retail space to apartments/condos). There's plenty of land for housing, just not affordable in the short list of most desirable spots.
teeray 6y ago
But it has been treated like an investment, so that’s where we have to start from with solutions. How do we put the genie back in the bottle without bankrupting everyone?
KoftaBob 6y ago
Why does someone's primary home need to be an investment vehicle at all?
- foogazi 6y ago
  Doesn’t need to be, but it can Society wants stability and homeownership provides that. So owning a home is valuable - add capitalism, land, time and you get an investment whether you want it or not
- AnimalMuppet 6y ago
  It doesn't need to be. But people look at what has happened to house prices over the last 30-50 years, and see that it has been a good investment. So people are buying houses thinking "investment plus place to live" instead of "place to live".
belltaco 6y ago
I wish housing was more like the market for cars. People generally don't buy cars and sit on them as an investment for years waiting for them to gain value to flip.
- paconbork 6y ago
  The difference is we don't demand that automobile manufacturers only make "affordable" cars and people with cars can't stop new cars from being made
candybar 6y ago
> Housing can't be simultaneously an investment and affordable. I see this cliche often but it's simply wrong. Housing prices don't need to increase over time for housing to be a good investment, as long as the rental yield is sufficiently high relative to cost of capital.

sadmann1 6y ago

Why would anyone sell now that the dollar is getting printed in the trillions?

101001001001 6y ago

I am at the tail end of a 4 year journey of building my own house. It started with 3.5 years of research. Because of the pandemic and wildfires impacting lumber prices, this might be the worst time in a hundred years to build anything that’s made of wood.

mistrial9 6y ago
for the US Market, how does price inflation, local govt collusion and rent-seeking by boomers fit in, in your opinion?
- stevehawk 6y ago
  The problem with the US market isn't really any of that.. it's the extreme shortage of raw materials due to construction booms throughout the world, but particularly in the US because money is "free" (low interest rates). Lumber is at least twice the price it was a year ago, if not more. Cement is up (so concrete is up). Rumor is that China just cut off fiberglass shipments to the US so now a lot of other tangential goods are going to go up (showers, bath tubs, hot tubs, insulation, etc). Great time to be a builder, bad time to need a building.
  - lifty 6y ago
    OP did mention price inflation as one of the factors.
- mistrial9 6y ago
  https://www.gov.ca.gov/wp-content/uploads/2019/01/EO-N-06-19.pdf https://www.gov.ca.gov/wp-content/uploads/2019/01/EO-N-06-19...
- deleted 6y ago
  [deleted]
lastofthemojito 6y ago
Is it bad enough to consider alternative materials? Concrete? Metal? Or are those solely for high-fashion, super-high-costs houses one would see on Grand Designs?

bane 6y ago

The market is quite insane right now. We have a second property we're likely to sell this year, and the market estimate is up over $70k from last year. When we talked to a realtor we were informed that it would probably move inside of 2 days with multiple competing offers. This is over 50km from the nearest major city. Buyers are waiving nearly every contingency, they know sellers basically have all the marbles right now. It's a 180 degree turnaround from 3-4 years ago when the same property would have lost us over $100k on the market. A nearly $200k markup over less than 4 years is crazy.

sigstoat 6y ago
> We have a second property we're likely to sell this year, and the market estimate is up over $70k from last year. When we talked to a realtor we were informed that it would probably move inside of 2 days with multiple competing offers so, if it'll go so fast, couldn't you sell for even more? i keep hearing these second hand tales of houses going under contract in <24 hours, and that seems to imply at least a few more dollars could be squeezed out of the sale.
- awb 6y ago
  If you have 30 offers within 2 days, but then reject them all waiting for another buyer, the buyer you wait for has to outbid the 30 previous buyers to make it worthwhile. The likelihood of that is slim. Most serious buyers are ready to go in this market and will come in strong with their best offer days after it hits the market. Plus, realtors put a lot of pressure on sellers to accept an offer especially when it's over asking price. They'd rather have 2 sales a week at 98% of max price than 1 sale a week at 100% of max price.
  - brudgers 6y ago
    Realtors would rather have a sale in two days at 70% of market value than a sale at 110% in ninety days. With the quick sale they have vastly reduced expenses. No brochures, web-site pictures, open houses, etc. Fewer showings also save time. An extra $10,000 in the purchase price puts about $200 in the agent's pocket. And $9300 in the seller's.

brobdingnagians 6y ago

What are analysts saying about where this will end? Housing prices can't go up forever like this. And when the demand drops will the prices crash? I guess what I'm asking is, is it a bubble? EDIT: just a month ago there were all the stories about how San Francisco's property prices were plummeting. It seems like a wild ride.

SavantIdiot 6y ago
Agreed. This growth cannot continue. But I feel like I've said that before over the last 30+ years. Houses are so expensive, and rising so quickly for shite buildings, that it is unnerving. I recently looked up my first house I bought in 1991 for $100K in Emeryville and it is going for $900K now. There's no effing way I could afford to live in my old house, my salary/net-work didn't increase 10x in 30 years. This is scary as hell.
dlp211 6y ago
To address your edit, it is possible and perfectly reasonable for prices to be dropping in San Francisco, while still having a massive shortfall of housing units and prices to be skyrocketing elsewhere. Prices will continue to go up significantly in places that are deemed desirable to live in until the prices are so high as to deter enough demand, then price growth should stabilize somewhat or recede if the market overshot. When will this end? When there are enough houses to house people in the places they want to be housed.
- StavrosK 6y ago
  The problem is that the people that make those places desirable to live in can no longer live in them.
tartoran 6y ago
What if the dollar is about to take a dip that it's never been seen before and people are locking out wealth into these homes, would that be a bad thing? I'm not talking about very expensive homes in very desired places, recently the mid covid trend to buy homes outside large cities due to not having to be in close proximity to offices made prices go up significantly. It may sound like a bad deal but if one takes a mortgage now for x amount (which seems high), that amount would mean a lot less in the not so distant future so even if prices come down a bit it might still be a potential good achievement.

fnord77 6y ago

the market is all over the place. in SF, the price of single family homes have gone to the moon, while the price of condos are down 10-33%. (yes, 33%)

fnord77 6y ago

I wonder too how much of the housing demand is for legit dwellers and how much is for money launderers looking for a safe place to park money. I've always suspected that condos in big cities are semi-fungible places to put money you want to hide from people.

ilamont 6y ago
Big foreign investment firms that buy office buildings, hotels and shopping centers around the world have a new favorite real-estate play: single-family homes in American suburbs. These institutions are partnering with U.S. housing companies to buy or build rental homes by the thousands. In suburban neighborhoods near cities such as Atlanta, Las Vegas and Phoenix, blocks of families are sending monthly rent checks to ventures backed by Canadian pension funds, European insurers, and Asian or Middle Eastern government-run funds. https://www.wsj.com/articles/that-suburban-home-buyer-could-be-a-foreign-government-11618306380 https://www.wsj.com/articles/that-suburban-home-buyer-could-...

burlesona 6y ago

Anybody have a billion dollars and want to go build some new cities from scratch? Seems like now would be a good time. The labor and material shortages are definitely complicating factors, but historically the biggest problem is that places with a lot of jobs tend to not permit much housing to be built in the first place, thus the recent labor and material problems are merely compounding a regulatory created deficit. Edit: to riff on this more, in most of the world you can make decent bricks by baking the dirt underneath your feet (not quite that easy, but close). A lot of places also have ample quarryable stone. So if you had sufficient capital and a bit of know how to get it started, you could set up a new city with a largely local material supply. You’d have to import some labor, but labor shortages are more a function of regional wages than of there literally being no one around willing to work. The hardest part is the location, as you’d need to find a place that was close enough to vibrant economic centers to pull in jobs, but not within the regulatory ice bath of those same places. That’s a tough one, but there are some places that could work.

TameAntelope 6y ago
I have neither the capital nor the skillset required to do this, but if I heard of something like this actually taking place in a way that looked like it had a reasonable chance of success, I'd sweep the floors just to be part of it.
- burlesona 6y ago
  Same here. I think it’s time for a new model city, oriented to pedestrians plus micro mobility, running on green power, and with some pandemic firebreaks designed in. More affordable and entrepreneurial. In the same way that Levittown set the template for the following 50+ years, I think we’re hungry for a new model for the next few generations of human habitat. Building that is my life dream, but I have yet to figure out a way to do it without quantities of capital that I don’t have access to, so instead I post on HN :)
Gibbon1 6y ago
> Anybody have a billion dollars and want to go build some new cities from scratch? Seems like now would be a good time. Something I found out. In the ten years after WWII the Federal government used it's WWII command economy powers to force builders to create new housing. I think I've come down on the side that the current fad of monetarism plus the free market doesn't provide enough house stock. And reliably creates price bubbles.

b1gtuna 6y ago

This is frustrating. After realizing I can only afford a small condo in Metro Vancouver area, I moved to a low COL city (relatively) 3 years ago. While the prices are still somewhat affordable from the West Coast standard, prices have gone up significantly in the past year alone.

marto1 6y ago
> This is frustrating. Understatement of the century. People started very bloody revolutions for much less.

the_economist 6y ago

According to the U.S. census the US is building houses at the fastest pace since 2006. About 1.74 million housing units per year. https://eyeonhousing.org/2021/04/housing-starts-spring-forward-in-march/ https://eyeonhousing.org/2021/04/housing-starts-spring-forwa...

mjevans 6y ago

Only 10 years short? This has been happening for far longer than just the last economic downturn / recession(?). Even then there both weren't the right type of houses being built nor enough housing.

sakopov 6y ago

I know virtually nothing about real estate and this question might seem dumb. I hear people are paying in the excess of $100K over asking prices on homes in some areas. Are these exuberantly high prices offsetting low interest rates for buyers?

vannevar 6y ago

"Demand" is a bit misleading right now. A friend of mine put her place up for sale in Houston and 80% of the offers she got were investors. I suspect that it's not so much about actual housing demand, but the same huge appetite for investment that is driving the stock market boom.

alert0 6y ago
There is a ton of money exiting the bond market looking for yield, this is driving up stocks reducing earnings. Probably a lot of people exiting their previous investments looking for places to park their cash. I'm in this boat.
AnimalMuppet 6y ago
And that's going to further mess up the housing supply for people who want to buy instead of rent.
- brundolf 6y ago
  I wonder if property tax could be stratified so people who actually live in their property pay less than outside investors? If something doesn't change, we may be careening towards a dark deepening of economic inequality.
  - timw4mail 6y ago
    It exists, it's called the Homestead exemption.
    - AnimalMuppet 6y ago
      I looked that up. It seems to apply to shielding part of the equity in your house during bankruptcy, which seems to be unrelated to brundolf's comment about property taxes. Are there states that have different tax rates for lived-in and rented property? If so, can you supply some specifics?
comeonseriously 6y ago

rmah 6y ago

I was speaking to a friend who works in the real estate side of banking and he informed me that the shortage was partly due to the foreclosure protection currently in place. He said that once that's lifted, a LOT of resident real estate will be entering the market. In short, if you own now and are thinking about selling in the next 6 to 12 months, sell sooner rather than later.

Shadonototro 6y ago

what a boring civilization we built nothing make sense, and nothing is fair

zamfi 6y ago

We have made it extremely expensive to build new housing in much of the United States. Between Byzantine development regulations, density and growth caps, local zoning boards that allow any development to be dragged through years of negotiation as long as neighbors show up for meetings, the actual “building” part is very hard to get to. Beyond the cost of lawyers, years of property taxes paid while negotiations stall, etc., the years-long timescale of these developments also makes financing hard to come by, limiting the number of projects in progress at any given time. No surprise that the result is not enough housing, and a huge increase in price: demand is growing and relatively inelastic — the population keeps going up and everyone needs housing!