5 ms·

It consistently shocks me how rarely this is brought up as a solution. Price of something too high? Increase the supply.

by tharne 5y ago

noneeeed 5y ago
It's been so frustrating watching people celebrating UK governments who have repeatedly failed to really tackle the supply side issues while propping up the demand side with tweaks that just increase the prices. The most amazing example of this was the stamp-duty holiday to help stimulate the market for a few months during covid. The maximum you could save was £15k. The average house price increased during that time by about £16k...
- russx2 5y ago
  They were still likely benefiting to be fair. Remember stamp duty is paid externally to the mortgage so it effectively comes off your deposit, not your loan.
cryptoz 5y ago
This is brought up all the time. There is frequently huge opposition from locals anywhere regarding increasing housing supply.
- toxik 5y ago
  And many times rightly so, living next door to a long construction project is a mistake I will only make once in my life. Utter insanity to be woken up by literal bombs going off in the bedrock.
- loeg 5y ago
  Yeah, this is why SB9/10 work - they override the problem of that vocal minority of locals.
tomkat0789 5y ago
Me too! I think the average American thinks "increase supply" means skyscrapers with apartments, rather than lower impact multiunit, mixed-use apartments/street shops that are more common in Europe. Another issue with increasing supply/density: where is every household going to park its 2-3 cars?! (Disclaimer: I've been watching tons of City Beautiful and Not Just Bikes on Youtube)
- corpdronejuly 5y ago
  The issue is that those kinds of mixed use neighborhoods are literally illegal in most American Suburbs. Strong Towns goes over this, but our zoning laws are basically designed to create and exacerbate this problem long run
- bernawil 5y ago
  people are arguing here that housing in Europe is even less affordable than in the US, so what is even the point?
  - scrollaway 5y ago
    The demand in Europe is just as high as in the US. Density is not the same however... Think about how large European cities would have to be in order to match US population at US density. We don't have as many skyscrapers here. Regardless there are plenty of reasons not to want car-centric suburbian neighbourhoods. Unwalkable, outrageously expensive to maintain, encourages car ownership and usage (yay more debt and running costs), etc.
giantg2 5y ago
Increasing supply can help some. But when you do that, you increase demand for material and labor, which can negate some of the benefit depending on what markets we're looking at. The real problem isn't supply at all, it's the distribution of supply and the choices of people to live there.
- ashtonkem 5y ago
  > The real problem isn't supply at all, it's the distribution of supply and the choices of people to live there. I’ve said this plenty of times; America has plenty of homes, it just doesn’t have enough homes where people actually want to live. You can get a home in my parents home town (which they left) for $60-100k right now. The issue is that there are no jobs and even fewer services. It was probably a great place to live 80 years ago when small towns were the norm, but now it’s shrinking, aging, and a long distance from any of the amenities that most Americans now demand.
  - km3r 5y ago
    The same problem of the house price to income ratio shows there is as much of a housing shortage in rural America as well. "Solving" housing by moving all high CoL people to rural America is just going to price out all those with lower CoL area salaries. Our vacancy rate nation wide is low, likely well within the frictional margins that need to exist for a healthy market.
    - ashtonkem 5y ago
      This is certainly happening in small cities right now, as prices skyrocket.
    - giantg2 5y ago
      "The same problem of the house price to income ratio shows there is as much of a housing shortage in rural America as well." Not necessarily. You can't use the overall picture data to make claims about localized or subcategories of data. Especially if the bulk of the people live in suburban and urban areas.
maxsilver 5y ago
Because it doesn't actually work. It helps a tiny little bit, in the places that are actually somewhat constrained (like SF/BayArea specifically). But it's not any kind of significant fix. Housing is an investment asset for stock market folks, it doesn't follow a Econ-101 understanding of "supply" and "demand" in any meaningful way. The Midwest and the South are both way ahead of California on the whole "just build more housing" thing, for example, and have been for many years. And yeah, it makes us somewhat cheaper than a coastal city if you have California dollars to burn. But our Price-to-Income-Ratio's are still in the high 5-7+ range too, just like everywhere else. We have basically zero population growth, and every single stray piece of land is getting built on right now (record high construction, record high new housing starts, for the past three years straight) and housing prices still rise 10% to 15% every single year like clockwork, with no end in sight. "Just build more" sounds really pretty, but that alone will never get housing prices back down to a real-world-affordable figure for most people.
- marvin 5y ago
  Are you saying that if the housing market has 10 million homes and 7 million people live there, prices will continue to appreciate to stratospheric levels because someone will magically appear to buy the excess 3 million properties and leave them without tenants? That's what it sounds like to me.
  - newaccount2021 5y ago
    there will never be a market with 1/3 of homes empty and surplus - where do the builders get the capital to pay for land and construction?
  - BirdieNZ 5y ago
    That does actually happen; see China, for example.
- taurath 5y ago
  We don’t build enough - density levels are extremely low compared to much of the world. Most US cities have a small downtown dense area and are surrounded by single family homes. Even the Bay Area is something like 80% single family zoned. NYC on the other hand is a good example of what you’re talking about - it’s expensive to live there and pretty dense already. But Tokyo for example had 150k housing starts on a recent year, which is more than LA, NYC, Boston, and Houston combined (source: https://www.google.com/amp/s/www.wsj.com/amp/articles/what-housing-crisis-in-japan-home-prices-stay-flat-11554210002 https://www.google.com/amp/s/www.wsj.com/amp/articles/what-h...) - amp link to get around paywall. I think there’s tons of evidence that we just don’t build enough myself. In bangkok, another market, they’re throwing up more new tall buildings every year than almost the entire USA does.

It consistently shocks me how rarely this is brought up as a solution. Price of something too high? Increase the supply.

by tharne 5y ago

It consistently shocks me how rarely this is brought up as a solution. Price of something too high? Increase the supply.

noneeeed 5y ago

It's been so frustrating watching people celebrating UK governments who have repeatedly failed to really tackle the supply side issues while propping up the demand side with tweaks that just increase the prices. The most amazing example of this was the stamp-duty holiday to help stimulate the market for a few months during covid. The maximum you could save was £15k. The average house price increased during that time by about £16k...

russx2 5y ago
They were still likely benefiting to be fair. Remember stamp duty is paid externally to the mortgage so it effectively comes off your deposit, not your loan.

cryptoz 5y ago

This is brought up all the time. There is frequently huge opposition from locals anywhere regarding increasing housing supply.

toxik 5y ago
And many times rightly so, living next door to a long construction project is a mistake I will only make once in my life. Utter insanity to be woken up by literal bombs going off in the bedrock.
loeg 5y ago
Yeah, this is why SB9/10 work - they override the problem of that vocal minority of locals.

tomkat0789 5y ago

Me too! I think the average American thinks "increase supply" means skyscrapers with apartments, rather than lower impact multiunit, mixed-use apartments/street shops that are more common in Europe. Another issue with increasing supply/density: where is every household going to park its 2-3 cars?! (Disclaimer: I've been watching tons of City Beautiful and Not Just Bikes on Youtube)

corpdronejuly 5y ago
The issue is that those kinds of mixed use neighborhoods are literally illegal in most American Suburbs. Strong Towns goes over this, but our zoning laws are basically designed to create and exacerbate this problem long run
bernawil 5y ago
people are arguing here that housing in Europe is even less affordable than in the US, so what is even the point?
- scrollaway 5y ago
  The demand in Europe is just as high as in the US. Density is not the same however... Think about how large European cities would have to be in order to match US population at US density. We don't have as many skyscrapers here. Regardless there are plenty of reasons not to want car-centric suburbian neighbourhoods. Unwalkable, outrageously expensive to maintain, encourages car ownership and usage (yay more debt and running costs), etc.

giantg2 5y ago

Increasing supply can help some. But when you do that, you increase demand for material and labor, which can negate some of the benefit depending on what markets we're looking at. The real problem isn't supply at all, it's the distribution of supply and the choices of people to live there.

ashtonkem 5y ago
> The real problem isn't supply at all, it's the distribution of supply and the choices of people to live there. I’ve said this plenty of times; America has plenty of homes, it just doesn’t have enough homes where people actually want to live. You can get a home in my parents home town (which they left) for $60-100k right now. The issue is that there are no jobs and even fewer services. It was probably a great place to live 80 years ago when small towns were the norm, but now it’s shrinking, aging, and a long distance from any of the amenities that most Americans now demand.
- km3r 5y ago
  The same problem of the house price to income ratio shows there is as much of a housing shortage in rural America as well. "Solving" housing by moving all high CoL people to rural America is just going to price out all those with lower CoL area salaries. Our vacancy rate nation wide is low, likely well within the frictional margins that need to exist for a healthy market.
  - ashtonkem 5y ago
    This is certainly happening in small cities right now, as prices skyrocket.
  - giantg2 5y ago
    "The same problem of the house price to income ratio shows there is as much of a housing shortage in rural America as well." Not necessarily. You can't use the overall picture data to make claims about localized or subcategories of data. Especially if the bulk of the people live in suburban and urban areas.

maxsilver 5y ago

Because it doesn't actually work. It helps a tiny little bit, in the places that are actually somewhat constrained (like SF/BayArea specifically). But it's not any kind of significant fix. Housing is an investment asset for stock market folks, it doesn't follow a Econ-101 understanding of "supply" and "demand" in any meaningful way. The Midwest and the South are both way ahead of California on the whole "just build more housing" thing, for example, and have been for many years. And yeah, it makes us somewhat cheaper than a coastal city if you have California dollars to burn. But our Price-to-Income-Ratio's are still in the high 5-7+ range too, just like everywhere else. We have basically zero population growth, and every single stray piece of land is getting built on right now (record high construction, record high new housing starts, for the past three years straight) and housing prices still rise 10% to 15% every single year like clockwork, with no end in sight. "Just build more" sounds really pretty, but that alone will never get housing prices back down to a real-world-affordable figure for most people.

marvin 5y ago
Are you saying that if the housing market has 10 million homes and 7 million people live there, prices will continue to appreciate to stratospheric levels because someone will magically appear to buy the excess 3 million properties and leave them without tenants? That's what it sounds like to me.
- newaccount2021 5y ago
  there will never be a market with 1/3 of homes empty and surplus - where do the builders get the capital to pay for land and construction?
- BirdieNZ 5y ago
  That does actually happen; see China, for example.
taurath 5y ago
We don’t build enough - density levels are extremely low compared to much of the world. Most US cities have a small downtown dense area and are surrounded by single family homes. Even the Bay Area is something like 80% single family zoned. NYC on the other hand is a good example of what you’re talking about - it’s expensive to live there and pretty dense already. But Tokyo for example had 150k housing starts on a recent year, which is more than LA, NYC, Boston, and Houston combined (source: https://www.google.com/amp/s/www.wsj.com/amp/articles/what-housing-crisis-in-japan-home-prices-stay-flat-11554210002 https://www.google.com/amp/s/www.wsj.com/amp/articles/what-h...) - amp link to get around paywall. I think there’s tons of evidence that we just don’t build enough myself. In bangkok, another market, they’re throwing up more new tall buildings every year than almost the entire USA does.