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That would be basic supply and demand, but I think we are beyond that. Demand for the product (housing) has moved beyond basic consumers (people who want to li

That would be basic supply and demand, but I think we are beyond that. Demand for the product (housing) has moved beyond basic consumers (people who want to live in them). Real estate is now a primary investment vehicle. So building more doesn't necessarily mean more houses for people to live in. Rather it will mean more investment opportunities for people seeking to move money into a "safe" asset. That is the cycle we need to break. Real estate needs to become a less stable investment vehicle. Then we can start lowering prices by building more houses.

bryondowd 5y ago
Don't most investment homes rely on tenants to offset the maintenance and tax costs of owning the home? Construct enough to meet demand for places to live and the rental market should drop, which would hurt the home-as-investment model, which in turn should bring down home prices, right?
- sandworm101 5y ago
  Not these days. In hot markets (Vancouver, SF etc) real estate tends to appreciate faster than rent. Having a tenant in a property, along with all the associated rights and obligations, makes a property more difficult to develop or sell. Once upon a time a rental unit with a good tenant was worth more than one without. These days you need to get the tenant out in order to refit and show the property to prospective buyers. Unless an owner plans to keep the property unimproved for many years, having a long-term tenant is just an inconvenience. Yearly rent is generally going to be about 1/20th the total value of the property. So if the owner plans on doing anything to improve the value of the property by more than 5% in a given year, that improvement process is worth more than having a tenant. In a market like Vancouver, where rent-to-cost ratios are even lower, a tenant paying rent is almost irrelevant in the equation.
  - WalterBright 5y ago
    > along with all the associated rights and obligations Government regulation (again) exacerbates this problem. In Seattle, landlords have to give 6 months notice for rent increases. They also are obliged to pay the tenant's relocation costs when the tenant leaves. They can't evict tenants who don't pay rent. Seattle will provide free lawyers to tenants who want to sue their landlords. So, yeah, if the real estate market is rising fast enough, it's best to not rent it.
    - adgjlsfhk1 5y ago
      Right because in a "free market" tenants have no rights. Moving costs a minimum of 1 day of work, which is not available to many working people. As such, without laws to prevent it, landlords could arbitrarily raise rents whenever they felt like it.
      - WalterBright 5y ago
        > in a "free market" tenants have no rights. Their rights are what is mutually agreed upon in the rental agreement. > without laws to prevent it, landlords could arbitrarily raise rents whenever they felt like it. Many rental contracts have clauses specifying when and how much the rent can change. Landlords can demand whatever they want, but a tenant would have to agree to it. Tenants can also demand whatever they want, but the landlord would have to agree. That's supply & demand at work.
        adgjlsfhk1 5y ago
        contacts only work because we don't live in a few market. without regulation, a contract is just a piece of paper
        WalterBright 5y ago
        Contracts are not regulations. But the government provides contract enforcement, which is an essential part of a free market.
    - 5y ago
droptablemain 5y ago
The state needs to build a slew of affordable housing. I think the market has shown quite clearly it's ill-equipped to deal with the problem. Housing needs to be built for the purpose of housing people rather than the purpose of making profit.
- simfree 5y ago
  The state building affordable and midrange housing does have precedent in Finland, where municipal employees build the majority of homes, leaving the upper mid-range and high end homes to be built by private developers. They do tightly manage where each type of residence is built, from what I hear the goal is to avoid the creation of exclusively wealthy or poor neighborhoods as their existence damages society.
- TeeMassive 5y ago
  > The state needs to build a slew of affordable housing. These have never worked and are full of pervert effects. It's at best a band aid. > I think the market has shown quite clearly it's ill-equipped to deal with the problem. > I think the market has shown quite clearly it's ill-equipped to deal with the problem. Housing needs to be built for the purpose of housing people rather than the purpose of making profit. That's a cool political slogan, however nobody will build a housing without a profit and nobody is entitled to other people's labor. Making sure that houses are not left empty and sane zoning rules are more likely to result in viable changes. Absurdly low interest rates are also to blame.
  - foerbert 5y ago
    You started by dismissing the proposed solution out of hand and then went on to attack a strawman. You do end with a couple ideas of your own, but overall I find this comment more disingenuous than not.
    - TeeMassive 5y ago
      I merely pointed obvious problems in your argument. Then your reply to my comment make accusations but has no substantive explanations at all, which also means it can be dismissed as such.
WalterBright 5y ago
> So building more doesn't necessarily mean more houses for people to live in. Of course it does. I know that some people buy homes and let them sit vacant, but that's a transitory state. A home has no value if it is not being used. To realize its value, it must be sold to someone who will live in it.
- onion2k 5y ago
  Real estate can be a store of value. It needs to be sold to liquidate the money tied up in it, but that could be years in the future. Having it sit empty until then doesn't stop the investment from working.
  - WalterBright 5y ago
    Vacant real estate can be quite a drain on your money. Vacant houses, for example, attract squatters, thieves and vandals. They still cost property taxes, insurance, upkeep, and your time.
    - onion2k 5y ago
      If you buy a $5m house in a place where the property prices double in 10 years (eg some parts of London), it can still be worthwhile no matter what else happens.
      - WalterBright 5y ago
        It's even more worthwhile to collect rent on it for 10 years. How much rent can you accrue in 10 years on a posh $5m house? A price doubling in 10 years is only a 7% rate of return, which is below what the stock market in the US averages. (Prices may double, but you've got inflation, taxes, insurance, vandalism, theft, maintenance expenses, and non-trivial amounts of your time in the meantime. None of this is free.)
- 8note 5y ago
  It has to be sold to somebody who while buy it* They don't have to live in it either, just sell it to somebody else who will buy it
davidw 5y ago
> Real estate is now a primary investment vehicle. So building more doesn't necessarily mean more houses It says right in the SEC filings that places that build enough housing are a threat to the investments of companies like Blackrock. https://www.vox.com/platform/amp/22524829/wall-street-housing-market-blackrock-bubble https://www.vox.com/platform/amp/22524829/wall-street-housin... It's a good investment because we don't build enough homes.
chmsky00 5y ago
Supply and demand took a back seat to hoarding assets to prop up investor value. Taken literally the government is engaged in class warfare by forcing the public to engage in labor for private enterprise to prosper. America is effectively a caste system, abstracting a persons value into a net worth, focused on gossip, and gaming semantics, very similarly to religious tribes. Murder rates have come down generally speaking, over the centuries. The cycle we need to break is letting millions starve and go homeless. We refuse to see it as equivalent to other human atrocities political capture by selfish, bitter men and women. We need a pivot to new core values entirely. My preference would be along the lines of prioritizing biological/medical health of individuals and setting aside superfluous economic activity. But good luck passing laws favored by the public (polling has shown a majority support universal healthcare for years now). Work stoppages will force austerity on aristocrats. History is pretty clear that’s what it takes to move the needle politically. Gaming house prices is, to borrow Greers area/perimeter metaphor for programming, hacking the area of the established perimeter. Futurists have been predicting collapse of nation states and a re-emergence of the city-state by 2050 for a while now. Often leaning on environmental concern and the lack of Federal exigency to tackle the problem. Perhaps they’re onto something.

bryondowd 5y ago

Don't most investment homes rely on tenants to offset the maintenance and tax costs of owning the home? Construct enough to meet demand for places to live and the rental market should drop, which would hurt the home-as-investment model, which in turn should bring down home prices, right?

sandworm101 5y ago
Not these days. In hot markets (Vancouver, SF etc) real estate tends to appreciate faster than rent. Having a tenant in a property, along with all the associated rights and obligations, makes a property more difficult to develop or sell. Once upon a time a rental unit with a good tenant was worth more than one without. These days you need to get the tenant out in order to refit and show the property to prospective buyers. Unless an owner plans to keep the property unimproved for many years, having a long-term tenant is just an inconvenience. Yearly rent is generally going to be about 1/20th the total value of the property. So if the owner plans on doing anything to improve the value of the property by more than 5% in a given year, that improvement process is worth more than having a tenant. In a market like Vancouver, where rent-to-cost ratios are even lower, a tenant paying rent is almost irrelevant in the equation.
- WalterBright 5y ago
  > along with all the associated rights and obligations Government regulation (again) exacerbates this problem. In Seattle, landlords have to give 6 months notice for rent increases. They also are obliged to pay the tenant's relocation costs when the tenant leaves. They can't evict tenants who don't pay rent. Seattle will provide free lawyers to tenants who want to sue their landlords. So, yeah, if the real estate market is rising fast enough, it's best to not rent it.
  - adgjlsfhk1 5y ago
    Right because in a "free market" tenants have no rights. Moving costs a minimum of 1 day of work, which is not available to many working people. As such, without laws to prevent it, landlords could arbitrarily raise rents whenever they felt like it.
    - WalterBright 5y ago
      > in a "free market" tenants have no rights. Their rights are what is mutually agreed upon in the rental agreement. > without laws to prevent it, landlords could arbitrarily raise rents whenever they felt like it. Many rental contracts have clauses specifying when and how much the rent can change. Landlords can demand whatever they want, but a tenant would have to agree to it. Tenants can also demand whatever they want, but the landlord would have to agree. That's supply & demand at work.
      - adgjlsfhk1 5y ago
        contacts only work because we don't live in a few market. without regulation, a contract is just a piece of paper
        WalterBright 5y ago
        Contracts are not regulations. But the government provides contract enforcement, which is an essential part of a free market.
  - 5y ago

droptablemain 5y ago

The state needs to build a slew of affordable housing. I think the market has shown quite clearly it's ill-equipped to deal with the problem. Housing needs to be built for the purpose of housing people rather than the purpose of making profit.

simfree 5y ago
The state building affordable and midrange housing does have precedent in Finland, where municipal employees build the majority of homes, leaving the upper mid-range and high end homes to be built by private developers. They do tightly manage where each type of residence is built, from what I hear the goal is to avoid the creation of exclusively wealthy or poor neighborhoods as their existence damages society.
TeeMassive 5y ago
> The state needs to build a slew of affordable housing. These have never worked and are full of pervert effects. It's at best a band aid. > I think the market has shown quite clearly it's ill-equipped to deal with the problem. > I think the market has shown quite clearly it's ill-equipped to deal with the problem. Housing needs to be built for the purpose of housing people rather than the purpose of making profit. That's a cool political slogan, however nobody will build a housing without a profit and nobody is entitled to other people's labor. Making sure that houses are not left empty and sane zoning rules are more likely to result in viable changes. Absurdly low interest rates are also to blame.
- foerbert 5y ago
  You started by dismissing the proposed solution out of hand and then went on to attack a strawman. You do end with a couple ideas of your own, but overall I find this comment more disingenuous than not.
  - TeeMassive 5y ago
    I merely pointed obvious problems in your argument. Then your reply to my comment make accusations but has no substantive explanations at all, which also means it can be dismissed as such.

WalterBright 5y ago

> So building more doesn't necessarily mean more houses for people to live in. Of course it does. I know that some people buy homes and let them sit vacant, but that's a transitory state. A home has no value if it is not being used. To realize its value, it must be sold to someone who will live in it.

onion2k 5y ago
Real estate can be a store of value. It needs to be sold to liquidate the money tied up in it, but that could be years in the future. Having it sit empty until then doesn't stop the investment from working.
- WalterBright 5y ago
  Vacant real estate can be quite a drain on your money. Vacant houses, for example, attract squatters, thieves and vandals. They still cost property taxes, insurance, upkeep, and your time.
  - onion2k 5y ago
    If you buy a $5m house in a place where the property prices double in 10 years (eg some parts of London), it can still be worthwhile no matter what else happens.
    - WalterBright 5y ago
      It's even more worthwhile to collect rent on it for 10 years. How much rent can you accrue in 10 years on a posh $5m house? A price doubling in 10 years is only a 7% rate of return, which is below what the stock market in the US averages. (Prices may double, but you've got inflation, taxes, insurance, vandalism, theft, maintenance expenses, and non-trivial amounts of your time in the meantime. None of this is free.)
8note 5y ago
It has to be sold to somebody who while buy it* They don't have to live in it either, just sell it to somebody else who will buy it

davidw 5y ago

> Real estate is now a primary investment vehicle. So building more doesn't necessarily mean more houses It says right in the SEC filings that places that build enough housing are a threat to the investments of companies like Blackrock. https://www.vox.com/platform/amp/22524829/wall-street-housing-market-blackrock-bubble https://www.vox.com/platform/amp/22524829/wall-street-housin... It's a good investment because we don't build enough homes.

chmsky00 5y ago

Supply and demand took a back seat to hoarding assets to prop up investor value. Taken literally the government is engaged in class warfare by forcing the public to engage in labor for private enterprise to prosper. America is effectively a caste system, abstracting a persons value into a net worth, focused on gossip, and gaming semantics, very similarly to religious tribes. Murder rates have come down generally speaking, over the centuries. The cycle we need to break is letting millions starve and go homeless. We refuse to see it as equivalent to other human atrocities political capture by selfish, bitter men and women. We need a pivot to new core values entirely. My preference would be along the lines of prioritizing biological/medical health of individuals and setting aside superfluous economic activity. But good luck passing laws favored by the public (polling has shown a majority support universal healthcare for years now). Work stoppages will force austerity on aristocrats. History is pretty clear that’s what it takes to move the needle politically. Gaming house prices is, to borrow Greers area/perimeter metaphor for programming, hacking the area of the established perimeter. Futurists have been predicting collapse of nation states and a re-emergence of the city-state by 2050 for a while now. Often leaning on environmental concern and the lack of Federal exigency to tackle the problem. Perhaps they’re onto something.