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> 5. Housing construction isn’t keeping up This is sufficient to explain why prices are much higher than they used to be. All the other stuff is window dressin

> 5. Housing construction isn’t keeping up This is sufficient to explain why prices are much higher than they used to be. All the other stuff is window dressing for things the author already believes about the world. Once you've admitted that we've way under-built, then you don't need any other explanations.

beerandt 5y ago
Which is a direct result of restrictive federal lending policies, which make it difficult for builders and investors to finance building rentals or spec-houses. It all goes back to Dodd-Frank. "Fixing" one regulation with another just makes unintended consequences more likely.
vineyardmike 5y ago
> we've way under-built, then you don't need any other explanation Not only that, but the other explanations become suspect. Eg. Is it true that corporations are going to own every home and turn it into vacation rentals? Obviously not, most places aren't that desirable for tourists, and the more competition, the lower the price, so the lower the return, so the lower the value as a rental. Really this goes back to under-built too -> 1. people want to vacation at location X. X doesn't have enough beds for residents and tourists. Solution? More places for everyone by building to meet demand.
- dionidium 5y ago
  In fact, companies like BlackRock et al specifically target areas where new construction is unlikely, because of NIMBYs and zoning. Why didn't investors buy up single-family homes in the 70s or 80s or 90s? Did they just decide to get greedier in 2021? No, it's precisely the high prices and lack of new construction that attracts them to these assets now, where historically it wasn't profitable. This is from the SEC filing of one such investor (Invitation Homes) [0]: > We have selected locations with strong demand drivers, high barriers to entry and high rent-growth potential. And: > We have selected markets that we believe will experience strong population, household formation and employment growth and exhibit constrained levels of new home construction. [0] https://www.sec.gov/Archives/edgar/data/1687229/000119312517029042/d260125d424b4.htm https://www.sec.gov/Archives/edgar/data/1687229/000119312517...

beerandt 5y ago

Which is a direct result of restrictive federal lending policies, which make it difficult for builders and investors to finance building rentals or spec-houses. It all goes back to Dodd-Frank. "Fixing" one regulation with another just makes unintended consequences more likely.

vineyardmike 5y ago

> we've way under-built, then you don't need any other explanation Not only that, but the other explanations become suspect. Eg. Is it true that corporations are going to own every home and turn it into vacation rentals? Obviously not, most places aren't that desirable for tourists, and the more competition, the lower the price, so the lower the return, so the lower the value as a rental. Really this goes back to under-built too -> 1. people want to vacation at location X. X doesn't have enough beds for residents and tourists. Solution? More places for everyone by building to meet demand.

dionidium 5y ago
In fact, companies like BlackRock et al specifically target areas where new construction is unlikely, because of NIMBYs and zoning. Why didn't investors buy up single-family homes in the 70s or 80s or 90s? Did they just decide to get greedier in 2021? No, it's precisely the high prices and lack of new construction that attracts them to these assets now, where historically it wasn't profitable. This is from the SEC filing of one such investor (Invitation Homes) [0]: > We have selected locations with strong demand drivers, high barriers to entry and high rent-growth potential. And: > We have selected markets that we believe will experience strong population, household formation and employment growth and exhibit constrained levels of new home construction. [0] https://www.sec.gov/Archives/edgar/data/1687229/000119312517029042/d260125d424b4.htm https://www.sec.gov/Archives/edgar/data/1687229/000119312517...