9 ms·

> should be heavy state intervention on it, preferably by doing the same as Vienna, which is holding >40% of the renting stock and charging according to income

> should be heavy state intervention on it, preferably by doing the same as Vienna, which is holding >40% of the renting stock and charging according to income This is great policy if you want to make housing unaffordable. When supply is less than demand, prices go up. Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). Capping prices prevents the price mechanism from working, leaving a shortage of housing. > Rent is the main detractor of disposable income which hurts the rest of the economy I’m happy (perhaps not quite the right word…) to pay rent. I don’t want to own property. It’s a large, illiquid investment with high transaction fees, carry costs, and concentration risk. My landlord takes all the risk of owning the property (prices don’t always go up after all).

sokoloff 4y ago
Is housing unaffordable in Vienna? If so, your mechanism might explain it. If housing is not unaffordable in Vienna, your explanation seems likely to be missing something.
- spaniard89277 4y ago
  Housing is becoming unnafordable in Vienna again... because they didn't keep up with their program and now public offer is way behind of what should be.
madaxe_again 4y ago
Unless of course your builders wise up and work together to produce the bare minimum of housing stock required in order to keep prices rising, as they don’t want to flood with stock and reduce demand.
madsbuch 4y ago
> Those price increases incentivize builders to increase the housing stock Ahh yes, walking around in NY seeing building projects to increase the supply of housing in the 4th dimension where land is plentiful and the rivers are clean /s
- nickles 4y ago
  > Ahh yes, walking around in NY seeing building projects to increase the supply of housing in the 4th dimension where land is plentiful and the rivers are clean /s Have you tried obtaining building permits in NYC? My understanding is that it’s not easy. If you don’t allow builders to construct new housing then you won’t get new housing, regardless of price level.
  - oezi 4y ago
    Free market advocates always find the next culprit why the market can't deliver. I can only speak of Berlin where land prices and construction prices have increased by demand so much, that new construction is coming in at 4x than 10 years ago (from 2k per sqm to 8k). I don't see how the market is really solving anything here.
    - nickles 4y ago
      > Free market advocates always find the next culprit why the market can't deliver. I advocate for the free market because it's been the most reliable way of elevating humans from subsistence levels of consumption and improving their quality of life. It's been the driving force in elevating billions of people from poverty over recent decades. I'd wager that most people, free market advocates or otherwise, would consider that a good thing. To be clear, there are cases where markets fail. In those cases, government intervention can actually produce more efficient outcomes. Consider the case of basic research. Private enterprises would have be foolish to pay for glowing worms and shrimp treadmills; there's just no clear payoff. But this seemingly silly research is critical to progress. For example, the research on glowing worms (GFP added to C. Elegans) ended up winning the Nobel Prize and is crucial for observing biological processes in living organisms. > new construction is coming in at 4x than 10 years ago... I don't see how the market is really solving anything here. It sounds like high prices incentivized builders to increase construction by 400% over 10 years? That seems like the price mechanism is driving an increase in housing supply, exactly as one would want when there's a shortage of housing.
      - 4y ago
Victerius 4y ago
Rents are already through the roof. If that hasn't incentivized builders to build enough housing to lower rents in places people want to live, why not go for the centralized solution? CMV The "let the free market take care of it; government intervention can only make it unaffordable" view is standing on extremely shaky legs today.
- nickles 4y ago
  > The "let the free market take care of it; government intervention can only make it unaffordable" view is standing on extremely shaky legs today. The term “NIMBY” is commonly used to describe people who prevent new construction of housing. They typically use legal maneuvers (like requiring years of environmental review) to do this. By allowing this to continue, government intervention supports unaffordable housing.
karatinversion 4y ago
> Those price increases incentivize builders to increase the housing stock Of course this does not work if building new housing is illegal, in which case you might as well have the rent control.
- nickles 4y ago
  > Of course this does not work if building new housing is illegal, in which case you might as well have the rent control. Or make it possible to build new housing. Rent control is a subsidy to existing residents to the detriment of people who would otherwise move to the area.
spaniard89277 4y ago
Yet it isn't working in most european cities. Price increases and capital holders always build behind the offer/demand curve so they get a better yield from it. Also, rent is always high enough to milk as much as possible from modal income, as demand is pretty inelastic. Also, read carefully, I don't want price control directly onto the private sector but the adminsitration controlling a big chunk of the offer.
- nickles 4y ago
  > I don't want price control directly onto the private sector but the adminsitration controlling a big chunk of the offer. If the government sets prices for 40% of the market, it’s price control by definition.
  - spaniard89277 4y ago
    It doesn't work like that, because not all property nor customer is even. A luxury apartment is not competing with a 2 bedroom public housing apartment. And there will be floating population, there will people moving in, there will be people with special needs that public housing doesn't cover, etc etc Maybe such situation would actually push investors to be innovative with housing for once. If regulations allow that, of course, which is important too.
foven 4y ago
Yet somehow this doesn't seem to materialize in any meaningful way, the price of housing has only been going up exponentially and I'm sure builders are doing their best to build more but it's not getting any cheaper.
ricardobeat 4y ago
Why would housing become unaffordable if the state intervenes? The purpose is precisely to control affordability. Prices are controlled for social housing, and flexing supply allows you to influence the free market prices. Supply is always less than demand in dense cities/countries, leaving it for the 'invisible hand' only ensures that the whole market is unaffordable and/or gentrified. Like what we are seeing in this news piece. I don't know exactly how it works here in the Netherlands, but as far as I understand the government leases land to the constructors at its own pace, with strict quotas on social housing, to let vs to buy ratio, and free-market properties. It isn't perfect (massive bubble on the free market right now) but seems to work well enough.
- nickles 4y ago
  > Supply is always less than demand in dense cities/countries, leaving it for the 'invisible hand' only ensures that the whole market is unaffordable and/or gentrified Is that the case in Detroit? I’d wager there’s substantially more supply than demand. > It isn't perfect (massive bubble right now) but seems to work well enough. If there’s a massive bubble then it seems like that system didn’t control prices.
  - ricardobeat 4y ago
    > If there’s a massive bubble then it seems like that system didn’t control prices. The bubble mostly affects new home buyers, which are the ones who need the least protection. Rent is inflation-adjusted and can't be raised at will, so there is a very long delay between market prices increasing and most tenants actually bearing the cost. Everyone living in social housing still has a home, and won't be evicted so that another person can come in to pay 2x the rent. Seems pretty good to me. I don't know much about Detroit but it seems to demonstrate that the simple supply-demand model does not reflect reality. Prices should have dropped significantly, but instead it followed the same curve as the rest of the USA, with those $500 properties being a localized phenomenon.
    - nickles 4y ago
      > The bubble mostly affects new home buyers, which are the ones who need the least protection. So now you (or more generally the government) get to decide who is more deserving of appropriately priced housing? Why do new home buyers need less protection? > Rent is inflation-adjusted and can't be raised at will, so there is a very long delay between market prices increasing and most tenants actually bearing the cost. This is precisely the problem with this policy. When price doesn’t feed through to the market, the market can’t adjust. People simultaneously argue that the free market doesn’t work while endorsing policies that prevent the market from working. > it seems to demonstrate that the simple supply-demand model does not reflect reality The population dropped from its peak by 1.2mm people. Prices subsequently fell so much that it was possible to buy houses for $500. That’s exactly what the supply/demand model would predict.
f17 4y ago
> Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). Capping prices prevents the price mechanism from working, leaving a shortage of housing. The issue, empirically, is that (a) we don't see the right housing being built, and (b) we don't see quality housing being built. We see a lot of high-end luxury units being built, but what we need are more 1- and 2-bedroom units within 20 minutes (preferably, by affordable public transit) of where people work. We also see a lot of large (and therefore expensive) but cheaply built McMansions that'll be falling down in 20-40 years, so the long-term picture of the housing stock is not improved. What we need is for the government to step in and build affordable housing as a floor at a controlled price ("commie blocks"). No one will be forced to live in one, of course, but they'll be an option; the rich can still buy property on the market if they're so inclined. > My landlord takes all the risk of owning the property (prices don’t always go up after all). If you own your house and control your geography (i.e., you'll never be forced to move due to economic inopportunity) then you have the truly risk-free position. Renters are at much higher risk (log transform, Kelly Criterion) than landlords, because real estate costs are such a high percentage of their budgets. The problem, of course, is that owning a house, while it gives you a zero beta to the housing market in theory, still does have the risks you described. For one thing, other people can do things that damage your house's value--both its subjective value as a place to live, and its objective market price--such as building highways and obstructing sun/view. The other issue is that, in today's hypercompetitive world where in decent employment every job search is national (and possibly international) it's impossible to control your geography... you could be laid off and forced to relocate to get your next position. So, you're not wrong in general. I think it's a wise financial decision for a young person to keep renting one's place--as opposed to renting money to buy a place--but I also think it's inaccurate to imply that landlords are taking more risks than they really are. It really gets on my nerves when rich people and employers talk about how they're "taking all the risk" and therefore deserve more, when the truth is that the poor (involuntarily) take all the risk, because each $100 means so much more to them.
jahnu 4y ago
Been this way in Vienna for many many decades and still it’s a very affordable city. So I dunno, I do believe this can go wrong if implemented incorrectly and has done in some cities, but it hasn’t here yet and looks fairly stable for the foreseeable too.
- ipaddr 4y ago
  How many new units have been added over the last 20 years?
  - jahnu 4y ago
    Not sure exactly but the population has grown from 1.5 million in 2001 to 1.9 million in 2021 Some of that growth fit into existing stock but since the late 90s there has been a lot of new neighbourhoods built. The city generally plans ahead, even building public transport like metro out before it is completely needed. E.g. out to this new neighbourhood https://en.m.wikipedia.org/wiki/Aspern https://en.m.wikipedia.org/wiki/Aspern
- namdnay 4y ago
  I think that’s more due to the relative attractiveness of the cities. London, NYC, Paris etc have become extremely expensive because they’re world cities, attracting huge amounts of people and jobs. That’s not really the case for Vienna, or Glasgow, or Riga etc
  - jahnu 4y ago
    In fact Vienna has had a huge population growth in the past 20 years
    - rr888 4y ago
      Fewer people than 100 years ago, compare that to Bay Area. https://en.wikipedia.org/wiki/Vienna#Demographics https://en.wikipedia.org/wiki/Vienna#Demographics
Baloo 4y ago
>Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). This is not reality though. Here in the UK our housing is in major crisis because people simply cannot afford the insane price increases. Pretty much everyone I know shares their living situation, on their own they would not be able to afford basic amenities. The guardian today published an article showing: >Average monthly rental payments were now 40% higher than they were 10 years ago, while typical mortgage payments for the same properties were up 13%. Landlords and property owners are hiking the prices way beyond reasonable value, in some parts of the country rent is up by over 20% in the last year alone. By your logic there should be an incentive for builders to increase the housing stock, but private enterprise aren't building anymore homes now than they were 10, 20, 30, 40, 50 years ago. We do however have a situation where the average mortgage is about £900 per month, whereas the average rent has skyrocketed to £1600 per month (£1100 outside of London, £2200 in London). Available rental stock is down 25%, with demand up 5%. It's great for property speculators, buy-to-let landlords and property developers, people are offering above asking prices simply to secure a home. >My landlord takes all the risk of owning the property (prices don’t always go up after all). Sure there is risk, but when you charge 30% more than you repay for the mortgage, while at the same time property prices rise 75% in 10 years, it's safe to say that the cash cow is being thoroughly milked for every last drop and as a result many people are suffering. Ultimately there shouldn't be 'risk', this mindset is a big problem. Homes are a fundamental, basic human need. Using them as an investment method, business model or means to hedge against inflation, is causing rampant speculation and quite honestly extorting people that have no other choice, exploiting vulnerable families that need a home. It should be an extremely tightly controlled market, with sufficient funding to ensure that quality & affordable housing is available for everyone.
- wahnfrieden 4y ago
  - feet 4y ago
    Yea, and they're disagreeing. What are you trying to say?
eatsyourtacos 4y ago
>When supply is less than demand, prices go up Question though... why, exactly does that have to be the case? Especially with something like housing where say there is mostly a fixed supply at any point and you can't just turn a machine on/off to produce more. The only reason the prices go up is because of greed basically- because people say "hey I can just charge more and people will pay more!". And there in lies the bullshit of the free market once again. It always benefits the people with money, who can afford to pay that amount more "just to get what they want". The last few years in particular have made me so tired of hearing about people talk about supply & demand like it is some unarguable hard scientific fact. It's not even close to that. It just represents how much people like to price gouge because "they can" >Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). Capping prices prevents the price mechanism from working, leaving a shortage of housing. And the following part of this is also just more bullshit. I'm not saying you are "wrong", but you say it as if that is how things have to work and there is no other alternative. Every word of what you said is based on greed and squeezing the most you possibly can from people. Please realize that.
- nhooyr 4y ago
  There is a machine... Of thousands of workers. If those people can't make more money, they have less incentive to recruit more and build more housing stock faster... Such price signals are a basic element of the efficiency of the free market.
- ElevenLathe 4y ago
  I largely agree, but if there is a scarce good (where there is less of it available than people want -- i.e. supply is less than demand) then we have to ration it /somehow/. The American way is by bidding up the price, so whoever is willing to pay the most money gets it. The Soviet way was by queuing, so whoever gets in line first gets it. We could also do it by lottery. We can come up with any number of schemes and most of them are "fairer" than market pricing, but they do all involve the "price" going up in some sense. Either you pay more in money, or in time, or in luck, but the price has increased because there are more people chasing the stuff than there is stuff to chase.
ehnto 4y ago
We're all very aware of how the economics should play out, but look around you, it's not working that way in a bunch of places. That's because houses are being used as investment vehicles, with rentals being thoroughly flogged because they know people have no choice but to pay. No amount of building will help if the value of the property is not intrinsically linked to the supply and demand of places to live for people who want to live there, but is instead linked or at least heavily influenced by what investors with increased buying capacity are willing to pay.
- nickles 4y ago
  > No amount of building will help if the value of the property is not intrinsically linked to the supply and demand Building new houses is intrinsically linked to supply. When you build a house, that increases the supply of housing. NIMBYs oppose new construction precisely to prevent the value of their properties from decreasing.
  - ehnto 4y ago
    Sorry, of course that's correct. I was trying to articulate that the supply and demand, as a whole, is not currently a marketplace for people with housing to sell to those who want to be housed (in many places). It's a marketplace dominated by investors and landlords, and people who want to be housed are having to stretch their funds as far as they possibly can to keep up with the market currently being made by investors and landlords.
    - nickles 4y ago
      > people who want to be housed are having to stretch their funds as far as they possibly can to keep up with the market currently being made by investors and landlords. I'm sympathetic to the difficulties people are facing right now, and I've seen the stories about housing being purchased by investors. The issue is that the data doesn't seem to indicate a structural change in ownership [0]. Home ownership appears to have peaked at 69.4% in 2004 and now sits at 65.4%, the same level as in 1980. [0] https://fred.stlouisfed.org/series/RSAHORUSQ156S https://fred.stlouisfed.org/series/RSAHORUSQ156S

sokoloff 4y ago

Is housing unaffordable in Vienna? If so, your mechanism might explain it. If housing is not unaffordable in Vienna, your explanation seems likely to be missing something.

spaniard89277 4y ago
Housing is becoming unnafordable in Vienna again... because they didn't keep up with their program and now public offer is way behind of what should be.

madaxe_again 4y ago

Unless of course your builders wise up and work together to produce the bare minimum of housing stock required in order to keep prices rising, as they don’t want to flood with stock and reduce demand.

madsbuch 4y ago

> Those price increases incentivize builders to increase the housing stock Ahh yes, walking around in NY seeing building projects to increase the supply of housing in the 4th dimension where land is plentiful and the rivers are clean /s

nickles 4y ago
> Ahh yes, walking around in NY seeing building projects to increase the supply of housing in the 4th dimension where land is plentiful and the rivers are clean /s Have you tried obtaining building permits in NYC? My understanding is that it’s not easy. If you don’t allow builders to construct new housing then you won’t get new housing, regardless of price level.
- oezi 4y ago
  Free market advocates always find the next culprit why the market can't deliver. I can only speak of Berlin where land prices and construction prices have increased by demand so much, that new construction is coming in at 4x than 10 years ago (from 2k per sqm to 8k). I don't see how the market is really solving anything here.
  - nickles 4y ago
    > Free market advocates always find the next culprit why the market can't deliver. I advocate for the free market because it's been the most reliable way of elevating humans from subsistence levels of consumption and improving their quality of life. It's been the driving force in elevating billions of people from poverty over recent decades. I'd wager that most people, free market advocates or otherwise, would consider that a good thing. To be clear, there are cases where markets fail. In those cases, government intervention can actually produce more efficient outcomes. Consider the case of basic research. Private enterprises would have be foolish to pay for glowing worms and shrimp treadmills; there's just no clear payoff. But this seemingly silly research is critical to progress. For example, the research on glowing worms (GFP added to C. Elegans) ended up winning the Nobel Prize and is crucial for observing biological processes in living organisms. > new construction is coming in at 4x than 10 years ago... I don't see how the market is really solving anything here. It sounds like high prices incentivized builders to increase construction by 400% over 10 years? That seems like the price mechanism is driving an increase in housing supply, exactly as one would want when there's a shortage of housing.
    - 4y ago

Victerius 4y ago

Rents are already through the roof. If that hasn't incentivized builders to build enough housing to lower rents in places people want to live, why not go for the centralized solution? CMV The "let the free market take care of it; government intervention can only make it unaffordable" view is standing on extremely shaky legs today.

nickles 4y ago
> The "let the free market take care of it; government intervention can only make it unaffordable" view is standing on extremely shaky legs today. The term “NIMBY” is commonly used to describe people who prevent new construction of housing. They typically use legal maneuvers (like requiring years of environmental review) to do this. By allowing this to continue, government intervention supports unaffordable housing.

karatinversion 4y ago

> Those price increases incentivize builders to increase the housing stock Of course this does not work if building new housing is illegal, in which case you might as well have the rent control.

nickles 4y ago
> Of course this does not work if building new housing is illegal, in which case you might as well have the rent control. Or make it possible to build new housing. Rent control is a subsidy to existing residents to the detriment of people who would otherwise move to the area.

spaniard89277 4y ago

Yet it isn't working in most european cities. Price increases and capital holders always build behind the offer/demand curve so they get a better yield from it. Also, rent is always high enough to milk as much as possible from modal income, as demand is pretty inelastic. Also, read carefully, I don't want price control directly onto the private sector but the adminsitration controlling a big chunk of the offer.

nickles 4y ago
> I don't want price control directly onto the private sector but the adminsitration controlling a big chunk of the offer. If the government sets prices for 40% of the market, it’s price control by definition.
- spaniard89277 4y ago
  It doesn't work like that, because not all property nor customer is even. A luxury apartment is not competing with a 2 bedroom public housing apartment. And there will be floating population, there will people moving in, there will be people with special needs that public housing doesn't cover, etc etc Maybe such situation would actually push investors to be innovative with housing for once. If regulations allow that, of course, which is important too.

foven 4y ago

Yet somehow this doesn't seem to materialize in any meaningful way, the price of housing has only been going up exponentially and I'm sure builders are doing their best to build more but it's not getting any cheaper.

ricardobeat 4y ago

Why would housing become unaffordable if the state intervenes? The purpose is precisely to control affordability. Prices are controlled for social housing, and flexing supply allows you to influence the free market prices. Supply is always less than demand in dense cities/countries, leaving it for the 'invisible hand' only ensures that the whole market is unaffordable and/or gentrified. Like what we are seeing in this news piece. I don't know exactly how it works here in the Netherlands, but as far as I understand the government leases land to the constructors at its own pace, with strict quotas on social housing, to let vs to buy ratio, and free-market properties. It isn't perfect (massive bubble on the free market right now) but seems to work well enough.

nickles 4y ago
> Supply is always less than demand in dense cities/countries, leaving it for the 'invisible hand' only ensures that the whole market is unaffordable and/or gentrified Is that the case in Detroit? I’d wager there’s substantially more supply than demand. > It isn't perfect (massive bubble right now) but seems to work well enough. If there’s a massive bubble then it seems like that system didn’t control prices.
- ricardobeat 4y ago
  > If there’s a massive bubble then it seems like that system didn’t control prices. The bubble mostly affects new home buyers, which are the ones who need the least protection. Rent is inflation-adjusted and can't be raised at will, so there is a very long delay between market prices increasing and most tenants actually bearing the cost. Everyone living in social housing still has a home, and won't be evicted so that another person can come in to pay 2x the rent. Seems pretty good to me. I don't know much about Detroit but it seems to demonstrate that the simple supply-demand model does not reflect reality. Prices should have dropped significantly, but instead it followed the same curve as the rest of the USA, with those $500 properties being a localized phenomenon.
  - nickles 4y ago
    > The bubble mostly affects new home buyers, which are the ones who need the least protection. So now you (or more generally the government) get to decide who is more deserving of appropriately priced housing? Why do new home buyers need less protection? > Rent is inflation-adjusted and can't be raised at will, so there is a very long delay between market prices increasing and most tenants actually bearing the cost. This is precisely the problem with this policy. When price doesn’t feed through to the market, the market can’t adjust. People simultaneously argue that the free market doesn’t work while endorsing policies that prevent the market from working. > it seems to demonstrate that the simple supply-demand model does not reflect reality The population dropped from its peak by 1.2mm people. Prices subsequently fell so much that it was possible to buy houses for $500. That’s exactly what the supply/demand model would predict.

f17 4y ago

> Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). Capping prices prevents the price mechanism from working, leaving a shortage of housing. The issue, empirically, is that (a) we don't see the right housing being built, and (b) we don't see quality housing being built. We see a lot of high-end luxury units being built, but what we need are more 1- and 2-bedroom units within 20 minutes (preferably, by affordable public transit) of where people work. We also see a lot of large (and therefore expensive) but cheaply built McMansions that'll be falling down in 20-40 years, so the long-term picture of the housing stock is not improved. What we need is for the government to step in and build affordable housing as a floor at a controlled price ("commie blocks"). No one will be forced to live in one, of course, but they'll be an option; the rich can still buy property on the market if they're so inclined. > My landlord takes all the risk of owning the property (prices don’t always go up after all). If you own your house and control your geography (i.e., you'll never be forced to move due to economic inopportunity) then you have the truly risk-free position. Renters are at much higher risk (log transform, Kelly Criterion) than landlords, because real estate costs are such a high percentage of their budgets. The problem, of course, is that owning a house, while it gives you a zero beta to the housing market in theory, still does have the risks you described. For one thing, other people can do things that damage your house's value--both its subjective value as a place to live, and its objective market price--such as building highways and obstructing sun/view. The other issue is that, in today's hypercompetitive world where in decent employment every job search is national (and possibly international) it's impossible to control your geography... you could be laid off and forced to relocate to get your next position. So, you're not wrong in general. I think it's a wise financial decision for a young person to keep renting one's place--as opposed to renting money to buy a place--but I also think it's inaccurate to imply that landlords are taking more risks than they really are. It really gets on my nerves when rich people and employers talk about how they're "taking all the risk" and therefore deserve more, when the truth is that the poor (involuntarily) take all the risk, because each $100 means so much more to them.

jahnu 4y ago

Been this way in Vienna for many many decades and still it’s a very affordable city. So I dunno, I do believe this can go wrong if implemented incorrectly and has done in some cities, but it hasn’t here yet and looks fairly stable for the foreseeable too.

ipaddr 4y ago
How many new units have been added over the last 20 years?
- jahnu 4y ago
  Not sure exactly but the population has grown from 1.5 million in 2001 to 1.9 million in 2021 Some of that growth fit into existing stock but since the late 90s there has been a lot of new neighbourhoods built. The city generally plans ahead, even building public transport like metro out before it is completely needed. E.g. out to this new neighbourhood https://en.m.wikipedia.org/wiki/Aspern https://en.m.wikipedia.org/wiki/Aspern
namdnay 4y ago
I think that’s more due to the relative attractiveness of the cities. London, NYC, Paris etc have become extremely expensive because they’re world cities, attracting huge amounts of people and jobs. That’s not really the case for Vienna, or Glasgow, or Riga etc
- jahnu 4y ago
  In fact Vienna has had a huge population growth in the past 20 years
  - rr888 4y ago
    Fewer people than 100 years ago, compare that to Bay Area. https://en.wikipedia.org/wiki/Vienna#Demographics https://en.wikipedia.org/wiki/Vienna#Demographics

Baloo 4y ago

>Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). This is not reality though. Here in the UK our housing is in major crisis because people simply cannot afford the insane price increases. Pretty much everyone I know shares their living situation, on their own they would not be able to afford basic amenities. The guardian today published an article showing: >Average monthly rental payments were now 40% higher than they were 10 years ago, while typical mortgage payments for the same properties were up 13%. Landlords and property owners are hiking the prices way beyond reasonable value, in some parts of the country rent is up by over 20% in the last year alone. By your logic there should be an incentive for builders to increase the housing stock, but private enterprise aren't building anymore homes now than they were 10, 20, 30, 40, 50 years ago. We do however have a situation where the average mortgage is about £900 per month, whereas the average rent has skyrocketed to £1600 per month (£1100 outside of London, £2200 in London). Available rental stock is down 25%, with demand up 5%. It's great for property speculators, buy-to-let landlords and property developers, people are offering above asking prices simply to secure a home. >My landlord takes all the risk of owning the property (prices don’t always go up after all). Sure there is risk, but when you charge 30% more than you repay for the mortgage, while at the same time property prices rise 75% in 10 years, it's safe to say that the cash cow is being thoroughly milked for every last drop and as a result many people are suffering. Ultimately there shouldn't be 'risk', this mindset is a big problem. Homes are a fundamental, basic human need. Using them as an investment method, business model or means to hedge against inflation, is causing rampant speculation and quite honestly extorting people that have no other choice, exploiting vulnerable families that need a home. It should be an extremely tightly controlled market, with sufficient funding to ensure that quality & affordable housing is available for everyone.

wahnfrieden 4y ago
- feet 4y ago
  Yea, and they're disagreeing. What are you trying to say?

eatsyourtacos 4y ago

>When supply is less than demand, prices go up Question though... why, exactly does that have to be the case? Especially with something like housing where say there is mostly a fixed supply at any point and you can't just turn a machine on/off to produce more. The only reason the prices go up is because of greed basically- because people say "hey I can just charge more and people will pay more!". And there in lies the bullshit of the free market once again. It always benefits the people with money, who can afford to pay that amount more "just to get what they want". The last few years in particular have made me so tired of hearing about people talk about supply & demand like it is some unarguable hard scientific fact. It's not even close to that. It just represents how much people like to price gouge because "they can" >Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). Capping prices prevents the price mechanism from working, leaving a shortage of housing. And the following part of this is also just more bullshit. I'm not saying you are "wrong", but you say it as if that is how things have to work and there is no other alternative. Every word of what you said is based on greed and squeezing the most you possibly can from people. Please realize that.

nhooyr 4y ago
There is a machine... Of thousands of workers. If those people can't make more money, they have less incentive to recruit more and build more housing stock faster... Such price signals are a basic element of the efficiency of the free market.
ElevenLathe 4y ago
I largely agree, but if there is a scarce good (where there is less of it available than people want -- i.e. supply is less than demand) then we have to ration it /somehow/. The American way is by bidding up the price, so whoever is willing to pay the most money gets it. The Soviet way was by queuing, so whoever gets in line first gets it. We could also do it by lottery. We can come up with any number of schemes and most of them are "fairer" than market pricing, but they do all involve the "price" going up in some sense. Either you pay more in money, or in time, or in luck, but the price has increased because there are more people chasing the stuff than there is stuff to chase.

ehnto 4y ago

We're all very aware of how the economics should play out, but look around you, it's not working that way in a bunch of places. That's because houses are being used as investment vehicles, with rentals being thoroughly flogged because they know people have no choice but to pay. No amount of building will help if the value of the property is not intrinsically linked to the supply and demand of places to live for people who want to live there, but is instead linked or at least heavily influenced by what investors with increased buying capacity are willing to pay.

nickles 4y ago
> No amount of building will help if the value of the property is not intrinsically linked to the supply and demand Building new houses is intrinsically linked to supply. When you build a house, that increases the supply of housing. NIMBYs oppose new construction precisely to prevent the value of their properties from decreasing.
- ehnto 4y ago
  Sorry, of course that's correct. I was trying to articulate that the supply and demand, as a whole, is not currently a marketplace for people with housing to sell to those who want to be housed (in many places). It's a marketplace dominated by investors and landlords, and people who want to be housed are having to stretch their funds as far as they possibly can to keep up with the market currently being made by investors and landlords.
  - nickles 4y ago
    > people who want to be housed are having to stretch their funds as far as they possibly can to keep up with the market currently being made by investors and landlords. I'm sympathetic to the difficulties people are facing right now, and I've seen the stories about housing being purchased by investors. The issue is that the data doesn't seem to indicate a structural change in ownership [0]. Home ownership appears to have peaked at 69.4% in 2004 and now sits at 65.4%, the same level as in 1980. [0] https://fred.stlouisfed.org/series/RSAHORUSQ156S https://fred.stlouisfed.org/series/RSAHORUSQ156S