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Why should residential property values increase anyway? It's not like the population growth in the US (overall) is staggering. Property prices the last couple o

Why should residential property values increase anyway? It's not like the population growth in the US (overall) is staggering. Property prices the last couple of decades are largely artificial. They've long been disconnected from the supply and (non-speculative) demand, that's (one important reason) why the market's been unable to solve the problem. The signal is broken.

ThrustVectoring 4y ago
> Why should residential property values increase anyway? Total non-worker consumption is equal to the unconsumed portion of total worker production, the worker-to-retiree ratio is getting worse each year, and total productivity gains are stalling. Working-age adults have to get squeezed somehow on pain of retirees voting different policies, and housing/rent/mortgage is the least flexible in terms of household budget and least politically obvious pathway for it.
ako 4y ago
Housing prices are mostly supply and demand driven, but it's the supply and demand of location, not of the building itself. Next to that, the maximum price is largely defined by how much people can and are willing to borrow with a typical income for the location and the type of building. And with location being in short supply, locations (and houses) go for maximum price. With rent going up, maximum price will come down, to keep total price the same.
- geysersam 4y ago
  > how much people can borrow This is the main factor, and it's a result of the monetary policy of the last decades. Since this number has been increasing compared to wages, it's becoming less sensible to build apartments for rental. But at the same time, those are needed to increase density and availability of affordable housing in attractive cities. It's a mess.
  - Karrot_Kream 4y ago
    It's complicated. The loose monetary policy is certainly one aspect. Another is that most American city-center residential areas are still zoned at low densities. If organic growth could lead to organic densification in central locations, there would be less impact to the housing market, but American zoning is stuck in the aftermath of WWII and is loathe to densify.
    - cloudier 4y ago
      Yep. One study^1 estimates that zoning and land use restrictions across the country leads to an (unnecessary) increase in housing costs worth 2% of the US GDP (about $400 billion). [1]: https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.32.1.3 https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.32.1.3
- tsss 4y ago
  Environmental regulations and such also artificially increase the price of older buildings because you can buy existing buildings that don't fulfil new regulations but can't build new ones. This is effectively a top-down supply restriction of low quality housing.
coffeeblack 4y ago
Because everybody wants to live in the same place. You can get houses very cheap in places that are not popular.
fredgrott 4y ago
it's the underlying FinTech of housing loans that is the systematic driver of high house prices. To get low house prices we would have to destroy Fintech of house loans which will not happen.
colinmhayes 4y ago
Well for one thing houses have gotten much bigger and nicer.
starik36 4y ago
> It's not like the population growth ... is staggering It is staggering. California in 1990 was 29 million. In 2020, it's 39 million. If this is not staggering, I don't know what is.

ThrustVectoring 4y ago

> Why should residential property values increase anyway? Total non-worker consumption is equal to the unconsumed portion of total worker production, the worker-to-retiree ratio is getting worse each year, and total productivity gains are stalling. Working-age adults have to get squeezed somehow on pain of retirees voting different policies, and housing/rent/mortgage is the least flexible in terms of household budget and least politically obvious pathway for it.

ako 4y ago

Housing prices are mostly supply and demand driven, but it's the supply and demand of location, not of the building itself. Next to that, the maximum price is largely defined by how much people can and are willing to borrow with a typical income for the location and the type of building. And with location being in short supply, locations (and houses) go for maximum price. With rent going up, maximum price will come down, to keep total price the same.

geysersam 4y ago
> how much people can borrow This is the main factor, and it's a result of the monetary policy of the last decades. Since this number has been increasing compared to wages, it's becoming less sensible to build apartments for rental. But at the same time, those are needed to increase density and availability of affordable housing in attractive cities. It's a mess.
- Karrot_Kream 4y ago
  It's complicated. The loose monetary policy is certainly one aspect. Another is that most American city-center residential areas are still zoned at low densities. If organic growth could lead to organic densification in central locations, there would be less impact to the housing market, but American zoning is stuck in the aftermath of WWII and is loathe to densify.
  - cloudier 4y ago
    Yep. One study^1 estimates that zoning and land use restrictions across the country leads to an (unnecessary) increase in housing costs worth 2% of the US GDP (about $400 billion). [1]: https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.32.1.3 https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.32.1.3
tsss 4y ago
Environmental regulations and such also artificially increase the price of older buildings because you can buy existing buildings that don't fulfil new regulations but can't build new ones. This is effectively a top-down supply restriction of low quality housing.

coffeeblack 4y ago

Because everybody wants to live in the same place. You can get houses very cheap in places that are not popular.

fredgrott 4y ago

it's the underlying FinTech of housing loans that is the systematic driver of high house prices. To get low house prices we would have to destroy Fintech of house loans which will not happen.

colinmhayes 4y ago

Well for one thing houses have gotten much bigger and nicer.

starik36 4y ago

> It's not like the population growth ... is staggering It is staggering. California in 1990 was 29 million. In 2020, it's 39 million. If this is not staggering, I don't know what is.