6 ms·

Government is one of the primary reasons why housing is so expensive. In some areas, the cost to develop a plot of land has gone up 10x in as many years. Permit

by AmVess 4y ago

Government is one of the primary reasons why housing is so expensive. In some areas, the cost to develop a plot of land has gone up 10x in as many years. Permit process is expensive and takes time. Laying utilities is expensive. Paying the myriad of fees is expensive. In one place I lived, the cost of developing a plot of land for single family use was almost $70k, and that was not an expensive state like California. And then mortgage rate hikes have to be considered. Buyers are walking away from contracts and homes being built because rate hikes made the homes unaffordable. Less government is the solution, not more.

socialismisok 4y ago
Investors owning real estate has done more to move prices up than permits. Investors buy a quarter of all stock and have an incentive to lobby for keeping supply low. The solution is more government regulation reducing the number of units big investors can own, building small public housing units throughout their cities (not big projects), and making investing in property less appealing for big players via rent control, landlord tenant laws, zoning up, etc.
- cuteboy19 4y ago
  Isn't Amazon cheaper than your local electronics store? So therefore, won't big players be able to be cheaper than smaller ones? So then what is the logic behind stopping big investors? Also don't understand the thought process behind not having big government projects
  - socialismisok 4y ago
    Big projects are considerably more specialized to maintain. You don't just need a guy with a pressure washer, you need someone who can get a whole rig hanging over the edge of the building. The plumbing, elevators, fire suppression, trash collection, heating and cooling, and electrical systems require specialists. They also centralize poverty, which has effects on the local area. The workers in those buildings need to travel all over for their work. Small, two to four story apartment buildings can largely be managed by handymen. They can be distributed throughout a city, placing them in communities that can support them. The people who live there can work in their local communities. Beyond that, their initial capital costs are lower, and it's easier to find land that is zoned for 4 story buildings than 40 story buildings. > Isn't Amazon cheaper than your local electronics store? Cheaper? Maybe. Better? Absolutely not. Amazon might save me a couple bucks, but the hassle and time dealing with quality control issues, poorly managed inventory, lack of local experience, etc makes the dollars I save disappear I into increased headaches. The thought of renting a home from Amazon vs the local bookstore is nightmarish to me.
  - joe-collins 4y ago
    Amazon is forced to compete on price because electronics supply is flexible. People can find other retailers. Even if every regulation was struck from the books tomorrow, housing supply doesn't have anywhere close to the same flexibility. It's limited by the availability of undeveloped (or redevelopable) land, and just as importantly, by the location of that land. You can't just create more land next to the metropolis of your preference. There are practical and physical limits.
    - astrange 4y ago
      You can create more houses on the same land with technology called "taller buildings", mass timber construction, single stair apartment reforms, upzoning, &c. The above comment saying corporate investors lobby for reducing supply isn't true though. It's individual old NIMBYs and small time developers who lobby for that. Big companies like BlackRock are passively investing because it's so easy when the local government already wants to help them by restricting supply, but they don't individually show up to city council meetings and lobby for this stuff. You really can defeat them by showing up. No California YIMBY policy has lost someone an election yet.
      - joe-collins 4y ago
        You're quite right! If only so much of the viable, desirable land wasn't already occupied.
        astrange 4y ago
        Many of the people currently occupying it would be happy to sell it to you so you could do infill development and they could move to Hawaii! It's just illegal to do it now. (Or they could stay in place - California requires this to be possible through "right of return" laws.)
- esoterica 4y ago
  Forcing people to pay $3000/month in rent to a small time mom and pop landlord instead of $3000/month to a REIT (owned by the 401ks of those exact same small time landlords) does nothing for either housing affordability or equity. The main political force behind restricting housing supply is incumbent homeowners, not large investors. Many types of housing are simply not feasible to build and operate except by large investors (e.g large apartment buildings), and banning entire categories of in-demand housing artificially restricts supply and drives prices up. Imagine if we banned CPUs built by large corporations. Do you think that would make CPUs cheaper or cause massive shortages and drive prices up?
joe-collins 4y ago
Existing housing is expensive because a substantial portion of the stock isn't owned by the residents. Housing is used to extract rents, by wealthy individuals or businesses, and rent-seeking drives up prices. New housing is expensive because of safety regulations, environmental regulations, and zoning restrictions. Those categories are listed in increasing order of negotiability: some zoning makes obvious sense (e.g. separating industrial areas from housing), but housing density mandates seem less defensible to me; meanwhile, I don't particularly feel like relaxing safety unless something can be demonstrated as clearly irrelevant due to age, or requiring gross overbuilding. I invite someone more fluent in the subject matter to enlighten us with the relative impact of each factor.
nine_k 4y ago
If it were so easy as "less government"! (Which, I agree, is often a good idea.) The problem is that a house is seen as in investment vehicle. Buy a house, its value will always grow, they said. So people who bought houses expect their values to grow, and loathe their values to go down even a little bit. Now the value (aka cost) of a house has grown so much that it's unaffordable for large swaths of regular working population, even well-paid. Cheaper housing is badly needed. But cheaper housing also means that "value" of existing houses will go down! Either from being next to a cheaper house, or from a general downturn on the housing market (aka housing becoming more affordable). Every house owner will hate that! And these house owners are voters. Now life savings of an old lady from the working class depend on a young family from the working class being unable to afford a similar (or any) house. We're in a pretty bad situation here :(
- astrange 4y ago
  > The problem is that a house is seen as in investment vehicle. That's not an alternative to the problem of bad regulation, it's the reason for the bad regulation. "Seen as an investment vehicle" doesn't mean "the corporations" are hoarding them, it means every old person is counting the house in their net worth, and the government tries to prop them up while at the same time providing affordable housing for the poor. This causes the "missing middle" effect, where there isn't anything in between for those of us who could theoretically buy something unsubsidized.
- phpthrowaway99 4y ago
  It can't be just that. I have the skills, tools, and basically enough cash to build what would have been a nice house on decent land in California 20 years ago. But it's nowhere near enough now. By the time you buy 2 acres on the edge of town, get all the connections to utilities you need, get everything approved and permitted, and pay for all the materials, you're well beyond what most regular people can afford. In 1998, I had a highschool friend who's mother was going to law school at 40 years old, and his dad was an employee in the construction industry. In 2 years over weekends, while the mother still paid for law school, they build a house that today is worth well over a million dollars on 1 acre. A construction worker with a wife going back to college isn't pulling that off today. If they could, they would do it full time and build one of owner builder homes and sell them. It doesn't pencil out these days at all from government fees and material costs. It's not just 'oh houses are expensive because owners want them to be'.

by AmVess 4y ago

socialismisok 4y ago

Investors owning real estate has done more to move prices up than permits. Investors buy a quarter of all stock and have an incentive to lobby for keeping supply low. The solution is more government regulation reducing the number of units big investors can own, building small public housing units throughout their cities (not big projects), and making investing in property less appealing for big players via rent control, landlord tenant laws, zoning up, etc.

cuteboy19 4y ago
Isn't Amazon cheaper than your local electronics store? So therefore, won't big players be able to be cheaper than smaller ones? So then what is the logic behind stopping big investors? Also don't understand the thought process behind not having big government projects
- socialismisok 4y ago
  Big projects are considerably more specialized to maintain. You don't just need a guy with a pressure washer, you need someone who can get a whole rig hanging over the edge of the building. The plumbing, elevators, fire suppression, trash collection, heating and cooling, and electrical systems require specialists. They also centralize poverty, which has effects on the local area. The workers in those buildings need to travel all over for their work. Small, two to four story apartment buildings can largely be managed by handymen. They can be distributed throughout a city, placing them in communities that can support them. The people who live there can work in their local communities. Beyond that, their initial capital costs are lower, and it's easier to find land that is zoned for 4 story buildings than 40 story buildings. > Isn't Amazon cheaper than your local electronics store? Cheaper? Maybe. Better? Absolutely not. Amazon might save me a couple bucks, but the hassle and time dealing with quality control issues, poorly managed inventory, lack of local experience, etc makes the dollars I save disappear I into increased headaches. The thought of renting a home from Amazon vs the local bookstore is nightmarish to me.
- joe-collins 4y ago
  Amazon is forced to compete on price because electronics supply is flexible. People can find other retailers. Even if every regulation was struck from the books tomorrow, housing supply doesn't have anywhere close to the same flexibility. It's limited by the availability of undeveloped (or redevelopable) land, and just as importantly, by the location of that land. You can't just create more land next to the metropolis of your preference. There are practical and physical limits.
  - astrange 4y ago
    You can create more houses on the same land with technology called "taller buildings", mass timber construction, single stair apartment reforms, upzoning, &c. The above comment saying corporate investors lobby for reducing supply isn't true though. It's individual old NIMBYs and small time developers who lobby for that. Big companies like BlackRock are passively investing because it's so easy when the local government already wants to help them by restricting supply, but they don't individually show up to city council meetings and lobby for this stuff. You really can defeat them by showing up. No California YIMBY policy has lost someone an election yet.
    - joe-collins 4y ago
      You're quite right! If only so much of the viable, desirable land wasn't already occupied.
      - astrange 4y ago
        Many of the people currently occupying it would be happy to sell it to you so you could do infill development and they could move to Hawaii! It's just illegal to do it now. (Or they could stay in place - California requires this to be possible through "right of return" laws.)
esoterica 4y ago
Forcing people to pay $3000/month in rent to a small time mom and pop landlord instead of $3000/month to a REIT (owned by the 401ks of those exact same small time landlords) does nothing for either housing affordability or equity. The main political force behind restricting housing supply is incumbent homeowners, not large investors. Many types of housing are simply not feasible to build and operate except by large investors (e.g large apartment buildings), and banning entire categories of in-demand housing artificially restricts supply and drives prices up. Imagine if we banned CPUs built by large corporations. Do you think that would make CPUs cheaper or cause massive shortages and drive prices up?

joe-collins 4y ago

Existing housing is expensive because a substantial portion of the stock isn't owned by the residents. Housing is used to extract rents, by wealthy individuals or businesses, and rent-seeking drives up prices. New housing is expensive because of safety regulations, environmental regulations, and zoning restrictions. Those categories are listed in increasing order of negotiability: some zoning makes obvious sense (e.g. separating industrial areas from housing), but housing density mandates seem less defensible to me; meanwhile, I don't particularly feel like relaxing safety unless something can be demonstrated as clearly irrelevant due to age, or requiring gross overbuilding. I invite someone more fluent in the subject matter to enlighten us with the relative impact of each factor.

nine_k 4y ago

If it were so easy as "less government"! (Which, I agree, is often a good idea.) The problem is that a house is seen as in investment vehicle. Buy a house, its value will always grow, they said. So people who bought houses expect their values to grow, and loathe their values to go down even a little bit. Now the value (aka cost) of a house has grown so much that it's unaffordable for large swaths of regular working population, even well-paid. Cheaper housing is badly needed. But cheaper housing also means that "value" of existing houses will go down! Either from being next to a cheaper house, or from a general downturn on the housing market (aka housing becoming more affordable). Every house owner will hate that! And these house owners are voters. Now life savings of an old lady from the working class depend on a young family from the working class being unable to afford a similar (or any) house. We're in a pretty bad situation here :(

astrange 4y ago
> The problem is that a house is seen as in investment vehicle. That's not an alternative to the problem of bad regulation, it's the reason for the bad regulation. "Seen as an investment vehicle" doesn't mean "the corporations" are hoarding them, it means every old person is counting the house in their net worth, and the government tries to prop them up while at the same time providing affordable housing for the poor. This causes the "missing middle" effect, where there isn't anything in between for those of us who could theoretically buy something unsubsidized.
phpthrowaway99 4y ago
It can't be just that. I have the skills, tools, and basically enough cash to build what would have been a nice house on decent land in California 20 years ago. But it's nowhere near enough now. By the time you buy 2 acres on the edge of town, get all the connections to utilities you need, get everything approved and permitted, and pay for all the materials, you're well beyond what most regular people can afford. In 1998, I had a highschool friend who's mother was going to law school at 40 years old, and his dad was an employee in the construction industry. In 2 years over weekends, while the mother still paid for law school, they build a house that today is worth well over a million dollars on 1 acre. A construction worker with a wife going back to college isn't pulling that off today. If they could, they would do it full time and build one of owner builder homes and sell them. It doesn't pencil out these days at all from government fees and material costs. It's not just 'oh houses are expensive because owners want them to be'.