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This is basically the housing market. Homebuilders react to high prices by continuing to build more homes as long as they can do so at a profit. Not hard to und
by rsj_hn 4y ago
This is basically the housing market. Homebuilders react to high prices by continuing to build more homes as long as they can do so at a profit. Not hard to understand. There is always overshooting. That's OK, it results in a lot of homes.
Those who complain that there isn't enough housing are complaining that they are being priced out of popular areas. It's like complaining you can't afford a BMW and have to stick with an old Ford. Housing in the U.S. is still available and home ownership rates are relatively high.
The problem is that well-paid jobs are scarce, and getting scarcer, which puts a lot of pressure on housing in the handful of areas that have well-paid jobs. But that's not a problem with the national housing market, but the local markets in hot regions, which are captive to local zoning laws in those markets. Again, not something homebuilders can address easily.
I wish people would stop talk about housing problems and instead focus on the distribution-of-jobs problem. Housing is never going to be fast enough to catch up to a hot jobs market area, and it will always end up overshooting. Moreover, as a nation, we need well paid jobs to be much more geographically diverse if we are to survive as something other than pockets of wealth surrounded by vast regions of poverty.
- danielmarkbruce 4y agoAgree with a lot of this, but the zoning problems are real. They can't be fixed by homebuilders (of any type) and local governments face perverse incentives on the issue, so it can only be solved at a state level (US). In other jurisdictions it's likely similar.
- rsj_hn 4y agoI agree that the pains of restrictive zoning are very real and punish newcomers. When I was in SF, I lived in a rent controlled unit in which there was a cranky old lady paying $800 for a 2 bedroom apartment while a young couple moved into a smaller unit in the same building and were paying $3000. They were planning on having a child, but it was really hard. Both working full time just to afford rent. That's what happens when you freeze housing supply. But the usual counterweight is to move to areas with more liberal zoning -- e.g. zoning is locally controlled and if a city wants to stop growing, then there's not much that can be done to stop them - California is trying, but there is a lot of opposition to forcing cities to grow if they don't want to. The solution is to not build a major corporate HQ in such a city, or to move the HQ to cities that embrace growth -- which is the majority. But if that doesn't happen, then good jobs only exist in areas with restrictive zoning, and that's what makes the zoning painful.
- danielmarkbruce 4y agoYup, agree. Houston is a good example. It's a bit of a chicken and egg though.
- twblalock 4y agoWe know what happens when the high-paying jobs become more geographically distributed. We saw it in Portland and Austin in the past few decades, for example: people are drawn to those places from California and housing prices go up significantly. People do that to escape the high prices in California -- but by doing so, they cause prices to increase in the places they move to, because doing so creates a sudden influx of demand from buyers who have more spending power than the people who already lived there. If the housing supply had been increased in California, fewer people would be flooding into Austin from California to buy houses.