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Housing builders don't want prices to fall. Nor do the investors who fund new construction and buy existing houses. In other words, the general public are not t
by falcolas 3y ago
Housing builders don't want prices to fall. Nor do the investors who fund new construction and buy existing houses. In other words, the general public are not the ones you need to convince.
EDIT: Nor do existing homeowners want to see their house prices fall. So anything that relies upon them voting to change the value of their homes is a non-starter too.
Plus, houses are touted as a major investment vehicle for the average citizen. If they all go underwater due to lowered prices, it'll result in a pretty big economic crisis. So most government agencies won't want to see house prices go down too much either.
- watwut 3y agoYou kinda do, because the biggest obstacles are zoning laws and regulations.
- falcolas 3y agoIf there's one thing America has, it's space. There's plenty of land free of zoning laws and regulations right now. Also, NIMBY homeowners don't want the prices to go down either.
- orangepurple 3y agoCertain social circles wants to live near each other. Moving away simply isn't an option in their head space. It would mean abandoning what they consider their family.
- watwut 3y agoAnd it would also mean abandoning their jobs. People want and need to live where they can find jobs.
- rqtwteye 3y agoA lot of US cities are already spread out a lot. But businesses don’t spread very much but concentrate in a few hot spots. That leads to very long commutes. If remote work doesn’t become much more common people can’t move into that empty space because there is no way to earn a living there.
- HDThoreaun 3y agoThere is absolutely not space where people want to be. If you want to move to bumfuck be my guest.
- Beached 3y agothere is a surprisingly low volume of land free from zoning. most America want to.live in urban areas, which are loaded with stupid zoning laws
- jjoonathan 3y agoCompetition means they don't have to want prices to fall for prices to fall. Come on, this is capitalism 101.
- falcolas 3y agoHousing builders and investors are currently allowing 10% of the total house stock in the US sit vacant to keep the prices up. They're not competing, whether by silent agreement or individually acknowledging it's in their best interests to keep the status quo in place.
- matchbok 3y agoSimply inaccurate. Apartments and houses are opening up all the time. That % is meaningless. Some amount of vacancy is necessary.
- falcolas 3y agoWhich part? That 10% of all houses in the US are vacant? A quick Google search shows that 10% is probably low. That they're not competing? What evidence is there of this? Prices aren't falling, after all.
- kemotep 3y agoA vacant 2 bed room 1 bath house in Mansfield Ohio does not help the family of 5 in San Francisco let alone Cleveland. Where the vacancy is and the “quality” so to speak matters a lot. Additionally, some percentage of homes have to be vacant to allow someone to move into it. You will need to provide evidence that the vacancy rate of a specific market is causing prices to go higher. Citing national statistics when talking about a local issue does not help.
- dingosity 3y agoLook at my post immediately previous to yours. It links to a Lending Tree study that indicates an inverse relationship between vacancy rate and median home price. Hawaii is an obvious outlier, but interestingly, so is New Jersey. (What's going on in Jersey?) The data in this study is broken down by state; SMSA would probably be better, but I didn't spend a lot of time digging up data.
- HPsquared 3y agoHouse builders aren't the deciding factor. It's property owners.
- falcolas 3y agoThe builders and the property owners are often the same entity. Speculative house building has been a thing since forever.
- ethanbond 3y agoBuilders only temporarily own property. They don’t have a long enough horizon for the land price to make much of a difference. The neighbors who have lived in the same place for 20-30 years trying to disrupt development though…
- _0ffh 3y agoNo, but they want to profit from the existing prices, which they do by building new ones. Builders earn their money by building, not by gloating over the prices.
- falcolas 3y agoThey have 10% of their stock sitting empty, waiting for their asking prices. Builders earn their money by selling houses for what the market can bear. The act of building itself is merely a cost.
- dingosity 3y agoNot to sound too much like a marxist, but @falcolas has a point here. If builders were offering a public service, they would likely sell their new homes (condos, townhomes, high-rises, etc.) for cost plus a reasonable percentage. But new homes go into a speculation market where the exchange value of the home factors in profit by the rentier class who add nothing to the value of the transaction.
- gottorf 3y ago> the rentier class who add nothing to the value of the transaction I lived in one of the most expensive rental markets in the US for a while, so believe me, I'm not inclined to defend landlords, but the availability of rental units do serve a function. Even if we make the crazy assumption that a law forbidding the ownership of more than one residence would have resulted in a median home price one-third of what it actually was in my market, for half the time I lived there, I couldn't have afforded a down payment and a mortgage, and for the other half, I wouldn't have wanted to. There's a risk in tying up a significant chunk of your net worth in an illiquid asset. For what it's worth, I believe rent-seeking (in the economic sense) behavior should be heavily discouraged as a matter of public policy, and believe that a system of taxation that is centered around land-value tax is the best way to achieve that, at least for residences. > a public service [...] for cost plus a reasonable percentage This type of regulation only makes sense for natural monopolies like utilities and whatnot.
- 3y ago
- tootie 3y agoBuilders don't make money on the resale of existing homes. They want new homes to fetch the highest price, but they can also earn money on volume. Nothing built, nothing sold. Existing homeowners are the blocker. And increased construction doesn't mean home owner go underwater. That's a pretty extreme situation. Housing prices are unlikely to drop barring a disaster like 2007. Houses will become affordable even if the prices rise more slowly. Encouraging home ownership as a means to increase wealth really has to go away. It's the major contributing factor to the aforementioned reluctance of existing home owners.
- JohnFen 3y ago> Nor do existing homeowners want to see their house prices fall. In my area, people who own homes to live in (rather than as investments) love to see their house value fall because it reduces the amount they pay in property tax.
- rqtwteye 3y agoI don’t think so. Once your house value falls, you can’t move anywhere else.
- josefresco 3y agoIf your home value increases, because regional home values increased, you also can't move!
- HDThoreaun 3y agoMany(most?) people do not plan on ever moving.
- Beached 3y agowhy not? if my home value falls, presumably the one I'm going to move into fell as well.
- JohnFen 3y agoThat's only relevant if you intend on moving someplace else. Most people I know who own homes have no intent of ever vacating them.
- bcrosby95 3y agoIf my house value falls, broadly speaking, other ones fall. If my house value raises, broadly speaking, other ones raise. Buying a house means, generally speaking, I can kinda "guarantee" I can afford that "quality" of house. It's like having a housing share that I can exchange for another similar house.
- rqtwteye 3y ago“Plus, houses are touted as a major investment vehicle for the average citizen. If they all go underwater due to lowered prices, it'll result in a pretty big economic crisis. So most government agencies won't want to see house prices go down too much either.” That’s a big problem. A lot of peoples retirement plans rely on the value of their house. I am one of them.
- sfvisser 3y agoStarting homeowners who might want to move into a bigger home do want prices to fall as well. The loss in return of your current home is being royally offset by reduction in price when buying.
- phmqk76 3y agoSeriously. So many people have a low-information understanding of the housing market, and think that homebuilders somehow aren't rational actors. Why would people who make their money building houses be into lowering their profit margins and causing pricing shocks for their existing stock of houses that are in construction? Developers are incentivized to charge what the market will bear. It is public policy's job to reform the incentives so other market players see opportunities to build lower-priced and lower-margin housing stock - I think the best way to do this is to make public lending corporations that will provide 3% construction loans, which are far more attractive than the 8% to 10% presently charged by institutional lenders. Couple that with expedited permitting for these projects, and tie them to affordability standards, and that's a market disruption that makes sense for most people. But simply deregulating and hoping that prices will fall never, ever works.