6 ms·

Repeat after me - the private housing sector is not going to build sufficient housing stock to tank prices in... the private housing sector. The housing market

Repeat after me - the private housing sector is not going to build sufficient housing stock to tank prices in... the private housing sector. The housing market is red hot right now, and yet builders are loathe to invest in a major way, fearing a downturn that will impact their profit margins, even though they stand to make big bucks. But we somehow expect a building surge that will shift the market dynamics to make all housing worth less? The only way to incentive construction is to incentive construction. NYC HPD is an agency, for example, that has a history of providing low interest rate loans for approved projects to rehab old buildings. With borrowing costs hovering at 8%-10% for new construction projects, and with lenders tightening standards, this is the perfect time for state governments and the federal government to provide 3% construction loans, accessed in tranches after milestones are met, to facilitate not only housing on the cheaper end of the spectrum, but lower-margin housing projects that established developers and big lenders typically shy away from. Simply deregulating does not work, and it's foolish to think it would. Lower cost housing, made profitable by public lenders as a last resort, is a no-brainer that gets lost in the discussion. As is rent control, by the way. But that won't lead to the same cast of characters getting boffo bucks through deregulation, so neither option is taken seriously by Serious People.

the88doctor 3y ago
3% construction loans would majorly undermine the Fed's effort to fight inflation
- soperj 3y ago
  How? It's not 3% for everyone, it's 3% for specific projects for low income housing.
  - Empact 3y ago
    The boom gets started with an expansion of credit. The fed sets rates low, are you starting to get it? That new money is confused for real loanable funds, but it’s just inflation that’s driving the ones who invest in new projects, like housing construction. The boom plants the seeds for its future destruction. The savings aren’t real, consumption’s up too! And the grasping for resources reveals there’s too few. https://youtu.be/d0nERTFo-Sk?si=mcHcwlGi-TPaf5q- https://youtu.be/d0nERTFo-Sk?si=mcHcwlGi-TPaf5q- The claim being that to back a loan with new “printed” money is necessarily inflationary. Loans backed with saved/invested funds are non-inflationary, because the saver gives up their ability to consume with those funds, in proportion with the consumption the borrower takes on.
- RC_ITR 3y ago
  Excluding shelter, inflation is already bellow 2%. Not building enough housing is majorly undermining the Fed's effort to fight inflation.
  - the88doctor 3y ago
    Not sure what data you're looking at, but that's completely off. Trailing 12 month food inflation is over 4%. Transportation inflation is over 10%. Services excluding energy are up 5.9%.
    - RC_ITR 3y ago
      Sure those are other numbers, but the number I’m looking at is inflation ex-shelter for the most recent month? [0]. To be clear, housing is categorized as a service and transportation inflation is 1.6% [1] Not sure why you think I’m completely off but I would be curious to see links. [0]https://fred.stlouisfed.org/graph/?g=18UVC https://fred.stlouisfed.org/graph/?g=18UVC [1] https://fred.stlouisfed.org/graph/?g=18UVL https://fred.stlouisfed.org/graph/?g=18UVL
- phmqk76 3y ago
  Nope. It would be a massive pressure-relief valve on inflation, so much of which is in housing expenses, not just post-COVID, but for decades.
justrealist 3y ago
> fearing a downturn that will impact their profit margins The obvious answer is for the Fed to give clear guidance on when rates can go back to dropping. There's no mystery why builders are pulling back; people can't get mortgages. We don't need a new complicated system, there are easy fiscal knobs to turn.
- the_optimist 3y ago
  They cannot do this because doing so would eliminate the ambiguous feedback loop on “expectations” that is intended to exist and ultimately under their credibility in the longer run.
bemusedthrow75 3y ago
> Repeat after me - the private housing sector is not going to build sufficient housing stock to tank prices in... the private housing sector. This. In the UK in particular there are so few housebuilders working at scale that they effectively have an oligopoly. And they turn off the tap as quickly as OPEC do.
- deleted 3y ago
  [deleted]
- the_optimist 3y ago
  Are these groups impairing their future profit interest, discounted at the cost of capital, by building more homes? You assert the answer is ‘yes.’ Why?
  - bemusedthrow75 3y ago
    It doesn't take much imagination to understand that the handful of companies who control house-building and therefore house prices might have a variety of reasons to slow down the building of houses that have nothing do to with direct profit. Because they exert power over more than just the market price by doing so. But since you're imagining words into my mouth you ought to have the imaginative capacity to figure that out for yourself.
hn_throwaway_99 3y ago
> The housing market is red hot right now Sorry to be harsh, but what planet was this written from? The housing market in the US is largely frozen - many people bought at peak prices over the pandemic years at rock bottom interest rates, so now they basically can't move - they simply can't afford the same amount of house at today's rates, and many would have to lower their prices in an attempt to sell in this higher rate market. The fact that employment is still relatively high means most people aren't forced to sell, and thus prices remain unaffordably high in many cities. Edit: And rent control? Virtually every economist of all ideological stripes agrees that rent control is ultimately self defeating in the long term. And just look what happens with people that live in rent-controlled cities. Families hang on to those apartments like they're diamonds, and all it does is create a world of "haves vs. have nots", where it's like a big lottery to get a rent controlled apartment, but meanwhile you've disincentivized builders from building any new stock.
- coding123 3y ago
  While that may be true, it is also true that the market is red hot right now - the prices are still going up for the stock that IS available.
  - lostmsu 3y ago
    It is not hot. What you describe is called thawing.
  - deleted 3y ago
    [deleted]
  - hn_throwaway_99 3y ago
    That's not what a "red hot market" means. And the price gains are not universal. Median housing prices in the Austin metro fell 15% from May 2022 to May 2023.
    - bob_theslob646 3y ago
      "And the price gains are not universal. Median housing prices in the Austin metro fell 15% from May 2022 to May 2023" Why do you think that happened? Demand was less than supply or the prices they were asking for were outrageous or they built to many homes. Housing is a very tough area to analyze as a whole because of state rules regarding mortgages being assumable
the_optimist 3y ago
You characterize the private sector as a monolithic decision-making entity, like the government. That’s a fundamental misunderstanding and mischaracterization. There is a collection of fiercely competing interests that balances. Right now, everyone who is able to build a new house is doing so, at significant profit interest. There’s an entire subsector of the economy that is “developers and home builders.” Do you presume these people somehow sit on their hands at the command of some other group?
- akavi 3y ago
  Well yes, but the "other group" commanding them to do so is municipal governments, at the behest of existing property owners.
RC_ITR 3y ago
A reminder to all that 80% of Singapore's population lives in housing built by the government [0] That's right, business-friendly small-government Singapore came to this realization decades ago. [0]https://www.bloomberg.com/news/articles/2020-07-08/behind-the-design-of-singapore-s-low-cost-housing https://www.bloomberg.com/news/articles/2020-07-08/behind-th...
pydry 3y ago
The problem is land. The private sector isnt going to make new land. Nobody makes land. Not in the private sector. It'll build apartments on freed up land but it won't make new land. If private investors dont lose money on inefficiently used land then they will hoard it as jealously as a goldbug hoards gold or a crypto bro hoards bitcoin. Right now one theoretically could build a mansion in London with 100 rooms and pay $1500/year in property taxes. This isnt theoretical. I live about a kilometer away from a Russian oligarch who did exactly that and that is indeed how little he pays in tax on it. We can either jack up property taxes or jack up land taxes but either way until land hoarding is made a shortcut to bankruptcy then the housing crisis will only ever get worse.
- sofixa 3y ago
  > Nobody makes land The Dutch do.
- xnx 3y ago
  Plenty of land if everyone didn't try and fit in the same dozen metro areas.
- phmqk76 3y ago
  We used to build cities in America. Our grandparents' generation got brand new roads, brand new houses, brand new schools, etc. There is a concept of being at capacity, and there are areas that have reached that capacity, where the roads can comfortably carry X number of cars, where density is enough to support a local economy and industry, and the quality of life is good. Rather than trying to cram 5 pounds of crap into a 10 pound bag, building new cities in proximity to economic megalopolises (first as a crutch to support the population of the new city) with easy transportation between the two is something that California has a great track record of, for example, that you don't see in the Northeast. Irvine is a great semi-recent example of that. This is development done correctly, not cramming as many people into a mature area as possible, and then whining that NIBMYism makes living there expensive when the infrastructure of a city or region is at capacity. And what happens when you can't build anymore, like on the island of Manhattan? You regulate rents to protect housing for the economically-diverse population of people who live there. This is all not that complicated, but all we hear about is this deregulation model that doesn't make any sense when you game it out two steps ahead.
beebmam 3y ago
Housing barely appreciates above inflation. About 4% on average, yearly. It would be better if we didn't interfere in the market, or there are going to be some nasty consequences.
- bemusedthrow75 3y ago
  I can't read the FT article to see whether it is based on domestic stories here UK or whether they are addressing this from a US perspective. But what you're saying is historically far from true in the UK, at least. Over the last seventy years, UK house prices have increased by on average 300% in real terms. This isn't barely outpacing inflation, surely.
  - fennecfoxy 3y ago
    Don't worry dude, you're right: https://pearsonblog.campaignserver.co.uk/wp-content/uploads/3.-Nominal-and-real-UK-house-prices.png https://pearsonblog.campaignserver.co.uk/wp-content/uploads/... (https://pearsonblog.campaignserver.co.uk/tag/house-price-inflation/ https://pearsonblog.campaignserver.co.uk/tag/house-price-inf...). Kiwi moved to the UK and housing market is just insane here, not even just London. Not only have house prices outpaces inflation (lack of new being built, housing being used as "investments" etc) but also stagnant wages. The only reason I'll ever be able to afford a smallish house here is being on a tech salary; take average London wage here...and without generational wealth transfer they _cannot_ buy a house. Even with generational wealth transfer, our London salary friend will have to buy a house _outside_ london and commute (or wfh). It's not a "hot market" it's just the haves have a vested interest in keeping the prices high for the have-nots. Just look at how landlords reacted to tenants getting some basic rights (that we've had in NZ for ages) "the sky is falling". And all of this is for terraced houses at best, sharing a wall with neighbours, not detached at all, maybe you get a backyard maybe not. All made out of brick and built in the 40s-60s for the most part - and falling apart because of this. Never have I seen so much scaffolding since I moved to the UK. There are still a few great things about living in the UK, but the housing market (amongst other things, wage gap, classism, corruption, population political apathy) is an absolute disgrace.
  - 3y ago
HDThoreaun 3y ago
> yet builders are loathe to invest in a major way This is not true in areas that make it easy to build housing. The reality is that builders are loath to get caught up in NIMBY bullshit that stops them from building after they dump a million on bureaucratic nonsense, not that they are trying to protect housing prices.
voisin 3y ago
> the private housing sector is not going to build sufficient housing stock to tank prices in... the private housing sector. > yet builders are loathe to invest in a major way, fearing a downturn that will impact their profit margins, even though they stand to make big bucks. The second quote doesn’t flow from the first. The second quote is correct - builders aren’t building not because they don’t want to tank housing prices, but because of concerns about the economy. In a capitalist system with thousands of players, it there are expectations of profits there will be construction even if it drives down the profits of the industry as a whole (that’s the free market, eliminating excess profits). The issue has nothing to do with mass collusion to keep prices high and everything to do with concerns about the economy and the current interest rate environment.
- phmqk76 3y ago
  The second quote isn't entirely related to the first. "Sufficient housing stock to tank prices" is an enormous amount of housing, the likes of which are not contemplated by traditional builders, who are out to build high profit margin housing at prices the market will bear. That's the system that needs disruption. It's not de jure collusion, it's a mature industry with mature players who have been on the search for blockbuster profits in recent memory. The average home size has skyrocketed over the last forty years, builders and their financiers are no longer content to make a living building homes, they want to hit home runs every time. It's time to incentivize smaller players in the market and to steer them towards building cheaper housing with smaller profit margins.
deleted 3y ago
[deleted]
nostrademons 3y ago
"Nothing great was ever built without a speculative bubble." -- Fred Wilson The way this normally works out is that the price goes up; the high price attracts many independent firms into the market; these firms all go gangbusters trying to supply the market to cash in on the money in the sector; they solve the supply problem; the market ends up being oversupplied as all the new firms keep building; prices crash; lots of these firms declare bankruptcy; and then their resources are redeployed in the next speculative bubble. If you're talking about "the private housing sector" or "the builders" as a monolithic entity, you've already lost. There should be individual builders who all respond to price incentives and build what the market demands, not a cartel of builders who have the ability to dictate local policy & prices.
- phmqk76 3y ago
  I agree with you - that's why I propose public corporations as lenders of last resort to create incentives outside of the traditional market forces that would help create this housing stock that industry insiders would rather not.
sokoloff 3y ago
> Repeat after me - the private housing sector is not going to build sufficient housing stock to tank prices in... the private housing sector. Are personal computer manufacturers willing to build sufficient computers to tank prices in computers? (They did.) Are television manufacturers willing to build sufficient televisions to tank prices in televisions? (They did.) What makes you think that builders aren't willing to build enough to tank prices overall, if it still lets them make a buck?
- bemusedthrow75 3y ago
  Houses aren't computers or televisions, though. They are built on land that is relatively scarce (in suburban areas, and the UK scarce full stop), zoned by local government, subject to the influence of regulations and unions etc. House builders in the UK quite clearly hold back on (or try to corrupt their way out of) large developments that require them to build social housing, they seem to have slowed down building in response to threatened law changes around leaseholds (which are onerous and abusive), and they appear to hold back on smaller projects as leverage with local governments in discussions about the regulations that are stopping them taking on larger projects. They are absolutely willing to build fewer houses than they could, and they tend to be rewarded for this with higher prices, because the barriers to entry in building houses at scale are really significant.

the88doctor 3y ago

3% construction loans would majorly undermine the Fed's effort to fight inflation

soperj 3y ago
How? It's not 3% for everyone, it's 3% for specific projects for low income housing.
- Empact 3y ago
  The boom gets started with an expansion of credit. The fed sets rates low, are you starting to get it? That new money is confused for real loanable funds, but it’s just inflation that’s driving the ones who invest in new projects, like housing construction. The boom plants the seeds for its future destruction. The savings aren’t real, consumption’s up too! And the grasping for resources reveals there’s too few. https://youtu.be/d0nERTFo-Sk?si=mcHcwlGi-TPaf5q- https://youtu.be/d0nERTFo-Sk?si=mcHcwlGi-TPaf5q- The claim being that to back a loan with new “printed” money is necessarily inflationary. Loans backed with saved/invested funds are non-inflationary, because the saver gives up their ability to consume with those funds, in proportion with the consumption the borrower takes on.
RC_ITR 3y ago
Excluding shelter, inflation is already bellow 2%. Not building enough housing is majorly undermining the Fed's effort to fight inflation.
- the88doctor 3y ago
  Not sure what data you're looking at, but that's completely off. Trailing 12 month food inflation is over 4%. Transportation inflation is over 10%. Services excluding energy are up 5.9%.
  - RC_ITR 3y ago
    Sure those are other numbers, but the number I’m looking at is inflation ex-shelter for the most recent month? [0]. To be clear, housing is categorized as a service and transportation inflation is 1.6% [1] Not sure why you think I’m completely off but I would be curious to see links. [0]https://fred.stlouisfed.org/graph/?g=18UVC https://fred.stlouisfed.org/graph/?g=18UVC [1] https://fred.stlouisfed.org/graph/?g=18UVL https://fred.stlouisfed.org/graph/?g=18UVL
phmqk76 3y ago
Nope. It would be a massive pressure-relief valve on inflation, so much of which is in housing expenses, not just post-COVID, but for decades.

justrealist 3y ago

> fearing a downturn that will impact their profit margins The obvious answer is for the Fed to give clear guidance on when rates can go back to dropping. There's no mystery why builders are pulling back; people can't get mortgages. We don't need a new complicated system, there are easy fiscal knobs to turn.

the_optimist 3y ago
They cannot do this because doing so would eliminate the ambiguous feedback loop on “expectations” that is intended to exist and ultimately under their credibility in the longer run.

bemusedthrow75 3y ago

> Repeat after me - the private housing sector is not going to build sufficient housing stock to tank prices in... the private housing sector. This. In the UK in particular there are so few housebuilders working at scale that they effectively have an oligopoly. And they turn off the tap as quickly as OPEC do.

deleted 3y ago
[deleted]
the_optimist 3y ago
Are these groups impairing their future profit interest, discounted at the cost of capital, by building more homes? You assert the answer is ‘yes.’ Why?
- bemusedthrow75 3y ago
  It doesn't take much imagination to understand that the handful of companies who control house-building and therefore house prices might have a variety of reasons to slow down the building of houses that have nothing do to with direct profit. Because they exert power over more than just the market price by doing so. But since you're imagining words into my mouth you ought to have the imaginative capacity to figure that out for yourself.

hn_throwaway_99 3y ago

> The housing market is red hot right now Sorry to be harsh, but what planet was this written from? The housing market in the US is largely frozen - many people bought at peak prices over the pandemic years at rock bottom interest rates, so now they basically can't move - they simply can't afford the same amount of house at today's rates, and many would have to lower their prices in an attempt to sell in this higher rate market. The fact that employment is still relatively high means most people aren't forced to sell, and thus prices remain unaffordably high in many cities. Edit: And rent control? Virtually every economist of all ideological stripes agrees that rent control is ultimately self defeating in the long term. And just look what happens with people that live in rent-controlled cities. Families hang on to those apartments like they're diamonds, and all it does is create a world of "haves vs. have nots", where it's like a big lottery to get a rent controlled apartment, but meanwhile you've disincentivized builders from building any new stock.

coding123 3y ago
While that may be true, it is also true that the market is red hot right now - the prices are still going up for the stock that IS available.
- lostmsu 3y ago
  It is not hot. What you describe is called thawing.
- deleted 3y ago
  [deleted]
- hn_throwaway_99 3y ago
  That's not what a "red hot market" means. And the price gains are not universal. Median housing prices in the Austin metro fell 15% from May 2022 to May 2023.
  - bob_theslob646 3y ago
    "And the price gains are not universal. Median housing prices in the Austin metro fell 15% from May 2022 to May 2023" Why do you think that happened? Demand was less than supply or the prices they were asking for were outrageous or they built to many homes. Housing is a very tough area to analyze as a whole because of state rules regarding mortgages being assumable

the_optimist 3y ago

You characterize the private sector as a monolithic decision-making entity, like the government. That’s a fundamental misunderstanding and mischaracterization. There is a collection of fiercely competing interests that balances. Right now, everyone who is able to build a new house is doing so, at significant profit interest. There’s an entire subsector of the economy that is “developers and home builders.” Do you presume these people somehow sit on their hands at the command of some other group?

akavi 3y ago
Well yes, but the "other group" commanding them to do so is municipal governments, at the behest of existing property owners.

RC_ITR 3y ago

A reminder to all that 80% of Singapore's population lives in housing built by the government [0] That's right, business-friendly small-government Singapore came to this realization decades ago. [0]https://www.bloomberg.com/news/articles/2020-07-08/behind-the-design-of-singapore-s-low-cost-housing https://www.bloomberg.com/news/articles/2020-07-08/behind-th...

pydry 3y ago

The problem is land. The private sector isnt going to make new land. Nobody makes land. Not in the private sector. It'll build apartments on freed up land but it won't make new land. If private investors dont lose money on inefficiently used land then they will hoard it as jealously as a goldbug hoards gold or a crypto bro hoards bitcoin. Right now one theoretically could build a mansion in London with 100 rooms and pay $1500/year in property taxes. This isnt theoretical. I live about a kilometer away from a Russian oligarch who did exactly that and that is indeed how little he pays in tax on it. We can either jack up property taxes or jack up land taxes but either way until land hoarding is made a shortcut to bankruptcy then the housing crisis will only ever get worse.

sofixa 3y ago
> Nobody makes land The Dutch do.
xnx 3y ago
Plenty of land if everyone didn't try and fit in the same dozen metro areas.
phmqk76 3y ago
We used to build cities in America. Our grandparents' generation got brand new roads, brand new houses, brand new schools, etc. There is a concept of being at capacity, and there are areas that have reached that capacity, where the roads can comfortably carry X number of cars, where density is enough to support a local economy and industry, and the quality of life is good. Rather than trying to cram 5 pounds of crap into a 10 pound bag, building new cities in proximity to economic megalopolises (first as a crutch to support the population of the new city) with easy transportation between the two is something that California has a great track record of, for example, that you don't see in the Northeast. Irvine is a great semi-recent example of that. This is development done correctly, not cramming as many people into a mature area as possible, and then whining that NIBMYism makes living there expensive when the infrastructure of a city or region is at capacity. And what happens when you can't build anymore, like on the island of Manhattan? You regulate rents to protect housing for the economically-diverse population of people who live there. This is all not that complicated, but all we hear about is this deregulation model that doesn't make any sense when you game it out two steps ahead.

beebmam 3y ago

Housing barely appreciates above inflation. About 4% on average, yearly. It would be better if we didn't interfere in the market, or there are going to be some nasty consequences.

bemusedthrow75 3y ago
I can't read the FT article to see whether it is based on domestic stories here UK or whether they are addressing this from a US perspective. But what you're saying is historically far from true in the UK, at least. Over the last seventy years, UK house prices have increased by on average 300% in real terms. This isn't barely outpacing inflation, surely.
- fennecfoxy 3y ago
  Don't worry dude, you're right: https://pearsonblog.campaignserver.co.uk/wp-content/uploads/3.-Nominal-and-real-UK-house-prices.png https://pearsonblog.campaignserver.co.uk/wp-content/uploads/... (https://pearsonblog.campaignserver.co.uk/tag/house-price-inflation/ https://pearsonblog.campaignserver.co.uk/tag/house-price-inf...). Kiwi moved to the UK and housing market is just insane here, not even just London. Not only have house prices outpaces inflation (lack of new being built, housing being used as "investments" etc) but also stagnant wages. The only reason I'll ever be able to afford a smallish house here is being on a tech salary; take average London wage here...and without generational wealth transfer they _cannot_ buy a house. Even with generational wealth transfer, our London salary friend will have to buy a house _outside_ london and commute (or wfh). It's not a "hot market" it's just the haves have a vested interest in keeping the prices high for the have-nots. Just look at how landlords reacted to tenants getting some basic rights (that we've had in NZ for ages) "the sky is falling". And all of this is for terraced houses at best, sharing a wall with neighbours, not detached at all, maybe you get a backyard maybe not. All made out of brick and built in the 40s-60s for the most part - and falling apart because of this. Never have I seen so much scaffolding since I moved to the UK. There are still a few great things about living in the UK, but the housing market (amongst other things, wage gap, classism, corruption, population political apathy) is an absolute disgrace.
- 3y ago

HDThoreaun 3y ago

> yet builders are loathe to invest in a major way This is not true in areas that make it easy to build housing. The reality is that builders are loath to get caught up in NIMBY bullshit that stops them from building after they dump a million on bureaucratic nonsense, not that they are trying to protect housing prices.

voisin 3y ago

> the private housing sector is not going to build sufficient housing stock to tank prices in... the private housing sector. > yet builders are loathe to invest in a major way, fearing a downturn that will impact their profit margins, even though they stand to make big bucks. The second quote doesn’t flow from the first. The second quote is correct - builders aren’t building not because they don’t want to tank housing prices, but because of concerns about the economy. In a capitalist system with thousands of players, it there are expectations of profits there will be construction even if it drives down the profits of the industry as a whole (that’s the free market, eliminating excess profits). The issue has nothing to do with mass collusion to keep prices high and everything to do with concerns about the economy and the current interest rate environment.

phmqk76 3y ago
The second quote isn't entirely related to the first. "Sufficient housing stock to tank prices" is an enormous amount of housing, the likes of which are not contemplated by traditional builders, who are out to build high profit margin housing at prices the market will bear. That's the system that needs disruption. It's not de jure collusion, it's a mature industry with mature players who have been on the search for blockbuster profits in recent memory. The average home size has skyrocketed over the last forty years, builders and their financiers are no longer content to make a living building homes, they want to hit home runs every time. It's time to incentivize smaller players in the market and to steer them towards building cheaper housing with smaller profit margins.

deleted 3y ago

[deleted]

nostrademons 3y ago

"Nothing great was ever built without a speculative bubble." -- Fred Wilson The way this normally works out is that the price goes up; the high price attracts many independent firms into the market; these firms all go gangbusters trying to supply the market to cash in on the money in the sector; they solve the supply problem; the market ends up being oversupplied as all the new firms keep building; prices crash; lots of these firms declare bankruptcy; and then their resources are redeployed in the next speculative bubble. If you're talking about "the private housing sector" or "the builders" as a monolithic entity, you've already lost. There should be individual builders who all respond to price incentives and build what the market demands, not a cartel of builders who have the ability to dictate local policy & prices.

phmqk76 3y ago
I agree with you - that's why I propose public corporations as lenders of last resort to create incentives outside of the traditional market forces that would help create this housing stock that industry insiders would rather not.

sokoloff 3y ago

> Repeat after me - the private housing sector is not going to build sufficient housing stock to tank prices in... the private housing sector. Are personal computer manufacturers willing to build sufficient computers to tank prices in computers? (They did.) Are television manufacturers willing to build sufficient televisions to tank prices in televisions? (They did.) What makes you think that builders aren't willing to build enough to tank prices overall, if it still lets them make a buck?

bemusedthrow75 3y ago
Houses aren't computers or televisions, though. They are built on land that is relatively scarce (in suburban areas, and the UK scarce full stop), zoned by local government, subject to the influence of regulations and unions etc. House builders in the UK quite clearly hold back on (or try to corrupt their way out of) large developments that require them to build social housing, they seem to have slowed down building in response to threatened law changes around leaseholds (which are onerous and abusive), and they appear to hold back on smaller projects as leverage with local governments in discussions about the regulations that are stopping them taking on larger projects. They are absolutely willing to build fewer houses than they could, and they tend to be rewarded for this with higher prices, because the barriers to entry in building houses at scale are really significant.