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You only perceive corporate landlords as the greater problem because we're not living in the counterfactual reality where there are millions of new apartments t

by spir 3y ago

You only perceive corporate landlords as the greater problem because we're not living in the counterfactual reality where there are millions of new apartments that are inexpensive, tiny, safe, quiet, modern, clean, dignified, and well-located. In pretty much every major city in North America, it is illegal or there is too much red tape to build the affordable housing people actually want. Why is it that living in a tent on the street costs $0/month but the entry-level apartments cost ~$2k/month? Why are there no price points between $0 and $2k? The answer is bad government policy.

skeeter2020 3y ago
Maybe? Or how about they are in no-way comparable.Unless you are talking mass subsidization there is an absolute floor for providing housing, not to mention finite capacity for both tent cities and affordable apartments.
- JumpCrisscross 3y ago
  > Unless you are talking mass subsidization there is an absolute floor for providing housing Sure. We are nowhere close to that floor. Voters who reject supply and demand pay the consequence for their ignorance.
- Ajedi32 3y ago
  What would you say determines the level of that floor? It's an interesting question, because I can imagine lots of possible housing solutions that would be way cheaper than $2k/month and more pleasant than living in a tent on the street. So the question is why haven't those solutions been built?
- fatfingerd 3y ago
  The absolute floor is nothing, far less than the cost of tent cities which use a lot of horizontal space compared to high rises of prefab micro apartments. The trouble is that local government is coerced to eliminate people who don't directly or indirectly pay a lot of property tax, especially if they are minors and require school. The federal government should be required to pay general costs per head to local government from it's excessive collection of income tax to put an end to this nonsense of states and towns trying to evict the poor and steal the rich from each other.
- dublinben 3y ago
  The absolute floor is pretty low, and the market will provide these solutions if they're not regulated out of existence. My first "apartment" was a 100 square foot bedroom rented in a 4 bed / 2 bath unit with 3 other residents. At the time I moved in, it was only $350/month plus utilities, in a market where the median rent for a studio was $1750/month. That room would have been affordable for a single person working full-time at minimum wage. Was it code compliant? Hell no! Was it better than living on the street or in a car? Unquestionably. If you raise the floor to require every adult to have their own kitchen and bathroom, then you've consigned this segment of the market to homelessness. Someone who can pay $350/month certainly would need a massive subsidy to afford a $1750 studio, or you can just get out of the way and allow them to rent a room for $350.
  - jjav 3y ago
    > My first "apartment" was a 100 square foot bedroom rented in a 4 bed / 2 bath unit with 3 other residents. That's called having roommates, why do call it not code compliant? It's done all the time.
    - dublinben 3y ago
      Each room was rented individually from the landlord, so we were legally separate tenants, not just roommates all on the same lease. The building itself was over a hundred years old, and had countless violations of modern building codes, health codes, and fire safety codes. It was pretty much a disaster waiting to happen, but it was affordable!
IKantRead 3y ago
> not living in the counterfactual reality where there are millions of new apartments that are inexpensive, tiny, safe, quiet, modern, clean, dignified, and well-located. China serves as this counter factual and it's facing an even larger housing crisis. Massive building of houses lead to many people buying up property for investment reasons and now there is a pretty clear oversupply while plenty of people still struggle to find housing. I don't really understand why HN is obsessed with building unlimited housing as though this will fix the problem. For years people clamored that this was the solution to all of SFs problems, but as SF starts to shrink it already looks deserted, I can't image what happen if the HN fantasy of building unlimited massive apartment housing had materialized.
- wyager 3y ago
  Monetization of real estate in china is exacerbated by the fact that A) there aren't a lot of great investment opportunities available to most chinese people B) the chinese government has a history of propping up property values, so there's a perception that housing is a safe investment. The situation for non-housing assets is not quite as bad in the US.
- shiftpgdn 3y ago
  People wouldn’t have left and could have steered the political situation to something less insane.
- thatfrenchguy 3y ago
  > SF starts to shrink it already looks deserted I don't think we've been to the same city, vacancy rate is around 7%.
- dghlsakjg 3y ago
  China is especially interesting since it appears that much of the housing stock was built purely to be a financial instrument, and was never occupied. There are entire towers that were never used as residences, but just used as investment vehicles based on faith rather than any sort of realized value. This is really a story about the dangers of using housing stock as an investment vehicle. North America has a related problem of financialization, but is complicated by rules constraining stock in the places where people would like to live. I would argue that you need rules around financialization (punitive capital gains taxes on market based gains for non primary residence), as well as rules around allowing people to do reasonable things with their property (infill, single family zoning, etc) to increase the amount of allowable stock.
ToucanLoucan 3y ago
You say this like every developer would be rushing out to build low-income housing if only they could. Developers build expensive luxury units because they can rent them for $2k a month by scalping tenants from nearby buildings who are currently paying $2.1k per month, because the buildings really don't cost that much more to build, the higher forecasted income from said renting makes it easier to sell to banks and get financed, and because every local politician is happy to have a new set of expensive units to tell the public about, especially if it's near a new commercial development they can hype up for bonus points. Because at the end of the day: people aren't housed because people need housing, people are housed because it is profitable to do so. And housing the middle class is always going to be more profitable than housing the poor. Which paradoxically means, as long as the motive is profit, it is incentivized more to cater to a smaller group of buyers with more money than a larger one with less. And, the ability for investment groups to write off losses means they are incentivized, in turn, to keep housing that the poor can't afford empty instead of lowering the rents, because too many renters at a lower rent would make them less money than simply holding onto the appreciating asset and writing off the lost rental income. This is not to say that government policy couldn't do a ton to fix this, but it's basically all policies that go against financial motivations in a system where money and power are incredibly well correlated with one another, so it's practically a non-starter. Low income housing benefits people who are low-income and will attract them as a result, and no city in the entire fuckin world has a financial incentive to cater to poor people, because they're, you know, poor. If they did we would have a ton more options for things like reliable and well priced public transit, not more bloody freeways.
- JumpCrisscross 3y ago
  > housing the middle class is always going to be more profitable than housing the poor You could make this argument for any product. Of course it’s more profitable to cook steaks for the rich. That doesn’t mean nobody poor has ever eaten. About one percent of Americans are poor on a global scale [1]. Unaffordability of housing is a political choice. It is driven by an alliance between cynical and ignorant interests. [1] https://en.m.wikipedia.org/wiki/List_of_sovereign_states_by_percentage_of_population_living_in_poverty https://en.m.wikipedia.org/wiki/List_of_sovereign_states_by_...
User23 3y ago
> build the affordable housing people actually want. And the unspeakable little problem that people don't want to live around the people who will be living in the affordable housing people actually want. Hence, NIMBY.
- chx 3y ago
  This here. You can't fix housing problem in a bubble. You need to solve healthcare, public transit and more. It needs to be handled as a complex unit with solutions advanced in parallel.
- Ajedi32 3y ago
  This is an interesting point. So the housing problem is (at least partially) a crime problem? Because I don't think there's anything that makes low income housing _inherently_ unpleasant to live next to; it's more a question of how the people who live there tend to conduct themselves, and to what extent that behavior is tolerated by the local authorities. I don't often see people complaining about living next to affordable senior living centers, so it's not really the income level of the residents that's the problem.
  - jlangenauer 3y ago
    It's not even a "crime problem". It's much more often people expecting their class prejudices to be embodied in the built environment, so that working class/poor/immigrant folks - which has nothing to do with crime, I hasten to add - are not defiling their beautiful suburb.
    - yakubin 3y ago
      I’ve never been to the US, so I don’t have a good idea of what it is like there, but over here I lived for a couple years in a poorer district of Warsaw, where I would never be able to get good sleep, because there would either be a neighbour screaming out of nowhere in the middle of the night, or a party going on with music on full blast a floor up the whole night. Every night. Police wouldn’t do anything about the noise. It was also commonly accepted to smoke in the stairwell, leaving the cigarette dust on the floor in little dunes. A couple times I found a big pile of crap (once it was literally cow crap size) left in the middle of the first pavement tile at the exit of the building. I moved to a more expensive district. One of the best decisions I made in my life for my mental health. So it’s not a crime problem, but it is a real problem of public order, tidiness, peacefulness etc.
macNchz 3y ago
SROs used to exist to fill that gap, but were largely banned over the last hundred years. The stupid thing is that now they basically exist again in the form of regular hotels, except city governments are the ones paying full price to house otherwise homeless people.
- jxramos 3y ago
  this would be interesting history to review in video format of someone walked through the before and after and the transition. This makes me think of these very old hotels which used to line a major street in my town that slowly faded away and crumbled. I wonder if they were SRO properties essentially.
- DakotaR 3y ago
  I rented for a few months in a motel converted to studios/section 8, great niche and I wish it was more common
r3trohack3r 3y ago
I think I agree with you in principle. I don’t understand how the consolidation of the housing market doesn’t create a feedback loop that prevents that counterfactual reality? A few asset management companies have been purchasing the entire supply chain. From land to homes, from builders to agents. These companies have a large amount of capital to deploy to make sure their assets go up and to the right. It also seems like that capital being deployed to create a positive feedback loop pricing buyers out of the market is being funded by … buyers in the market. It’s partly their retirement assets. It seems that, in a very real way, buyers are bidding against their own retirement accounts trying to maximize returns in a decelerating market. I very much agree that it’s government policy that gave rise to this, and that the counterfactual reality would normalize prices, but I’m not sure you can separate off corporate buyers from the feedback loop. It all seems to be part of the same death spiral.
- ZoomerCretin 3y ago
  There is no evidence that the housing market has reached a level of consolidation needed for cartel-like activity (i.e. withholding supply to increase total rent revenue) to be feasible. No one is withholding supply. Asset management companies don't buy houses and leave them vacant. They rent them out. There is no net-loss in supply. There is no effect on rents, only purchase price. > These companies have a large amount of capital to deploy to make sure their assets go up and to the right. These companies are required by law to share their investment strategies. They explicitly state that they are only interested in buying housing in areas with strong job markets and _restrictive supply policies_. It makes no sense to buy housing in an area where the bottom can fall out on rents because other people with money can just build more housing. Blackstone et al. are a convenient boogeyman, but they are merely taking advantage of our housing crisis, not creating it.
- carom 3y ago
  From two different articles. It is less than you think. >Large institutions owned roughly 5% of the 14 million single-family rentals nationally in early 2022 >Institutional investors, referring to entities that purchase 100 or more properties, accounted for under 3 percent of home sales in 2021 and 2022, according to Freddie Mac. So-called “mom-and-pop” investors, who own fewer properties, are growing at faster rates, and according to the National Rental Home Council, only 1.16 percent of single-family rental homes were owned by rental companies. Americans for Financial Reform estimated that as of June 2022, private equity firms owned about 3.6 percent of apartments and 1.6 percent of rental homes.
tzs 3y ago
What counts as a major city? When you start looking in cities that are under around 400k population you start to find plenty of price points under $2k.
- adra 3y ago
  You're right that raw $ cost of a unit doesn't tell nearly enough information. The ideal measure is probably % of median income / sqf, or something like that. Even then, it's a very different story for singles looking for a hole to sleep in while partying up all the time vs. a family of 5 looking to have a stable home vs 4 friends looking for a cheap rental while going to school.
ryandrake 3y ago
What specific government policy is causing developers to only build $2k+/mo rentals? You can't just vaguely say "government" is at fault without connecting the dots. This seems more like the market's fault. If homes in a particular area are going for $2k/mo, then that's what they are going for. If this is the government's fault, are you proposing price controls?
- BytesAndGears 3y ago
  You can’t built a “$2k rental”. You can only build a rental that someone will pay for. Landlords are building luxury housing because it’s the only thing that’s profitable right now due to the immensely ridiculous laws that don’t help people. But if an apartment building popped up in downtown SF charging $800/mo, it’s not like only the low income people would live there. Many people living in $3000/mo apartments also want cheaper apartments, which pushes up the price! So you can’t build “cheap apartments” or “luxury apartments”. Only “apartments”. And lots of them. But if we suddenly built a million “luxury” apartments in each major city, then they couldn’t all charge high prices because there would be a bit of competition for tenants. Prices on the “slightly less luxury but still nice” apartments would have to drop faster.
  - TheOtherHobbes 3y ago
    A non-trivial amount of "property" is speculation at best and concrete money laundering at worst, especially in the largest cities It's not supposed to saleable or rentable. But it does take up land that could be used for real housing. And it also drives up the perceived value - and price - of both rentals and outright buys. Rent control may or may not be a solution. But many of these schemes are run through shady shell companies, and aggressive enforcement of financial reporting and taxation would go some way to fixing the problem.
    - Schiendelman 3y ago
      That's the case in any predictably supply restricted market. That behavior completely disappears if you don't restrict supply, because if people can build more housing, housing depreciates - and investors put their money somewhere else because they don't want to lose it.
datavirtue 3y ago
Saw a YouTube video about row houses being built in Texas. They start at $135k to $160k ranging from 350sq ft to 600sq ft. You have to buy. Parking for one. No street parking. The feng shui is horrible/dystopian. They are all going to sell.
- yakubin 3y ago
  > Parking for one. Are you saying it’s too many or too few?
  - m348e912 3y ago
    He/She is implying that it's below what's typical for a suburban home. Here are the houses in question: https://twitter.com/WallStreetSilv/status/1692310045122293873 https://twitter.com/WallStreetSilv/status/169231004512229387...?
    - yakubin 3y ago
      That does look terrible.
afavour 3y ago
It’s not an either/or. Excessive housing regulation and corporate landlords both perpetuate a housing crisis.
andrei_says_ 3y ago
Because corporate landlords are large enough to price fix in markets they control?
cogman10 3y ago
What government policy would allow for a 2k apartment building and not a $500 apartment building? I just don't buy this argument. The reason there's not a $500 apartments being built is because by expanding the residence out just a tiny bit you can charge $2000 for the same space that 2 $500 apartments would occupy. I'm seeing this play out where I live that has practically no zoning laws or regulations (LOTS of building in unincorporated land). There's almost no $500 housing going in but a lot of new luxery apartments. Boise ID, for reference.
- belligeront 3y ago
  Allowing SROs, which have been banned in most cities.
- tinco 3y ago
  Not the US, but here real estate developers are complaining that modern stringent building code requirements (i.e. gas free, highly insulated) combined with high labor costs make it so that it is infeasible to build lower income housing. I think the bigger problem is that land value is insanely high in The Netherlands right now, but there's probably a truth in the middle as well. Land costs might be lower in the US, but maybe not closer to metropolitan centers?
  - theGnuMe 3y ago
    That’s all smoke and mirrors from the builders. Most high end luxury features are cheap to install but they can charge a lot for them. Lot size and location will matter but now they put houses right next to each other. Townhomes with shared walls are even cheaper! Builders will also complain about inspections though since time is money… but if you don’t have them they will take shortcuts.
- NathanKP 3y ago
  I have an external garage building that I'd love to turn into a small ADU, but it's not allowed in my area. Additionally, if you look at historical cheap rentals of the past, you see things like tenement buildings, which were arguably horrible, but provided a cheap alternate to homelessness. You can also see examples of what low rent places look like today in Asian countries, such as Hong Kong tiny apartments. Many of those types of residences are not allowed by local government policies. An actual $500 a month rental is going to be really tiny, might have a shared bathroom and kitchen with other units. And these are all things that are often disallowed by government policies.
svnt 3y ago
It is counterfactual in the literal sense. It is entirely possible that there are no real prices below $2k in urban centers because of demand and constrained supply. It is entirely possible that getting below this would result in a return to conditions where people were regularly dying in fires and building collapse. We have plenty of examples of what happens in your fantasy land, you just choose to reason from ideology instead of researching them.
- carom 3y ago
  Maybe we keep the fire codes but eliminate parking minimums and lot setbacks. Just a thought.
  - brewdad 3y ago
    Lot set backs are frequently a part of the fire codes. They help prevent a fire in one building taking out the entire block. Parking minimums are a chicken and egg problem. My suburb has started allowing new apartments to build about half the parking that would have been required a decade ago. Trouble is, those tenants still own cars since the transit system isn't robust enough to go without. Now those cars flood the streets of the single family residences nearby. Eliminating parking minimums has been mostly successful in the city core but expanding it out to the entire metro doesn't work with how we've built America over the last 70 years.
  - pokerface_86 3y ago
    [dead]
  - svnt 3y ago
    Many cities have reduced or done away with the parking minimums. It ends up being another way of extracting value out of the existing market, but does little to reduce the median price of new homes.
kurthr 3y ago
If parking spaces are $400/mo, you're going to be hard pressed to have power, water, and heating for $500. The reason a tent in the city is $0 is because that is an externality that is allowed... you can't even stay for free in a campground, because water, trash, and toilets cost money.
- jethro_tell 3y ago
  or, and hear me out here, parking spaces are $400/mo because that's what people are willing to pay in a sparsely populated autocentric living environment. We don't have to take things like "the cost of a parking space in the system we've created" as a fact, we can change the value of the parking space.
  - brewdad 3y ago
    How? You need to either build a LOT more parking or you need to make it possible to live without a car. There are only a handful (with leftover fingers) of US cities where going car-free is reasonable.
  - kurthr 3y ago
    Well, usually those are for parking either in quite dense (>3 story) business/commercial or residential. It's "only $13/day". Even Tokyo, NY, Paris parking spaces don't get cheaper. So the exception is for rural/suburban environments where parking spaces are cheap/free because space is cheap. Guess what, if you want to live cheaply, it's not going to be where everyone else wants to live and work. Cheap Tokyo apartments are far from transit and on the outskirts or even outside Yamanote. People commute daily over an hour by train each way. Shanghai and Beijing built huge amounts of dense housing (also Shezhen, Chongqing, Hefei, Ordos) and what happened to property prices? They spiraled out of control since they were considered investments (that only go up) with many of them vacant. What happened to prices in Tokyo (notably after the '89 bust and not before)? Housing became relatively affordable since it's not considered an investment (even with near 0% interest rates).
revlolz 3y ago
I dont think the Government can do much (that it will do well), but I think it needs to: 1) Curtail companies and LLCs from acquiring Single Family Residences (SFR). 2) Dramatically step up incentives for builders to increase quality control and build quality while increasing punishment severely for fraudsters. In my opinion flipping, rentals, and "fixer uppers" have gotten out of control. I see the only way of curtailing this as penalizing those types of lenders in interest rates or taxes to push them out of the market. For those unaware, flippers seek out private money lenders aka hard money lenders and pursue crazy high interest rates that balloon after 3, 6, 9, or 12 months. The idea is by taking on loans while they flip properties they can take on risk/liability, but spread their assets out and purchase/flip more properties. It happens for almost all property types, but typically is done for SFR/MFR because commercial has a lot more risk since property prices are much higher. The quality of repairs and renovations these flippers typically perform is well known to be absolute god awful. Flippers make short term investment choices on home improvements needing long term solutions. To my second point, I've heard of so much fraud from home builders it baffles me they aren't in prison. Full neighborhood developments where builder's sold 30 year roofing, but built roofs with materials known to fail in 10-15, and the building company dissolves into the wind leaving homeowners with little to no recourse other than some couple hundred dollar settlement check whenever some class action suit eventually settles. There are plenty more examples of things like this, but my point is I think the only win to have is promote tax incentives for builders to build using quality processes and pass inspections, but I will admit I'm chasing a solution and am ill equipped to be presenting a solution. I am more focused on calling out the problem.
deleted 3y ago
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downrightmike 3y ago
The answer is non-market housing. Housing made to pay for itself, but not profit from. Vienna has 60% non-market housing, which puts a huge damper on what the market can charge. Which is why we will likely never see it until the boomers and the boomer minded are long gone.
jjav 3y ago
> we're not living in the counterfactual reality where there are millions of new apartments that are inexpensive, tiny, safe, quiet, modern, clean, dignified, and well-located It is true that there's way too much (and way too costly) red tape to build housing. At the same time, it's also true that even if you skip all that, building is expensive due to materials & labor in any urban or suburban area. Look at building costs in your area by sqft, just for labor & materials. Building cheap units (for a local wage-adjusted level of cheap) is very difficult without some form of external assistance (e.g. like low-income units subsidized by other units).
escapedmoose 3y ago
I can’t speak for all of the US, but locally the most common way that affordable housing is built is because we have local government mandates which require it of large companies who build in my area. It seems to work very well; ours is the fastest-growing region in my state, and homelessness has been low.
jamesnadeau 3y ago
No, the answer is capitalism.

by spir 3y ago

skeeter2020 3y ago

Maybe? Or how about they are in no-way comparable.Unless you are talking mass subsidization there is an absolute floor for providing housing, not to mention finite capacity for both tent cities and affordable apartments.

JumpCrisscross 3y ago
> Unless you are talking mass subsidization there is an absolute floor for providing housing Sure. We are nowhere close to that floor. Voters who reject supply and demand pay the consequence for their ignorance.
Ajedi32 3y ago
What would you say determines the level of that floor? It's an interesting question, because I can imagine lots of possible housing solutions that would be way cheaper than $2k/month and more pleasant than living in a tent on the street. So the question is why haven't those solutions been built?
fatfingerd 3y ago
The absolute floor is nothing, far less than the cost of tent cities which use a lot of horizontal space compared to high rises of prefab micro apartments. The trouble is that local government is coerced to eliminate people who don't directly or indirectly pay a lot of property tax, especially if they are minors and require school. The federal government should be required to pay general costs per head to local government from it's excessive collection of income tax to put an end to this nonsense of states and towns trying to evict the poor and steal the rich from each other.
dublinben 3y ago
The absolute floor is pretty low, and the market will provide these solutions if they're not regulated out of existence. My first "apartment" was a 100 square foot bedroom rented in a 4 bed / 2 bath unit with 3 other residents. At the time I moved in, it was only $350/month plus utilities, in a market where the median rent for a studio was $1750/month. That room would have been affordable for a single person working full-time at minimum wage. Was it code compliant? Hell no! Was it better than living on the street or in a car? Unquestionably. If you raise the floor to require every adult to have their own kitchen and bathroom, then you've consigned this segment of the market to homelessness. Someone who can pay $350/month certainly would need a massive subsidy to afford a $1750 studio, or you can just get out of the way and allow them to rent a room for $350.
- jjav 3y ago
  > My first "apartment" was a 100 square foot bedroom rented in a 4 bed / 2 bath unit with 3 other residents. That's called having roommates, why do call it not code compliant? It's done all the time.
  - dublinben 3y ago
    Each room was rented individually from the landlord, so we were legally separate tenants, not just roommates all on the same lease. The building itself was over a hundred years old, and had countless violations of modern building codes, health codes, and fire safety codes. It was pretty much a disaster waiting to happen, but it was affordable!

IKantRead 3y ago

> not living in the counterfactual reality where there are millions of new apartments that are inexpensive, tiny, safe, quiet, modern, clean, dignified, and well-located. China serves as this counter factual and it's facing an even larger housing crisis. Massive building of houses lead to many people buying up property for investment reasons and now there is a pretty clear oversupply while plenty of people still struggle to find housing. I don't really understand why HN is obsessed with building unlimited housing as though this will fix the problem. For years people clamored that this was the solution to all of SFs problems, but as SF starts to shrink it already looks deserted, I can't image what happen if the HN fantasy of building unlimited massive apartment housing had materialized.

wyager 3y ago
Monetization of real estate in china is exacerbated by the fact that A) there aren't a lot of great investment opportunities available to most chinese people B) the chinese government has a history of propping up property values, so there's a perception that housing is a safe investment. The situation for non-housing assets is not quite as bad in the US.
shiftpgdn 3y ago
People wouldn’t have left and could have steered the political situation to something less insane.
thatfrenchguy 3y ago
> SF starts to shrink it already looks deserted I don't think we've been to the same city, vacancy rate is around 7%.
dghlsakjg 3y ago
China is especially interesting since it appears that much of the housing stock was built purely to be a financial instrument, and was never occupied. There are entire towers that were never used as residences, but just used as investment vehicles based on faith rather than any sort of realized value. This is really a story about the dangers of using housing stock as an investment vehicle. North America has a related problem of financialization, but is complicated by rules constraining stock in the places where people would like to live. I would argue that you need rules around financialization (punitive capital gains taxes on market based gains for non primary residence), as well as rules around allowing people to do reasonable things with their property (infill, single family zoning, etc) to increase the amount of allowable stock.

ToucanLoucan 3y ago

You say this like every developer would be rushing out to build low-income housing if only they could. Developers build expensive luxury units because they can rent them for $2k a month by scalping tenants from nearby buildings who are currently paying $2.1k per month, because the buildings really don't cost that much more to build, the higher forecasted income from said renting makes it easier to sell to banks and get financed, and because every local politician is happy to have a new set of expensive units to tell the public about, especially if it's near a new commercial development they can hype up for bonus points. Because at the end of the day: people aren't housed because people need housing, people are housed because it is profitable to do so. And housing the middle class is always going to be more profitable than housing the poor. Which paradoxically means, as long as the motive is profit, it is incentivized more to cater to a smaller group of buyers with more money than a larger one with less. And, the ability for investment groups to write off losses means they are incentivized, in turn, to keep housing that the poor can't afford empty instead of lowering the rents, because too many renters at a lower rent would make them less money than simply holding onto the appreciating asset and writing off the lost rental income. This is not to say that government policy couldn't do a ton to fix this, but it's basically all policies that go against financial motivations in a system where money and power are incredibly well correlated with one another, so it's practically a non-starter. Low income housing benefits people who are low-income and will attract them as a result, and no city in the entire fuckin world has a financial incentive to cater to poor people, because they're, you know, poor. If they did we would have a ton more options for things like reliable and well priced public transit, not more bloody freeways.

JumpCrisscross 3y ago
> housing the middle class is always going to be more profitable than housing the poor You could make this argument for any product. Of course it’s more profitable to cook steaks for the rich. That doesn’t mean nobody poor has ever eaten. About one percent of Americans are poor on a global scale [1]. Unaffordability of housing is a political choice. It is driven by an alliance between cynical and ignorant interests. [1] https://en.m.wikipedia.org/wiki/List_of_sovereign_states_by_percentage_of_population_living_in_poverty https://en.m.wikipedia.org/wiki/List_of_sovereign_states_by_...

User23 3y ago

> build the affordable housing people actually want. And the unspeakable little problem that people don't want to live around the people who will be living in the affordable housing people actually want. Hence, NIMBY.

chx 3y ago
This here. You can't fix housing problem in a bubble. You need to solve healthcare, public transit and more. It needs to be handled as a complex unit with solutions advanced in parallel.
Ajedi32 3y ago
This is an interesting point. So the housing problem is (at least partially) a crime problem? Because I don't think there's anything that makes low income housing _inherently_ unpleasant to live next to; it's more a question of how the people who live there tend to conduct themselves, and to what extent that behavior is tolerated by the local authorities. I don't often see people complaining about living next to affordable senior living centers, so it's not really the income level of the residents that's the problem.
- jlangenauer 3y ago
  It's not even a "crime problem". It's much more often people expecting their class prejudices to be embodied in the built environment, so that working class/poor/immigrant folks - which has nothing to do with crime, I hasten to add - are not defiling their beautiful suburb.
  - yakubin 3y ago
    I’ve never been to the US, so I don’t have a good idea of what it is like there, but over here I lived for a couple years in a poorer district of Warsaw, where I would never be able to get good sleep, because there would either be a neighbour screaming out of nowhere in the middle of the night, or a party going on with music on full blast a floor up the whole night. Every night. Police wouldn’t do anything about the noise. It was also commonly accepted to smoke in the stairwell, leaving the cigarette dust on the floor in little dunes. A couple times I found a big pile of crap (once it was literally cow crap size) left in the middle of the first pavement tile at the exit of the building. I moved to a more expensive district. One of the best decisions I made in my life for my mental health. So it’s not a crime problem, but it is a real problem of public order, tidiness, peacefulness etc.

macNchz 3y ago

SROs used to exist to fill that gap, but were largely banned over the last hundred years. The stupid thing is that now they basically exist again in the form of regular hotels, except city governments are the ones paying full price to house otherwise homeless people.

jxramos 3y ago
this would be interesting history to review in video format of someone walked through the before and after and the transition. This makes me think of these very old hotels which used to line a major street in my town that slowly faded away and crumbled. I wonder if they were SRO properties essentially.
DakotaR 3y ago
I rented for a few months in a motel converted to studios/section 8, great niche and I wish it was more common

r3trohack3r 3y ago

I think I agree with you in principle. I don’t understand how the consolidation of the housing market doesn’t create a feedback loop that prevents that counterfactual reality? A few asset management companies have been purchasing the entire supply chain. From land to homes, from builders to agents. These companies have a large amount of capital to deploy to make sure their assets go up and to the right. It also seems like that capital being deployed to create a positive feedback loop pricing buyers out of the market is being funded by … buyers in the market. It’s partly their retirement assets. It seems that, in a very real way, buyers are bidding against their own retirement accounts trying to maximize returns in a decelerating market. I very much agree that it’s government policy that gave rise to this, and that the counterfactual reality would normalize prices, but I’m not sure you can separate off corporate buyers from the feedback loop. It all seems to be part of the same death spiral.

ZoomerCretin 3y ago
There is no evidence that the housing market has reached a level of consolidation needed for cartel-like activity (i.e. withholding supply to increase total rent revenue) to be feasible. No one is withholding supply. Asset management companies don't buy houses and leave them vacant. They rent them out. There is no net-loss in supply. There is no effect on rents, only purchase price. > These companies have a large amount of capital to deploy to make sure their assets go up and to the right. These companies are required by law to share their investment strategies. They explicitly state that they are only interested in buying housing in areas with strong job markets and _restrictive supply policies_. It makes no sense to buy housing in an area where the bottom can fall out on rents because other people with money can just build more housing. Blackstone et al. are a convenient boogeyman, but they are merely taking advantage of our housing crisis, not creating it.
carom 3y ago
From two different articles. It is less than you think. >Large institutions owned roughly 5% of the 14 million single-family rentals nationally in early 2022 >Institutional investors, referring to entities that purchase 100 or more properties, accounted for under 3 percent of home sales in 2021 and 2022, according to Freddie Mac. So-called “mom-and-pop” investors, who own fewer properties, are growing at faster rates, and according to the National Rental Home Council, only 1.16 percent of single-family rental homes were owned by rental companies. Americans for Financial Reform estimated that as of June 2022, private equity firms owned about 3.6 percent of apartments and 1.6 percent of rental homes.

tzs 3y ago

What counts as a major city? When you start looking in cities that are under around 400k population you start to find plenty of price points under $2k.

adra 3y ago
You're right that raw $ cost of a unit doesn't tell nearly enough information. The ideal measure is probably % of median income / sqf, or something like that. Even then, it's a very different story for singles looking for a hole to sleep in while partying up all the time vs. a family of 5 looking to have a stable home vs 4 friends looking for a cheap rental while going to school.

ryandrake 3y ago

What specific government policy is causing developers to only build $2k+/mo rentals? You can't just vaguely say "government" is at fault without connecting the dots. This seems more like the market's fault. If homes in a particular area are going for $2k/mo, then that's what they are going for. If this is the government's fault, are you proposing price controls?

BytesAndGears 3y ago
You can’t built a “$2k rental”. You can only build a rental that someone will pay for. Landlords are building luxury housing because it’s the only thing that’s profitable right now due to the immensely ridiculous laws that don’t help people. But if an apartment building popped up in downtown SF charging $800/mo, it’s not like only the low income people would live there. Many people living in $3000/mo apartments also want cheaper apartments, which pushes up the price! So you can’t build “cheap apartments” or “luxury apartments”. Only “apartments”. And lots of them. But if we suddenly built a million “luxury” apartments in each major city, then they couldn’t all charge high prices because there would be a bit of competition for tenants. Prices on the “slightly less luxury but still nice” apartments would have to drop faster.
- TheOtherHobbes 3y ago
  A non-trivial amount of "property" is speculation at best and concrete money laundering at worst, especially in the largest cities It's not supposed to saleable or rentable. But it does take up land that could be used for real housing. And it also drives up the perceived value - and price - of both rentals and outright buys. Rent control may or may not be a solution. But many of these schemes are run through shady shell companies, and aggressive enforcement of financial reporting and taxation would go some way to fixing the problem.
  - Schiendelman 3y ago
    That's the case in any predictably supply restricted market. That behavior completely disappears if you don't restrict supply, because if people can build more housing, housing depreciates - and investors put their money somewhere else because they don't want to lose it.

datavirtue 3y ago

Saw a YouTube video about row houses being built in Texas. They start at $135k to $160k ranging from 350sq ft to 600sq ft. You have to buy. Parking for one. No street parking. The feng shui is horrible/dystopian. They are all going to sell.

yakubin 3y ago
> Parking for one. Are you saying it’s too many or too few?
- m348e912 3y ago
  He/She is implying that it's below what's typical for a suburban home. Here are the houses in question: https://twitter.com/WallStreetSilv/status/1692310045122293873 https://twitter.com/WallStreetSilv/status/169231004512229387...?
  - yakubin 3y ago
    That does look terrible.

afavour 3y ago

It’s not an either/or. Excessive housing regulation and corporate landlords both perpetuate a housing crisis.

andrei_says_ 3y ago

Because corporate landlords are large enough to price fix in markets they control?

cogman10 3y ago

What government policy would allow for a 2k apartment building and not a $500 apartment building? I just don't buy this argument. The reason there's not a $500 apartments being built is because by expanding the residence out just a tiny bit you can charge $2000 for the same space that 2 $500 apartments would occupy. I'm seeing this play out where I live that has practically no zoning laws or regulations (LOTS of building in unincorporated land). There's almost no $500 housing going in but a lot of new luxery apartments. Boise ID, for reference.

belligeront 3y ago
Allowing SROs, which have been banned in most cities.
tinco 3y ago
Not the US, but here real estate developers are complaining that modern stringent building code requirements (i.e. gas free, highly insulated) combined with high labor costs make it so that it is infeasible to build lower income housing. I think the bigger problem is that land value is insanely high in The Netherlands right now, but there's probably a truth in the middle as well. Land costs might be lower in the US, but maybe not closer to metropolitan centers?
- theGnuMe 3y ago
  That’s all smoke and mirrors from the builders. Most high end luxury features are cheap to install but they can charge a lot for them. Lot size and location will matter but now they put houses right next to each other. Townhomes with shared walls are even cheaper! Builders will also complain about inspections though since time is money… but if you don’t have them they will take shortcuts.
NathanKP 3y ago
I have an external garage building that I'd love to turn into a small ADU, but it's not allowed in my area. Additionally, if you look at historical cheap rentals of the past, you see things like tenement buildings, which were arguably horrible, but provided a cheap alternate to homelessness. You can also see examples of what low rent places look like today in Asian countries, such as Hong Kong tiny apartments. Many of those types of residences are not allowed by local government policies. An actual $500 a month rental is going to be really tiny, might have a shared bathroom and kitchen with other units. And these are all things that are often disallowed by government policies.

svnt 3y ago

It is counterfactual in the literal sense. It is entirely possible that there are no real prices below $2k in urban centers because of demand and constrained supply. It is entirely possible that getting below this would result in a return to conditions where people were regularly dying in fires and building collapse. We have plenty of examples of what happens in your fantasy land, you just choose to reason from ideology instead of researching them.

carom 3y ago
Maybe we keep the fire codes but eliminate parking minimums and lot setbacks. Just a thought.
- brewdad 3y ago
  Lot set backs are frequently a part of the fire codes. They help prevent a fire in one building taking out the entire block. Parking minimums are a chicken and egg problem. My suburb has started allowing new apartments to build about half the parking that would have been required a decade ago. Trouble is, those tenants still own cars since the transit system isn't robust enough to go without. Now those cars flood the streets of the single family residences nearby. Eliminating parking minimums has been mostly successful in the city core but expanding it out to the entire metro doesn't work with how we've built America over the last 70 years.
- pokerface_86 3y ago
  [dead]
- svnt 3y ago
  Many cities have reduced or done away with the parking minimums. It ends up being another way of extracting value out of the existing market, but does little to reduce the median price of new homes.

kurthr 3y ago

If parking spaces are $400/mo, you're going to be hard pressed to have power, water, and heating for $500. The reason a tent in the city is $0 is because that is an externality that is allowed... you can't even stay for free in a campground, because water, trash, and toilets cost money.

jethro_tell 3y ago
or, and hear me out here, parking spaces are $400/mo because that's what people are willing to pay in a sparsely populated autocentric living environment. We don't have to take things like "the cost of a parking space in the system we've created" as a fact, we can change the value of the parking space.
- brewdad 3y ago
  How? You need to either build a LOT more parking or you need to make it possible to live without a car. There are only a handful (with leftover fingers) of US cities where going car-free is reasonable.
- kurthr 3y ago
  Well, usually those are for parking either in quite dense (>3 story) business/commercial or residential. It's "only $13/day". Even Tokyo, NY, Paris parking spaces don't get cheaper. So the exception is for rural/suburban environments where parking spaces are cheap/free because space is cheap. Guess what, if you want to live cheaply, it's not going to be where everyone else wants to live and work. Cheap Tokyo apartments are far from transit and on the outskirts or even outside Yamanote. People commute daily over an hour by train each way. Shanghai and Beijing built huge amounts of dense housing (also Shezhen, Chongqing, Hefei, Ordos) and what happened to property prices? They spiraled out of control since they were considered investments (that only go up) with many of them vacant. What happened to prices in Tokyo (notably after the '89 bust and not before)? Housing became relatively affordable since it's not considered an investment (even with near 0% interest rates).

revlolz 3y ago

I dont think the Government can do much (that it will do well), but I think it needs to: 1) Curtail companies and LLCs from acquiring Single Family Residences (SFR). 2) Dramatically step up incentives for builders to increase quality control and build quality while increasing punishment severely for fraudsters. In my opinion flipping, rentals, and "fixer uppers" have gotten out of control. I see the only way of curtailing this as penalizing those types of lenders in interest rates or taxes to push them out of the market. For those unaware, flippers seek out private money lenders aka hard money lenders and pursue crazy high interest rates that balloon after 3, 6, 9, or 12 months. The idea is by taking on loans while they flip properties they can take on risk/liability, but spread their assets out and purchase/flip more properties. It happens for almost all property types, but typically is done for SFR/MFR because commercial has a lot more risk since property prices are much higher. The quality of repairs and renovations these flippers typically perform is well known to be absolute god awful. Flippers make short term investment choices on home improvements needing long term solutions. To my second point, I've heard of so much fraud from home builders it baffles me they aren't in prison. Full neighborhood developments where builder's sold 30 year roofing, but built roofs with materials known to fail in 10-15, and the building company dissolves into the wind leaving homeowners with little to no recourse other than some couple hundred dollar settlement check whenever some class action suit eventually settles. There are plenty more examples of things like this, but my point is I think the only win to have is promote tax incentives for builders to build using quality processes and pass inspections, but I will admit I'm chasing a solution and am ill equipped to be presenting a solution. I am more focused on calling out the problem.

deleted 3y ago

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downrightmike 3y ago

The answer is non-market housing. Housing made to pay for itself, but not profit from. Vienna has 60% non-market housing, which puts a huge damper on what the market can charge. Which is why we will likely never see it until the boomers and the boomer minded are long gone.

jjav 3y ago

> we're not living in the counterfactual reality where there are millions of new apartments that are inexpensive, tiny, safe, quiet, modern, clean, dignified, and well-located It is true that there's way too much (and way too costly) red tape to build housing. At the same time, it's also true that even if you skip all that, building is expensive due to materials & labor in any urban or suburban area. Look at building costs in your area by sqft, just for labor & materials. Building cheap units (for a local wage-adjusted level of cheap) is very difficult without some form of external assistance (e.g. like low-income units subsidized by other units).

escapedmoose 3y ago

I can’t speak for all of the US, but locally the most common way that affordable housing is built is because we have local government mandates which require it of large companies who build in my area. It seems to work very well; ours is the fastest-growing region in my state, and homelessness has been low.

jamesnadeau 3y ago

No, the answer is capitalism.