6 ms·

Rents are rising faster than wages across the country

80 points by indigodaddy 2y ago

justahuman74 2y ago
I mean, isn't this the whole point of inflation
8f2ab37a-ed6c 2y ago
Could someone explain why this is happening? Older generations of home owners knowing they can get away with it? Corporate interests buying up real estate and also tightening the ratchet? Construction not keeping up with population growth? Not at all an expert in this area, but would love to understand the underlying dynamics here?
- wernercd 2y ago
  Inflation makes everything more expensive (light bulbs, nails, electricity). Regulations to make stuff "safer" also makes stuff more expensive. Places like CA have had a housing shortage for decades - they are short on houses built vs needed by tens of thousands a year for decades. Add to that "investment" in rentals and the like. it all adds up. I assume it's going to get worse.
  - bombcar 2y ago
    An "investment" in rentals doesn't take supply away, even converting from a rental to an owner-occupied doesn't. What you need is more supply, and without that prices will continue to go wild because the number of people who want to live in the area outstrips the supply of spaces. In the past, you'd have new cities pop up and take some of the pressure off, but that's slowed down (though places like Austin have gone wild).
    - wernercd 2y ago
      It doesn't take supply away... but it does add overhead and middle men - which increases costs. Those investors need returns on their investments - whether you agree with capitalism or not. "more supply" which is why I included places like CA that have had DECADES of shortages because of regulation, corruption, NIMBY, etc. When you add the need for "more supply" to the need for investors to recoup costs, increased costs to build (IE: More safety features, solar requirements, etc), increased interest rates, etc? It's easy to say supply and it's easy to say "towns used to pop up"... it's harder to admit that there's only so much space and those easy to pop-up areas are becoming fewer because there's fewer places to put up "towns" out of nowhere.
- hn_throwaway_99 2y ago
  It's really a basic supply and demand issue. Austin TX had skyrocketing housing prices and rents during the pandemic. It also built a shit ton of new apartments that have come online during the past year (and are continuing to come on line), and rent prices fell considerably: https://www.austinmonitor.com/stories/2024/02/austin-apartments-boomed-and-rents-went-down-now-some-builders-are-dismantling-the-cranes/ https://www.austinmonitor.com/stories/2024/02/austin-apartme...
- betaby 2y ago
  Not enough supply. Even with the US population growth of 0.4%/year one has to build a whole new Phoenix,AZ worth of housing. That's just not happening.
- callalex 2y ago
  I don’t think there’s one simple and satisfying answer, it’s a complex system. The only simple broad-stroke answer is that the government is incredibly powerful so violent uprising/revolution by the working class is essentially impossible.
- johncessna 2y ago
  Taxes, utilities, heating costs, construction costs, insurance cost, the cost of a new property (build or buy) are all going up. The title on this article could have easily been '$insertAnythingHere going up faster than wages' I can speak to the 'mom and pop' landlords. The best you can hope for is that your properties are paid for. If they're leveraged, it's a razor thin margin where are one roof replacement, furnace replacement, or state/local government deciding failure to pay isn't grounds for eviction away from losing money.
  - bombcar 2y ago
    The average "mom and pop" landlord (who owns a house or two) is almost always subsidizing their tenants if you honestly do the math. The only thing that has keep it worthwhile at the rental rates we've seen for years has been the appreciation they're booking and the low interest rates. If you do an actual cap-ex spreadsheet for a property and compare it to what it's renting for, it's almost never worth it.
- mywittyname 2y ago
  Lack of housing growth seems to be a factor. Housing starts in 2023 were still not even close to 2000 numbers. And the dip from the GFC lasted a long time (6 years). Looks like COVID stalled the recovery as well. https://ipropertymanagement.com/research/housing-starts https://ipropertymanagement.com/research/housing-starts Not enough housing means people have to combine houses and pay more. This problem has been 16 years in the making.
- dublinben 2y ago
  High interest rates also push up demand by keeping more people stuck as renters who would rather buy a home.
  - criddell 2y ago
    What is considered to be a high interest rate? Looking at this[1] chart, it looks like rates right now are close to average for the past 50 years or so. https://fred.stlouisfed.org/series/MORTGAGE30US https://fred.stlouisfed.org/series/MORTGAGE30US
- lenerdenator 2y ago
  Pretty much all of those. The "older generation" mismanaged the economy for 40 years, and now their children are paying for it. This is what happens when you base an economy purely off of what equities trade at in two exchanges. EDIT: Downvote me all you want, but it's true. I'm 32. I have no debt, a good paying job, no spouse, no kids. I live in the same county my parents did at my age, in a major-ish American metro in the lower Midwest. I cannot afford the same standard of living they did at my age. Why? Because of inflation. Why is inflation high? Because we had to print a bunch of money out of nowhere to keep the economy from collapsing during COVID. Why did we have to keep the economy from collapsing during COVID? Because the average American household is living paycheck-to-paycheck and has no emergency savings. They're living paycheck-to-paycheck because the average wage has not kept up with both the costs of living and the value created by labor for the last four decades. The value created by labor went to earnings-per-share on stocks, bonds, and other investment instruments issued by companies. The average person cannot afford to have the returns on such investments factor into their five-to-ten-year financial goals. More and more, they cannot afford to have returns on such investments factor into their 20-30-year financial goals, either. This shift did not come from nowhere; it came from human behaviors, modalities, and policies. There were people alive and in a majority to make this happen during that period of time.
  - dangus 2y ago
    I think you’re naive to think that even a hypothetical affluent highly responsible nation of hundreds of millions of people with excess savings in their bank accounts is supposed to magically deal with an unemployment rate of 15% that occurred basically overnight without doing any kind of quantitative easing. I think the lack of housing supply is still the core culprit and that major reforms need to be made to the US’ approach to building.
    - lenerdenator 2y ago
      It might not have completely negated the need to print off all of that money, but it would have negated a good deal of it. The alternative would have been to have backed the checks with pre-existing money. That would have meant having a sane tax policy and a lack of military adventures in the United States over the last 30 years. The lack of housing supply happened because some geeked-up bankers 15-20 years ago decided to gamble the nation's economy on its ability to pay for mortgage rates that had gone out of their teaser rates. That destroyed the residential construction industry. We never caught up, because catching up means that the people responsible for the whole mess to begin with would have faced real financial consequences. The fact that building codes and zoning laws are what they are doesn't help, but it all comes back to money, and remember, there's a reason those zoning laws and building codes were there to begin with.
- JumpCrisscross 2y ago
  > Could someone explain why this is happening? Given "Florida markets occupy three of the top five spots where rent growth has most dramatically outpaced wage growth since pre-pandemic," and "Houston saw the greatest annual wage growth of any metro — nearly double the national average — and was one of only four markets where wages outperformed rents," it seems like the cause is migration and insufficient new housing [1]. (Counterfactual: "In three areas — San Francisco, Portland, and Austin — rents actually declined from 2022 as market heat began to moderate, while wage growth in those areas continued to climb.") [1] https://streeteasy.com/blog/rents-grow-faster-than-wages-across-us-nyc/ https://streeteasy.com/blog/rents-grow-faster-than-wages-acr...
- rcpt 2y ago
  "housing prices are going down" is bad news for voting demographics.
  - bluGill 2y ago
    It isn't bad news - but it feels like it. The forget that they have a place to live during that time and so most of their house payment would go to rent anyway. They also forget that in 30 years they get a place to live rent free (well property taxes - and of course this breaks if you take cash out). House prices generally don't go down so much as stagnate compared to inflation.
    - bombcar 2y ago
      House prices have dropped in nominal dollars a number of times, specially the five years from 2008-2013. Of course, that's on a national average; localities can deviate. That annoys people and makes houses go underwater; if you instead hold house prices mostly steady whilst inflation goes up, most everyone is happy. People who bought think they're financial geniuses for locking in a low rate, and non-owners see their affordability slowly improve. The problem is it's slowly; even 5% inflation would take a few years to be really noticeable.
    - rcpt 2y ago
      It's interpreted as bad news, thus there is zero political will to pursue policies that reduce housing prices.
- nimbius 2y ago
  If I had to speculate, I'd say its a combination of rebound from covid rent furloughs, and market capture by capital management firms like trammel crow (who really, really want you to think theyre a property management company now) Some might say deposit regulation and reform is a driver, but all that really did was set up a scumbag market of fintechs that replaced outrageous renters deposits with slightly less expensive non refundable premiums. Not that it matters. We are building plenty of apartments you can't afford for other reasons. Paid parking, pet fees, 3 figure application fees, move in fees, and common area fees not to mention Arizona's renter property tax all raise the bar. Even if you can afford it you'll likely not qualify. Credit, criminal and prior landlord checks all have to come back spotless. You'll need to submit 2 pay stubs after that.
- ninininino 2y ago
  Wealthy boomers control politics and wealthy boomers (mostly - a portion but obviously not all - of the first half of their generation years-wise) own housing. Why would they want to allow their rental incomes to decrease or their home values to decline by allowing new housing to be built? They are the me-me-me generation after all. Anything they can do to set the future on fire in order to maximize their returns while they live, they will do. Whether that's bail out failing businesses with government-owned debt that future generations (including their grandkids) have to pay back or destroy the planet and environment. The only solution is to get younger people to vote or to wait for them to die.
  - jobs_throwaway 2y ago
    > The only solution is to get younger people to vote or to wait for them to die. There are other means, perhaps less palatable for the HN crowd though
- sonotathrowaway 2y ago
  One factor I’m not seeing mentioned in these replies is the rise of price fixing software meant to maximize profit for landlord companies. Multiple investigations have found the behavior replicated in many cities, with many of these companies being sued. https://www.propublica.org/article/senators-introduce-legislation-stop-landlords-algorithm-price-fixing https://www.propublica.org/article/senators-introduce-legisl...
- bell-cot 2y ago
  Imagine a game of Musical Chairs, but... - at the end of each round, "who gets a chair" is determined by a "rent auction" - after each round, 2 players and 1 chair are added - auction losers are sent to the local homeless shelter, freeway overpass, or whatever
- maxsilver 2y ago
  All of the above. - Prices are determined by comparables. When home owners sell, and can push prices higher, it pushes all possible future prices for all properties nearby higher simultaneously. - Corporate interests are buying up real estate, and especially rentals. (public and private equity purchases are 6x higher than they were a decade ago here). Higher rental prices encourage people to leave rentals faster, making people more desperate to buy, increasing their willingness to take on more debt. - (in a few areas) construction is limited and not keeping up with growth. In most of Midwest US, construction outpaces growth, but since prices are determined by comparables, new construction in an area can be priced at top of the market, resetting those comparables higher too. Paradoxically, even though we do need new housing construction to have housing, our financial system is setup such that new housing construction generally raises all prices for all housing on average -- the "more supply" benefits don't really take effect for about 30 years, when they become normal mid-market units. - In some areas, new Hotels entrants are escaping basic regulation by lying about who they are. (see AirBnB, Vrbo and similar hotel chains). This removes housing supply, and can't be market corrected by other competitive hotels (since they would have to follow basic hotel regulation, but AirBnB and Vrbo are allowed to break the law) - Unlike in 2008, corporate interests are willing to just eat massive losses to prevent property prices from falling. And the federal government is willing to extend massive amount of lending to them to allow them to do this almost indefinitely. So even in places where there's a massive supply of empty units, those units aren't making it to the market at any reduced prices because it's too affordable to simply sit on them instead and hope they're eventually able to rent out again at ultra-high pricing. I suspect we'll never see a gentle market reset back to real-world-based numbers like we saw in 2008 for that reason. Any one of those problems would raise property prices for everyone. But we're dealing with all of them, simultaneously. Something like this https://ny1.com/nyc/all-boroughs/news/2024/01/05/hedge-fund-rental-housing-home-affordable-representative-adam-smith-congress- https://ny1.com/nyc/all-boroughs/news/2024/01/05/hedge-fund-... would be a gentle start to attempt to address the above problems, but it remains to be seen if they actually get this through.
  - HDThoreaun 2y ago
    Corporations only buy housing because it is a good investment. Its only a good investment because supply is severely limited by the government. If you think corporate ownership is a problem the solution is building more, LVT wouldnt hurt either.
- subsubzero 2y ago
  People act like this stuff is magic. When Biden came into office he pushed the build back better plan(luckily Manchin did not vote the largest portion of the bill) - 6.25 trillion even though Trump had already pushed a huge stimulus package during covid(which I think was too big also). Massive increase in cash supply led to skyrocketing inflation. Its why houses, cars everything is like 40-60% more expensive since 2019. I mean you can't get away with sending hundreds of millions of people thousands of dollars for free and expect things to just keep on going as if nothing ever happened.
  - olddustytrail 2y ago
    Except you are obviously wrong. If US monetary policy had been the cause then the inflation would have been due to the dollar losing value and you would have seen a change in exchange rates against other currencies. But you didn't.
    - gottorf 2y ago
      US monetary policy didn't exist in a vacuum! The dollar did lose value relative to actual things you can buy, like groceries and houses, but did not lose value relative to other currencies because other countries were also printing money like mad.
      - olddustytrail 2y ago
        Some were and some weren't. Which currencies appreciated significantly against USD in this period? Come to think of it, the UK didn't. It borrowed instead. Why didn't GBP massively increase against USD?
        gottorf 2y ago
        > Which currencies appreciated significantly against USD in this period? Very few did. A quick snapshot is the Dollar Index, which is a basket of six "major" currencies (pound sterling, yen, Euro, Swiss franc, Canadian dollar, and Swedish krona), which remains higher (stronger dollar) today than even the Covid crash peak, during which basically everything that could be traded did so in a huge range due to extreme market volatility. The Swiss franc is stronger against the dollar since 2019, and so is the Mexican peso, both by roughly 9-10%. That's about it for what I can think of in terms of globally relevant currencies. Most everything else is weaker against the USD than back in 2019. The US dollar, by virtue of being the global reserve currency, can likely absorb more abuse than others. It's often called the cleanest shirt in a pile of dirty laundry. > the UK didn't. It borrowed instead. Why didn't GBP massively increase against USD? It looks like the UK spent roughly ~5k per capita as a response to Covid[0]. When the spending comes from budgetary deficits (that is, absent a commensurate increase in taxes) financed by new bond issuance ("borrowed", as you said), and a large part of said bonds were absorbed by the central bank[1], it's effectively printing money. [0]: https://commonslibrary.parliament.uk/research-briefings/cbp-9309/ https://commonslibrary.parliament.uk/research-briefings/cbp-... [1]: https://tradingeconomics.com/united-kingdom/central-bank-balance-sheet https://tradingeconomics.com/united-kingdom/central-bank-bal...
- davidw 2y ago
  The "corporate interests" thing is a bogeyman. They're a symptom of the problem, rather than a cause, as is explained here: https://www.strongtowns.org/journal/2024/2/21-going-after-corporate-homebuyers-good-politics-ineffective-policy https://www.strongtowns.org/journal/2024/2/21-going-after-co... If you go to local hearings and listen in on city council meetings, you start seeing a pattern of people who "got theirs" trying to stop homes from being built: https://bendyimby.com/2024/04/16/the-hearing-and-the-housing-shortage/ https://bendyimby.com/2024/04/16/the-hearing-and-the-housing...
  - dingnuts 2y ago
    the existing housing stock would be fine if the population wasn't growing. With birth rates as they are, increased demand and increased crowding is a choice made through immigration policy. unpopular political stance, I know, but you can't welcome in unlimited residents without expecting the existing inhabitants to get used to more crowding or fight over the available space
    - davidw 2y ago
      Or you could build more housing. Many of those immigrants would love to work doing that! And a lot of it is actually not really immigrants anyway, but household formation in a large cohort: https://oregoneconomicanalysis.com/2023/10/26/household-formation-in-oregon/ https://oregoneconomicanalysis.com/2023/10/26/household-form... Oh, also, in any case the existing housing stock would not be fine, because people migrate around the country, too, to places with jobs, or away from places in decline. A vacant house in Cyanide Springs, Oklahoma doesn't do much good if your job is in Mountain View, California.
- gen220 2y ago
  It used to be that when you moved from point A to point B (for retirement, career-change, whatever), you'd sell your home in A and buy a home in B. Modern communications + financial tech have converted homes into cash-flowing assets that can be managed at a distance at 1/10th the risk-adjusted cost of 40 years ago. Home-owning people of the age 55+ do not sell homes when they move, they rent them out and use the cash flow as leverage to buy a new home. This has been happening at least since 2008, but is a secular trend. In my opinion, talk of "not enough housing" is a mind trick to get you to ignore the fact that we actually do have adequate sqft/people in desirable areas, but ownership of that square footage is distributed incredibly unequally. The % of homes that are lived-in by owners is approaching all-time lows in most high-COL regions in the U.S.. Those people pass their assets on to their children, who often have no ties to the region, and to whom real estate is purely a financial asset to be squeezed for maximum cash flow to subsidize their unearned lifestyles. We live with the consequences: rent that is increasingly unhinged from reality, and allows for dismal savings rates for our youth. IDK, it's pretty bleak as somebody who wants to be a homeowner in a community that feels like home. I keep suspecting that there'll be a populist anti-landlord policy movement in my urban area (NYC) but outside of maybe 2-3 months during COVID it remains a pretty fringe idea.
  - bombcar 2y ago
    These people have been getting away with it because of the relatively continual appreciation during that time. When the worm turns, and it will turn, these people are in for a surprise and world of hurt. I saw it in the 80s and in the early 2000s and will see it again.
  - bluGill 2y ago
    Some people have been doing that all along. I've seen fiction books from the 1930s talking about some person doing that. It sometimes works sometimes doesn't.
- patrickmay 2y ago
  The root cause is zoning and NIMBYism (Not In My Back Yard). It's not difficult. Prices are determined by supply and demand. When local and state governments restrict supply via zoning and other laws, prices go up. If you want prices to go down, increase the supply.
- rawgabbit 2y ago
  All the posts here addressed the immediate cause, zoning and NIMBY. If you look into the issue from the viewpoint of American policy, the US has a long tradition of promoting home ownership as it is viewed as promoting a more responsible citizenry who care about their neighborhood and will make good long term decisions. The fact that this stated goal of American policy is out of reach for many means American policy is broken. There are now too many vested interests against new home ownership. If you ask many current homeowners they will tell you they have debt up to their ears. Their one asset is their home which they will borrow against, reverse mortgage, or sell to fund their retirement. That is they will do everything in their power to prevent their homes from losing value.
hnthrowaway0328 2y ago
Not surprising with rates hiked to 5% in just a couple of years. Apparently we don't have rate control.
- bluGill 2y ago
  I'd say not surprising when rates were down to 2-3% for years. I haven't seen anyone make a rigorous argument as to what rates should be, but it is clear that when they get too low - as they did - you cause inflation and that has been happening. (note that inflation is never even across the economy - this time it housing early)
deleted 2y ago
[deleted]
beaeglebeachedd 2y ago
I solved this problem by finding a place with no fire/building code inspections and built a shack for 40k. People build whatever here and all the stuff paranoid people claim would happen, didn't. Code inspections eliminated 20 years ago. I imagine the code scam and it's costs result in untold deaths and exposure, or money lost that could have been spent on healthcare, education, or healthy foods .
- bitcharmer 2y ago
  It's a bit like advocating not wearing a seatbelt because You've never been in an accident. Pretty short sighted
- bitxbitxbitcoin 2y ago
  Is this a county level jurisdiction in the United States?
  - beaeglebeachedd 2y ago
    Yes. Most counties experiencing booms since the 70s, developers swooped in and coopted the county boards to make a guy and his truck weak competition.
    - jameshart 2y ago
      To be fair, many towns don’t actually want to only attract guys with trucks. They also want families, professionals, schoolteachers, etc. It’s not evil for a town to prefer that developers come in and build housing in volume to enable the growth the town desires versus individuals coming in and building one offs.
  - sixothree 2y ago
    Yeah. Not sure this is an answer for anyone except people in that one specific region.
- loandbehold 2y ago
  Where is it?
kvmet 2y ago
That graph is awful. What is it showing aside from "bigger arrow more bad"? Does color mean anything? What variable does arrow size actually represent?
alexpetralia 2y ago
I think the inevitable conclusion is returns to capital is rising versus the returns to labor. Put your money in investments because that's what we (as a society) reward. https://www.mckinsey.com/featured-insights/employment-and-growth/a-new-look-at-the-declining-labor-share-of-income-in-the-united-states#section-header-1 https://www.mckinsey.com/featured-insights/employment-and-gr...
- lifestyleguru 2y ago
  The taxation and obligatory contributions on labor in Europe are brutal. Very quickly reaching over 40% in total in most countries. In the cities where there exist employment options, salary pays for housing, food, some going out, tiny savings and that's it. There is no point in working.
  - trgn 2y ago
    The most bizar thing in Europe to me is that many countries are straight up tax havens, no capital gains taxes, but then tax labor so highly. It's a wonder to me, and I feel like many europeans don't even realize. In US, the commonwealth is funded by the rich. In Europe, by everybody else.
    - lifestyleguru 2y ago
      Actually many countries heavily tax all of them - labour, dividends, and capital gains. Especially Nordics, Benelux, France, Germany. Sometimes I wonder what's the point even of working and investing in countries like France, Belgium, or Denmark... yeah everything is so tidy, clean, and nice but you'll never afford any of it through employment.
- trgn 2y ago
  Wage growth has been really strong lately, 4-5% for a number of years now. Capital gains on the contrary have been very choppy last few years. Broad correction after 2021, and some sectors have still not recovered. Housing is now dropping as well.
nostromo 2y ago
Higher interest rates make building new housing more expensive. Fewer new builds + higher costs = higher rents.
- lenerdenator 2y ago
  What you're seeing are not extraordinarily high interest rates.
  - tesrx 2y ago
    OP said "higher interest rates" relative to historic lows in '20-21. Your comment does not negate the effect that interest rates have had on affordability. The last time interest rates were this high, home prices were significantly lower than what they are now. Wages have not kept up with inflation.
    - lenerdenator 2y ago
      Being relative to historic lows in anything doesn't say much, though.
- bombcar 2y ago
  The biggest thing higher rates is doing is preventing people from moving when they might otherwise want to, because going from 3% to 7% will double their monthly. This results in fewer people "upgrading" into new construction, which further constricts the "starter home" pool (nobody builds starter homes).
- bluGill 2y ago
  Higher interest rates are not that much a hit on new building - the construction loans don't last long and so while there is more cost it isn't very significant compared to all the other costs. They are a problem to owners though - if you want to own a building you will pay a lot more. There is a subtle difference, and this is why new house construction is still going strong - there are enough people who can afford a loan who want a new house as to make it worth building. Having been in construction I call tell you a contractor can build two identical houses in the same neighborhood, with the only difference being the contractor is planning on selling one after it is built, while the other a buyer is exists for the house. The second house will costs at least $20,000 more than the first, the only difference being the buyer will upgrade lights, doors, flooring, countertops and so on. All those little $300 upgrades add up.
deleted 2y ago
[deleted]
lenerdenator 2y ago
This is going to have long-term economic and sociopolitical ramifications, and it's mainly due to the fact that we put the value of equities above all else. The next generation isn't being born, because their would-be parents are saying "I cannot afford to give my children as good or better of a life than I had". The equities that labor's value is stored in are beyond their reach. There's really only two ways to deal with this: 1) Get the older generation - the Baby Boomers - to work longer and rely on their stock-based savings less. Given that we've structured our entire society around them getting to retire to Florida for golf and wife-swapping until the dementia sets in, I don't see them being willing to stick around the office longer to produce value for the economy. 2) Import labor through immigration. Given that one candidate for President right now is running on a platform of severely curtailing certain types of immigration, and is doing so successfully, I don't see this being a viable option.
- HDThoreaun 2y ago
  Birthrate seems to have little correlation with income. The Scandinavian countries have made hard pushes to incentivize having children and they still wont. More likely that people just dont want kids.
  - dangus 2y ago
    When half your babies aren’t dying of disease and you have life and career aspirations for yourself the idea of raising more than 1-3 kids seems pretty insane. Arguably low birth rates are a very good thing and we should adjust our society more to embrace them (like not building the economy so that it depends on being a giant pyramid scheme).
  - rybosworld 2y ago
    Birth rate has generally been inversely correlated to income. AFAIK this is true in almost every country. The plot of Idiocracy was derived from this phenomenon. Humans are complicated and there are probably multiple reasons for this. But the most convincing one that I've heard is tied to education. Higher income generally means better education. And the better educated are more likely to use birth control. https://wol.iza.org/uploads/articles/228/pdfs/female-education-and-its-impact-on-fertility.pdf https://wol.iza.org/uploads/articles/228/pdfs/female-educati... I mentioned before that birth rate and income are generally inversely correlated. But that isn't completely true. The relationship is more of a j-curve. That is, past a certain income (think top 5% or more), the fertility rate begins to tick up. https://en.wikipedia.org/wiki/Income_and_fertility#:~:text=There%20is%20generally%20an%20inverse,born%20in%20any%20developed%20country https://en.wikipedia.org/wiki/Income_and_fertility#:~:text=T.... So, the breakdown is basically this: - The lowest-income/least-educated have the most children by far. - As you climb up the middle income/college-educated ladder, fertility drops almost linearly. - The wealthiest have more kids than the upper middle income, but still a lot less than low income.
newhotelowner 2y ago
24000 Students - 27 Schools (K-12) in my school district. District hardly approves any apartments/duplex/fourplex/multi-family. All new builds are 3500-4500 sqft single family home netting $12-15k in property taxes. State decided to fund charter/private/religious school.
davidw 2y ago
This is why groups like https://new.yimbyaction.org/ https://new.yimbyaction.org/ and https://welcomingneighbors.us/ https://welcomingneighbors.us/ exist. Find (or start!) a local group. It's extremely meaningful work, because you see homes built that you helped advocate for, that now provide someone with a place to live. And since it's local politics, it's much easier to make a difference than on some hot-button national issue.
VyseofArcadia 2y ago
This was already a problem when I moved to Atlanta in 2017. And the six years before that in the smaller town I was living in. The only time I got a raise above my rent increase is when I switched jobs. It didn't feel like a supply crunch either. Plenty of apartments for rent in both places, but still rent everywhere increased in lockstep in both cities. Made the whole thing seem very arbitrary and cruel.
- bryanlarsen 2y ago
  > The only time I got a raise above my rent increase is when I switched jobs. This is the American economy in a nutshell. Wages have been going up faster than inflation for the last year or so, but if you dig into it, it's only for workers who change jobs and union members.
zer00eyz 2y ago
There are so many factors that drive this. I own, I have plenty of space, I would happily take on a roommate. But the tenancy laws make my life hell if that person turns into an asshole. I have not seen any stats on housing distribution. Are there more houses with 1-2 residents where there would have been 2 or more in the past?
- bombcar 2y ago
  One aspect over long periods of time is the number of single-parent households, as some of those would have been combined in the past. That increases pressure. Reduction of "roommate/quasi-renting" because of tenancy laws. That increases pressure. Proliferation of AirBNB - that increases pressure. Everything is increasing pressure, but the number of new dwelling units isn't increasing as fast as needed.
smm11 2y ago
Buy low, sell high. There are cheap houses all over this country, and the 'flip' world we're in now means that a lot of houses have a lot of stuff already done. Buy. Work remote. Sit on it a year or two. Move up.
peoplefromibiza 2y ago
You're not alone. I can testimony it's happening in Italy too, at least in larger cities (Rome, Milan, Bologna, etc) It's even worse here cause salaries are not rising at all It's been like the perfect storm: high inflation, high interest rates, people cannot afford a mortgage anymore (or banks are not lwnding them money) and rents have become the only option available, reaching record highs. To add insult to injury energy prices are among the highest in the whole EU and you can imagine how grim the situation really is. Except for owners of multiple homes/apartments of course.
- lifestyleguru 2y ago
  Since I remember the regular salary in Italy has been 1600 EUR net monthly. It's like a number engraved on a marble block - "1600".
- bombcar 2y ago
  And to make it worse, Americans are moving in and buying places up! https://www.businessinsider.com/retired-americans-move-to-italy-affordable-healthcare-work-life-balance-2024-5 https://www.businessinsider.com/retired-americans-move-to-it...
jobs_throwaway 2y ago
> Rents jumped 30.4% nationwide between 2019 and 2023 I don't understand how this isn't a major national emergency. The fact that your average voter cares more about, say, immigration, than this problem is absolutely ludicrous
- idontpost 2y ago
  [dead]
- kjkjadksj 2y ago
  The powers that be would rather you quibble over inconsequential immigration than notice the other hand reaching into your wallet. It’s just that simple.
  - JumpCrisscross 2y ago
    > powers that be would rather you quibble over inconsequential immigration Those powers being two thirds of Americans [1]. (And a greater fraction of voters [2].) It's tempting to blame a conspiracy. But at least the housing cost side of the equation is quite obviously a policy choice in much of the country. [1] https://en.wikipedia.org/wiki/Homeownership_in_the_United_States https://en.wikipedia.org/wiki/Homeownership_in_the_United_St... [2] https://www.route-fifty.com/management/2022/08/problem-homeowners-being-more-likely-vote/376521/ https://www.route-fifty.com/management/2022/08/problem-homeo...
    - kjkjadksj 2y ago
      Why are you citing homeownership stats? I saw fox news on tv in public recently. The headline cited “millions of migrants overwhelming border.” These are the powers that be who I am referring to. The powers who craft those unhinged headlines and also stand to benefit in some way by entrenching those headlines into the formative minds of their dedicated political base.
- mensetmanusman 2y ago
  They are related, millions of more unplanned civilians dramatically increases rent and reduces supply. At least that has been the case in Canada.
UncleOxidant 2y ago
This is the major problem that neither political party seems to have anything to say about (let alone a viable plan to deal with it). The party that gets serious about the housing affordability crisis could do very well, but for whatever reason they don't seem to want to focus on this issue. I was just looking at the reddit for our town yesterday and a guy with a family was posting about how they had been forced out of their rental house recently due to a sale and are now living in motels while trying to find a rental they could afford and qualify for (he'd had an eviction years ago and that was on his record). He said that that having to live in a motel was quickly draining their funds. Seems like this family is just about to be homeless and this is becoming more and more common for middle class people now given the level of rents.
- lurking15 2y ago
  > but for whatever reason they don't seem to want to focus on this issue printing money funds the cancerous growth of government, so there's no way a major party can focus on that when it causes the monetization of shelter (and other hard, scarce assets)
- HDThoreaun 2y ago
  Housing policy is Newsome's main issue at this point
kkfx 2y ago
Aside that's a good example of why ownership is good and so why homes instead of apartments are good as well and as a corollary why WFH for all eligible jobs should be even mandatory by default with derogation only for proven reasons (yes, WFH means also the possibility to work outside big cities for many who do not WFH, thank to the mere spread mass of humans WFH produce)...
xnx 2y ago
2 groups of people in the US: homeowners and renters. Homeowners want housing prices to go up. Renters want housing prices to go down. Homeowners vote.
higeorge13 2y ago
Same in Greece both for renting and selling. People got rich just because they had some old apartment from the 80s which was worth 100k 5 years ago but they can now sell it 200-250-300k. And here we also have lots of foreigners buying houses at extraordinary prices. Situation is bad in cities, but way worse in the touristic destinations.
lurking15 2y ago
cut off immigration and stop printing money, and then housing will be available for people in the US
Thoreandan 2y ago
Related (2005): https://en.wikipedia.org/wiki/Rent_Is_Too_Damn_High_Party https://en.wikipedia.org/wiki/Rent_Is_Too_Damn_High_Party
- lifestyleguru 2y ago
  > Rent Is Too Damn High I remember laughing at that meme 10 years ago. I'm not laughing now anymore. This thing spread globally.
TheChaplain 2y ago
There are few simple things that can possibly help? 1) Increase property tax considerably on housing that is empty, low-usage or switches tenant as often as twice a year. Easy to check for empty/usage by correlating the electricity bill. 2) Increase tax on housing owned by out-of-country people/companies. 3) Increase tax on properties owned that exceeds 3 (people playing the airbnb game buying up housing just to rent it to tourists suck). Had 2 more but I think the friday beer turned off the brain..

80 points by indigodaddy 2y ago

I mean, isn't this the whole point of inflation

Could someone explain why this is happening? Older generations of home owners knowing they can get away with it? Corporate interests buying up real estate and also tightening the ratchet? Construction not keeping up with population growth? Not at all an expert in this area, but would love to understand the underlying dynamics here?

wernercd 2y ago
Inflation makes everything more expensive (light bulbs, nails, electricity). Regulations to make stuff "safer" also makes stuff more expensive. Places like CA have had a housing shortage for decades - they are short on houses built vs needed by tens of thousands a year for decades. Add to that "investment" in rentals and the like. it all adds up. I assume it's going to get worse.
- bombcar 2y ago
  An "investment" in rentals doesn't take supply away, even converting from a rental to an owner-occupied doesn't. What you need is more supply, and without that prices will continue to go wild because the number of people who want to live in the area outstrips the supply of spaces. In the past, you'd have new cities pop up and take some of the pressure off, but that's slowed down (though places like Austin have gone wild).
  - wernercd 2y ago
    It doesn't take supply away... but it does add overhead and middle men - which increases costs. Those investors need returns on their investments - whether you agree with capitalism or not. "more supply" which is why I included places like CA that have had DECADES of shortages because of regulation, corruption, NIMBY, etc. When you add the need for "more supply" to the need for investors to recoup costs, increased costs to build (IE: More safety features, solar requirements, etc), increased interest rates, etc? It's easy to say supply and it's easy to say "towns used to pop up"... it's harder to admit that there's only so much space and those easy to pop-up areas are becoming fewer because there's fewer places to put up "towns" out of nowhere.
hn_throwaway_99 2y ago
It's really a basic supply and demand issue. Austin TX had skyrocketing housing prices and rents during the pandemic. It also built a shit ton of new apartments that have come online during the past year (and are continuing to come on line), and rent prices fell considerably: https://www.austinmonitor.com/stories/2024/02/austin-apartments-boomed-and-rents-went-down-now-some-builders-are-dismantling-the-cranes/ https://www.austinmonitor.com/stories/2024/02/austin-apartme...
betaby 2y ago
Not enough supply. Even with the US population growth of 0.4%/year one has to build a whole new Phoenix,AZ worth of housing. That's just not happening.
callalex 2y ago
I don’t think there’s one simple and satisfying answer, it’s a complex system. The only simple broad-stroke answer is that the government is incredibly powerful so violent uprising/revolution by the working class is essentially impossible.
johncessna 2y ago
Taxes, utilities, heating costs, construction costs, insurance cost, the cost of a new property (build or buy) are all going up. The title on this article could have easily been '$insertAnythingHere going up faster than wages' I can speak to the 'mom and pop' landlords. The best you can hope for is that your properties are paid for. If they're leveraged, it's a razor thin margin where are one roof replacement, furnace replacement, or state/local government deciding failure to pay isn't grounds for eviction away from losing money.
- bombcar 2y ago
  The average "mom and pop" landlord (who owns a house or two) is almost always subsidizing their tenants if you honestly do the math. The only thing that has keep it worthwhile at the rental rates we've seen for years has been the appreciation they're booking and the low interest rates. If you do an actual cap-ex spreadsheet for a property and compare it to what it's renting for, it's almost never worth it.
mywittyname 2y ago
Lack of housing growth seems to be a factor. Housing starts in 2023 were still not even close to 2000 numbers. And the dip from the GFC lasted a long time (6 years). Looks like COVID stalled the recovery as well. https://ipropertymanagement.com/research/housing-starts https://ipropertymanagement.com/research/housing-starts Not enough housing means people have to combine houses and pay more. This problem has been 16 years in the making.
dublinben 2y ago
High interest rates also push up demand by keeping more people stuck as renters who would rather buy a home.
- criddell 2y ago
  What is considered to be a high interest rate? Looking at this[1] chart, it looks like rates right now are close to average for the past 50 years or so. https://fred.stlouisfed.org/series/MORTGAGE30US https://fred.stlouisfed.org/series/MORTGAGE30US
lenerdenator 2y ago
Pretty much all of those. The "older generation" mismanaged the economy for 40 years, and now their children are paying for it. This is what happens when you base an economy purely off of what equities trade at in two exchanges. EDIT: Downvote me all you want, but it's true. I'm 32. I have no debt, a good paying job, no spouse, no kids. I live in the same county my parents did at my age, in a major-ish American metro in the lower Midwest. I cannot afford the same standard of living they did at my age. Why? Because of inflation. Why is inflation high? Because we had to print a bunch of money out of nowhere to keep the economy from collapsing during COVID. Why did we have to keep the economy from collapsing during COVID? Because the average American household is living paycheck-to-paycheck and has no emergency savings. They're living paycheck-to-paycheck because the average wage has not kept up with both the costs of living and the value created by labor for the last four decades. The value created by labor went to earnings-per-share on stocks, bonds, and other investment instruments issued by companies. The average person cannot afford to have the returns on such investments factor into their five-to-ten-year financial goals. More and more, they cannot afford to have returns on such investments factor into their 20-30-year financial goals, either. This shift did not come from nowhere; it came from human behaviors, modalities, and policies. There were people alive and in a majority to make this happen during that period of time.
- dangus 2y ago
  I think you’re naive to think that even a hypothetical affluent highly responsible nation of hundreds of millions of people with excess savings in their bank accounts is supposed to magically deal with an unemployment rate of 15% that occurred basically overnight without doing any kind of quantitative easing. I think the lack of housing supply is still the core culprit and that major reforms need to be made to the US’ approach to building.
  - lenerdenator 2y ago
    It might not have completely negated the need to print off all of that money, but it would have negated a good deal of it. The alternative would have been to have backed the checks with pre-existing money. That would have meant having a sane tax policy and a lack of military adventures in the United States over the last 30 years. The lack of housing supply happened because some geeked-up bankers 15-20 years ago decided to gamble the nation's economy on its ability to pay for mortgage rates that had gone out of their teaser rates. That destroyed the residential construction industry. We never caught up, because catching up means that the people responsible for the whole mess to begin with would have faced real financial consequences. The fact that building codes and zoning laws are what they are doesn't help, but it all comes back to money, and remember, there's a reason those zoning laws and building codes were there to begin with.
JumpCrisscross 2y ago
> Could someone explain why this is happening? Given "Florida markets occupy three of the top five spots where rent growth has most dramatically outpaced wage growth since pre-pandemic," and "Houston saw the greatest annual wage growth of any metro — nearly double the national average — and was one of only four markets where wages outperformed rents," it seems like the cause is migration and insufficient new housing [1]. (Counterfactual: "In three areas — San Francisco, Portland, and Austin — rents actually declined from 2022 as market heat began to moderate, while wage growth in those areas continued to climb.") [1] https://streeteasy.com/blog/rents-grow-faster-than-wages-across-us-nyc/ https://streeteasy.com/blog/rents-grow-faster-than-wages-acr...
rcpt 2y ago
"housing prices are going down" is bad news for voting demographics.
- bluGill 2y ago
  It isn't bad news - but it feels like it. The forget that they have a place to live during that time and so most of their house payment would go to rent anyway. They also forget that in 30 years they get a place to live rent free (well property taxes - and of course this breaks if you take cash out). House prices generally don't go down so much as stagnate compared to inflation.
  - bombcar 2y ago
    House prices have dropped in nominal dollars a number of times, specially the five years from 2008-2013. Of course, that's on a national average; localities can deviate. That annoys people and makes houses go underwater; if you instead hold house prices mostly steady whilst inflation goes up, most everyone is happy. People who bought think they're financial geniuses for locking in a low rate, and non-owners see their affordability slowly improve. The problem is it's slowly; even 5% inflation would take a few years to be really noticeable.
  - rcpt 2y ago
    It's interpreted as bad news, thus there is zero political will to pursue policies that reduce housing prices.
nimbius 2y ago
If I had to speculate, I'd say its a combination of rebound from covid rent furloughs, and market capture by capital management firms like trammel crow (who really, really want you to think theyre a property management company now) Some might say deposit regulation and reform is a driver, but all that really did was set up a scumbag market of fintechs that replaced outrageous renters deposits with slightly less expensive non refundable premiums. Not that it matters. We are building plenty of apartments you can't afford for other reasons. Paid parking, pet fees, 3 figure application fees, move in fees, and common area fees not to mention Arizona's renter property tax all raise the bar. Even if you can afford it you'll likely not qualify. Credit, criminal and prior landlord checks all have to come back spotless. You'll need to submit 2 pay stubs after that.
ninininino 2y ago
Wealthy boomers control politics and wealthy boomers (mostly - a portion but obviously not all - of the first half of their generation years-wise) own housing. Why would they want to allow their rental incomes to decrease or their home values to decline by allowing new housing to be built? They are the me-me-me generation after all. Anything they can do to set the future on fire in order to maximize their returns while they live, they will do. Whether that's bail out failing businesses with government-owned debt that future generations (including their grandkids) have to pay back or destroy the planet and environment. The only solution is to get younger people to vote or to wait for them to die.
- jobs_throwaway 2y ago
  > The only solution is to get younger people to vote or to wait for them to die. There are other means, perhaps less palatable for the HN crowd though
sonotathrowaway 2y ago
One factor I’m not seeing mentioned in these replies is the rise of price fixing software meant to maximize profit for landlord companies. Multiple investigations have found the behavior replicated in many cities, with many of these companies being sued. https://www.propublica.org/article/senators-introduce-legislation-stop-landlords-algorithm-price-fixing https://www.propublica.org/article/senators-introduce-legisl...
bell-cot 2y ago
Imagine a game of Musical Chairs, but... - at the end of each round, "who gets a chair" is determined by a "rent auction" - after each round, 2 players and 1 chair are added - auction losers are sent to the local homeless shelter, freeway overpass, or whatever
maxsilver 2y ago
All of the above. - Prices are determined by comparables. When home owners sell, and can push prices higher, it pushes all possible future prices for all properties nearby higher simultaneously. - Corporate interests are buying up real estate, and especially rentals. (public and private equity purchases are 6x higher than they were a decade ago here). Higher rental prices encourage people to leave rentals faster, making people more desperate to buy, increasing their willingness to take on more debt. - (in a few areas) construction is limited and not keeping up with growth. In most of Midwest US, construction outpaces growth, but since prices are determined by comparables, new construction in an area can be priced at top of the market, resetting those comparables higher too. Paradoxically, even though we do need new housing construction to have housing, our financial system is setup such that new housing construction generally raises all prices for all housing on average -- the "more supply" benefits don't really take effect for about 30 years, when they become normal mid-market units. - In some areas, new Hotels entrants are escaping basic regulation by lying about who they are. (see AirBnB, Vrbo and similar hotel chains). This removes housing supply, and can't be market corrected by other competitive hotels (since they would have to follow basic hotel regulation, but AirBnB and Vrbo are allowed to break the law) - Unlike in 2008, corporate interests are willing to just eat massive losses to prevent property prices from falling. And the federal government is willing to extend massive amount of lending to them to allow them to do this almost indefinitely. So even in places where there's a massive supply of empty units, those units aren't making it to the market at any reduced prices because it's too affordable to simply sit on them instead and hope they're eventually able to rent out again at ultra-high pricing. I suspect we'll never see a gentle market reset back to real-world-based numbers like we saw in 2008 for that reason. Any one of those problems would raise property prices for everyone. But we're dealing with all of them, simultaneously. Something like this https://ny1.com/nyc/all-boroughs/news/2024/01/05/hedge-fund-rental-housing-home-affordable-representative-adam-smith-congress- https://ny1.com/nyc/all-boroughs/news/2024/01/05/hedge-fund-... would be a gentle start to attempt to address the above problems, but it remains to be seen if they actually get this through.
- HDThoreaun 2y ago
  Corporations only buy housing because it is a good investment. Its only a good investment because supply is severely limited by the government. If you think corporate ownership is a problem the solution is building more, LVT wouldnt hurt either.
subsubzero 2y ago
People act like this stuff is magic. When Biden came into office he pushed the build back better plan(luckily Manchin did not vote the largest portion of the bill) - 6.25 trillion even though Trump had already pushed a huge stimulus package during covid(which I think was too big also). Massive increase in cash supply led to skyrocketing inflation. Its why houses, cars everything is like 40-60% more expensive since 2019. I mean you can't get away with sending hundreds of millions of people thousands of dollars for free and expect things to just keep on going as if nothing ever happened.
- olddustytrail 2y ago
  Except you are obviously wrong. If US monetary policy had been the cause then the inflation would have been due to the dollar losing value and you would have seen a change in exchange rates against other currencies. But you didn't.
  - gottorf 2y ago
    US monetary policy didn't exist in a vacuum! The dollar did lose value relative to actual things you can buy, like groceries and houses, but did not lose value relative to other currencies because other countries were also printing money like mad.
    - olddustytrail 2y ago
      Some were and some weren't. Which currencies appreciated significantly against USD in this period? Come to think of it, the UK didn't. It borrowed instead. Why didn't GBP massively increase against USD?
      - gottorf 2y ago
        > Which currencies appreciated significantly against USD in this period? Very few did. A quick snapshot is the Dollar Index, which is a basket of six "major" currencies (pound sterling, yen, Euro, Swiss franc, Canadian dollar, and Swedish krona), which remains higher (stronger dollar) today than even the Covid crash peak, during which basically everything that could be traded did so in a huge range due to extreme market volatility. The Swiss franc is stronger against the dollar since 2019, and so is the Mexican peso, both by roughly 9-10%. That's about it for what I can think of in terms of globally relevant currencies. Most everything else is weaker against the USD than back in 2019. The US dollar, by virtue of being the global reserve currency, can likely absorb more abuse than others. It's often called the cleanest shirt in a pile of dirty laundry. > the UK didn't. It borrowed instead. Why didn't GBP massively increase against USD? It looks like the UK spent roughly ~5k per capita as a response to Covid[0]. When the spending comes from budgetary deficits (that is, absent a commensurate increase in taxes) financed by new bond issuance ("borrowed", as you said), and a large part of said bonds were absorbed by the central bank[1], it's effectively printing money. [0]: https://commonslibrary.parliament.uk/research-briefings/cbp-9309/ https://commonslibrary.parliament.uk/research-briefings/cbp-... [1]: https://tradingeconomics.com/united-kingdom/central-bank-balance-sheet https://tradingeconomics.com/united-kingdom/central-bank-bal...
davidw 2y ago
The "corporate interests" thing is a bogeyman. They're a symptom of the problem, rather than a cause, as is explained here: https://www.strongtowns.org/journal/2024/2/21-going-after-corporate-homebuyers-good-politics-ineffective-policy https://www.strongtowns.org/journal/2024/2/21-going-after-co... If you go to local hearings and listen in on city council meetings, you start seeing a pattern of people who "got theirs" trying to stop homes from being built: https://bendyimby.com/2024/04/16/the-hearing-and-the-housing-shortage/ https://bendyimby.com/2024/04/16/the-hearing-and-the-housing...
- dingnuts 2y ago
  the existing housing stock would be fine if the population wasn't growing. With birth rates as they are, increased demand and increased crowding is a choice made through immigration policy. unpopular political stance, I know, but you can't welcome in unlimited residents without expecting the existing inhabitants to get used to more crowding or fight over the available space
  - davidw 2y ago
    Or you could build more housing. Many of those immigrants would love to work doing that! And a lot of it is actually not really immigrants anyway, but household formation in a large cohort: https://oregoneconomicanalysis.com/2023/10/26/household-formation-in-oregon/ https://oregoneconomicanalysis.com/2023/10/26/household-form... Oh, also, in any case the existing housing stock would not be fine, because people migrate around the country, too, to places with jobs, or away from places in decline. A vacant house in Cyanide Springs, Oklahoma doesn't do much good if your job is in Mountain View, California.
gen220 2y ago
It used to be that when you moved from point A to point B (for retirement, career-change, whatever), you'd sell your home in A and buy a home in B. Modern communications + financial tech have converted homes into cash-flowing assets that can be managed at a distance at 1/10th the risk-adjusted cost of 40 years ago. Home-owning people of the age 55+ do not sell homes when they move, they rent them out and use the cash flow as leverage to buy a new home. This has been happening at least since 2008, but is a secular trend. In my opinion, talk of "not enough housing" is a mind trick to get you to ignore the fact that we actually do have adequate sqft/people in desirable areas, but ownership of that square footage is distributed incredibly unequally. The % of homes that are lived-in by owners is approaching all-time lows in most high-COL regions in the U.S.. Those people pass their assets on to their children, who often have no ties to the region, and to whom real estate is purely a financial asset to be squeezed for maximum cash flow to subsidize their unearned lifestyles. We live with the consequences: rent that is increasingly unhinged from reality, and allows for dismal savings rates for our youth. IDK, it's pretty bleak as somebody who wants to be a homeowner in a community that feels like home. I keep suspecting that there'll be a populist anti-landlord policy movement in my urban area (NYC) but outside of maybe 2-3 months during COVID it remains a pretty fringe idea.
- bombcar 2y ago
  These people have been getting away with it because of the relatively continual appreciation during that time. When the worm turns, and it will turn, these people are in for a surprise and world of hurt. I saw it in the 80s and in the early 2000s and will see it again.
- bluGill 2y ago
  Some people have been doing that all along. I've seen fiction books from the 1930s talking about some person doing that. It sometimes works sometimes doesn't.
patrickmay 2y ago
The root cause is zoning and NIMBYism (Not In My Back Yard). It's not difficult. Prices are determined by supply and demand. When local and state governments restrict supply via zoning and other laws, prices go up. If you want prices to go down, increase the supply.
rawgabbit 2y ago
All the posts here addressed the immediate cause, zoning and NIMBY. If you look into the issue from the viewpoint of American policy, the US has a long tradition of promoting home ownership as it is viewed as promoting a more responsible citizenry who care about their neighborhood and will make good long term decisions. The fact that this stated goal of American policy is out of reach for many means American policy is broken. There are now too many vested interests against new home ownership. If you ask many current homeowners they will tell you they have debt up to their ears. Their one asset is their home which they will borrow against, reverse mortgage, or sell to fund their retirement. That is they will do everything in their power to prevent their homes from losing value.

hnthrowaway0328 2y ago

Not surprising with rates hiked to 5% in just a couple of years. Apparently we don't have rate control.

bluGill 2y ago
I'd say not surprising when rates were down to 2-3% for years. I haven't seen anyone make a rigorous argument as to what rates should be, but it is clear that when they get too low - as they did - you cause inflation and that has been happening. (note that inflation is never even across the economy - this time it housing early)

deleted 2y ago

[deleted]

beaeglebeachedd 2y ago

I solved this problem by finding a place with no fire/building code inspections and built a shack for 40k. People build whatever here and all the stuff paranoid people claim would happen, didn't. Code inspections eliminated 20 years ago. I imagine the code scam and it's costs result in untold deaths and exposure, or money lost that could have been spent on healthcare, education, or healthy foods .

bitcharmer 2y ago
It's a bit like advocating not wearing a seatbelt because You've never been in an accident. Pretty short sighted
bitxbitxbitcoin 2y ago
Is this a county level jurisdiction in the United States?
- beaeglebeachedd 2y ago
  Yes. Most counties experiencing booms since the 70s, developers swooped in and coopted the county boards to make a guy and his truck weak competition.
  - jameshart 2y ago
    To be fair, many towns don’t actually want to only attract guys with trucks. They also want families, professionals, schoolteachers, etc. It’s not evil for a town to prefer that developers come in and build housing in volume to enable the growth the town desires versus individuals coming in and building one offs.
- sixothree 2y ago
  Yeah. Not sure this is an answer for anyone except people in that one specific region.
loandbehold 2y ago
Where is it?

kvmet 2y ago

That graph is awful. What is it showing aside from "bigger arrow more bad"? Does color mean anything? What variable does arrow size actually represent?

alexpetralia 2y ago

I think the inevitable conclusion is returns to capital is rising versus the returns to labor. Put your money in investments because that's what we (as a society) reward. https://www.mckinsey.com/featured-insights/employment-and-growth/a-new-look-at-the-declining-labor-share-of-income-in-the-united-states#section-header-1 https://www.mckinsey.com/featured-insights/employment-and-gr...

lifestyleguru 2y ago
The taxation and obligatory contributions on labor in Europe are brutal. Very quickly reaching over 40% in total in most countries. In the cities where there exist employment options, salary pays for housing, food, some going out, tiny savings and that's it. There is no point in working.
- trgn 2y ago
  The most bizar thing in Europe to me is that many countries are straight up tax havens, no capital gains taxes, but then tax labor so highly. It's a wonder to me, and I feel like many europeans don't even realize. In US, the commonwealth is funded by the rich. In Europe, by everybody else.
  - lifestyleguru 2y ago
    Actually many countries heavily tax all of them - labour, dividends, and capital gains. Especially Nordics, Benelux, France, Germany. Sometimes I wonder what's the point even of working and investing in countries like France, Belgium, or Denmark... yeah everything is so tidy, clean, and nice but you'll never afford any of it through employment.
trgn 2y ago
Wage growth has been really strong lately, 4-5% for a number of years now. Capital gains on the contrary have been very choppy last few years. Broad correction after 2021, and some sectors have still not recovered. Housing is now dropping as well.

nostromo 2y ago

Higher interest rates make building new housing more expensive. Fewer new builds + higher costs = higher rents.

lenerdenator 2y ago
What you're seeing are not extraordinarily high interest rates.
- tesrx 2y ago
  OP said "higher interest rates" relative to historic lows in '20-21. Your comment does not negate the effect that interest rates have had on affordability. The last time interest rates were this high, home prices were significantly lower than what they are now. Wages have not kept up with inflation.
  - lenerdenator 2y ago
    Being relative to historic lows in anything doesn't say much, though.
bombcar 2y ago
The biggest thing higher rates is doing is preventing people from moving when they might otherwise want to, because going from 3% to 7% will double their monthly. This results in fewer people "upgrading" into new construction, which further constricts the "starter home" pool (nobody builds starter homes).
bluGill 2y ago
Higher interest rates are not that much a hit on new building - the construction loans don't last long and so while there is more cost it isn't very significant compared to all the other costs. They are a problem to owners though - if you want to own a building you will pay a lot more. There is a subtle difference, and this is why new house construction is still going strong - there are enough people who can afford a loan who want a new house as to make it worth building. Having been in construction I call tell you a contractor can build two identical houses in the same neighborhood, with the only difference being the contractor is planning on selling one after it is built, while the other a buyer is exists for the house. The second house will costs at least $20,000 more than the first, the only difference being the buyer will upgrade lights, doors, flooring, countertops and so on. All those little $300 upgrades add up.

deleted 2y ago

[deleted]

lenerdenator 2y ago

This is going to have long-term economic and sociopolitical ramifications, and it's mainly due to the fact that we put the value of equities above all else. The next generation isn't being born, because their would-be parents are saying "I cannot afford to give my children as good or better of a life than I had". The equities that labor's value is stored in are beyond their reach. There's really only two ways to deal with this: 1) Get the older generation - the Baby Boomers - to work longer and rely on their stock-based savings less. Given that we've structured our entire society around them getting to retire to Florida for golf and wife-swapping until the dementia sets in, I don't see them being willing to stick around the office longer to produce value for the economy. 2) Import labor through immigration. Given that one candidate for President right now is running on a platform of severely curtailing certain types of immigration, and is doing so successfully, I don't see this being a viable option.

HDThoreaun 2y ago
Birthrate seems to have little correlation with income. The Scandinavian countries have made hard pushes to incentivize having children and they still wont. More likely that people just dont want kids.
- dangus 2y ago
  When half your babies aren’t dying of disease and you have life and career aspirations for yourself the idea of raising more than 1-3 kids seems pretty insane. Arguably low birth rates are a very good thing and we should adjust our society more to embrace them (like not building the economy so that it depends on being a giant pyramid scheme).
- rybosworld 2y ago
  Birth rate has generally been inversely correlated to income. AFAIK this is true in almost every country. The plot of Idiocracy was derived from this phenomenon. Humans are complicated and there are probably multiple reasons for this. But the most convincing one that I've heard is tied to education. Higher income generally means better education. And the better educated are more likely to use birth control. https://wol.iza.org/uploads/articles/228/pdfs/female-education-and-its-impact-on-fertility.pdf https://wol.iza.org/uploads/articles/228/pdfs/female-educati... I mentioned before that birth rate and income are generally inversely correlated. But that isn't completely true. The relationship is more of a j-curve. That is, past a certain income (think top 5% or more), the fertility rate begins to tick up. https://en.wikipedia.org/wiki/Income_and_fertility#:~:text=There%20is%20generally%20an%20inverse,born%20in%20any%20developed%20country https://en.wikipedia.org/wiki/Income_and_fertility#:~:text=T.... So, the breakdown is basically this: - The lowest-income/least-educated have the most children by far. - As you climb up the middle income/college-educated ladder, fertility drops almost linearly. - The wealthiest have more kids than the upper middle income, but still a lot less than low income.

newhotelowner 2y ago

24000 Students - 27 Schools (K-12) in my school district. District hardly approves any apartments/duplex/fourplex/multi-family. All new builds are 3500-4500 sqft single family home netting $12-15k in property taxes. State decided to fund charter/private/religious school.

davidw 2y ago

This is why groups like https://new.yimbyaction.org/ https://new.yimbyaction.org/ and https://welcomingneighbors.us/ https://welcomingneighbors.us/ exist. Find (or start!) a local group. It's extremely meaningful work, because you see homes built that you helped advocate for, that now provide someone with a place to live. And since it's local politics, it's much easier to make a difference than on some hot-button national issue.

VyseofArcadia 2y ago

This was already a problem when I moved to Atlanta in 2017. And the six years before that in the smaller town I was living in. The only time I got a raise above my rent increase is when I switched jobs. It didn't feel like a supply crunch either. Plenty of apartments for rent in both places, but still rent everywhere increased in lockstep in both cities. Made the whole thing seem very arbitrary and cruel.

bryanlarsen 2y ago
> The only time I got a raise above my rent increase is when I switched jobs. This is the American economy in a nutshell. Wages have been going up faster than inflation for the last year or so, but if you dig into it, it's only for workers who change jobs and union members.

zer00eyz 2y ago

There are so many factors that drive this. I own, I have plenty of space, I would happily take on a roommate. But the tenancy laws make my life hell if that person turns into an asshole. I have not seen any stats on housing distribution. Are there more houses with 1-2 residents where there would have been 2 or more in the past?

bombcar 2y ago
One aspect over long periods of time is the number of single-parent households, as some of those would have been combined in the past. That increases pressure. Reduction of "roommate/quasi-renting" because of tenancy laws. That increases pressure. Proliferation of AirBNB - that increases pressure. Everything is increasing pressure, but the number of new dwelling units isn't increasing as fast as needed.

smm11 2y ago

Buy low, sell high. There are cheap houses all over this country, and the 'flip' world we're in now means that a lot of houses have a lot of stuff already done. Buy. Work remote. Sit on it a year or two. Move up.

peoplefromibiza 2y ago

You're not alone. I can testimony it's happening in Italy too, at least in larger cities (Rome, Milan, Bologna, etc) It's even worse here cause salaries are not rising at all It's been like the perfect storm: high inflation, high interest rates, people cannot afford a mortgage anymore (or banks are not lwnding them money) and rents have become the only option available, reaching record highs. To add insult to injury energy prices are among the highest in the whole EU and you can imagine how grim the situation really is. Except for owners of multiple homes/apartments of course.

lifestyleguru 2y ago
Since I remember the regular salary in Italy has been 1600 EUR net monthly. It's like a number engraved on a marble block - "1600".
bombcar 2y ago
And to make it worse, Americans are moving in and buying places up! https://www.businessinsider.com/retired-americans-move-to-italy-affordable-healthcare-work-life-balance-2024-5 https://www.businessinsider.com/retired-americans-move-to-it...

jobs_throwaway 2y ago

> Rents jumped 30.4% nationwide between 2019 and 2023 I don't understand how this isn't a major national emergency. The fact that your average voter cares more about, say, immigration, than this problem is absolutely ludicrous

idontpost 2y ago
[dead]
kjkjadksj 2y ago
The powers that be would rather you quibble over inconsequential immigration than notice the other hand reaching into your wallet. It’s just that simple.
- JumpCrisscross 2y ago
  > powers that be would rather you quibble over inconsequential immigration Those powers being two thirds of Americans [1]. (And a greater fraction of voters [2].) It's tempting to blame a conspiracy. But at least the housing cost side of the equation is quite obviously a policy choice in much of the country. [1] https://en.wikipedia.org/wiki/Homeownership_in_the_United_States https://en.wikipedia.org/wiki/Homeownership_in_the_United_St... [2] https://www.route-fifty.com/management/2022/08/problem-homeowners-being-more-likely-vote/376521/ https://www.route-fifty.com/management/2022/08/problem-homeo...
  - kjkjadksj 2y ago
    Why are you citing homeownership stats? I saw fox news on tv in public recently. The headline cited “millions of migrants overwhelming border.” These are the powers that be who I am referring to. The powers who craft those unhinged headlines and also stand to benefit in some way by entrenching those headlines into the formative minds of their dedicated political base.
mensetmanusman 2y ago
They are related, millions of more unplanned civilians dramatically increases rent and reduces supply. At least that has been the case in Canada.

UncleOxidant 2y ago

This is the major problem that neither political party seems to have anything to say about (let alone a viable plan to deal with it). The party that gets serious about the housing affordability crisis could do very well, but for whatever reason they don't seem to want to focus on this issue. I was just looking at the reddit for our town yesterday and a guy with a family was posting about how they had been forced out of their rental house recently due to a sale and are now living in motels while trying to find a rental they could afford and qualify for (he'd had an eviction years ago and that was on his record). He said that that having to live in a motel was quickly draining their funds. Seems like this family is just about to be homeless and this is becoming more and more common for middle class people now given the level of rents.

lurking15 2y ago
> but for whatever reason they don't seem to want to focus on this issue printing money funds the cancerous growth of government, so there's no way a major party can focus on that when it causes the monetization of shelter (and other hard, scarce assets)
HDThoreaun 2y ago
Housing policy is Newsome's main issue at this point

kkfx 2y ago

Aside that's a good example of why ownership is good and so why homes instead of apartments are good as well and as a corollary why WFH for all eligible jobs should be even mandatory by default with derogation only for proven reasons (yes, WFH means also the possibility to work outside big cities for many who do not WFH, thank to the mere spread mass of humans WFH produce)...

xnx 2y ago

2 groups of people in the US: homeowners and renters. Homeowners want housing prices to go up. Renters want housing prices to go down. Homeowners vote.

higeorge13 2y ago

Same in Greece both for renting and selling. People got rich just because they had some old apartment from the 80s which was worth 100k 5 years ago but they can now sell it 200-250-300k. And here we also have lots of foreigners buying houses at extraordinary prices. Situation is bad in cities, but way worse in the touristic destinations.

lurking15 2y ago

cut off immigration and stop printing money, and then housing will be available for people in the US

Thoreandan 2y ago

Related (2005): https://en.wikipedia.org/wiki/Rent_Is_Too_Damn_High_Party https://en.wikipedia.org/wiki/Rent_Is_Too_Damn_High_Party

lifestyleguru 2y ago
> Rent Is Too Damn High I remember laughing at that meme 10 years ago. I'm not laughing now anymore. This thing spread globally.

TheChaplain 2y ago

There are few simple things that can possibly help? 1) Increase property tax considerably on housing that is empty, low-usage or switches tenant as often as twice a year. Easy to check for empty/usage by correlating the electricity bill. 2) Increase tax on housing owned by out-of-country people/companies. 3) Increase tax on properties owned that exceeds 3 (people playing the airbnb game buying up housing just to rent it to tourists suck). Had 2 more but I think the friday beer turned off the brain..